Category: Digital Health

Oracle Acquires Cerner for $28.3B

Posted on by Jason Barry

Sometimes when there’s smoke, there’s fire, and that was definitely the case with last week’s rumor that Oracle was in talks to acquire Cerner in one of the largest healthcare M&A moves of the year.

Database and cloud infrastructure provider Oracle is acquiring Cerner for $28.3B in a transaction expected to close in early 2022. Upon closing, Cerner will be organized as its own dedicated business unit, serving as Oracle’s “anchor asset” to expand deeper into the healthcare sector.

What does Oracle gain from the merger?

Cerner marks Oracle’s largest acquisition ever, with several key benefits justifying the move.

  • Oracle and Cerner share a large overlap in end users. Cerner has access to an existing customer base in a giant market, potentially expediting Oracle’s pivot toward the cloud by leveraging these established relationships.
  • Cerner is expected to be a source of durable revenue growth, with Oracle anticipating a positive earnings impact in the first year that is likely to accelerate as it expands Cerner’s services into new regions.
  • As Oracle looks to push into healthcare, access to patient data will be a deciding factor of success, and Cerner’s EHR data helps eliminate its reliance on third party data providers.

What does Cerner gain from the merger?

Cerner was valued at close to $23B heading into the merger (vs. Oracle’s $280B valuation), and it will be looking to pursue ways to use its newfound scale to help it move past the EHR business that’s been slowly losing ground to competitors like Epic.

  • Oracle’s resources, infrastructure, and cloud capabilities will accelerate Cerner’s pace of technology development, while its global footprint could also allow Cerner to reach new geographies faster than if it was a standalone company.
  • Oracle’s hands-free Voice Digital Assistant will become the primary interface for Cerner’s clinical systems, reducing time spent typing and creating more time to care for patients.
  • Cerner will move to Oracle’s Gen2 cloud with the goal of achieving “zero unplanned downtime in the medical environment,” a migration that should happen quickly because of previous integrations between the two companies. 

Industry Impact

If this strategy sounds familiar, it’s right from Microsoft’s playbook, with the tech giant acquiring Nuance for nearly $20B to add more clinical speech recognition tools while gaining a foothold in healthcare.

Cerner has been in the process of shifting its focus beyond its core EHR business, under the helm of David Feinberg, who left Google to become the company’s chief executive in October. 

Feinberg has stated that improving usability and data analytics would be a critical component of Cerner’s strategy going forward, and the combination of Oracle’s Voice Digital Assistant and cloud computing capabilities could go a long way toward making this strategy a reality.

Cerebral Raises $300M for Digital Mental Health

Posted on by Jason Barry

Online mental healthcare provider Cerebral announced the close of its $300M Series C round, raising the company’s valuation to $4.8B within two years of its launch.

  • Cerebral is a “one-stop shop” for comprehensive digital mental healthcare and wellness, offering support for depression, anxiety, and post-traumatic stress disorder among other illnesses.
  • Monthly subscription plans give members access to Cerebral’s team of over 2,000 clinicians, lowering barriers to care through its virtual platform combining therapy and medication management for full-service support in the home setting.
  • The funding will be invested in new services such as schizophrenia management expected to launch in 2022, as well as strategic partnerships and international expansion.
  • Advancing partnerships with employers and payors is another priority for the funds, with Cerebral’s new Chief Impact Officer, Simone Biles, enrolling to help on this front after withdrawing from the Tokyo Olympics to focus on her own mental health.

Industry Impact

In-person mental health facilities were heavily impacted by the pandemic, experiencing capacity constraints that frequently led to month-long wait times to see a provider. This created a window for digital providers to address the care gap, with Cerebral reporting that the wait times for its  “instant live” visits are now just over five minutes.

Large amounts of capital continue to be directed towards the mental health space, and more M&A announcements from its well-funded startups are likely to follow as companies like Cerebral aggressively compete for contracts with employers.

CVS and Microsoft Partner on Digital-First Care

Posted on by Jason Barry

CVS Health is wasting little time with its transformation into an “integrated health solutions company.” Less than a month after unveiling its omnichannel strategy, CVS announced a new five-year strategic partnership with Microsoft focused on digital health and personalized care.

The partnership is centered on leveraging Microsoft’s computing capabilities to unlock value from CVS’ treasure trove of patient and consumer data. CVS is in a unique position to know a patient’s provider choices (through its Aetna payor arm), medication history (through CVS pharmacy), and even shopping habits (through its retail stores).

Now, the company has enlisted Microsoft to tie it all together, with key goals of:

  • Customizing care by combining information from across the company to deliver customized health recommendations while scaling loyalty and personalization programs.
  • Enabling front line workers through the use of Microsoft Teams and Office products, allowing retail employees to quickly consume information and solve customer needs.
  • Digitizing operations through Azure’s cognitive services like computer vision and text analytics to automate tasks such as pharmacy intake.
  • Expanding cloud services by migrating applications currently running on on-site servers to Azure, giving CVS access to over 1,500 new business apps.

The Takeaway

The partnership announcement adds color to the picture of what CVS’ transformation from a local pharmacy to a healthcare destination might look like.

Microsoft’s cloud infrastructure enables CVS to take a more proactive approach to its services, including preventative health recommendations, like when a patient is due for a screening, or automated reminders to pick up sunscreen if a customer has an increased risk of melanoma.

CVS has millions of customers between its retail operations and health plan enrollees, and this partnership allows it to use this data to reach people ”with the right services, through the right channels, at the right time.”

SWORD Raises $163M for Virtual MSK Platform

Posted on by Jason Barry

Digital musculoskeletal (MSK) care provider SWORD Health raised a $189m Series D round, making the startup the latest digital health “unicorn” by lifting its valuation to $1.8b.

Based on SWORD’s fundraising pace, it’s safe to say the pandemic has been a boom for virtual MSK solutions. The company closed a $25m Series B in January, followed by an $85m Series C in June, and the recent funding pushed its outside capital total to over $324m.

SWORD offers a suite of personalized MSK solutions that includes:

  • ASK a PT – 24/7 remote access to physical therapists for general questions
  • Digital Guardian – Applies wearables and video monitors to guide safe workouts
  • The Academy – Customized educational content

The virtual-first approach is designed to reduce preventable surgeries for patients while driving value for risk-taking customers such as payors, employers, and health systems.

SWORD CEO Virgilio Bento founded the company in 2015 after seeing first-hand the “challenges that families face when they have to recover a loved one.” The WHO estimates that close to 2 billion people suffer from MSK conditions globally, creating a lot of room for multiple companies to emerge as leaders.

Digital MSK startups have attracted significant investor attention in recent months, with Hinge Health securing $600m to expand its online MSK platform, and Kaia Health raising $75m for its no-hardware-needed rehabilitation programs.

The Takeaway

SWORD prides itself on being “the industry’s only end-to-end digital MSK solution” (but then again, so does Hinge), and it will need to demonstrate that its hybrid approach offers a superior return on investment than competing strategies. If it can accomplish this, then the new funding should give it strong positioning within an MSK market that is quickly establishing itself as one of the top telehealth use cases.

AppliedVR Raises $36M for VR Pain Management

Posted on by Jason Barry

Virtual reality (VR) therapeutics developer AppliedVR raised a $36m Series B round ($71m total funding) to fuel growth as it awaits a decision from the FDA on its first de-novo submission for pain management.

  • AppliedVR combines VR-based cognitive-behavioral therapies with mindfulness exercises to help manage chronic pain, with patients reporting reductions in the daily life interference caused by their pain for up to several months after treatment.
  • EaseVRx is the company’s flagship product awaiting FDA approval, standing out as the first VR prescription therapeutic to receive breakthrough device designation for treatment-resistant fibromyalgia and chronic intractable lower back pain.
  • Research published in JMIR found that EaseVRx produced “clinically meaningful” improvement in pain outcomes, and AppliedVR is investing heavily in building evidence demonstrating its therapeutics as effective for patients, scalable for providers, and viable for reimbursement.
  • The latest funding will be used to prepare for EaseVRx’s full market launch after FDA approval, as well as to build out its product pipeline that includes RelieVRx (for acute postoperative pain) and AnxietyVRx (for generalized anxiety treatment).

Industry Impact

Although other startups such as XRHealth are pursuing the therapeutic VR space, none have AppliedVR’s established client roster (AppliedVR partners with over 200 health systems) or supporting body of research.

Following its Series B, AppliedVR has a lot of momentum in a chronic pain market estimated to negatively impact the economy to the tune of $635b annually. EaseVRx’s FDA approval would provide another tailwind to help the company be among the first to make VR pain management a reality.

Kareo and PatientPop Merge to Help Private Practices

Posted on by Jason Barry

Cloud-based software developer Kareo and private practice growth company PatientPop announced the closing of their merger and unveiled the combined company’s new name, Tebra.

Tebra currently supports over 100k providers and is looking to combine the technology of both companies to help modern private practices along every step of the patient journey.

  • PatientPop helps physicians grow their practices through marketing assistance, virtual scheduling, and an online platform to practice care remotely. The company offers cloud-based solutions that automate tasks such as scheduling and referrals to grow bookings.
  • Kareo provides software that supports EHRs and financial services for independent practices. The technology includes features supporting practice management, patient engagement, and third-party app connectivity.
  • Tebra, as in “vertebrae,” aims to be the backbone of private practices, integrating PatientPop’s growth solutions with Kareo’s operations tech to allow physicians to work at the top of their licence while meeting the rising patient expectations for seamless digital experiences.
  • Advantages of scale might emerge as Tebra continues expanding its client base, such as networking its physicians to drive more referrals, or even the possibility of facilitating consolidation of the offices it helps grow.

Industry Impact

As healthcare systems invest heavily in digital innovation, Tebra’s practice management platform is a lifeline for private practices trying to keep up. Without the financial buffer of larger systems, independent physicians were severely impacted by the post-pandemic declines in patient volumes, and offloading administration and growth functions onto a company like Tebra could be a piece of the solution.

Hinge Health Raises $600M for Digital MSK Treatment

Posted on by Jason Barry

In a virtual care landscape where many competitors are looking to address multiple conditions with a single solution, Hinge Health is setting itself apart by taking the opposite approach.

Last week, online musculoskeletal (MSK) clinic Hinge Health raised $600m to help build its team and platform, doubling the fast-growing startup’s valuation to $6.2b. Despite the influx of capital, Hinge is keeping a singular focus on musculoskeletal therapy, and tackling the problem with a deep roster of solutions.

  • Hinge launched in 2015 with a mission to improve MSK treatment by combining wearable sensors and computer vision-assisted physical therapy with a multidisciplinary team of physical therapists, doctors, and health coaches.
  • Several acquisitions have helped fuel Hinge’s growth within the last few months, including both Enso (manufactures devices for electrical stimulation pain relief) and wrnch (digitizes human motion with computer vision).
  • Hinge’s holistic approach covers the complete MSK journey from prevention to post-surgery, using HingeConnect to integrate patients’ external EMR data and ensure continuous coordination with other providers.
  • Over 80% of employers that cover digital MSK solutions choose Hinge’s platform, utilizing it to reduce unnecessary surgeries through preventative interventions. Hinge doubled its customer base to 575 companies over the past year. 

The Takeaway

By keeping MSK treatment as its exclusive focus, Hinge has quickly built one of the most robust solutions on the market while bridging the gap between in-person and digital care. The new funding adds to this momentum, and could lead to more developments for MSK patients seeking accessible care.

Oak Street Acquires Specialty Care Provider RubiconMD

Posted on by Jason Barry

Value-based primary care network Oak Street Health acquired RubiconMD for $130m, adding virtual specialty care to its existing services focused on seniors in the Medicare Advantage population.

  • Oak Street operates by initiating full-risk contracts with Medicare Advantage plans, taking on complete economic responsibility for patients in exchange for per-member, per-month compensation. Oak Street Health currently operates over 100 centers across 18 states and is the only primary care provider endorsed by the AARP. 
  • RubiconMD’s network contains over 230 specialists across all major specialties, with a virtual platform that provides clinical insights on specific patient cases and allows primary care providers to directly manage more of a patient’s care needs.
  • Integrating specialty care into Oak Street’s value-based model will enable it to improve coordination between PCPs and specialists while streamlining operations, an important component to successfully managing a full-risk model.

