JPM23, Day 2: Progyny projects 56% revenue growth in 2022 as employers eye fertility benefits; Cigna focusing on partnerships in primary care strategy

Welcome to Day 2 of the annual J. P. Morgan Healthcare Conference. Here's your need to know, as rumors swirl about more primary care M&A.

We're expecting news from Ascension, CVS Health, Walgreens, Cigna and many other companies today, so stay tuned.

Fierce Healthcare will be covering the day's biggest news as it happens. Check back here for updates, and catch Fierce Biotech's reporting here and Fierce Pharma's reporting here.

UPDATED: Tuesday, Jan. 10 at 10:00 p.m. ET

Fertility benefits are becoming a major lever in the ongoing talent wars, and that's good news for Progyny.

The eight-year-old company, which provides family building and fertility benefits for employees at large firms, launched with five clients and 110,000 covered lives. Today, Progyny has more than 370 clients with 5.4 million covered lives.

"In the past year given the current macroeconomic environment, inflationary economy an a potential looming recession, despite all that, for Progyny and its members, it's proven to be a resilient space. People aren't foregoing and or deferring family building, in light of all those things, and companies aren't deferring their decisions," Pete Anevski, Progyny’s CEO, told Fierce Healthcare on the conference sidelines.

Progyny, which went public back in 2019, continues to chart strong growth. The company raised its financial guidance in late November with revenue projections for 2022 between $781.5 million to $786.5 million, reflecting growth of 56% to 57%. The company also expected profits in 2022 to reach between $28.5 million to $29.5 million, or $0.28 to $0.29 per diluted share. Adjusted EBITDA was projected to be $124 million to $125.5 million.

Fourth-quarter revenue is projected to be $208.9 million to $213.9 million, reflecting growth of 64% to 68%. Net income for the quarter is projected to be $1.5 million to $2.5 million, or $0.02 to $0.03 per diluted share.

On Monday at JPM, Progyny highlighted its financial performance and issued a statement that it now expects fourth quarter and full year 2022 revenue, net income and Adjusted EBITDA to come in at or near the high-end of that financial guidance.

Progyny also expects to report record fourth-quarter operating cash flow of approximately $50 million, or approximately $79 million for the full year.

The company gained 105 new clients, half of which hadn't offered fertility benefits before, Anevski said.

More than a quarter of Progyny's existing clients made the decision to expand their relationship with Progyny, even against the backdrop of the current macroeconomic environment.

"Taken together, we believe this reinforces our strong conviction that family building benefits continue to be a top priority for employers in 2023 and that Progyny is the brand of choice for employers looking to provide these benefits," he said.

Progyny started working with employers in two industries and has now expanded into 40 industries. 

"We have mid-single-digit penetration with self-insured employers. We are still in early innings," Anevski said.— Heather Landi

UPDATED: Tuesday, Jan. 10 at 5:57 p.m. ET

Cigna presented at JPM on Tuesday afternoon, and stood in contrast with its competitor, CVS Health's, earlier segment in outlining its thinking around primary care.

CEO David Cordani said that the insurer's national strategy focuses on identifying the right partnerships where assets available at Evernorth can be deployed to both enhance the primary care provider as well as Cigna itself.

He pointed to the company's recent investment in VillageMD as an example, which was announced alongside the news that VillageMD would acquire Summit Health. Evernorth can assist both VillageMD and Summit Health in a multitude of ways through the strategic partnership, he said, including making it easier to transition to value-based care, virtual care services and pharmacy.

"We seek to partner and enable the medical delivery infrastructure with our Evernorth service capabilities versus own in our national strategy," Cordani said.

Cordani said that Cigna will make strategic acquisitions in specific markets where it makes sense, and has made some of those purchases already, but it is not taking an M&A-centric approach to primary care broadly.

This contrasts with many of its competitors. Earlier in the day, CVS confirmed that it is still on the hunt for a primary care acquisition, but wants to ensure it does not make a deal hastily. Humana and Elevance Health have also made significant acquisitions and investments in building out primary care, while UnitedHealth Group's Optum is one of the largest employers of physicians in the country.

While acquisitions are not a focus in primary care, Cordani said that Evernorth is more interested in making deals in some of its key segments, naming specialty pharmacy, behavioral health, virtual care and home health as areas of focus.

Look out for more from Cordani's remarks, including details on pharmacy benefit management priorities, in a story later today. — Paige Minemyer

UPDATED: Tuesday, Jan. 10 at 5:15 p.m. ET

Omada Health is teaming up with Castell, Intermountain Healthcare’s value-based care subsidiary, to expand patients' access to Omada's virtual diabetes prevention and chronic condition management programs.

The partnership will focus on patients receiving care from Intermountain Healthcare’s primary care providers within its Utah Medical Group. Castell will help to target and enroll eligible patients through their existing care pathways. Patients who have, or are at risk for, diabetes will be proactively contacted by Castell care coordinators and Intermountain providers to give them the option to enroll into the appropriate Omada program, executives said in a press release.

Omada Health’s Diabetes Prevention Program and Diabetes Program offer members support along with intervention from health coaches certified through CDC-affiliated diabetes training and technical assistance center. The members of the programs receive pre-connected cellular scales, with Diabetes Program members also receiving continuous glucose monitors and blood glucose meters. 

“This announcement points to a critical, strategic need in the industry - deep collaboration between health systems and virtual care providers,” said Wei-Li Shao, president of Omada Health. “Together, Omada Health and Castell can connect traditional care with virtual care to reach more at-risk patients with our proven Diabetes Prevention and Diabetes programs. This new partnership positions Omada Health squarely at the intersection of in-person and virtual healthcare for some of the most prevalent chronic conditions and is a statement on where the evolution of care is headed."

The partnership between Omada Health and Intermountain Healthcare’s Castell aims to establish a synergy between virtual and in-person care opportunities for members, executives said.

In a peer-reviewed study, Omada’s Diabetes Prevention Program showed proven results, with an average weight loss achieved by Omada participants associated with 50% reduction in the risk of developing type 2 diabetes and 58% achieving normal A1C levels. In a separate study, Diabetes Program members saw an average of 0.8% A1C reduction, including an average of 1.4% reduction for individuals with baseline A1C values at or above 9%.

Also, during JPM, Intermountain Healthcare announced is was partnering with UCHealth to develop a clinically integrated network (CIN) with comprehensive patient resources. The venture will bring together 700 primary care physicians and hundreds of clinics and hospitals, with support from specialists throughout Colorado. In addition, the partnership will help bring a new health insurance option to Coloradans.

The two health systems plan to remain independent and said they will operate the clinically integrated network as a separate entity. — Heather Landi

UPDATED: Tuesday, Jan. 10 at 3:01 p.m. ET

Walgreens announced in November that its VillageMD arm planned to acquire Summit Health in a deal valued at $9 billion.

AT JPM on Tuesday, Roz Brewer, CEO of the Walgreens Boots Alliance, took investors through key areas where the pharmacy giant expects to see the acquisition pay off. For one, it will allow the company to break into lucrative markets in New Jersey and New York, Brewer said.

In addition, the company expects that Summit will play a key role in driving its healthcare services business on a path to profitability. Brewer said that they are projecting seven to 11 cents in earnings per share contribution in fiscal year 2024. Walgreens expects to end 2023 with positive earnings before interest taxes, depreciation and amortization (EBITDA), she said. 

"The addition of Summit Health will further enhance our portfolio of assets," Brewer said.

The biggest benefit for Summit, which translates to a boon for the broader enterprise, is support on its journey to transition to value-based care, she added. Increasing the number of patient lives enrolled in value-based contracts is a key goal for WBA, Brewer said. — Paige Minemyer

UPDATED: Tuesday, Jan. 10 at 11:50 a.m. ET

Aetna fell short of its expectations on its first year back on the Affordable Care Act's exchanges, but this year is seeing much more significant growth, executives said Tuesday.

CVS Health CEO Karen Lynch said during the company's session at J.P. Morgan that the insurer expects to add about 700,000 new members in its individual market plans as open enrollment winds down, bringing its total membership in exchange plans to about 750,000.

Aetna fully exited the exchanges as insurers faced massive losses in 2018 and filed to return to the market for the 2022 plan year after the markets stabilized significantly. Executives said that enrollment for the 2022 plan year was lower than expected.

Aetna did disappoint, however, on Medicare Advantage enrollment. Though it did not share full projections in a filing with the Securities and Exchange Commission on Monday, the insurer said that individual MA membership growth came in at lower-than-expected numbers. It did grow in the dual special needs space as well as group Medicare Advantage, according to the filing.

The company expects total MA membership to grow in the low single digits for 2023.

We'll have more from Lynch and CFO Shawn Guertin, who discussed the healthcare giant's strategy around primary care and the potential it sees in Signify Health, in a full story later today. — Paige Minemyer

UPDATED: Tuesday, Jan. 10 at 9:00 a.m. ET

CVS Health has been dominating headlines here at JPM so far this week. On Monday, the company announced a partnership with Carbon Health along with a $100 million investment. The drugstore retail giant also backed Monogram Health's massive $375 million growth fund and a $25 million round for telepsychiatry company Array Behavioral Care.

Rumors are now swirling that the behemoth is exploring a $10 million deal to buy Medicare-focused primary care provider Oak Street Health. Bloomberg reported Monday that talks between the companies are ongoing and could end without an agreement, citing people familiar with the matter.

A deal could be reached within weeks that would value Oak Street at more than $10 billion, including debt, Bloomberg reported.

Oak Street Health rose as much as 32% in after-hours trading. 

The timing of the rumors seems odd given that CVS just announced a $100 million investment and partnership with Carbon Health.

The drugstore operator has made strategic plays to expand its footprint in healthcare via acquisitions. It plans to buy home health company Signify Health for nearly $8 billion. There were rumors last year that CVS was in talks to buy another primary care player, Cano Health.

And, according to regulatory filings, there was at one point a bidding war between Amazon and CVS to buy One Medical.

Oak Street Health, which went public in 2020, operates 169 primary care clinics in 21 states.with 159,00 at-risk patients receiving care, according to information the company present at the J.P. Morgan Healthcare Conference on Monday.

The company estimates its 2022 revenue will reach $2.16 billion.

Oak Street is a tech-enabled primary care chain that specifically targets Medicare-eligible patients, particularly those in underserved communities. The company leverages value-based care payment structures to improve outcomes and curb cost.

Oak Street has data to show that it's economic model helps to provide better patient outcome. The company achieved the highest net savings out of 53 Direct Contracting Entities (DCEs) in the Global and Professional Direct Contracting (GPDC) Model for the 2021 performance year, while earning the highest possible quality score of 100%. 

However, the company has sizeable losses and is forecasting an adjusted EBITDA loss of $287.5 million in 2022. — Heather Landi