7 min. read

AstraZeneca’s digital health strategy. Pear and Cognoa studies.

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Issue 046.

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Digital health research from Brian Dolan.

Welcome to E&O.

Last week’s newsletter had a 56 percent open rate. Here’s what’s happening this week:

  • Working toward the next long-form report, which will be focused on musculoskeletal (MSK) digital therapeutics companies. (Like many, I was surprised by Hinge Health’s $90 million raise earlier this year.) Send tips, rumors, and requests my way if this one is of interest.
  • Livongo abandoned its trademark for “Cuff to Cloud”, which was its brand for the voice-enabled health nudging feature it has developed with Amazon’s developer tools. Despite the trademark sunsetting, Livongo tells me the voice-enabled feature is still very much a part of its hypertension program.
  • Health Advances’ Partner Andrew Matzkin has a worthwhile column outlining the ways the COVID–19 pandemic is likely to shape the future of digital health. On digital therapeutics, he writes: “There is an argument that virtual disease management services should see a boost due to COVID as fewer patients are able to access in-person visits. While that shift could certainly benefit patients, it isn’t clear how these patients would be directed to digital providers. Companies like Livongo and Omada generally do not acquire their patients through HCP referrals, so patients will not be directed to these companies by their doctors, no matter how overwhelmed they are.”
  • McKinsey posted a recap of the discussion it co-hosted with the Digital Therapeutics Alliance at a recent conference, the Promise of Digital Therapeutics. This reads like a DTx company-centric view, but one takeaway stood out for me: “The pharmaceutical companies that succeed in digital therapeutics may not turn out to be the most innovative, the most digitally capable, or the biggest investors in the industry. Instead, they may be those that are the best partners, striving to smooth the transition for digital start-ups that are working with a large pharmaceutical company for the first time. There are significant advantages to be gained by being the leader in ‘playing nicely with others.'”
  • BCG Digital Ventures just posted part two of its mini-series on digital therapeutics strategy. This one focuses on regulation and commercialization.
  • Many companies, especially mental health service providers, are finding ways to make their offerings free to use (either to healthcare workers or their general public) during the pandemic. SilverCloud, however, might be the first to do so via Express Scripts’ new Digital Health Formulary. SilverCloud’s digital products aim to help people deal with stress, improve their sleep, and build resilience.
  • Finally, CMS and other federal agencies continue to relax regulations around the use of telehealth: “CMS will now pay for more than 80 additional services when furnished via telehealth. These include emergency department visits, initial nursing facility and discharge visits, and home visits, which must be provided by a clinician that is allowed to provide telehealth. Providers also can evaluate beneficiaries who have audio phones only.” CMS Fact Sheet.

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More on AstraZeneca’s digital health strategy

Last week I mentioned AstraZeneca had taken a big step forward in its digital health strategy by inking a deal with BrightInsight:

“AstraZeneca will develop apps, algorithms, Software as a Medical Device and connected devices on top of the BrightInsight Platform… Built under a robust Quality Management System to support regulated use cases, the BrightInsight Platform enables its biopharma and medtech customers to develop and host digital health devices, apps, algorithms and Software as a Medical Device (SaMD) at scale while maintaining compliance with privacy, security and regulatory requirements across the globe.”

A couple of readers wrote in asking for more, so I talked to Karan Arora, the Chief Commercial Digital Officer and Global Vice President at AstraZeneca.

Arora and his team have tracked the plethora of digital health products, including digital therapeutics, that have entered the market. He noted a surge in new digital products over the past two years in particular.

“Strategically, the ambition around digital health is sound, but commercially the go-to-market strategies around digital health have not been well thought out. That explains why you haven’t seen a massive uptick,” Arora said.

In Issue 034 of E&O, I shared the three phases of AstraZeneca’s digital health strategy, as laid out in the company’s job postings for digital roles, but here they are again for easy reference:

“Digital in R&D journey is incorporating 3 key stages:

Stage 1 – foundational, reimagine how we work, by maximizing the use of digital, data and analytics transform processes within R&D to gain significant benefits on speed of the portfolio (goal 9 months acceleration) productivity (goal -20% reduction in cost per patient per year) quality at source, patient experience and probability of success

Stage 2 – advanced, reimagine clinical trials to improve patient outcomes, example redefining patient populations, remote clinical trials, patient apps to reduce/manage adverse events and improve patient outcomes (OS), using data from EHMr and RWE instead of control arms, and through PROs and continuous patient monitoring, creating new endpoints enabling studies in earlier stages of disease (ctDNA changes) prolonging significantly patients lives

Stage 3 – future-readiness, reimagine healthcare, examples, AZ as a healthcare provider beyond medicines for certain indications (example: Breast Cancer, proving monitoring, predictive analytics and therapies for improved outcomes), full integration of Multiomics (imaging, genomics, proteomics …) to better predict and significantly improve patients’ health”

Arora indicated that, at least initially, the deal with BrightInsight will help power Stage 2.

Specifically, AstraZeneca is building a population health management platform on top of BrightInsight, with a patient-facing app to collect PRO (and probably to collect data from devices, too). Arora described the software as consisting of three pieces:

  1. the patient-facing application;
  2. a population-level, aggregated view for care teams or providers;
  3. and a drill-down mechanism to enable clinicians to look at longitudinal data for any specific patient.

The aim is to provide a more holistic view of patients for healthcare providers that integrates with their EMRs:

“We partnered with providers to think through how will digital therapeutics be integrated into their workflow and how will they get reimbursed,” Arora said. “When we started solving for those things we found that the biggest impact will come in chronic care settings. You can’t build point-based solutions, because most of the chronic patients we see are comorbid. Need to think about building things for multiple diseases. The therapeutic areas we are focusing on are chronic care, which means: respiratory, diabetes, heart failure, renal and — to a certain degree — mental health as well.”

Interestingly, Arora said that AstraZeneca was able to do “fast pivot” in recent weeks to help its provider partners with COVID–19. Since they had been doing work in the respiratory space, they were able to help manage overcrowding in hospitals and with risk stratification before patients checked in.

“For providers, this is about appropriate risk stratification,” Arora said. “For us, it is really about — as you start getting more and more into specialty care and drugs that are very well-suited for a certain aspect of the population rather than a broad brush — having that view from a longitudinal standpoint (and beyond the analysis from retrospective claims data that pharma companies have done) will allow pharma companies to be extremely precise in suggesting therapy or advising on clinical workflows — where it makes sense — based on real-world data. There is a unique synergy there with the provider groups. They are using this and it is an incremental revenue stream for them.”

Arora noted that creating digital therapeutics and other digital-drug combination products are of interest too, but the initial focus for the commercial team is to aggregate this real-world data.

“For combination products for our existing therapies, we are certainly taking a look at existing digital therapeutics that exist on the market,” Arora said. “Or if we need to build something specific, we will. And those take the traditional clinical-validation route and would be set up as a combination digital-drug product that is launched under the principle that the combination product will drive better outcomes than the drug alone. We are also looking for those. However, those use cases are largely driven by the R&D side, and the use case I am [describing above] is mostly on the commercial side and centered on real-world data and real-world evidence.”

Arora is skeptical about whether a digital therapeutic can drive revenues tantamount to a drug any time soon:

“For us, I don’t think digital health is ever going to be, from a revenue portfolio perspective, equivalent to a drug. Unlocking reimbursement in a market, even if it is a small market, and expanding your population within a matter of months is worth a lot more than the return on investment from digital health — purely on a revenue standpoint — at least today.”

“The interest today is more about complementing our knowledge about our patients and around lapses in care. We understand the 20 percent of what happens in the clinical setting because of our trial work. But once out [of trial settings] — that 80 percent — we don’t understand what is happening in home care. If we can understand that better and drive a little more compliance and adherence or even have a better understanding of which patient should get which therapy, that holds a lot more value for a pharma company than selling a digital therapeutic.”

While it’s likely not going to hit the market any time soon — as noted in the Stage 3 section above — AstraZeneca will probably develop a digital therapeutic for breast cancer patients first.

Cognoa kicks off autism DTx usability trial. Pear begins insomnia trial for Somryst.

Two digital therapeutics companies kicked off clinical trials this week: Cognoa and Pear Therapeutics.

Cognoa has begun recruiting for a small, 30-kid study that will include participants between the ages of three and eight: “Cognoa will measure usability, engagement with the device, and changes in parent-reported socialization during a 4-week period of intervention at home with the Cognoa ASD therapeutic device.” The study should finish up by the end of July 2020.

Pear Therapeutics, meanwhile, began inviting participants to a 350-person 9-week trial for its insomnia offering, Pear-003A (Somryst), back in February. It just posted information about the trial on ClinicalTrials.gov this week: “The purpose of the study is to collect data in a real-world environment, for a digital therapeutic that delivers CBT-I through a decentralized clinical trial, open to participants with chronic insomnia.” Pear expects this to conclude by the end of January 2021.

Quick links to E&O research reports

The links below aim to make it easier for paying subscribers to find the long-form research reports on the E&O site:

The Digital Health Enrollment Report (Subscribers-only Link)
The Omada Health Report (Subscribers-only Link)
The Google Health Report (Subscribers-only Link)
The Pear Therapeutics Report (Subscribers-only Link)
The AliveCor Report (Subscribers-only Link)
Apple’s Healthcare Work Experience (Subscribers-only Link)
Approximating Livongo’s S-1 (Subscribers-only Link)

Let’s call that Issue 046. Never thought I’d be going to buy milk while wearing a mask, but that’s what’s next for me today. Catch you next week.

5 min. read

Orexo prices DTx at $600 to $1,000. Pear: $1,000 to $1,600.

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It's a good one, too.
This digital health research is for paying Exits & Outcomes subscribers only. Subscribe now to read this article, get the weekly newsletter, and receive unrestricted access to past and future research from the Exits & Outcomes archives. Smash the link above or below to subscribe yourself -- or head over to our pricing page to subscribe your team or your whole company!

Issue 045.

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Digital health research from Brian Dolan. 9680e452-e6b2-4094-9dd7-2c2081fa1deb.png

Welcome to E&O.

Last week’s newsletter had a 54 percent open rate. Here’s what’s happening this week:

  • We are coming to the end of week two in self-isolation up here in the Greater Boston Area. Here’s hoping all of you are staying safe and feeling healthy. Onward.
  • If you have plans to launch a digital health product in France, the Dutch government commissioned an in-depth analysis of all things “e-health” in that country. Perhaps coincidentally, Health Advances has a (shorter but still in-depth) look at digital health in France this month, too — read it here.
  • Last week I mentioned the FDA’s move to allow medical device makers to tweak their clearances for remote monitoring devices in order to use them in the fight against COVID–19. Alivecor was among the digital health companies that answered that call: Alivecor’s six-lead ECG device can now be used to measure a patient’s QTc and detection of potentially dangerous QT prolongation: “A prolonged QTc can lead to a potentially fatal side effect, called drug-induced sudden cardiac death (DI-SCD), associated with the use of several medicines now being used in the treatment of COVID-19.”
  • Google may have been a bit overzealous policing its Android App store for app makers that tried to capitalize on the COVID–19 pandemic: Sanvello Health (formerly called Pacifica), which offers an app to help with anxiety, depression, and stress, announced its app would be free to use because of the outbreak. After a surge in downloads, Google removed the app from the store temporarily and warned the company against taking advantage of the coronavirus crisis. After a day of looking more closely at it, Google reversed the decision and reinstated the app. No good deed… as they say.
  • Cognoa, which is developing digital therapeutics focused on autism spectrum disorder and ADHD, announced that CEO Brent Vaughn was stepping down. Former Chrono Therapeutics CEO David Happel is taking the helm at Cognoa. Cognoa expects to get its first FDA clearance in 2021. (Looks like Chrono Therapeutics, which Happel led for the past two years is out of business: Website and social media accounts are all deleted and most of the employees have new gigs based on LinkedIn.)
  • Livongo shared some (very) limited data on its coaching capacity along with which types of members are most likely to ask a coach for help. The partially unlabeled chart in the blog post indicates that the number of diabetes response alerts (triggered by members’ numbers being out of range, for example) has doubled in the past year.
  • Finally, AstraZeneca announced this week that it has tapped BrightInsight to power its digital health platform. The biopharma will initially leverage BrightInsight to collect real-world evidence data related to chronic care. AstraZeneca has longterm plans to add digital therapeutic products to the platform, too.

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Orexo reveals pricing for alcohol and opioid use disorder DTx: $600 to $1,000 per treatment

At its investor summit this month, Swedish biopharma Orexo shared new details on launch plans for the alcohol (vorvida) and opioid use disorder (OXD01) digital therapeutics it has licensed from GAIA. Orexo plans to price the two digital therapeutics between $600 and $1,000 per treatment, which Orexo says positions its products below list prices for Pear Therapeutics’ two competitive DTx offerings: reSET ($1,000) and reSET-O ($1,600), which are also for alcohol and opioid use disorder, respectively.

Orexo expects to generate between $120 million and $200 million in net sales for vorvida — five years post-launch — using the lower $600 pricepoint and targeting the market share figures outlined in the image above. Vorvida is not yet cleared by the FDA, but Orexo expects clearance sometime in Q2, followed by a swift commercial launch in Q3 of this year.

Expectations for its opioid use disorder DTx (codenamed OXD01, for now) are similar, but this product isn’t expected to launch for a few more years. Orexo aims to submit OXD01 to the FDA sometime in 2022, after completing clinical trials in 2021.

Watch the DTx portion of Orexo’s investor summit presentation by clicking here.

FDA clears Pear Therapeutics’ insomnia DTx, Somryst — its third market authorization

You’ve likely already read that the FDA has cleared Pear Therapeutics’ insomnia digital therapeutic, Somryst via the 510(k) process. Somryst also went through the FDA’s Pre-Cert evaluation process, but that was really just a practice run for the agency as it continues to figure out how Pre-Cert should work.

(On that note, this write-up over at MedTechDive has a status update on Pre-Cert, which includes Bakul Patel admitting, “I don’t think we are out of the woods… we are continuing to understand the feasibility of this program.”​ Implying the future launch of Pre-Cert is in doubt? As I wrote a few weeks back, the FDA seemingly asked Congress to authorize Pre-Cert when it made its case to the appropriations committee for its annual budget.)

Back to Somryst.

Like Pear’s other digital therapeutics, Somryst is based on a digital intervention that Pear licensed. In this case, the licensed intervention wasn’t an academic pursuit but a direct-to-consumer offering, called SHUTi (pronounced “shut eye” but also an amazing acronym: “Sleep Health Using The internet”). Pear’s FDA clearance announcement cites two peer-reviewed studies, and both of those were actually studies of the original SHUTi program. They include this 303-person RCT published in JAMA and this larger RCT published in Lancet Psychiatry.

Up until October 2018, anyone could go to the SHUTi website and buy access to SHUTi, which was created by a small firm named BeHealth. Most of BeHealth’s team has since joined Pear and is helping to bring Somryst to market.

SHUTi came in two flavors: SHUTi, which ran a one-time fee of $135 for 16 weeks of the program, or SHUTi Professional, which was priced at $156 for 20 weeks of access but required users to have a “clinical access coupon” from their doctor.

SHUTi offered:

  • Six interactive classes, which took 45-60 minutes to complete each, and were offered over a six-week period
  • The initial six weeks were followed by 10 or 14 additional weeks of access — based on the program selected.
  • Online daily sleep diaries
  • Personalized sleep window recommendations each week
  • Interactive features (similar to quizzes)
  • Sleep improvement progress reports
  • Option to integrate with Fitbit devices
  • And printable reference materials to share with friends and family.

Somryst, by contrast, is a nine-week program that will be available via prescription-only to adults 22-years-old and older. More on the specifics of the program here. As mentioned in the article above, Pear has priced its other two digital therapeutics at $1,000 and $1,600 each. I’m curious to see how Somryst is priced now that it is FDA-cleared and available via prescription only.

I assume this is coronavirus-related, but the FDA hasn’t updated its 510(k) database online in six days, which is why Somryst’s 510(k) filing record isn’t online yet.

Quick links to E&O research reports

The links below aim to make it easier for paying subscribers to find the long-form research reports on the E&O site:

The Digital Health Enrollment Report (Subscribers-only Link)
The Omada Health Report (Subscribers-only Link)
The Google Health Report (Subscribers-only Link)
The Pear Therapeutics Report (Subscribers-only Link)
The AliveCor Report (Subscribers-only Link)
Apple’s Healthcare Work Experience (Subscribers-only Link)
Approximating Livongo’s S-1 (Subscribers-only Link)

That’s a wrap on Issue 045. Flatten the curve.

7 min. read

Genentech-Roche VR for autism. FDA’s new remote monitoring waiver.

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It's a good one, too.
This digital health research is for paying Exits & Outcomes subscribers only. Subscribe now to read this article, get the weekly newsletter, and receive unrestricted access to past and future research from the Exits & Outcomes archives. Smash the link above or below to subscribe yourself -- or head over to our pricing page to subscribe your team or your whole company!

Issue 044.

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Digital health research from Brian Dolan.

Welcome to E&O.

Last week’s newsletter had a 59 percent open rate. Here’s what’s happening this week:

  • A pandemic. My plan is to cover coronavirus-related developments only if they impact the future of digital health interventions in some meaningful way. So, this week’s edition of E&O will include a few. For example, the crisis has triggered some important regulatory rollbacks that will likely lead to long-term changes — much more on that after the jump.
  • One quick follow-up to my Sanofi-Verily-Onduo-Dexcom writeup from last week. Verily paid Sanofi $122 million worth of Dexcom stock as a dividend following the restructuring of Onduo, which saw Sanofi’s share reduced from 50 percent to 19.9 percent. This is oversimplifying it, but, in effect, Verily paid Sanofi $122 million for 30.1 percent of Onduo. Remember, when they set-up Onduo initially, Sanofi and Verily put in $250 million each (cash, IP, sweat) for a total of $500 million. So, 30.1 percent of Onduo on Day 1 was worth $150.5 million. Likely, there was much more to how these numbers came to be, but, just based on those numbers, the difference in valuation for that stake is a mere ($27.5 million). I’ll probably have more on the transaction next week.
  • The Academy of Managed Care Pharmacy (AMCP) has published a worthwhile overview of the current issues facing digital therapeutics. No new insights, but it captures much of the consensus thinking: “Participants generally favored inclusion of DTx within the existing pharmacy benefit because of the ability to apply managed care tools, such as formularies and prior authorizations. This allows use of already-established processes whereby a health care organization identifies drug products and therapies that are the most medically appropriate and cost-effective to best serve the health interests of a given patient population.”
  • Specialty pharmacy and patient services company Eversana, which currently has deals in place with Noom and Cognoa, has named Ed Cox as its new EVP of strategic alliances and global head of its new digital medicine practice area. Cox was formerly CEO and founder of Dthera, a pioneering digital therapeutics company focused on Alzheimer’s, that started up in 2012.
  • Finally, rumors of a new fitness offering from Apple have emerged ahead of the company’s annual iOS reboot in the fall. The offering, code-named Seymour, will consist of workout videos that guide and track Apple Watch wearers through the motions. Based on these initial reports, Seymour doesn’t sound as sophisticated as the many MSK digital therapeutics offerings on the market, but it sure looks like Apple could be headed in that direction soon.

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The Feds rolled back telehealth regs: Medicare reimbursement, HIPAA and anti-kickback waivers, interstate licensing.

Because of the coronavirus pandemic, this week the US federal government made it easier for patients to get access to their physicians and other caregivers remotely — either via phone calls or video visits.

Considering that surveys have shown something on the order of just 10 percent of people in the US have ever used remote visit software to see a healthcare provider, these changes and the likely large number of people who end up experiencing telehealth for the first time will probably lead to a longterm shift in consumer behavior. Even if many of these regulations return to their pre-virus status in the coming months, they will have made it possible for more people to experience telehealth. (More on commercial payers’ moves in the next story below.)

Here’s a quick rundown of the regulations that the Feds rolled back this week to make it easier for people to receive remote care from providers:

  • Medicare covers “e-visits” for all now: CMS announced that any Medicare patients can now use telehealth, virtual check-ins, or e-visits regardless of whether they live in a rural area. The different flavors of visits and their respective billing codes are outlined in the image above from CMS.
  • HIPAA: Thanks to a “HIPAA waiver”, HHS said providers could use almost any kind of video conferencing software to talk to patients if they use telehealth in “good faith”. Specifically, HHS named Facetime and Skype as viable options right now.
  • Anti-anti-kickback: HHS Office of Inspector General (OIG) relaxed anti-kickback regs to let providers reduce or waive beneficiary cost-sharing (co-pays) for telehealth visits paid by federal healthcare programs.
  • Interstate medical licensing for telehealth: HHS also announced licensure waivers that allow physicians working in federally-paid “health care programs to receive payment for telemedicine services in states where they do not hold a license during the coronavirus (COVID-19) emergency.”
  • DEA has relaxed some restrictions around using telemedicine to prescribe controlled substances too. More here.

Meanwhile, most commercial payers expand access to telehealth or waive co-pays, too

I spent a fair amount of time this week tracking the various telehealth-related announcements from private health plans across the US. Then, late yesterday, the Blue Cross Blue Shield Association announced that all 36 of its licensees would waive co-pays for telehealth visits between patients and providers:

“All 36 independently-operated BCBS companies and the Blue Cross and Blue Shield Federal Employee Program (FEP) are expanding coverage for telehealth services for the next 90 days. The expanded coverage includes waiving cost-sharing for telehealth services for fully-insured members and applies to in-network telehealth providers who are providing appropriate medical services.”

  • UnitedHealth announced that its members could access their existing telehealth benefits for free. It also announced that all members (whose in-network providers are willing and able) can conduct remote, synchronous visits with no cost-sharing.
  • Cigna said it would waive cost-sharing for telehealth visits related to the coronavirus, but it would also waive them for members at a higher-risk for coronavirus who prefer to use telehealth instead of traveling for an in-person visit.
  • Humana provided a bit more nuance in their announcement, so I’ll quote the relevant graf here:

“To help reduce the risk of infection and spread of disease, Humana is encouraging members to use telemedicine (e.g., video chat) as a first line of defense for all urgent care needs. The company will waive costs for telemedicine visits for urgent care needs for the next 90 days. This will apply to Humana’s Medicare Advantage, Medicaid and commercial employer-sponsored plans and is limited to in-network providers delivering synchronous virtual care (live video-conferencing). Self-insured plan sponsors will be able to opt-out of the program at their discretion. Humana is working closely with federal agencies to understand the impacts of both telemedicine and the coronavirus test on High Deductible Health Plans and Health Savings Accounts.”

  • Aetna, a CVS company, made its announcement a bit earlier than most on March 6th:

“For the next 90 days, Aetna will offer zero co-pay telemedicine visits for any reason. Aetna members should use telemedicine as their first line of defense in order to limit potential exposure in physician offices. Cost sharing will be waived for all virtual visits through Aetna-covered Teladoc offerings and in-network providers delivering synchronous virtual care (live video-conferencing) for all Commercial plan designs. Self-insured plan sponsors will be able to opt-out of this program at their discretion.”

  • Centene has announced plans to expand “access to certain telehealth services” because of COVID–19, but hasn’t mentioned waiving co-pays.
  • Molina has expanded access to virtual visits for all of its members and covered lives, including Medicare and Medicaid members, via its partner Teladoc. No mention of waiving co-pays, however.

Most of the companies mentioned here note that these changes are in effect for 90 days or until the coronavirus emergency is considered over, but these temporary measures will likely change the consumer experience of healthcare.

One obvious problem right now: demand for these synchronous, remote visits are leading to hours-long wait times. Dr. Jay Parkinson, founder of Sherpaa (acquired by Crossover Health), has long-argued for asynchronous, remote care as a better alternative. This post of his from 2018 is perhaps more relevant today than it has ever been.

FDA: Not going to object to modifications to remote monitoring devices’ indications if they help with COVID–19

Last night the FDA announced that it would allow medical device companies to tweak their claims if their remote monitoring technologies could help with the coronavirus pandemic while not creating “undue risk”:

“For the duration of the public health emergency, FDA does not intend to object to modifications to the FDA-cleared indications, claims, or functionality of the subject devices without prior submission of a premarket notification where the modification does not create an undue risk in light of the public health emergency. FDA currently believes a modification does not create such undue risk in the following scenario:

1. The device is intended for the purpose of displaying, printing or analyzing the physiological parameter(s) measured by the device; and
2. The device is intended for the purpose of supporting or providing adjunctive recommendations to the health care professional or patient about prevention, diagnosis or treatment of COVID-19 or co-existing conditions; and
3. The health care provider and/or patient can independently review the basis for any diagnostic or treatment recommendations.”

Earlier in the week, the agency relaxed regulations related to virtual clinical trials. You probably already read about those changes, but they are also in this same guidance document — read the full details here.

Roche-Genentech’s in-house digital therapeutic for autism spectrum disorder may use virtual reality

Back in October, E&O mentioned Roche-Genentech’s plans to build its first digital therapeutic in-house after spotting a reference to it in a job posting. Well, a new job posting adds a new detail about the project: virtual reality. Two days ago, Genentech’s San Francisco office posted the job ad for a position called: “Principal/Sr. Principal Platform Product Manager – Neurology/VR, Digital Health Technologies.”

Here’s what it said: “We’re looking for experienced, customer-focused product managers who want to have an impact by helping us build, clinically validate and deliver to patients a digital therapeutic to treat Autism.”

In addition to listing “VR” in the job ad’s heading, under the “desired qualifications” subheader, the posting stated: “Experience with developing Virtual Reality hardware/software solutions.”

Read the whole thing here.

Janssen Biotech, Vivante partner to discover predictive digital biomarkers for GI disorders

J&J company Janssen Biotech has partnered up with Vivante Health, the digital medicine company founded by Dr. Kimon Angelides, who also founded the original diabetes startup that eventually rebranded as Livongo. Janssen and Vivante’s partnership will focus on discovering predictive digital biomarkers for chronic diseases. Here’s how Vivante describes itself:

“Since 2015, the Vivante team has been developing a comprehensive digital health platform for inflammatory conditions, with a primary focus on digestive health and disease. Vivante Health’s user-centric, data-rich platform captures real-time information and includes biometric testing, as well as microbiome analyses, to capture a holistic profile of individuals and match them with psychosocial, nutritional, and medication interventions to fill gaps in care and alter disease progression.”

The companies will initially focus on digital biomarkers for inflammatory bowel disease, with an eye on future applications for Crohn’s disease and ulcerative colitis.

Quick links to E&O research reports

The links below aim to make it easier for paying subscribers to find the long-form research reports on the E&O site:

The Digital Health Enrollment Report (Subscribers-only Link)
The Omada Health Report (Subscribers-only Link)
The Google Health Report (Subscribers-only Link)
The Pear Therapeutics Report (Subscribers-only Link)
The AliveCor Report (Subscribers-only Link)
Apple’s Healthcare Work Experience (Subscribers-only Link)
Approximating Livongo’s S-1 (Subscribers-only Link)

That’s a wrap on Issue 044. More next week.

6 min. read

Verily paid Sanofi $122M. ResMed MitiGait. Happify Kopa.

Paying Subscribers Only

It's a good one, too.
This digital health research is for paying Exits & Outcomes subscribers only. Subscribe now to read this article, get the weekly newsletter, and receive unrestricted access to past and future research from the Exits & Outcomes archives. Smash the link above or below to subscribe yourself -- or head over to our pricing page to subscribe your team or your whole company!

Issue 043.

Get E&O weekly. | Subscribe

Digital health research from Brian Dolan.

Welcome to E&O.

Last week’s newsletter had a 62 percent open rate. Here’s what’s happening this week:

  • Once again you’re looking at a COVID–19-free newsletter. That will be the only mention of it here. There’s plenty of other things to read and think about so let’s get right onto it…
  • Regrets, I’ve had a few: Last week I dashed off a headline for the Livongo year-in-review piece and flubbed the company’s year-over-year multiple. Livongo’s revenues grew 2.5x between 2018 and 2019, not 1.5x as I wrote in the headline. All of the other information in the article was correct. Apologies for the mistake and thanks to the reader who pointed it out. Eager to hear when I’m wrong, so please don’t hesitate to tell me.
  • Speaking of righted wrongs, BCG’s white paper on digital therapeutics that I mentioned last week did, in fact, have an error where it claimed Omada raked in $250 million in revenues last year. The authors revised it by simply deleting the reference to Omada.
  • Typically, I don’t cover funding rounds here but this one is huge. The founder of iRhythm just raised $145.6 million for his new digital health startup, Element Science, which is developing the “Jewel Patch Wearable Cardioverter Defibrillator (P-WCD), an unobtrusive, low-profile personal defibrillator designed to detect and treat life-threatening arrhythmias in patients with an elevated temporary risk of Sudden Cardiac Death (SCD).”
  • Ipsen is hiring for a digital product owner in Cambridge, MA, and the job posting frames out how the biopharma is thinking about digital products at a high-level right now: “Ipsen’s Global Digital group leverages digital technologies to develop innovative therapies and bring differentiated life-changing solutions to patients suffering from rare conditions. Within this group, the Digital Health team focuses on Commercial innovation – ‘Beyond the Drug’ solutions that accelerate patient diagnosis, enhance the value of our products, and provide a better experience for patients and HCPs.”
  • A review published in BMC’s Medical Ethics journal looked at past studies focused on digital pills (DP), like those developed by Proteus Digital Health and etectRx. The researchers found 18 papers and concluded: “The first important finding is that published studies are quite diverse in their design, but are predominantly explorative, non-randomised and with small numbers of participants. This suggests that the evidence publicly available concerning DP is not robust.”
  • Financial analyst firm, The Edison Group, published a research note focused on Swedish biopharma Orexo’s recent FDA submission announcement. Orexo recently disclosed it was sending its digital therapeutic for alcohol use disorder to the FDA. I mentioned this last week, but didn’t know Orexo had filed a 513(g) with the FDA, which basically is a way of asking (in writing) how the agency wants to regulate a particular device. Clearly, regulatory pathways are still unclear for DTx companies.
  • Welldoc is partnering with Dexcom. That makes it the latest diabetes management company to announce a partnership with a continuous glucose meter (CGM) maker. It might be easier to tally up Type II diabetes management companies without a CGM partner at this point.
  • Finally, I’ve written a few times about Magic Leap, the much-hyped augmented reality company down in Florida. In recent years the company has hired digital therapeutics product leads and some reports indicated the company was going all-in on these health applications. In any case, after raising about $2 billion, Magic Leap is now hoping for a buyer, according to Bloomberg.

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A preview of future digital therapeutics thanks to trademark filings: Happify, Mahana, Resmed

One of the more reliable ways to preview products that have yet to be announced, let alone hit the market, is to comb through the USPTO’s trademark database. I’ve rounded up the potential names and therapeutic areas of various digital therapeutics that are likely to come to market in the coming years.

First, a word of warning: Companies file trademarks for products or features they don’t end up using all the time. Omada Health, for example, abandoned a trademark on a stylized version of the word “predicts” that looked like: Pred!cts — back in December. Omada has also casually referred to the potential users of its prediabetes program and other preventive programs as a “Tipping Point Population”. It abandoned that trademark in 2018.

Happify trademarks “Kopa”: Eight days ago Happify trademarked the word “Kopa”, which it describes as software for accessing and sharing information “related to the treatment, prevention, and management of diseases, conditions, and disorders.” Happify Health is working closely with Sanofi on DTx products for MS patients. Anxiety and depression are two comorbidities the partners have mentioned as likely TAs. So, good chance Happify’s first DTx is called Kopa.

Mahana Therapeutics trademarks “Parallel” and “Vitalogi”: JAZZ Venture Partners portfolio company, Mahana has trademarked both Parallel and Vitalogi. In its filing for Parallel the company describes “software for treating, monitoring, reporting on, and analyzing the use of therapeutics and pharmaceuticals in the fields of autoimmune and gastrointestinal conditions, diseases, or disorders.” The filing for Vitalogi is more generic, which suggests it may be the name of an underlying technology platform.

ResMed trademarks “MitiGait”: Yes, that’s a pun. Surprised to find this trademark from ResMed, which is focused on sleep conditions like sleep apnea as well as respiratory conditions like asthma and COPD, via its Propeller Health acquisition. MitiGait looks to be an as-yet-undisclosed new vertical for ResMed that will take it into aging in place technologies:

“Mobile applications for management of data for home health and assisted living care; software for the control of sensors in the field of home health and hospice care; movement sensors; motion detectors; motion sensors; personal monitoring equipment for sensing and detecting motion and sending data on the same to a remote location.”

Moderna Therapeutics: I was surprised to find this Cambridge, MA-based biopharma company has applied to trademark the general term “digital therapeutics” as of May 2018. This doesn’t look like a sign the company is pursuing DTx, however. Moderna is not using the term like everyone else. It writes the mark would not apply to “the use of digital technology designed to affect behavior or lifestyle changes or the use of digital technology to monitor dosing compliance or improve health outcomes.”

Click Therapeutics trademarks “Digital Functional Cure”: Click has also filed for various trademarks on the general term “digital therapeutics” over the years — starting in 2012 — but has since abandoned them all. Last month, however, Click filed for trademarks on both “Digital Functional Cure” and “Digital Cure”. I imagine these won’t be the names of products but rather a new way of describing Click’s offerings in general.

What Verily paid Sanofi for 30.1 percent of Onduo

At the end of 2019, Sanofi announced that it would decrease its stake in Onduo, the diabetes joint venture it has with Google’s Verily. This week Sanofi’s year-end financial documents show that the company decreased its 50 percent stake in Onduo to 19.9 percent.

As part of the restructuring of Onduo, Verily paid Sanofi a dividend in Dexcom stock. Sanofi said in its 20-F filing that the stock was worth $122 million on November 11, 2019, the day it received it. By the end of the year, the stock had a carrying value of $104 million.

In its 20-F, Sanofi wrote:

“As a result of the restructuring of Onduo LLC, finalized November 11, 2019, Sanofi lost significant influence over that entity on that date. The loss of significant influence over that entity did not have a material impact on profit or loss.”

Given Sanofi’s minority stake, which is now below the 20 percent threshold, I’d be surprised if they share any more details about its performance in future SEC filings.

Initial lineup for the CVS digital health formulary

CVS Health added a number of new digital health companies to its version of a Digital Health Formulary. When it first announced plans for this back in June, CVS called it a “Vendor Benefit Management” service for its PBM clients that would include digital and non-digital health offerings. It also announced that Big Health’s Sleepio would be the first one in the hopper.

Well, no one likes being called a “vendor”. This week CVS rebranded the new channel as “Point Solutions Management”, which is marginally better, I guess? Who wants to be referred to as a “point solution”? That’s “platform company” propaganda!

Express Scripts may have the right idea with its much more ambitious-sounding Digital Health Formulary.

The new point solutions in CVS Health’s formulary are: Hello Heart, Hinge Health, Livongo, Torchlight, and Whil. With Sleepio, the total comes to six. This page over at the CVS Health site digs into the selection process and ongoing requirements for the companies in the program. Notably, CVS claims the companies are obligated to offer CVS PBM clients their “most competitive pricing” as part of the deal.

Quick links to E&O research reports

The links below aim to make it easier for paying subscribers to find the long-form research reports on the E&O site:

The Digital Health Enrollment Report (Subscribers-only Link)
The Omada Health Report (Subscribers-only Link)
The Google Health Report (Subscribers-only Link)
The Pear Therapeutics Report (Subscribers-only Link)
The AliveCor Report (Subscribers-only Link)
Apple’s Healthcare Work Experience (Subscribers-only Link)
Approximating Livongo’s S-1 (Subscribers-only Link)

That’s about enough out of Issue 043 of Exits & Outcomes.

8 min. read

RCT shows no effect for AI coach. Livongo ups enrollment rate.

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It's a good one, too.
This digital health research is for paying Exits & Outcomes subscribers only. Subscribe now to read this article, get the weekly newsletter, and receive unrestricted access to past and future research from the Exits & Outcomes archives. Smash the link above or below to subscribe yourself -- or head over to our pricing page to subscribe your team or your whole company!

Issue 042. Get E&O weekly. | Subscribe

Digital health research from Brian Dolan.

Welcome to E&O.

Last week’s newsletter had a 59 percent open rate. Here’s what’s happening this week:

  • HIMSS 2020, the biggest annual conference focused on health IT, is canceled because of the COVID-19 pandemic. HIMSS bought my first company, MobiHealthNews, and I still know a lot of the people there. They made the right call, but I do worry about how this impacts the future of the organization. (The big event drives almost everything at HIMSS.) Here’s hoping for the best.
  • Besides the above, going to try to avoid writing about COVID-19 for now. Safe to assume you all are already overwhelmed. (Apologies in advance for this week’s bubonic plague doctor GIF below.)
  • Voluntis announced another oncology DTx deal, this time with Bristol-Myers Squibb. It also announced plans to dial back its diabetes business in the US, which is likely driven in part by Sanofi’s announcement to do the same. There’s a lot more here about Voluntis’ roadmap.
  • Surprised to happen upon a promotional brochure, or “leave behind”, for Zimmer Biomet’s mymobility offering. Zimmer is currently conducting a clinical trial with Apple for mymobility, which uses an Apple Watch and app to help patients before and after a knee or hip replacement surgery. The last study participants are expected to finish up the trial in December 2020. Here’s the brochure.
  • Swedish biopharma Orexo submitted its digital therapeutic for “bothersome or harmful alcohol consumption including diagnosed alcohol use disorder (AUD)” to the FDA for clearance. It hopes to have it commercially available in the US during the second half of the year. Its DTx partner, GAIA, already markets the therapeutic in Germany and Switzerland.
  • What’s next for Better Therapeutics: It plans to conduct an “open-label, multi-site, randomized, controlled, parallel-group trial” of its Type 2 diabetes digital therapeutic. The results from the trial will form the basis of its submission to the FDA. Better just released some results from a small study of the DTx.
  • Hims has brought in $100 million in total revenue since launching two years ago. This Modern Retail interview with the CEO is worth a read if you’re tracking their growth.
  • Similarly, this analysis over at Scale Fanatics digs into how Calm has built its marketing engine to become one of the highest revenue-generating iPhone apps on the market today. It gets into some nitty-gritty tactics but nothing groundbreaking: Facebook ads and retargeting are core to the strategy.
  • Verily inked a research partnership with London-based medtech company LivaNova to conduct a trial that uses Vagus Nerve Stimulation (VNS) therapy for Difficult to Treat Depression (DTD). Participants in the trial will wear a Verily Study Watch and have a Verily app on their phone.
  • Two interesting acquisitions in recent days: First, Ginger, a mental health-focused digital provider acquired the underlying technology of its competitor, LiveBetter. LiveBetter offered its services for free to end-users, and, despite acquiring its tech assets, Ginger granted LiveBetter a perpetual license to keep using them (as a restructured non-profit) to continue offering free services to the underserved.
  • Second: ACO Caravan Health has acquired Seattle-based Wellpepper, which tried to use apps and other tech to help patients better understand their treatment plans.
  • Finally, busy week for digital health thought leadership from the big consulting firms: Bain has a simple chart that shows biopharma’s are doing more deals (M&A and investments) in DTx and disease management than other digital-related areas.
  • BCG has a short piece out on digital therapeutics that claims Omada (like Noom) has made $250 million in revenue, which seems way off. It also said Omada was a unicorn, which I think is also untrue. Noom says it made about $237 million in revenues in 2019, and my (admittedly, very simple) calculations in the Omada report put it closer to $70 million (or less) that year. I asked the authors if it was a typo… (Update: It was a typo, and they removed it.)
  • Lastly, PwC published a short piece about how biopharma should approach the digital therapeutic opportunity. Most curious suggestion to me: Biopharma should see DTx as an opportunity to expand beyond priority therapeutic areas.

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Livongo in 2019: 2x members, 2.5x revenues, and improved enrollment rate

Now that the year-end 2019 results are in, it’s clear that Livongo has continued to grow at an impressive clip. Here are the highlights:

Revenues increased 148 percent year-over-year: Livongo brought in $169.9 million in revenue during 2019, which marked an increase of 148 percent over its 2018 revenue figure: $68.4 million.

Livongo ended 2019 with 804 clients and started 2020 with a lot of launches: In the first two months of 2019, Livongo has already launched “a record number” of clients with 424 already launched, up over the 231 it launched during Q1 of 2019. This year’s figure will grow as the quarter still has a few more weeks.

Livongo added more Fortune 500s: The company said it now has 30 percent of the Fortune 500 as customers as opposed to 20 percent during 2018.

Livongo added nine new health plan clients: The company said that includes a number of new additions on the fully-insured side.

Diabetes members nearly doubled: Year-over-year, Livongo almost doubled the number of people in its diabetes management program. At the end of 2019, it had 223,000 participants, up from 114,000 at the end of 2018. It had 53,000 at the end of 2017.

Hypertension and prediabetes membership is growing: Livongo announced that it now has 48,000 members across its hypertension, prediabetes and weight loss programs. The company also noted that the estimated value of all the new agreements it signed with customers in the fourth quarter was $77 million, and 35 percent of that (or $27 million) is for Livongo’s programs for hypertension, prediabetes and weight management, or behavioral health.

Average enrollment rate eked up one percentage point in 2019 vs. 2018: The company said its enrollment rate hit 35 percent in 2019. That’s one percentage point higher than its average enrollment rate for clients who launched in 2018.

Livongo predicts $280 million to $290 million in 2020 revenue, profitability in 2021: The company expects revenue to grow at less than 100 percent year-over-year for 2020. It expects to lose between $20 million and $22 million in adjusted EBIDTA for the year, but aims to be profitable in 2021. It also noted that its “preferred” status on the Express Scripts Digital Health Formularly will only start driving revenue this year, in 2020.

I’m surprised that the company has yet to acquire any additional startups that it could bolt onto its existing portfolio of services, but its impressive growth is, perhaps, answer enough that, so far at least, the company hasn’t needed acquisitions to grow. At this point, I’d be more surprised if Livongo doesn’t snap up one of the smaller MSK digital therapeutics companies by months end. It also still needs to a COPD/asthma program.

RCT shows Lark’s hypertension AI app drives similar outcomes to Omron’s simple BP tracker

You probably haven’t heard about this study, because the results aren’t great: This week JAMA published the results of a randomized control trial that aimed to figure out what kind of impact Lark’s automated coaching program had on people with uncontrolled hypertension. The Clinicaltrials.gov entry for the study is here.

A team of researchers conducted the trial with Lark’s partner, Omron, which also funded the work and provided the connected blood pressure cuffs used in the trial.

The RCT included 297 participants who completed the trial. They were randomized to either receive Lark’s hypertension coaching app or a blood pressure tracking app. Those that received Lark’s coaching app were not found to have lower blood pressure at six months than the control group. Ultimately, the researchers concluded that the study was not large enough to “detect small but potentially important intervention effects.”

The control group used an app that basically just received the blood pressure readings from the Omron device and provided no feedback or coaching. Lark’s app was much more feature-rich. Here’s how the researchers described some of its functionality:

“It is a conversational artificial intelligence smartphone app that uses cognitive behavioral therapy techniques to provide support and coaching to promote hypertension self-management and healthy behaviors, including diet, physical activity, medication adherence, blood pressure measurement, sleep, and stress management. Recommendations were tailored according to participants’ prior data and responses. The app uses encouragement, reminders, and tracking to promote home monitoring. It prompted participants to measure blood pressure daily for the first week, then weekly thereafter.”

It also prompts users to contact a provider if a reading is out of range. The feature list is pretty long. If you want more detail, the study’s results are published in JAMA’s open-access journal.

The final results of the RCT showed a drop in SBP of about 5.9 percent within the intervention group, which included 144 participants in the end. That’s something, but the control group of 153 participants, who just used Omron’s basic blood pressure tracking app, showed a decrease in SBP of about 4.8 percent, too. The researchers wrote: “The observed difference in the primary outcome by study groups is consistent with no effect, or with a treatment effect that was smaller than what the study was powered to detect.”

One curious thing about this study, however, is that Lark shared preliminary results from the study (as of April 2018) while the study was still underway. The company published a recap of preliminary results with a headline up top that read: “Health plans called on Lark to show how to improve hypertension management at scale. Lark delivered.” They said the study showed a drop of 13.35 percent in systolic blood pressure among 150 participants using Lark’s app.

This PDF of the results has since been deleted from Lark’s site along with an archived version of a webinar that apparently discussed them too, but after signing up for it, I can’t seem to get it to play. A different readout of results from an undisclosed study that included 76 participants is available on the Lark site here. (Given it was published in September 2019, this may be an analysis of a subgroup from the RCT, but that’s not clear from the text.)

Following these results, I’m curious to see whether Omron pushes ahead with a partnership with Lark, or just sticks with its own simple tracking app.

Arrivals and Departures: Novartis, Alivecor, Zoom+, Cognoa, and more

Novartis saw a few people leave its digital medicines business unit in recent months.

Earlier this year the biopharma saw the departure of Betul Susamis Unaran, its Global Head of Digital Medicines. She’s now at healthcare ecommerce company Zur Rose Group. On Linkedin, Unaran described her role at Novartis, which she held for two years, as “leading the digital agenda and team” of Novartis Pharma and “driving the efforts to ‘reimagine medicine with data and digital’”. Unaran’s purview included digital innovation along the customer journey, like around-the-pill, beyond-the-pill, and digital therapeutics. The five therapeutic areas her work focused on included: “Cardio-Metabolic, Respiratory, Neuroscience, Ophthalmology, IHD (Immunology, Hepatology, Dermatology).”

Last month a longtime Novartis employee, who had been with the biopharma since 2003, left to join Microsoft‘s health division. Andrew Warrington was a project leader at Novartis for its digital therapeutics domain. He spent the past two years on DTx for oncology and cardio-metabolic conditions: “Led two drug/digital combination projects — one preclinical in Oncology and one preparing for clinical in Cardio-Metabolic.” Warrington led the teams from drug development through market access and commercial.

The De-Googlification and Amazonification of Alivecor continues: Alivecor named a former Amazon executive as its new CTO: Siva Somayajula. The company named former Amazon exec Priya Abani as its new CEO in July. She replaced former Googler Vic Gundotra. As other Xooglers depart the company, it seems natural that more former Amazon employees join.

Mike Payne, an early Chief Commercial Officer and Head of Medical Affairs at Omada who went onto Virta Health and Ancestry in similar roles, has joined Zoom+Care. Zoom+ is a digital-savvy retail clinic chain in the Pacific Northwest that mostly focuses on Millennials.

The former president of the American Academy of Pediatrics, Dr. Colleen Kraft, has joined Cognoa as the senior medical director of clinical adoption.

Michael Evers, the CEO of The Learning Corp, makers of Constant Therapy, has left the company. Back in 2017, Digital Health Corp., a holding company that also includes Reflexion, acquired Learning Corp. Evers took the helm at The Learning Company about a year after its acquisition.

Life sciences manager at Deloitte UK, Carmen Jack, has joined London-based digital therapeutics company Medopad.

Quick links to E&O research reports

The links below aim to make it easier for paying subscribers to find the long-form research reports on the E&O site:

The Digital Health Enrollment Report (Subscribers-only Link)
The Omada Health Report (Subscribers-only Link)
The Google Health Report (Subscribers-only Link)
The Pear Therapeutics Report (Subscribers-only Link)
The AliveCor Report (Subscribers-only Link)
Apple’s Healthcare Work Experience (Subscribers-only Link)
Approximating Livongo’s S-1 (Subscribers-only Link)

That’s a wrap on Issue 042 of Exits & Outcomes. Catch you next week!

8 min. read

Strip companies tried to kill Livongo. Sanofi DTx distro.

Paying Subscribers Only

It's a good one, too.
This digital health research is for paying Exits & Outcomes subscribers only. Subscribe now to read this article, get the weekly newsletter, and receive unrestricted access to past and future research from the Exits & Outcomes archives. Smash the link above or below to subscribe yourself -- or head over to our pricing page to subscribe your team or your whole company!

Issue 041. Get E&O weekly. | Subscribe

Digital health research from Brian Dolan.

Welcome to E&O.

Last week’s newsletter had a 63 percent open rate. Here’s what’s happening this week:

  • After a hiatus from public speaking, I got back on-stage last night at the MIT Sloan Healthcare Innovations Prize startup pitch competition. Have to admit I felt a bit rusty, but it was fun to hand out over-sized checks to the winners: The top three split $25,000.
  • Eddie Martucci and Corey McCann, the CEOs of Akili Interactive and Pear Therapeutics, respectively, met with the FDA’s CDRH head Jeff Shuren earlier this month, according to Shuren’s public calendar. The meeting focused on “Digital Therapeutic Devices” but the agency didn’t disclose any additional information or attendees. Uncommon for two CEOs to meet with the FDA together without representing some other association or group. DTx is still early enough that it is a tightknit community.
  • Akili released the longer version of its STARS-ADHD RCT in the Lancet’s digital health journal. Well worth digging into the full text here.
  • Marc Slujis noticed something funny on LinkedIn: At the time of their uncoupling, Sandoz CEO Richard Saynor said the company’s deal with Pear “confused” Sandoz as an organization since it made it lose focus. And yet… every new job advertisement Sandoz posts mentions the company’s pioneering effort to commercialize the first prescription digital therapeutic. The confusion continues.
  • Meanwhile, Pear is hiring for a government account director focused on various Medicaid groups: state Medicaid agencies, Medicaid ACOs, Medicaid MCOs, and Medicaid PBMs.
  • Speaking of hiring, Cedars-Sinai just named Dr. Raj Khandwalla the “director of digital therapeutics” at its Smidt Heart Institute. While I’ve seen payers and pharma companies appoint directors of DTx, it seems less common for health systems. (Might just be the rise of DTx replacing digital health as the phrase of choice in some contexts.)
  • This 32-minute read is a deep dive into the current and future state of Behavioral Design, and it quotes a number of people working in digital health. I couldn’t get through the whole thing, but apparently, there is an even longer version of the report for those interested.
  • Finally, I thought this Twitter thread by Dr. Adam Cifu, Professor of Medicine at University of Chicago, focused on the various ways RCTs can be misleading was a great resource.

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Livongo’s free strips, Omada’s free scale: Incentives and digital health enrollment

This is one obvious tactic I meant to include in last week’s Digital Health Enrollment Report. Giving away things for free is about as simple as it gets, but it is likely an important reason both Omada and Livongo post high enrollment rates. Livongo’s unlimited test strips and Omada’s cellular-enabled weight scales are prominently featured in the companies’ various enrollment marketing materials.

These kinds of incentives and giveaways aren’t easy for every digital therapeutics company to offer, but in diabetes and weight management, they seem to work. That’s not to say they are without risks. Livongo recently discussed an existential threat that the free strip tactic set into motion.

Livongo battles strip makers: Livongo’s various programs include relevant personal medical devices, but its original giveaway was its diabetes program’s unlimited blood glucose strips, which the company delivered right to the doorstep. Livongo founder and chairman Glen Tullman said during a recent interview that this move angered incumbent strip makers. And it still does:

“In healthcare there is a big ecosystem. And in that ecosystem, there are people, for example, who make a lot of money selling test strips. And they shouldn’t. It’s wrong. They over-inflate the prices of those test strips. I think it ought to be illegal.