The Takeaway

RubiconMD was built to support the exact type of health centers managed by Oak Street, and the acquisition provides Oak Street with a proven platform and a large specialist network instead of having to develop both from scratch.

Although Oak Street was an early entrant in the value-based care segment, the RubiconMD acquisition highlights the scale needed to compete for contracts with a limited pool of employers and payors, likely foreshadowing more consolidation on the horizon.

Graphite Health Announces Open Marketplace

Posted on by Jason Barry

Piloting new digital health tools will soon be as easy as downloading a smartphone app, at least if Graphite Health has anything to say about it.

Intermountain Healthcare, Presbyterian Healthcare Services, and SSM Health recently announced the launch of Graphite Health, a member-led nonprofit aiming to create an interoperable data platform that will allow health systems to adopt new technologies “as easily as anyone can download an app from an app store to a smartphone.” 

Graphite Health is modeled on another Intermountain-owned venture called CivicaRx, which works to make generic medications broadly accessible, and is seeking to build an open marketplace for digital health tools.

  • Graphite Health Platform – To support the development of plug-and-play applications, Graphite Health is creating a common data language (built on the FHIR framework) that will allow providers to implement tools without unique customizations.
  • Graphite Health Marketplace – The marketplace will serve as a single location for innovators to distribute their solutions at scale, while giving providers a way to save months (if not years) of security and integration reviews when piloting a new tool.

In addition to the founding health systems, Graphite Health is planning on bringing additional organizations into the coalition over the coming months, with a target of reaching over 40m lives covered.

Industry Impact

Unlike current health marketplaces such as Epic’s App Orchard, Graphite Health’s nonprofit structure allows its marketplace to function as a “health utility,” serving members without the additional provisions of alternatives. If the company succeeds in its vision of streamlining interoperability, an elusive goal for many that have attempted, it will help facilitate the adoption of new tools while bringing operational efficiency to health systems.

Digital Health Funding Tops $21B in 2021

Posted on by Jason Barry

With three months left in 2021, digital health funding has reached a staggering total of $21.3b across 541 deals.

To put that number into perspective, last year was the first year that total digital health funding surpassed $10b, and 2019’s total was a small-by-comparison $7.9b.

These figures are from Rock Health’s Q3 2021 Digital Health Funding Report, which analyzed how 2021’s financing boom is shifting market expectations and creating a landscape that’s ripe for consolidation.

Funding themes remained similar to prior years, with investors focusing on value propositions such as R&D software and clinical indications like mental health. R&D funding was lifted by mega rounds from XtalPi ($400m) and Reify Health ($220m), while mental health services saw an influx of capital at Spring Health ($190m) and SonderMind ($150m).

Most funded value propositions:

  1. R&D catalysts ($4.7b)
  2. On-demand healthcare ($3.4b)
  3. Treatment of disease ($3.1b)
  4. Fitness & wellness ($2.9b)
  5. Non-clinical workflow ($2.1b)
  6. Consumer health information ($2.0b)

Most funded clinical indications:

  1. Mental health ($3.1b)
  2. Cardiovascular disease ($1.4b)
  3. Diabetes ($1.4b)
  4. Primary care ($1.4b)
  5. Oncology ($1.2b)
  6. Substance use disorder ($793m)

Industry Impact

This year’s unprecedented funding signals that investors are betting on a continued surge in healthcare innovation, but the wave of new entrants is creating a clutter of digital health options for patients and providers. As the market begins to call for more unified offerings, companies are turning to M&A for the answer.

The 216 digital health M&A deals through the first three quarters of the year have already eclipsed the 146 deals in 2020. Companies like Headspace and Ginger have combined to vertically integrate their solutions to provide their user base with a deeper well of resources. Other deals, like K Health’s recent Trusst acquisition, are focusing on horizontal integration to serve multiple channels with a single tech interface.

Regardless of the strategy, the rate of the dealmaking is causing many to wonder if company valuations can continue rising at the same pace for much longer, but for now it seems like we could be in the early innings of another record breaking Q4.

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