Happy Tuesday, Hospitalogists! I can tell the healthcare folks are BACK from their summer vacations and ready for Q3/Q4. The energy is flowing and I'm excited for the rest of 2024. Besides, college football is back! Texas to the natty. Book it. |
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The most important news from the week |
Pfizer launched PfizerForAll today, a digital telehealth platform that allows patients direct access to Pfizer medications across low acuity conditions like flu, migraines, Covid-19, RSV, and more. Pfizer is partnering with UpScriptHealth, Alto Pharmacy, and Instacart to launch the service. It's a growing trend among drugmakers to go direct. Remember Eli Lilly launched Lilly Direct earlier this year - also a virtual offering for scaling its medications for patients dealing with obesity, migraine and diabetes. Lilly partnered with FormHealth and 9amHealth for its platform. The bigger question for me is…what's the appetite for consumers to go here vs. an urgent care, primary care clinic, or better consumer-facing product like Hims, Ro, and others? When you have a migraine for instance…are you going to think to launch PfizerForAll, or would you prefer to connect with your local PCP via telehealth? I'm taking the second option 100% of the time personally. So adoption numbers for these businesses will be interesting to watch. Add to this point that Amazon folded its Clinic offering into One Medical, which is a notable datapoint in that direction. Plus, existing successful DTC telehealth brands have a large marketing, consumer-facing advantage. For instance - many male adults have probably already used Hims for ED or balding, so they're more likely to return to that platform. As we've seen with Hims and others, obesity is a huge patient / customer acquisition engine. Consequently, everyone is joining the fray. |
Truepill Acquired by LetsGetChecked |
In a deal valued at $525M, at-home lab testing and virtual care 'unicorn' LetsGetChecked is acquiring virtual pharmacy startup Truepill, which was once valued at $1.6B. Along with providing some interesting deal terms here, Rohit Mittal had some hearsay context to add to the story on Twitter (X) in which the founders of Truepill purportedly made $0 in creating a once $1.6B enterprise. If that's true, it's shocking. To summarize this 'acquisition' (more like a merger of …failing assets…if you ask me?), LetsGetChecked bolts on Truepill for $25M in good old cash - and then $200M attached to revenue earnout provisions, with the final $300M in stock-based comp. So that's $525M. $25M in actual cash, $200M that will probably never materialize, and $300M in a combined enterprise burning $10M a month. As someone who scans headlines every day, does hours of research, and sees how various companies launch products or announce partnerships, the fact that there's…nothing…out there from either company addressing or announcing the move tells you everything you need to know. |
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The Weekly Executive Summary |
Notable moves, policies, and strategies from around healthcare. |
"He who controls the spice controls the universe": Value-based kidney care player Monogram Health is the 3rd fastest growing private company in the U.S. from Inc. Magazine's Inc. 5000 list. You might recall who topped the list LAST year. That's right - a Bill Frist-led company in CareBridge. Bill Frist strikes again in 2024 in position 3! Once you get through all of the Bill Frist puff in both articles (no shade toward Bill but seriously - are the write-ups about the fastest growing healthcare companies or about Bill Frist?), you'll learn that Monogram Health's revenue grew from $4.9M in 2020 to a whopping $2.2B in 2023, generating $160M in savings that year (7.2%). Expectations are high in 2024, with projected revenue north of $3B. But keep in mind - this topline figure is somewhat misleading in risk-based orgs. The medical margin is much more telling. - Hospitalogists should remember Monogram raised $375M in January 2023 backed by CVS, Cigna, Humana, Memorial Hermann, and SCAN with participation from TPG, Frist Cressey, and other notable healthcare players. When you have financial and strategic backing by players like these - essentially The House - (similarly to CareBridge's backers) it's hard to lose.
Employers' Skyrocketing Drug Costs: Business Group on Health 2025 released its Employer Health Care Strategy Survey. Takeaways include: Projected healthcare costs are expected to rise 8% in 2025, and pretty much all of this increase is attributed to pharmacy costs - ahem, GLP-1s. 76% of employers are 'very concerned' about pharmacy costs Every company is a healthcare company given the disproportionate costs associated with health benefits - The interplay is the fact that employer fiduciary duty arguments are happening with J&J, Wells Fargo, and likely others. Class action lawsuits are arguing that employers are not acting in the best interest of their plan participants. Therefore employers are in breach of their fiduciary duties - specifically calling out employee drug benefit plan design when it comes to selection and monitoring of a company's PBM! Mark Cuban seems to have a point.
US Oncology Strikes Again: McKesson, which owns US Oncology (2,500+ providers in oncology), is buying a 70% stake in Core Ventures (established by Florida Cancer Specialists) for $2.5B. Florida Cancer Specialists is massive and practices with 250+ MDs and 280+ APPs across 100 locations. The practice includes quite a few oncology ancillaries: - clinical trials
- imaging
- med onc
- infusion
- integrative therapy
- molecular and path lab
- rad onc
- sequencing
- dispensing data
If you frame this transaction in the same ballpark as OneOncology's transaction with TPG and AmerisourceBergen, then this price tag from a multiple perspective was likely in the range of 15x - 20x+ EBITDA. Everything Else. Quick Hits Roundup: - The financial state of the not-for-profit hospital sector - key takeaways from the latest medians.
- TPG and UnitedHealth Group among suitors seeking to buy Surgery Partners (Bain with an existing 39% stake)
- ChristianaCare and Atlas Healthcare Partners form a new joint venture partnership.
- Judge strikes down the FTC's noncompete ban nationwide.
- California weighs blocking private equity health deals.
- UT San Antonio and UT Health San Antonio will merge into one institution.
- Anthem BCBS plans to cut CRNA reimbursements.
- 59% of physicians find productivity-based pay unfair.
- Legacy Health's margin plummets to -5.9% ahead of the planned OHSU merger.
- J&J takes aim at the hospital drug-discount program.
- Epic's big conference featured 6 highlights.
- Evolent Health take-private - rumored interest from Elevance given recent activity with Mosaic - but as of the latest reports it appears as if they've backed off. Will be interesting to see if anything materializes. At the very least this signals Elevance interest and increased involvement in VBC enablement and VBC specialty care.
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Thanks for the read! Let me know what you thought by replying back to this email. — Blake |
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