3 kidney care providers—Fresenius Health Partners, Cricket Health and InterWell Health—plan to merge in deal valued at $2.4B

Three big players in kidney care—Fresenius Health Partners, Cricket Health, and InterWell Health—plan to form a new value-based care company focused on services for the earlier stages of kidney disease.

The deal, announced Monday morning, will create a company valued at $2.4 billion, according to the companies.

The merger brings together expertise in value-based kidney care contracting of Fresenius Health Partners, a division of Fresenius Medical Care North America, InterWell Health’s network of more than 1,600 nephrologists and startup Cricket Health’s technology-enabled care model and patient engagement platform. Fresenius Medical Care is the world's largest operator of dialysis centers.

The independent new company is valued at $2.4 billion and will operate under the InterWell Health brand. The deal increases Fresenius Medical Care's total addressable market in the U.S. from around $50 billion to around $170 billion, according to the company.

The new InterWell Health will be separate from Fresenius Medical Care, executives said. As part of the deal, 1,100 physicians that are a part of the InterWell Health network will be equity stakeholders in the new company.

The deal, subject to regulatory review, is expected to close in the second half of 2022.

InterWell Health has the financial and strategic support of leading investors including Valtruis, Oak HC/FT, Cigna Ventures and Blue Shield of California, which all backed Cricket Health.

With more than $6 billion of medical costs under management and over 100,000 covered lives, the new company will accelerate growth in the mid- and late-stage chronic kidney disease value-based care population, according to company executives.

Bill Valle, CEO of care delivery for Fresenius Medical Care, told Fierce Healthcare in an exclusive interview that he expected the combined company will serve close to 300,000 patients by 2025 and will increase its medical costs under management to $11 billion.

"We look at this as three legs to the stool. We're excited to have InterWell Health and its 1,600 physicians participating both at the network and equity level and we're excited to combine with Cricket Health, given the strength of their mission as well as their technology," Valle told Fierce Healthcare. "And we bring the breadth of experience of Fresenius Health Partners  This gives us the opportunity to greatly accelerate our growth and expansion into the kidney care market."

Kidney disease is a health, disability, and workforce issue that costs taxpayers and the economy $130 billion in annual Medicare spending, including $50 billion just to manage kidney failure and dialysis care. More than 37 million Americans are living with kidney diseases, which for nearly 800,000 Americans progresses to kidney failure.

Robert Sepucha, Cricket Health's chief executive officer, who will lead the new InterWell Health as CEO, said Fresenius Health Partners and Cricket Health have a similar mission to improve the patient journey for those living with kidney disease.

"Cricket started with the premise that it's important to engage patients earlier before kidney failure. We have seen some fantastic results but if our mission is to truly improve the lives of as many patients as possible, in partnering with InterWell and Fresenius Health Partners to access the network of more than 1,600 nephrologists across the country, it's that kind of breadth and scope that's going to help us to accomplish our mission," he told Fierce Healthcare.

Cricket Health has raised $111 million in venture capital to date, according to Crunchbase.

Fresenius historically has focused on patients living with chronic kidney disease and renal failure and provides dialysis services throughout the country. Cricket Health, founded in 2015, focuses more "upstream" to try to intervene early and deliver stage-specific care to kidney disease patients. Cricket Health developed a predictive analytics model to risk-stratify patients and identify those with chronic kidney disease in stage 3b and beyond with 96% accuracy. Identified patients are then assigned a care team that includes a nurse, a pharmacist, a social worker, a dietitian and a trained patient peer mentor.

InterWell Health was formed in 2019 as a physician-centric joint venture between 1,100 physician investors and Fresenius Medical Care North America and has 1,600 nephrologists on its network.

"We're really blending two companies that had slightly different focuses. When this deal closes, we'll have more than 100,000 lives, with a mix of about 50% chronic kidney disease and end-stage renal disease (ESRD) and we'll be managing their total cost of care. So not PM/PM, but full risk," Valle said.

Cricket Health brings to the table its machine learning and predictive analytics to identify and risk-stratify patients before kidney failure to help slow disease progression. The company also developed a web-based patient engagement platform.

The COVID-19 pandemic has accelerated the demand for virtual care platforms and at-home care services.

"We are unapologetically a virtual first company," Cricket Health's Sepuchaour said. "Our care teams engage with patients over a virtual platform, talk, text, video, synchronous and asynchronous. It's allowed us to offer that persistent, constant contact so we're the doctors' eyes and ears between appointments. I think that's been a real significant driver as to why we're seeing improved clinical outcomes and reduced overall costs."

Fresenius Health Partners brings to the table experience in managing risk, including both government programs and private payers and the new company will be able to support providers in value-based kidney care contracting, Sepucha said.

"Providers are being asked to take on more financial and clinical accountability for their patients in this value-based world and that's putting a huge strain on them. They don't have the resources, the tools, the capabilities to be able to thrive and succeed in value-based diabetes care. I think there's a handful of attributes that companies need to bring to bear to really succeed in this world. I don't think anyone has done that quite yet in kidney care, until now," he said.

He added, "We're talking about a proven model of success clinically and an ability to reduce costs that nobody else brings to bear in this space. We're very bullish about the future."

Cricket Health's analytics and patient engagement technology will expand the new company's capabilities, according to Valle.

"This combination allows us to operate as a startup. We can bring that startup mentality, if you will, the agility, the flexibility and the nimbleness and the ability to do what's right the first time to improve that patient journey," he said. "We know that if we can develop these care models and algorithms and measure adherence that we are going to provide much better care for patients from the onset of the disease all the way through, hopefully, transplant, but, if necessary, renal replacement therapy and dialysis."

The company is among several startups, along with industry heavyweights like DaVita, chasing a lucrative kidney care market. 

Startups that focus on modernizing chronic kidney disease and end-stage renal disease management are attracting big investments including Strive Health, Monogram Health and Somatus, which recently scored $325 million in a series E funding, boosting its valuation to more than $2.5 billion.

Valle isn't fazed by the competition in the market, saying the combination of Fresenius Health Partners, Cricket Health, and InterWell Health will "set the standard" for kidney care.

"I truly believe this will be the start of transforming how care is delivered for the next 25 years for patients," he said.