Weekly Health Tech Reads | 2/2/25

Top headlines from the week

• Cigna missed its Q4 earnings expectations when it reported earnings on Thursday, driven by higher-than-expected MLR in the stop-loss business. Cigna attributed the stop-loss MLR issue to an increase in high-cost medical claims driven by specialty pharmacy and high-acuity surgeries. KEYTRUDA and OCREVUS were called out specifically in the category of specialty injectable drugs that drove up costs. On the surgery side, the costs were attributed to high-cost inpatient oncology and cardiology procedures. The earnings call featured some interesting Q&A on the stop-loss topic. In response to one question, Cigna shared that the rest of its book of business didn’t see MLR pressure in part because the total number of inpatient procedures was similar to what they anticipated — there was just a lower number of low acuity inpatient procedures and an increase in high acuity inpatient activity. I’d be curious to know why that is the case.

  • This report in STAT by Bob Herman on Cigna’s performance and how the stop-loss market has been struggling more generally makes for interesting reading on the topic. It’s interesting to see one of the other stop-loss players suggesting that the market has mispriced risk due to COVID and is still adjusting to utilization coming back. Regardless, as more and more of these high-cost drugs come down the pipe and high-cost cases increase, it seems like the topic of stop-loss insurance is something that will be discussed more in the coming years.

• The new administration had a tumultuous week this week. It included HHS Secretary nominee Robert F Kennedy Jr fumbling basic questions about how Medicare and Medicaid operate. It also included the administration issuing an executive order that sent the Medicaid market into chaos for a brief time, with Medicaid portals going down across the country at one point earlier in the week.

• In simultaneous transactions, Neuroflow has acquired Quartet’s core business, and Iris Telehealth acquired Quartet’s telepsychiatry division, innovaTel. Quartet originally acquired innovaTel in 2021. From the press releases, it appears Neuroflow purchased Quartet primarily for access to customers, with Independence Blue Cross specifically called out. Independence Blue Cross has a close relationship with Quartet, previously leading a $60 million funding round in Quartet in 2021.

• Axios reported that General Catalyst is considering selling a stake in its holding company as it transitions from a pure-play VC investor into a broader “transformation” business. It’s interesting to see how GC has three operating divisions: asset management (including VC funds), HATCo (the hospital thing), and a new division that sounds a bit consulting-esqe that will help large companies modernize their tech stack. Those same large companies will apparently be the same parties buying the stake in GC. Regardless of the questions I may have about the strategy (and there are many), it seems like GC is positioning itself as well as anyone to capitalize on the AI-driven disruption the industry will see in the coming years.

  • This is an interesting report from Petershill Partners, a former investor in GC’s holding company, announcing the sale of its position in GC earlier in January. Petershill appears to have done quite well on the position but made the move to sell its stake because of GC’s strategic shift away from VC.

• Amazon One Medical and Montefiore announced a partnership to open a new primary clinic in Westchester County, NY (just outside NYC) in 2026. The two organizations plan to open more clinics in the future. One Medical has a similar partnership in NYC with Mount Sinai that launched back in 2019 to be it’s preferred partner in the local market.

• 23andMe has created a new Special Committee to evaluate strategic options. The committee will consist of Independent board members who joined the board after all previous independent Board members resigned in September.

• Fertility benefits provider Progyny acquired BenefitBump, a parental leave benefits navigation platform.

Chart of the Week

This chart from a McKinsey report is now a few weeks old, but I thought well worth revisiting here as it highlights McKinsey’s perspective on how healthcare EBITDA will grow by industry segment between 2023 and 2028. Overall, McKinsey expects industry EBITDA to grow at 7% annually, increasing from $676 billion in 2023 to $987 billion in 2028.

It’s striking to see the size difference between the columns — with providers and manufacturers both bringing in over $300 billion of EBITDA annually, while services and tech bring in $103 billion, and the pharmacy and payers segments bring up the rear with <$100 billion in EBITDA.

For those thinking about opportunity spaces for innovation, It’s always worth paying attention to the segments that McKinsey thinks are growing quickly and also not growing:

• >10% growth rate: Duals, Medicare, Group Insurance, Office-based physicians, data analytics, software and platforms

• <0% growth rate: Medicaid, traditional pharmacies

Funding Announcements

• Rad AI, a AI platform for radiologists, raised $60 million at a $525 million valuation.

• SafelyYou, an AI-based fall reduction tool for senior living facilities, raised $43 million.

• The Helper Bees, a platform of non-medical services for aging-in-place, raised $35 million. The Helper Bees currently has 43 payers leveraging its network of 20,000+ service providers and intends to use this funding to expand into the Medicaid market.

• Hone Health, an online clinic for hormone health and longevity, raised $33 million.

• Manas AI, an AI drug discovery platform for oncology, raised $24.6 million.

• Delfina, a maternal health care model, raised $17 million.

• Bicycle Health, a virtual opioid use disorder care model, raised $16.5 million. The press release notes that Bicycle became profitable in Q4 2024.

• C the Signs, an AI platform for detecting cancer, raised $8 million. C the Signs has already been deployed by the NHS and is showing interesting data in detecting breast and ovarian cancer early, and will use the funding to expand to the US.

• Waterlily, an AI platform for long-term care planning, raised $7 million.

• Aligned Marketplace, a network of advanced primary care clinics for self-insured employers, raised an additional $3 million on top of a previously announced $8 million seed round.

• Systole, a virtual care model for women’s heart health, raised $2 million.

Other Good Reads

Wound care and skin substitutes: Rising costs, new policies and a whiff of scandal by Jeanette Pinder
This is a really helpful article diving into the state of the wound care market and how spending has ballooned in the market. If you’re looking for a good case study of how healthcare markets can go awry, this feels like a really good example of exactly that. The section about “Robin Hood” care was fascinating — discussing how some wound care practitioners justify the excess profits they’re making in Medicare because they couldn’t justify providing care to patients in rural settings. Read more

Claims Denials and Appeals in ACA Marketplace Plans in 2023 by Justin Lo, Michelle Long, Rayna Wallace, Meghan Salaga, and Kaye Pestaina
KFF data highlights claims denials rates for ACA plans in 2023, highlighting a wide variation between plans. As mentioned on Slack this week — I’d be curious to know more about what’s driving these denial levels. For instance, BCBS Alabama is at the top of the list of denials. Assuming they have the entire Alabama ACA exchange, 258k lives, they’d have received ~ 50 claims per member in 2023 and denied 17 claims per member. This compares to the overall exchange population of 25 claims per member and four claims denied. BCBS Alabama mentioned that 20%+ of those denied claims were due to filing errors — i.e. claim submissions for non-members, which hints at some of the confusion likely happening in the marketplace. Read more.

Medicare Advantage Insurers Made Nearly 50 Million Prior Authorization Determinations in 2023 by Jeannie Fuglesten Biniek, Nolan Sroczynski, Meredith Freed, and Tricia Neuman
Another helpful KFF data set looking at prior auths in Medicare Advantage. Total number of prior auths is up substantially since 2019, but that appears to generally mirror the growth of the number of people insured by MA — in 2019 there were 1.7 prior auth determinations per enrollee, in 2023 there were 1.8. Read more

Most Insurance Covers IUDs. Hers Cost More Than $14,000. by Julie Appleby
Continuing the theme of highlighting KFF’s work this week, the latest KFF bill of the month featured the story of an IUD implant that resulted in a surprise medical bill for the patient because her parents had a grandfathered plan before the ACA. It’s an unfortunate example of how the system is so complicated — I think it’s helpful to think about the role of the provider, employer, and insurer in a case like this and how we find a way forward to reduce the complexity in the system.
Read more.

Wash, dry, enroll: Helping people access health care, at the laundromat by Phil Galewitz
A very cool read on how Fabric Health is working with Medicaid and ACA plans to build relationships with enrollees by spending time with them in laundromats. Read more

Medicare Shopping and Switching Study by George Dippel
A white paper from Deft Research looking at consumer behavior in MA finds that MA plan switch rates jumped to 23%, matching the all-time high in the MA market. It also finds that only 18% of seniors who were forced to shop because their insurer terminated a plan are no longer willing to buy a future plan from that insurer. Read more

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