HGP Health IT May InsightsJune 05, 2019
HGP’s May Health IT Insights provides a summary of Health IT transactions, news, and public company performance during the month of May. Reflecting the ongoing trend to drive profits beyond care delivery, Bon Secours sold a 51% interest in its RCM subsidiary, Ensemble Health, to Golden Gate Capital for $1.2 billion. Also in the RCM space, JP Morgan announced a $500mm acquisition of InstaMed, a processor of patient payments. Apple expanded its monitoring capabilities with the acquisition of asthma monitoring company Tueo Health. On the capital front, HGP monitored nearly $1.7 billion in global health IT investment. The top five deals during the month accounted for $636mm of new capital and include Tempus (genomic decision support, $200mm), Zipline (supply delivery, $190mm), DocPlanner (patient scheduling, $93mm), and BHE Analytics (life sciences research, $78mm).
Noteworthy themes in May include:
- Multiple fitness companies raised money during the month including Noom (health coaching, $58mm) HealthIQ (health insurance, $55mm) Jawbone Health (wearable, $65mm), Cure.fit (health coaching, $75mm), and Beam Dental (smart toothbrush, $50mm).
- Telemed was a dominant theme in May, with the following noteable investments: Quartet Health (mental health, $60mm), Talkspace (mental health, $50mm), Dispatch Health (on-demand healthcare, $33mm), Phil (prescription delivery, $25mm), and Zipline (supply delivery, $190mm).
- In the life sciences sector, BHE Analytics (customer research) raised $78mm, Tempus (genomics) raised $200mm, and Axiom Real-Time Metrics (CTMS) raised an undisclosed amount.
- The patient engagement sector saw a lot of activity with many capital raises including DocPlanner (online appointments, $93mm), Solera (chronic care management, $42mm), Health Monitor Network (marketing), Legwork (marketing, $17mm), and Outcome Health (content, buyout).
Other noteworthy M&A transactions include:
- Bon Secours Mercy Health has entered into a definitve agreement to sell 51% of the equity in Ensemble Health, provider of revenue cycle managment and consulting services, to Golden Gate Capital. Bon Secours will pay $1.2 billion dollars, valuing the company at $2.35 billion.
- Bernoulli Health, developer of a real-time connected health platform designed to offer life support critical care applications, was acquired by Capsule Technologies.
- Netsmart Technologies acquired healthcare consulting firm McBee Associates.
- Uniphy Health, clinical communication and collaboration platform, was acquired by Harris Computer Systems.
- iContracts, announced it entered into a definitive agreement to be acquired by RLDatix for $210 million.
- JPMorgan announced its intent to purchase InstaMed, provider of a payments network designed to connect providers, payers and consumers, for $500 million.This would be the bank's biggest acquisition since the financial crisis.
- Apple acquired asthma monitoring startup Tueo Health, adding to its tools to help consumer monitor and manage their health.
Other noteworthy investment transactions include:
- The Chartis Group, provider of comprehensive advisory services and analytics to the healthcare industry, was recapitalized by Audax Private Equity.
- WindRose Health Investors completed the $85mm recapitalization of Healthmap Solutions, provider of a kidney care management solution.
Noteworthy News Headlines
HHS updated the maximum it will penalize providers, health plans and their business associates in the wake of HIPAA violations, in some cases dropping the upper limit by more than $1 million. The new system sets annual limits for these fines based on the organization's "level of culpability" associated with the HIPAA violation, according to the department's notice of enforcement discretion. That means organizations that have taken measures to meet HIPAA's requirements will face a much smaller maximum penalty than those who are found neglectful.
Practice Fusion, the EHR vendor acquired by Allscripts last year, has received a grand jury subpoena as part of a criminal investigation. Practice Fusion first came under fire from the Federal Trade Commission (FTC) in June 2016 following charges that the vendor had misled consumers about doctor reviews that were publicly posted. Practice Fusion allegedly did not inform consumers that their reviews would be posted publicly.
The Trump administration has been working behind the scenes for months on a strategy to force greater price disclosure across much of the $3.5 trillion health-care industry. The Administration wants to require up-front disclosure of prices patients will pay for treatment as well as rates insurers negotiate with providers.
While doctors’ rates of querying or finding patient health information from outside sources has increased by about half, they have not made progress in sending and receiving data electronically. That’s the finding of the Office of the National Coordinator for Health IT based on nationally representative surveys of office-based doctors conducted in 2015 and 2017. The good news is that physicians’ rates of electronically finding or querying data from outside sources increased by 50 percent between those years, according to ONC. However, the agency also reported that the rates of engaging in other domains of interoperability did not change during this period.
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 May:
The following tables include summary statistics on the four sectors tracked by HGP as well as the S&P 500 and NASDAQ for May 2019: