On this episode of Health Tech Deals, Ian Morrison is pinch-hitting for Jessica DaMassa! Ian and I worked together 25+ years ago, and he’s been sitting in Silicon Valley looking at the American health care system for a long long time. Some deals – MindMaze raises $105M; Memora Health raises $40M; Ro raises $150M; PriorAuthNow raises $25M; Equip raises $58M. Ian also shares his opinions on the American health system and the digital health space–Matthew Holt

TRANSCRIPT

Ian Morrison:

Hi there, I’m Jess DaMassa. Actually, no, Jess DaMassa. Jess DaMassa is a friend of mine and I am no Jess DaMassa. I am Ian Morrison. I am pinch hitting for Jess DaMassa, how could I possibly pinch hit? Matthew told me I had to go and put my kilt on and spruce myself up a bit. But anyway, it’s an honor, a deep honor to be here for the February 18th episode of Health Teach Deals.

Matthew Holt:

So Ian, it’s a Dan Quayle line. No, it’s not the Dan Quayle, it’s the Lloyd Bentsen line about Dan Quayle.

Ian Morrison:

Exactly.

Matthew Holt:

I’m surprised you didn’t get the brunette wig on, but thank you very much for pinch hitting. Jess is I believe in the wilds of the hills of Arizona in some Buddhist retreat in Sedona or something taking some well deserved time off. And thanks for coming in and pinch hitting and asking me the questions. She, by the way, has had me replaced like eight times. Lots of other people have done my bit, but her bit is really hard. So we’ll see how you do.

Ian Morrison:

You are eminently replaceable, but she is not. So this is kind of like we go from Beauty and the Beast to grumpy old man. It’s a different gig. But anyway, no, I’m flattered to be included in the-… the same pantheon.

Matthew Holt:

So people that don’t know you, we worked together 25 plus years ago.

Ian Morrison:

A long time ago.

Matthew Holt:

At Institute for the Future. But you’ve been sitting in Silicon Valley, but been looking at the American healthcare system for a long time, despite the Scottish, Canadian, Californian accent you have.

Ian Morrison:

Yeah. No, I’ve been doing this a long time. And I actually look to you and Jess to monitor the digital health space. I mean, I kind of helped think it through at the very beginning when we launched you, unleashed you on the world in the 1990s from the Institute for the Future. But you guys do an amazing job on this show of keeping up with all that’s going on in the marketplace, and you gave me the secret sauce to work off of, which is the database. And I have deals to-

Matthew Holt:

Don’t tell anyone there’s a database! They might want to steal it. All right. Fantastic. All right. You ready to go?

Ian Morrison:

Yeah. You got the weird chicken thing going?

Matthew Holt:

The chicken comes later, but you’ll see the clock going. Don’t forget the rules, which is that once you see this go, so long as… you’ll probably hear the alarm. So long as one of us is speaking when the alarm goes, we can answer the last one. Okay. You ready?

Ian Morrison:

Yeah, I got it. I got it. Got it.

Matthew Holt:

Go.

Ian Morrison:

Okay, straight out the gate, MindMaze raised $105 million for a total of 340 million.

Matthew Holt:

Okay. This is a sort of video game. It’s a digital therapeutic, but it’s got hardware. It’s also got software. They’ve got a coat you wear that… this is for people with stroke, Parkinson’s, other complex neuro diseases. And money came in Concord Health Partners, and you’re an advisor to them, right? Isn’t that the AHA fund?

Ian Morrison:

I’m conflicted, I can’t say anything about it. You’ve said wonderful things, but-

Matthew Holt:

Hopefully you know something. We’ll talk later.

Ian Morrison:

We have a great team at Concord and I trust their judgment. Okay. Memora Health, 40 million raised for a total of 50 million. What do they do?

Matthew Holt:

Yeah. Interesting, interesting. Newish company, money came from some of the big guys, Transformation Capital. My old buddy Julie Murchinson is there, Andresen Horowitz and some others. This is kind of a thing which is trying to go on the inside of hospital systems, figure out what is actually going on with between Epic and all the other stuff that’s on sticky notes, and take all that through some kind of AI system and build it into an alerting system which both messages patients and doctors. Highly complex, going to be interviewing the CEO and finding out more about it.

Ian Morrison:

Yeah, it sounds interesting in terms of helping doctors. Ro, Joe Ro.

Matthew Holt:

Ro! Ro!

Ian Morrison:

150 million for some astronomical total amount. I mean, is this not erectile dysfunction for young people?

Matthew Holt:

It is, but it’s worth $7 billion. Now their competitor Hims and Hers, its market cap is under a billion. So I don’t know if they’re doing seven times more, if they’re going to completely revolutionized primary care, if anyone is going to buy them, who knows?

Ian Morrison:

Amazing. PriorAuthNow. It’s obviously not a navigation company, right? 25 million of a total of 57 million.

Matthew Holt:

Yeah. Very similar to a company called CoverMyMeds that did this in pharmacy. They’re doing it for regular stuff. Difficult. Oh, we’re out!

Ian Morrison:

Equip, Equip [crosstalk 00:05:00].

Matthew Holt:

Too late. We missed it.

Ian Morrison:

Oh, come on!

Matthew Holt:

It’s two minutes, it’s two minutes.

Ian Morrison:

Come on, I’m an amateur.

Matthew Holt:

All right, all right. We’ll do Equip, we’ll do Equip. Okay, I love Equip.

Ian Morrison:

I’m going to throw a flag. I’m going to throw a flag.

Matthew Holt:

Throw a flag. Okay.

Ian Morrison:

I’m going to throw a flag. We’ve got to get Equip in at the… put 10 seconds back on the clock.

Matthew Holt:

Go on. Okay. We’ll put 10 seconds back on the clock.

Ian Morrison:

Equip, well, they got 58 million out of a total of 74.7 million. You have decimal spot.

Matthew Holt:

Ah, we have decimal spots. Call it 75, yeah.

Ian Morrison:

Yeah, call it 75.

Matthew Holt:

So this is a fascinating company. I know the CEO, Kristina Saffran very well. She started a nonprofit called the Project HEAL foundation. It’s a mental health company specializing in eating disorders. They’ve built this incredible team approach of both family, other external peers, psychologists, et cetera. Basically, she was doing this in the nonprofit world called Project HEAL. She herself founded that at age 15. She’s only in her twenties now, but was a while ago. And basically she talked about… this as kind of a replacement for doing facility-based treatment for eating disorders which doesn’t really work, or people regress a lot. And now she’s got 10 health plans nationwide, one Medicaid plan starting to pay for this. And it’s actually a great thing, because this is an awful condition that people don’t hear much about. And it, by the way, leads to the most suicides of any mental health condition, or deaths, which is quite incredible. So I love what she’s doing. And with that money, they’re looking to go nationwide. You should be hearing a lot more about that.

Ian Morrison:

Great, great.

Matthew Holt:

All right, we got to it, even though we cheated. Only a little bit.

Ian Morrison:

Yeah. Well, but the referee has the right to extend the game under the right circumstances. That was a worthy extension. That sounds like a really worthwhile thing.

Matthew Holt:

Did you see the African Cup of Nations when one of the referees just ended the game five minutes early?

Ian Morrison:

That’s pretty brutal.

Matthew Holt:

So, I mean, Ian, I got to ask you about this. I don’t know how much you can say if you know anything about MindMaze, I know you’re an advisor of Concord Health Partners, but that’s a really complicated… I mean, it’s a Swiss companies, it’s been around for 10 years, they’ve got a bunch of plans and what have you. that’s going after the stuff that people have really not gone after, which is all that neurological stuff like stroke and Parkinson’s and all that. And ALS and some other stuff in that zone. I mean, that’s an interesting area. Do you hear a lot about that from the folks you stick around with in the hospital world and the plan world, those kinds of diseases?

Ian Morrison:

Yeah. I mean, if you think about… what I think is sort of the split going on here in the digital health space is that a lot of the activity is for for serious conditions, but they’re more chronic conditions. But a massive amount of our investment in healthcare is in complex, very sick people with tough stuff. And certainly the hospitals. And there’s a sort of division in strategy in the hospital world between people who are sticking to the knitting, and others who are trying to engage more broadly with this new ambulatory decentralized world. But the common thread is that all of those hospitals are still going to be complex things. So, I mean, I think this is on point with the burden and opportunity to make meaningful improvement and care for people with complex neurological disease. I think that’s kind of where the sweet spot for this particular offering was, as I understand it.

Matthew Holt:

And then you told us, apparently… Jess told me that you told her, so I’m calling that you told us, that we had to guess about emerging acquisitions. So Ro and those folks, I don’t know whether… Do you think you could build a big nationwide primary care program monster out of selling Viagra, starting with selling Viagra in pharmacy? Do you think that’s a possible route to get there?

Ian Morrison:

No, I mean, what I was urging Jess and you to do in your show is to have a feature called fantasy deal of the week, which is your best guess of what the next big merger would look like. I think there’s going to be massive numbers of roll ups. I mean, you track this more than I do.

Matthew Holt:

Yeah. Yeah. I would say-

Ian Morrison:

It could be people with the financial muscle. And the thing about Ro and Hims and those guys is that they’re not really dealing with the insured world, right? I mean, it’s cash in the barrel, is it, mostly?

Matthew Holt:

Yeah. I mean, it is now, but it can’t be eventually, right? Eventually if you look at the other big player… If I were to give you a merger, it would be Ro and Amazon, right? Although Amazon’s probably got a lot of the pieces and probably doesn’t need it, because Amazon already has PillPack and it’s now doing Amazon Cares. I did a fascinating interview with Farzad Mostashari and Mandy Cohen-

Ian Morrison:

I love that.

Matthew Holt:

Aledade, not Ale-dade as I keep on calling it. But basically it’s the old story, how do you do primary care at scale, sensible primary care that’s not just a feeder to doing more stuff in the big medical palaces? And I don’t know if Ro can convert over there. Just this valuation blows my mind. I mean, $7 billion valuation, raising a billion. You could have bought Hims today on the stock market, the whole of it for the same thing. Are they doing 7 times the revenue of Hims? Maybe. I don’t know. But it’s going somewhere.

Ian Morrison:

It may be somebody valuing the brand, that they got ahead of the game. Because it’s not a hard thing to replicate, as you said. I mean, why would Amazon pay 7 billion for it when you could just do it, right? But they presumably have built up users. Look, it’s the thing we did for years. Everyone talks about consumerism in health, but we actually did surveys, you and I, over the last 30 years and found like 7% of Americans would actually use their own money to stuff. People talk about consumerism in Medicare Advantage, it’s free for God’s sake. No one’s writing a check.

Matthew Holt:

Actually, Sachin Jain grew SCAN Health Plan by sending people money, paying them to join up!

Ian Morrison:

I do things for money as well! But no, I do think you’re pointing to the fact that there is an upper limit about what people will pay. But we haven’t saturated that yet, as evidenced by I think some of these plays where people are willing to pay subscriptions for a service that adds value.

Matthew Holt:

Well, we shall see indeed. And talking about people doing stuff for money, as we’re not paying you for this, we should probably wrap it up. But want to thank you a lot for coming on, for playing Jessica.

Ian Morrison:

Thank you. It was an honor, it was a privilege and a pleasure. And I hope my Oscar is forthcoming.

Matthew Holt:

Your Oscar will be clearly in the mail. And for those of you who follow along, you can follow Ian, @securve, S-E-C-U-R-V-E. One C, right, in that?

Ian Morrison:

Yep.

Matthew Holt:

On Twitter. You can follow me, @boltyboy. Jessica’s not here, but also follow @jessdamassa. And then you can sign up for the newsletter at the healthcare blog, and you’ll find all these health tech deals and a bunch more in your inbox every week. And with that, thank you, Ian. Great pleasure having you on.

Ian Morrison:

Good to see you.