The 41st annual J. P. Morgan Healthcare Conference came to a close Thursday in San Francisco, the first in-person event after three years.
It was a week packed with rainstorms, meetings, presentations and long lines for elevators and coffee.
On the healthcare side, the biggest news might have been the weather, with intense downpours, hail and lightning.
Many executives attending JPM last week noted it was relatively quiet, from a news perspective, with the exception of CVS Health. The retail drugstore giant backed three funding rounds: Carbon Health's $100 million series D, $25 million for Array Behavioral Care and Monogram Health's hefty $375 million round. And there were rumors about a potential $10 billion deal to buy Medicare-focused primary care player Oak Street Health.
What you didn't hear at JPM was the typical buzz around new fundraising (except Carbon Health) and big M&A deals. The relative quiet reflects the current down market, many JPM attendees told Fierce Healthcare, as venture capital dollars are harder to come by and many startups are taking a back-to-basics approach.
But with large public health tech companies presenting alongside smaller, digital health startups, there were plenty of interesting tidbits throughout the week. Here's a roundup of the news you may have missed.
Talkspace plots path to profitability
Talkspace has a line of sight on achieving "near-term profitability," the company's new CEO Jon Cohen, M.D., told investors at the conference.
"We have a defined, very significant path to profitability within a short period of time and maintain a strong cash position," Cohen said.
Talkspace tapped Cohen 10 months ago to take the helm at the online therapy provider. He is a surgeon and a veteran healthcare executive who had served on the company’s board. He most recently served as executive chairman and CEO of BioReference Laboratories.
Talkspace connects people via an app with therapists who provide counseling remotely, either over the phone, by video chat or by text.
The company went public in 2021 via a SPAC deal but has struggled with losses. Its stock has fallen by 65% this year and is now trading at less than $1.
For the first three quarters of 2022, Talkspace has lost $61 million on revenues of $89 million, reflecting an increase of only 6% compared to the corresponding period in 2021.
The company had a rocky 2021 after losing its two founders and pushing out its chief operating officer. The online therapy app also was hit with a securities fraud lawsuit alleging that it misled investors before it went public by misrepresenting its financials and growth.
There were media reports in November that telehealth company Amwell was exploring a buyout. A spokesperson for Talkspace declined to comment on the media report.
Cohen is bullish on Talkspace's growth potential, citing the strength of the brand and its position as a virtual behavioral health provider at a time when there is a massive need for mental health services.
A Centers for Disease Control and Prevention survey in 2020 found that more than 30% of U.S. adults experienced symptoms of anxiety and depression. And, some studies show the rate is closer to 40% post-COVID, Cohen said. One in 4 Americans have a diagnosable mental health condition
"As a physician, the time for the delivery of mental health services in our healthcare system is now," he said.
He noted the recent incident of Buffalo Bills player Damar Hamlin suffering a cardiac arrest during an NFL football game and the impact it had on other players.
"There has been talk about providing therapy to team members before they go out on the field again. I can tell you, that is a discussion that never would have happened five years ago," he said.
The company started with a consumer focus but is now shifting to a model where it focuses more on employers and health plans. Talkspace now claims to have 86 million covered lines and has a strong commercial pipeline with established relationships with national payers and large employers, he said.
He also cited outcomes data based on 10,000 users that showed 12 weeks of using Talkspace's asynchronous messaging therapy resulted in a decrease in depression and anxiety symptoms among a majority of users (67%). A study focused on 820 healthcare workers, a demographic suffering from record levels of burnout, found that 56% reported an improvement on depression and anxiety symptoms with just 30 days of care, in most cases.
On the business side, the company is taking steps to improve operating efficiency including bringing down ad spending costs and consolidating vendor contracts while also continuing to invest in product and clinical innovation.
Veradigm—New name, new investment
Earlier in the month, Allscripts Healthcare Solutions changed its name to Veradigm after more than two years of streamlining its corporate portfolio. The brand transition to Veradigm represents a "capstone" on the company's evolution, Veradigm CEO Rick Poulton told investors at JPM.
The health IT company provides electronic health record (EHR) technology for ambulatory providers along with analytics, population health, patient engagement and revenue cycle management services.
Monday, the company announced it backed behavioral health data analytics company Holmusk's $45 million series B round. Holmusk will use the funding to expand its database of real-world clinical data for the behavioral health industry. Veradigm and Holmusk plan to enter a data partnership to bring groups of behavioral health and related de-identified patient data from Veradigm to the company's database.
Veradigm says it connects more than 300,000 U.S. healthcare providers, representing more than 170 million patients, and provides access to de-identified patient data and analytics at scale. The company is ramping up its focus on payers and life sciences companies.
"Our collective pool of assets span provider clients and gives us two critical assets for us to bring to payer and life sciences markets. Number one, the clinical and financial data records, and secondly, workflow point of care ownership—we are that last mile of connectivity to the point of care and that's a valuable asset to bring to other parties," Poulton said.
Veradigm has more than 100 health plan clients and works with nine of the top 20 health plans, covering about 30 million lives, he said.
The company benefits from a number of tailwinds, Poulton said, including the move to value-based care, the shift from inpatient to outpatient care, changing interoperability standards and the expanding use of real-world data.
"The move to value-based care creates convergence and a need to bring these different silos of providers, payers and life sciences together better," he said. "We have an opportunity to forge a tighter relationship and create more efficient ways to communicate with each other."
Veradigm delivers clinical data for biopharma and health plans while also turning those data into insights; the company also serves healthcare providers directly by providing point-of-care clinical software and patient outreach platforms, he noted.
During JPM, the company reported fourth-quarter business results. The company's payer business added six net-new regional and national payer clients in the fourth quarter, representing 26% new business growth for the full year. The company pointed to growth in its interoperability-focused solutions business.
In the provider market, the company added 30 new revenue cycle management clients in the fourth quarter, contributing to over 200% year-over-year client growth. The company’s clinical solutions added a total of 484 new practices across all solutions including many multispecialty practices.
In the fourth quarter, the company inked more than 20 data, research study and media agreements with life science companies and commercial partners to use Veradigm's de-identified patient data set.
Veradign is projecting 6% to 7% revenue growth for 2022 and also issued financial guidance projecting revenue between $640 million and $660 million for fiscal year 2023. The company projects non-GAAP earnings per share to be between $0.90 and $1.00
Information blocking a tailwind for NextGen Healthcare
New federal regulations now require hospitals and medical practices to open up access to patient data, and ambulatory technology company NextGen Healthcare was one of the first electronic health record (EHR) companies to meet compliance with these federal interoperability standards.
Information blocking rules put into effect in April 2021 require health IT vendors, providers and health information exchanges to enable patients to access and download their health records with third-party apps. Under the rule, providers can't inhibit the access, exchange or use of health information unless the data fall within eight exceptions.
However, the 21st Century Cures Act only specified civil monetary penalties for technology developers, HIEs and health information networks—up to $1 million per violation. But that leaves provider penalties up to the Department of Health and Human Services (HHS) to define.
In April 2022, the HHS Secretary Xavier Becerra stated that the agency was receiving “hundreds of complaints” related to information blocking and that closing the provider enforcement gap by imposing civil monetary penalties is a “top HHS priority.”
2023 may be the year that the "rubber meets the road" for providers.
"We feel good about where we are as far as upgrading our client. And we've been able to say to our competitors’ clients, 'Rather than upgrade, just migrate to NextGen. It will be easier than waiting,'" NextGen Healthcare CEO David Sides told investors and executives during JPM.
Sides speculated that companies and providers could start to pay information-blocking penalties by the end of this year or the beginning of 2024.
"I think you’ll start to see lawsuits that will happen there. And as people start to pay big penalties, I think you’ll see a lot more adoption. Consumers will start to say, 'I want my data. It’s my data. I own it," he said. "This is the next logical evolution of that kind of thinking of ‘This my data, it needs to be liquid.' The technology exists. It’s if people have business models that don’t work that way that’s holding up that evolution."
NextGen is a cloud-based technology provider serving medical practices and provides solutions spanning EHRs, patient engagement, revenue cycle management, data analytics and tools to support value-based care. The company is benefiting from other tailwinds, Sides said, including the shift to outpatient care, which requires more comprehensive solutions,
In the third quarter of 2022, the company reported total revenue of $159 million, up 7% compared to $149.3 million during the same period a year ago. NextGen reported $20 million in profits for the six months ending Sept. 30, 2022, compared to a loss of $4.8 million during the same period a year ago. The company projects 7% revenue growth in 2022 and around 6.5% revenue growth in 2023, Sides said, noting that the company is on a path to achieve double-digit top-line growth by 2025 and margin expansion.
NextGen plans to invest in new offerings to differentiate its solutions and also is eyeing M&A to expand its technologies and capabilities, Sides said.
The company recently acquired TSI Healthcare to expand NextGen's presence in key specialties including rheumatology, pulmonology and cardiology. As part of the deal, NextGen will pay $68 million, which will be paid in cash with contingent consideration of up to $22 million in cash in the form of an earnout, subject to achieving certain financial targets through March 31, 2025.
WellSky teams with Panoramic Health on kidney care
WellSky, a post-acute care software, analytics and services provider, announced a partnership with Panoramic Health to help the kidney care provider serve the complex needs of patients with chronic kidney disease and end-stage renal disease.
Panoramic Health has more 800 nephrology providers providing care across 19 states.
Through its partnership with WellSky, Panoramic Health will gain access to a national connected network of acute and post-acute providers that use WellSky solutions for their transition of care workflows. Panoramic Health will be able to collaborate directly with hospital discharge planners to optimize the next site of care, proactively engage with CKD or ESRD patients before discharge and receive real-time post-acute clinical data and alerts to support concurrent reviews and reduce unnecessary expenses, according to the companies.
WellSky, which is backed by TPG and Leonard Green & Partners, serves more than 20,000 client sites—including the largest hospital systems, blood banks, cell therapy labs, home health and hospice franchises, post-acute providers, government agencies and human services organizations.
More than 5 million caregivers use WellSky's solutions, according to WellSky Chief Operating Officer Steve Morgan, and the company serves 1 in 3 home-based providers of care. "Payers are a growing demographic of our client base," he told Fierce Healthcare on the sidelines of the conference.
WellSky uses data and analytics to help support care coordination for patients between acute and post-acute or home health settings. The industry's ongoing focus on providing more care at home, signaled by CVS' proposed $8 billion acquisition of Signify Health and Humana snapping up Kindred at Home, serves as a big tailwind for WellSky's business.
"[Servicing the whole care continuum] was a key part of our strategy years ago when we laid out the strategy for WellSky and set out to build what it is that we've rebuilt. We wanted solutions that cover every site and service line of care that happens outside the four walls of a hospital and happens outside of a primary care office. We went out and deployed capital to ensure that we have a solution for home health, for hospice, for personal care, for outpatient rehab, for inpatient rehab, for inpatient behavioral, for every site of care that has historically been underinvested and underfunded from a digitization standpoint, because we believed, longer-term, longitudinal health data would matter, especially to those who pay for care and certainly for people who want to navigate the health system with a lot more data," Morgan said in an interview.
"And we also thought the home would be ground zero, or that the home would matter as much as any other site. Then you fast-forward to 2019, there's a lot of great momentum because of baby boomers and 10,000 people turning 65 every single day," he said. "And then COVID hits at the beginning of 2020. And coming out of COVID I think it's put more emphasis toward the home and driving more care to the home."
Babylon Health CEO bullish on digital health company's growth
Babylon founder and CEO Ali Parsa shrugged off the company's plummeting stock price and said Babylon's story and stock are "misunderstood."
Babylon Health shares have been on a steep slide since reaching a high of $272.50 per share right after its IPO in October 2021 to $10.81 at market close on Friday.
"The story of our stock is almost super simple. We were brought public through a SPAC," Parsa told investors and executives during a presentation Thursday at JPM. "Our SPAC happened in October 2021 at a time when almost all the SPACS fell apart."
Founded in 2013, the company offers a healthcare app for AI-powered diagnosis and video appointments, with a value-based care platform called Babylon 360. The company says it support a global patient network across 15 countries and operates in 16 languages. In 2021 alone, Babylon helped a patient every six seconds, with approximately 5.2 million consultations and AI interactions, according to executives.
Babylon expects to top $1.05 billion in annual revenue in 2022, a threefold increase from 2021's $323 million. The company claims to have more than 271,000 value-based care members in the U.S.
But the company still has sizable losses. The company reported a quarterly loss of nearly $90 million in the third quarter of 2022, compared to a loss of $66 million a year prior.
But Parsa told investors he expected Babylon to be profitable "in the near term."
"It might be the end of next year [2024] or the beginning of the year after [2025]. We will break even," Parsa said.
"When I look at the stock price of Babylon, we are supposedly worth less today after generating more than $1 billion in revenue in 2022 than we were in 2016 as a private company that was doing about $1 million in revenue,” Parsa said. “Stock markets are usually either too optimistic or too negative, but eventually they settle on the right [value]. This will settle itself in time.”
In July, the company announced cost reductions expected to deliver up to $100 million in yearly savings.
Many health tech and digital health companies that went public in the past two years have been taking a beating in the public market. Digital health company Babylon has seen its stock plummet 93% in 2022. Faced with a potential delisting, the British health tech giant has opted to implement a reverse share split to increase its share price, the company announced in September.
Babylon also has been batting away acquisition rumors.
In October, the company announced the sale of its IPA Meritage Medical Network generating $400 million in annual revenue along with a private investment for around $75 million. The capital raise and IPA sale should keep it afloat until profitability, according to Babylon executives at the time.
David Larsen, healthcare IT and digital health analyst at BTIG, wrote in a recent analyst note that these actions should help Babylon "get to breakeven EBITDA in 2025."