HGP Health IT February InsightsMarch 04, 2019
HGP’s February Health IT Insights provides a summary of Health IT transactions, news, and public company performance during the month of February. Government influence in HIT showed no signs of abating during the month, with the introduction of new mandates and payment models, including HHS’s new interoperability standards and reimbursement programs for medical transportation. Now merged with Aetna, CVS unveiled its HealthHub, yet another example of consumer-based concepts intending to disrupt traditional care delivery models. Transaction highlights for the month reflect a mix of traditional EMR, consulting, and infrastructure consolidation, while investment activity was concentrated toward disruptive, next generation technologies, with two new companies achieving unicorn status.
HIT experienced significant M&A activity in February, with a high volume of deal activity within infrastructure and PM/EMR software and consulting.
Noteworthy infrastructure transactions include:
- API Healthcare, a developer of a labor resource management software, has entered into a definitive agreement to be acquired by Symplr for a reported $300 million.
- PerfectServe acquired Lightning Bolt Solutions, an AI-optimized physician shift scheduling technology, and CareWire, a mobile patient engagement platform, as part of their effort to deliver the first true care team collaboration platform.
PM/EMR software and consulting activity was particularly high during the month:
- Aprima Medical Software, a provider of electronic health record (EHR) and practice management (PM) software and revenue cycle management (RCM) applications for ambulatory care organizations, was acquired by eMDs.
- Collain Healthcare, an EHR, Virtual Care and Interoperability provider for the Long-Term and Post-Acute Care industry, announced that it has been acquired by Harris Computer Systems. Korea-based LG, along with Qualcomm, made the decision to divest their health IT assets.
- WellSky acquired Health Care Software, a provider of integrated clinical and financial IT software serving Long-Term and Post-Acute facilities.
- Wellsoft, a provider of information management software for the Emergency Department, was acquired by Medsphere.
- MediQuant announced its agreement to purchase HEF Solutions, a consulting firm specializing in electronic medical records (EMR) data conversions, legacy data archival and technical services that support needed access to clinical records.
- Healthtech Consultants, a Canadian provider of healthcare consulting services that include strategic planning, system selection, implementation, adoption and post-implementation support, was acquired by Nordic Consulting as its first step into the international consulting market.
- Haystack Informatics, a behavioral analytics company that helps health systems safeguard patient privacy and optimize operations, was acquired by healthcare consultancy, Iatric Systems.
Other noteworthy deals during the month include:
- Calm, a provider of a meditation app designed to reduce anxiety, promote better sleep, and elevate happiness, closed an $88 million Series B Funding from TPG Growth, CAA Ventures, Insight Venture Partners, Monkfish Equity and Sound Ventures at a $1B post-money valuation, achieving unicorn status.
- Sermo, a developer of a social network for doctors, was recapitalized by Abry Partners.
- Capsule Technologie, a provider of medical device integration solutions, was recapitalized by Francisco Partners from Qualcomm, in what was the divestiture of the Qualcomm Life business.
- Health Catalyst, a healthcare data warehousing, analytics, and outcomes improvement platform, also reached a $1 billion valuation via its $100 million Series F round led by OrbiMed. Sequoia Capital, Norwest Venture Partners, Sands Capital Ventures, UPMC Enterprises, and Kaiser Permanente Ventures also participated in the funding.
- Hatch Baby, a developer of smart wireless parenting devices, received an undisclosed amount of financing from Amazon. Hatch Baby raised $6.5mm in September 2018 at a $30mm valuation.
- DNAnexus, a developer of a biomedical informatics and data management platform designed to analyze DNA-sequencing data, received $68 million from GV, Foresite Capital Management, TPG Biotech, Claremont Creek Ventures, and WuXi NextCODE, raising total funding to nearly $200mm.
Noteworthy News Headlines
Greenway Health LLC has agreed to pay $57.25 million to resolve complaints that its “Prime Suite” EHR product caused users to submit false information to the EHR Incentive Programs. The federal government has also accused the company of falsely obtaining 2014 Edition Certified EHR Technology (CEHRT) status. The allegations claimed that Greenway misrepresented the capabilities of its product to customers and provided unlawful remuneration to users for positive recommendations to peers, violating the Anti-Kickback Statute.
A new rule issued by the Office of the National Coordinator for Health Information Technology involves the patient, not as a person being “acted upon,” said Elise Sweeney Anthony, director of Office of Policy for the ONC, but as someone in control of his or her electronic health records. If a patient requests their record, and it’s not given to them electronically and for free, that’s information blocking, Sweeney said during HIMSS19. The Centers for Medicare and Medicaid Services would also require that healthcare providers and plans implement open data sharing technologies to support transitions of care as patients move between these plan types. For instance, the records must be able to be transferred between providers when a patient requests that service when changing physicians.
CVS Health has unveiled three redesigned health-focused concept stores in the Houston market. The pilot stores, called HealthHubs, have space for services to help customers manage such chronic conditions as diabetes, hypertension and asthma. Each store also has an expanded health clinic with a lab for blood testing and health screenings. The stores will have respiratory specialists and dietitians on staff. Beyond those services, there are also wellness rooms equipped to handle yoga classes and seminars. The stores, part of the company's vision in acquiring health insurer Aetna, are designed to help the pharmacy chain become more of a convenient healthcare provider.
HHS unveiled a payment model that will reimburse ambulance services for transporting patients to facilities such as urgent care centers or physician's offices instead of emergency departments, as well as enabling them to work with a health care provider to use telemedicine for onsite care. The model, called Emergency Triage, Treat and Transport, or ET3, is designed to reduce unnecessary hospitalizations and is expected to run for five years starting next year.
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 February:
The following tables include summary statistics on the four sectors tracked by HGP as well as the S&P 500 and NASDAQ for February 2019: