HGP Health IT March InsightsApril 01, 2019
HGP’s March Health IT Insights provides a summary of Health IT transactions, news, and public company performance during the month of March. Buyout funds were active with a number of growth transactions that reflect the very broad interest across Health IT. Meanwhile, the market is seizing on a thesis that pharmacies can extend beyond medication dispensing and provide access to care at lower costs, a trend that was underscored by CVS's recent acquisition of Aetna and the ensuing introduction of the Health Hub pilot stores. The social determinants market, defined as the conditions in which people are born, grow, live, work and age, continues to mature and consolidate with three transactions announced during the month. Lastly, the health IT IPO market is finally coming alive, with three marquee IPOs in the hopper.
Noteworthy buyout and growth transactions include:
- Clearwave Corporation, a leading provider of digital check-in, insurance eligibility, and patient payments solutions to health systems and physician practices, received a significant growth investment from Frontier Capital.
- Anju Software, a developer of integrated life sciences software platform for pharma, biotech, medical device, and contract research organization companies, completed a recapitalization with ABRY Partners.
- Aldrich Capital Partners invested $41mm in eHealth Technologies, provider of medical record retrieval and organization services and image-enabled HIEs.
- Harmony Healthcare IT, developer of HealthData Archiver - a healthcare information technology used to extract demographic, financial, clinical and administrative data from healthcare systems, was recapitalized by Primus Capital.
- LLR Partners completed a growth recapitalization of CareATC, developer of a health management platform intended to offer more accurate, relevant, and actionable employee health data.
Noteworthy pharmacy transactions include:
- PrescribeWellness, a leading cloud-based patient relationship management solutions company that facilitates collaboration between more than 10,000 pharmacies with patients, payers, providers and pharmaceutical companies, was acquired by Tabula Rasa for $150mm.
- Truepill, developer of online an on-demand pharmacy delivery platform, raised $13.4mm in a Series A led by Initialized Capital with participation from Sound Ventures, Tuesday Capital, Foundation Capital, Index ventures, BoxGroup, Amity Ventures, Social Capital, and others.
- K1 invested $125mm in Digital Pharmacist, a digital health company that powers the digital communication, connectivity, and adherence solutions for pharmacies, national pharmacy wholesalers, hospitals systems, and pharmaceutical brands.
- Digital health prescription platform, Xealth, raised $11mm in Series A funding from Threshold Ventures, UPMC Enterprises, Providence Ventures, McKesson, Novartis, ResMed, Philips, and Froedtert.
Noteworthy social determinant transactions include:
- Unite Us, developer of a SaaS platform designed to build coordinated care networks for connecting health and social service providers together, raised $35 million in a Series B led by Oak HC/FT, with participation from Town Hall Ventures, Define Ventures, Scout Ventures, Omidyar Network, and New York Ventures.
- Pieces Tech, developer of software that interprets patient data in real-time, transforming billions of points into warning tools that can save lives and strengthen communities inside and outside of hospital walls, helping healthcare providers improve clinical decision-making, provide more precise interventions and address the social and economic determinants of health, raised $5mm from undisclosed investors.
- Signify Health acquired TAVHealth, a leading platform for collaborating with risk-bearing and community-based organizations to address social determinants of health.
Other noteworthy transactions include:
- Carestream Health signed an agreement to sell its healthcare information systems to Philips. Carestream’s HCIS business unit provides imaging IT solutions to multi-site hospitals, radiology services providers, imaging centers and specialty medical clinics around the world.
- Connecture, Inc sold certain assets of its commercial software solutions business to Benefitfocus.
- Hill-Rom announced it has entered into a definitive agreement to acquire Voalte, a leader in real-time, mobile healthcare communications, for a cash consideration of $180 million and up to an additional $15 million in payments.
Noteworthy News Headlines
The Justice Department won’t dispute a federal court’s decision that the Affordable Care Act is unconstitutional and should therefore be eliminated in its entirety This two-sentence announcement represents a position shift from earlier arguments in which the Trump administration advocated striking down only certain of ACA’s consumer protections, such as the requirement that insurers cover pre-existing conditions. A group of Republican governors sued the federal government after Congress eliminated the penalty for not buying health insurance, arguing that the decision renders the entire ACA unconstitutional, a position with which the federal government now agrees.
Centene Corporation will purchase rival insurer WellCare Health Plans in a deal valued at $17.3 billion, the companies announced early Wednesday. The deal will create one of the largest sponsors of government plans across the three main markets: Medicare, Medicaid and the Affordable Care Act exchanges, the insurers said on a call with investors Wednesday morning. Post-merger, the joint company would be the nation's biggest sponsor of Medicaid managed care and exchange plans, and the fourth-largest payer in the private Medicare space, including Medicare Advantage, supplemental coverage and Part D plans.
During the month of March, three high profile health IT IPOs were in the works:
- Health Catalyst: Health Catalyst, a $1 billion healthcare data startup, is interviewing banks for an initial public offering, according to multiple sources. Health Catalyst is a next-generation data, analytics, and decision-support company, committed to being a catalyst for massive, sustained improvements in healthcare outcomes.
- Livongo: Livongo is weighing a potential IPO that could come as soon as Q3 2019. Livongo sells software that uses connected devices to help users track and manage diabetes. Livongo's clients — primarily large, self-insured employers and health insurance companies — deliver this software to their beneficiaries with the hopes of reigning in costs associated with diabetes.
- Change Healthcare: Nashville-based Change Healthcare files for $100 million IPO. Change Healthcare’s main products are data analytics tools for healthcare providers that are meant to increase patient engagement, assist with quality reporting and risk adjustment, improve reimbursement and handle billing and post-clinical communication.
Public Company Performance
HGP tracks stock indices for publicly traded health IT companies within four different sectors - Health IT, Payers, Healthcare Services, and Health IT & Payer Services. The chart below summarizes the performance of these sectors compared to the S&P 500 for the month of March:
The following tables include summary statistics on the four sectors tracked by HGP as well as the S&P 500 and NASDAQ for March 2019: