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BFD Expert Voices - Health Tech Deals

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A scathing new study concluding that digital diabetes tools fail to improve patients' health and increase overall spending doesn't tell the whole story, companies mentioned tell Erin.

Why it matters: The study is one of the first large-scale pieces of research to question the benefits of digital diabetes care, long considered a proof point for the overall sector.

What they found: Researchers concluded that digital diabetes tools from companies like Omada, Vida Health, Verily-Onduo and Teladoc-Livongo "do not deliver meaningful clinical benefits, and they increase health care spending relative to usual care."

"The evidence showed that improvements in glycemic control for patients using digital diabetes management solutions were minimal and short-term," the researchers add.

"After accounting for the average price of these products, these solutions increase net health care spending for purchasers," they say.

The other side: "The missing piece here is that the diabetes population has many treatment goals," says Omada Health chief medical officer Carolyn Bradner Jasik.

Jasik takes issue with the study's primary focus on A1C, a representation of average blood sugar levels over the past three months.

"It would be like evaluating how well a primary care office treats acute asthma and using that to assess the whole clinic," Jasik says.

Yes, but: The metric is logical, considering the researchers took a methodological tack to their study similar to ones researchers apply to therapeutics, or medications with only one treatment outcome.

The intrigue: Virta Health was the only company in the assessment for which the researchers concluded there was enough evidence to "support broader adoption."

"Before Virta ever signed its first customer, we invested in a clinical trial to determine the effectiveness of our approach for treating metabolic disease," said Adam Wolfberg, Virta Health chief medical officer, in an emailed statement to Axios.

The big picture: The study prompts bigger questions about the digital health industry and how outcomes should be measured.

The question is whether virtual care is a just new way of delivering standard in-person care (and should be assessed as such) or an entirely alternate channel of care that should be measured differently.

Jasik, who says she thinks of Omada as similar to in-person care, believes in the former framing.

"What's broken [in diabetes care] is not the care itself," she adds, "but the access to that care — people can't get to the hospital to get it."

The fine print: The group responsible for the study is the Peterson Health Technology Institute (PHTI), launched by the nonprofit Peterson Center on Healthcare with $50 million to assess the clinical benefits and economic impact of digital health tools.

Between the lines: Omada's Jasik also noted the PHTI study considered only the research that Omada had available at the time, which was limited to four-month sponsored studies.

Omada recently unveiled a new 12-month sponsored study, which found that members with Type 2 diabetes with high A1C levels (>8%) saw an average 1.8-point decline in A1C over that period.

That's a significant drop that has been linked to a reduced risk of heart attack and stroke and fewer diabetes-related deaths.

That study was published in the journal The Science of Diabetes Self-Management and Care before PHTI had time to consider it, per Jasik.

Follow the money: Since 2010, companies providing virtual diabetes care have drawn $5.7 billion in venture capital, per Rock Health data, with transactions including mergers and acquisitions totaling $58 billion, per PitchBook data.

Omada in 2022 raised a $192 million Series E round.

Virta in 2021 collected $133 million at a $2.1 billion valuation.

Virtual diabetes care startup 9am.health recently raised a $16 million Series A.

Hybrid diabetes care provider Ryse Health recently drew $6.5 million Series A funds.

1 big thing: Diabetes care vendors say damning study doesn't tell full story

Illustration of a red cross balancing atop a syringe

New Mountain Capital will sell medical device materials maker ILC Dover to Ingersoll Rand for $2.3 billion.

Why it's the BFD: ILC will sell for a 17x EBITDA multiple before earn-outs — a rich valuation indicating the ongoing interest in life sciences, Aaron writes.

The deal includes an upfront cash purchase price of approximately $2.325 billion, with earn-outs tied to key metrics.

How it works: Founded in 1947, ILC is most known for being a supplier of spacesuits for NASA and making products used for safe handling of pharmaceutical agents during drug manufacturing processes.

Catch up quick: New Mountain Capital backed the company in January 2020 for an undisclosed price.

Under New Mountain, ILC acquired Flexan, a contract design and manufacturing organization that serves many top global medical device companies, in 2021.

What's next: Ingersoll Rand will establish a life sciences platform inside its precision and science technologies segment.

ILC CEO Corey Walker will lead the newly created platform and join the Ingersoll Rand leadership team.

It will have about $700 million in revenue and will enable further focus in life sciences.

The bottom line: Life sciences continue to drive overall health care M&A, with plenty of strategics strapped with cash and ready to buy.

2. The BFD: Ingersoll Rand to buy ILC Dover for $2.3B

Illustration of a stack of cash repeated three times, over green shapes and a blue zigzag line.

Want more health tech deals? Check out the Axios Pro Deals Tracker.

• Loyal, an SF-based dog longevity startup, raised a $45m Series B led by Bain Capital Ventures and joined by new backer Valor Equity Partners and insiders Khosla Ventures and First Round Capital and others. axios.link/3TKNC97

• Ultrahuman, a Bangalore, India-based wearables developer, raised a $35m Series B led by Blume Ventures and Steadview Capital. ultrahuman.com

• Persistence Capital Partners completed its C$1.2b take-private buyout of Toronto-based pharmacy chain Neighbourly Pharmacy. axios.link/3TLR2bE

• Waud Capital Partners acquired Senior Helpers, a Charlotte-based senior home care provider, from Advocate Health. seniorhelpers.com

• Riverside Company-backed Best Life Brands, a Troy, Mich.-based senior care organization, acquired Next Day Access, a Bartlett, Tenn.-based provider of residential and commercial accessibility and mobility tools. axios.link/3xcbQ3u 

3. Deals o' the day

• Cristina Costantini joined Care+Wear as COO and Kelly Gardiner, formerly of Thirty Madison, joined as chief marketing officer. careandwear.com

• Dave Guilmette, former president of the global employment segment at Cigna, co-founded WorldClass Health. worldclasshealth.com 

•  Jean-Jacques Bienaimé, former CEO of BioMarin, became chair of the board at Owkin. owkin.com

4. It's Personnel

🤖 Nvidia's AI ambitions in medicine get clearer — CNBC

😵‍💫 UnitedHealth to start processing $14B claims backlog after hack — Reuters

5. Your daily dose

Illustration of a pill capsule as the bell hammer on an alarm clock.

❌ Situational awareness: Rev cycle management provider R1 RCM has told its two biggest shareholders to end talks on a buyout, per an SEC filing.

🌴💒 Erin spent the weekend in Palm Springs celebrating the union of two close friends and wonderful humans.

🌈 Thanks for reading, and extra thanks to newsletter editor Claire Rychlewski and copy editor Egan Millard. Please ask your colleagues, friends and family to sign up.

March 25, 2024

1 big thing: Diabetes care vendors say damning study doesn't tell full story