InnovationRx: CVS Bid For Oak Street; Plus, Covid Strains In Beijing
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CVS Health announced its plans to acquire Oak Street Health in a $10.6 billion deal on Wednesday, as the pharmacy retailer and parent company of health insurer Aetna looks to expand its reach into primary care. As Forbes senior contributor Bruce Japsen writes, the move comes amid a broader primary care clinic buyout wave by other retailers. This includes Amazon’s $3.9 billion bid for One Medical in July and investments by Walgreens Boots Alliance and health insurer Cigna in VillageMD. The deal values Oak Street at $39 per share, which is 16% above the $33.68 share price at Tuesday’s market close.
The Chicago-based company, which employs 600 primary care providers across 169 medical centers, enters into value-based contracts with insurers to manage the care of seniors in the Medicare program. The company receives a set amount of money to take care of each patient and assumes financial risk – this means it reaps the benefit if care is delivered below cost but pays the price if care exceeds the set amount. Oak Street has yet to turn a profit. It posted a net loss of $130 million on $546 million in revenue in the third quarter of 2022 and a $375 million net loss on nearly $1.6 billion in revenue in the first three months of the year.
“While this transaction has been talked about for a while, we are somewhat surprised at the pace with which the market is moving,” BTIG’s David Larsen wrote in an analyst note. “[Oak Street] got a good price,” he added. Larsen suggested “recent market dynamics,” including the competitor activity around One Medical and VillageMD and “potential pressure on Medicare reimbursement, drove up the price CVS Health is willing to pay.”
Experts Warn Fungi Are A Major—And Growing—Health Threat
The horrifying zombie fungus disease that wiped out most of humanity in HBO’s hit adaptation of The Last of Us is inspired by a real group of fungi that pose no threat to humans, but experts warn fungal infections are already a major health threat. Fungal infections affect more than a billion people worldwide and claim approximately 1.5 million lives each year—as many as tuberculosis and more than double malaria, HIV and breast cancer—but are relatively unknown by the public and neglected by health officials, the media and funding agencies.
Deals Of The Week
Workforce Software: ShiftMD, a healthcare workforce marketplace of salaried W-2 workers (mostly nurses), raised $200 million led by Panoramic Ventures. The Virginia-based startup offers hospitals and other healthcare organizations an alternative to the increasingly expensive travel nursing market.
Care For Kids: Beaming Health, which started as an online directory of autism clinics to help families seeking care, has raised $1.7 million led by NextGen Venture Partners to build up its database with other providers focusing on speech therapy, ADHD and other kids’ health issues. Cofounder Marissa Pittard tells Forbes the website gets over 50,000 unique visitors a month with no paid marketing thanks to SEO optimization.
Diagnostics-As-A-Service: SimpleHealthKit, which is developing end-to-end digital diagnostics services for a variety of diseases, has raised an $8 million Series A round led by Initialized Capital.
Regenerative Platform: Dimension Inx, which is developing 3-D microenvironments to direct cell behavior for regenerative therapies, has raised a $12 million series A round led by Prime Movers Lab.
The pharmaceutical industry spends more money on advertising for drugs that have lower health benefits for patients, according to a study published in JAMA.
Profits at Cigna topped $1 billion in the fourth quarter, as the health insurer is projecting growth of at least 1.2 million new plan members in 2023.
Australia’s equivalent of the FDA has approved the legal use of MDMA and psilocybin (magic mushrooms).
Since China ended its zero Covid policy in early December, the country has seen huge surges in the numbers of cases. This has raised some concerns from public health officials that spikes in cases among a very large population could lead to the rise of a new, dangerous variant. So far, though, that hasn’t been the case, according to a new study published today in The Lancet. In it, the researchers who’ve been compiling information about the genetics of Covid strains in Beijing note that the two most predominant variants right now are BA.5.2 and BF.7 – both of which are subvariants of Omicon. Through the end of the year 2022, the researchers didn’t detect any new variants emerging in China’s capital. One limitation of this study, however, is this: China’s a big country, and this research was limited to samples taken in Beijing. So public health officials will have to continue to keep an eye on the coronavirus’ changing genetics as time moves on.
Women Who Live Healthy Lifestyles May Reduce Their Risk Of Long Covid By Half, Study Suggests
Women who regularly exercise, follow a high-quality diet, get adequate sleep and follow other healthy lifestyle choices cut the risk of long Covid in half compared with women without any healthy lifestyle factors, a new study suggests.
Other Coronavirus News
Widespread Covid outbreaks in mainland China in the fourth quarter of 2022 hurt earnings and revenue at Yum China, the country’s largest restaurant company, which saw its profit decline 89%. .
Covid variant CH.1.1, which was first detected in India, is now the fifth-most prevalent variant in the United States.
How Google Fell Behind In The AI Boom
Battery Push By Tesla And Other EV Makers Raises Child Labor Concerns
How Vietnamese Refugee David Tran Became America’s First Hot Sauce Billionaire
What Else We are Reading
Some pharmacies in Mexico passing off fentanyl, meth as legitimate pharmaceuticals (Los Angeles Times)
The Antibiotic Resistance Crisis Has a Troubling Twist (Wired)
A Technicality Could Keep RSV Shots From Kids in Need (Kaiser Health News)