When we came out and said we want to give test strips away for free, you can imagine how happy they were. So, they literally tried to kill the company. We were fighting for our survival. They would go into our customers, and they still do, and they say, ‘We are going to increase our prices if you work with Livongo.’ Totally illegal, but, in fact, they do it.”

Omada defends scale giveaway to CMS: From the very beginning, Omada Health sent its diabetes prevention program’s enrollees a cellular-enabled weight scale, because that meant the device could ship to users already paired with their account online. Since it is cellular, it also overcame any tech barriers the enrollee may have to pair it via Bluetooth to their phone or setting the scale up on their WiFi network at home. It just worked straight out of the box. A cellular chip, however, meant a more expensive weight scale.

This was one factor — maybe not the most important one — but an objection that the Trump administration’s CMS had to granting reimbursement to virtual diabetes prevention programs. It didn’t want Medicare patients signing up for virtual DPP just to get a free scale. So, it proposed a cap on the value of the equipment a Medicare-covered DPP could provide. It turns out, according to one of the last letters Omada sent to CMS before the payer decided not to include virtual DPP in its coverage, that Omada could provide their scale at a low enough cost. Omada wrote in 2017:

“CMS has proposed that equipment supplied to a Medicare beneficiary that is worth more than $100 must be collected from the beneficiary when they finish receiving their DPP services, including maintenance sessions. We can supply the scale within the $100 limit in the proposed rule, so therefore it need not be recalled.”

I’m curious to track other companies’ incentives-based tactics and any unintended consequences that befall them as a result. Send them my way.

Consumer Reports calls out GoodRx for sharing data with Google, Facebook, and others

GoodRx is on the defensive this week after a Consumer Reports article reported that the prescription savings company shares data with big tech companies like Facebook and Google as well as relatively unknown marketing tech companies like Braze and Branch.

The damning detail in the Consumer Reports is here:

“While people like Marie are saving money with GoodRx, the company’s digital products are sending personal details about them to more than 20 other internet-based companies. Google, Facebook, and a marketing company called Braze all receive the names of medications people are researching, along with other details that could let them pinpoint whose phone or laptop is being used.”

GoodRx posted a response:

“We sometimes use trusted, certified, third-party service providers to improve our service and provide the best customer experience. This is standard practice on the internet. We have strict contractual agreements in place that prohibit these partners from sharing personal user data with outside parties. Personal user data can only be used to provide services to us. For instance, our agreement with Braze, an email and messaging service, stipulates that personal health information must be handled in a HIPAA compliant environment, and that Braze must secure the confidentiality of the data we provide. Our security team regularly performs reviews of our third-party service providers to ensure we operate at the highest standards of data security and confidentiality.

Like many technology businesses, we run advertisements on the internet, including Facebook and Google, to reach customers who might find GoodRx useful. We do not display specific ads to users based on their particular medical data.”

Some specific details are lacking here, like why exactly GoodRx was sharing medication names tied to users’ metadata with Facebook in the first place. My guess is GoodRx was sloppy and incidentally revealed the name of medications to Facebook, which was helping them track the campaign. GoodRx makes clear they didn’t sell Facebook any user data, so it must have been indirect.

At a high level a few things are clear right now:

Digital health companies that have reached a certain level of success and that use pretty much any kind of consumer-facing Internet marketing platform, risk a Google-Ascension or GoodRx-Facebook style “exposé” right now. Internet marketing is driven by surveillance. These stories are going to keep on coming.

CMS: “Currently exploring ways” to let virtual DPPs get Medicare reimbursement

As mentioned above, one of the watershed moments in Omada Health’s history was CMS’ decision to exclude virtual diabetes prevention program companies from the Medicare DPP reimbursement program in 2018. Under the Obama administration’s CMS, virtual DPPs were set to be included, but once the new administration took over the payer reversed course.

This week, new hope emerged that CMS was closer to finding a way to include virtual providers in MDPP. Following a letter that 19 senators sent CMS at the end of last year encouraging it to reconsider its virtual DPP exclusion, a January response letter from CMS reportedly claims it is working to find a way to accommodate them.

Regulating access to digital therapeutics, especially for kids

When I moved into our house a few years ago, I was surprised to find a medicine cabinet in the master bathroom that had a lock and key. It’s not uncommon, I just hadn’t seen or noticed one before. Will digital therapeutics need that kind of safe-keeping?

I had a conversation this week about the difficulty digital therapeutics companies will have in the future around regulating access to their therapies. The person I was talking to suggested that a company like Akili Interactive might want to ensure that their therapeutic for pediatric ADHD, which is delivered in the form of a video game, doesn’t fall into the hands of the intended user’s sibling.

If I’m a parent with two kids who have been diagnosed with ADHD and get a prescription digital therapeutic for one of them, why wouldn’t I have the other one play that game too? These are safe therapies with little to no adverse events right? It’s just a game. Why pay twice?

The more immediate risk here is to Akili’s bottom-line, but I wonder if this aspect of DTx is a concern to regulators.

Hints at how Sanofi might approach commercialization of DTx with Happify

McKinsey recently published a great interview with Sanofi’s Head of Digital Therapeutics Bozidar Jovicevic that includes a worthwhile overview of the current state of DTx plus a few hints about how the biopharma channel strategy for DTx might unfold.

Jovicevic also said that he expects standalone digital products to hit the market first followed by digital-plus-drug combination products. But longterm he said the future for DTx is harder to envision:

“The long-term picture is much more important, but it’s intangible and abstract. Digital therapeutics present a big opportunity. They have the potential to become a multibillion-dollar category. The greatest value will be from data. If we know, for instance, when the right time is for a patient to move to the next step in the treatment algorithm, that will be better for everyone in the system.”

The section of the interview focused on business models and distribution was the most compelling:

“When we talk about business models, there’s a danger we might think that digital therapeutics are just like drugs, only digital. So a doctor prescribes a drug, and a digital therapeutic as well, and everything else is the same—development, commercialization, market access. But the way products are commercialized will be different, in fact, and that will have a huge spillover effect.

“Digital therapeutics will be used by more patients, but the price will be lower, which makes sense. Doctors will see fewer sales reps. Even today, 50 percent of US doctors don’t see reps, and an average sales visit lasts a couple of minutes. The productivity of that model is declining.

“I think digital therapeutics will spur the kind of experimentation that happens with all new commercial models. We already see consumer-healthcare companies combining paid media with e-commerce and telemedicine to bring products to market. I’m excited about what’s coming, and I see it having an impact on pharma as well.”

Based on the above, I wonder if Sanofi-Happify will be the first to market DTx via telemedicine prescribers like Ro does for pills.

Quick links to E&O research reports

The links below aim to make it easier for paying subscribers to find the long-form research reports on the E&O site:

The Digital Health Enrollment Report (Subscribers-only Link)
The Omada Health Report (Subscribers-only Link)
The Google Health Report (Subscribers-only Link)
The Pear Therapeutics Report (Subscribers-only Link)
The AliveCor Report (Subscribers-only Link)
Apple’s Healthcare Work Experience (Subscribers-only Link)
Approximating Livongo’s S-1 (Subscribers-only Link)

That’s a wrap on Issue 041 of Exits & Outcomes. Catch you next week!

12 min. read

The Digital Health Enrollment Report

Paying Subscribers Only

It's a good one, too.
This digital health research is for paying Exits & Outcomes subscribers only. Subscribe now to read this article, get the weekly newsletter, and receive unrestricted access to past and future research from the Exits & Outcomes archives. Smash the link above or below to subscribe yourself -- or head over to our pricing page to subscribe your team or your whole company!

Thirty-five years ago, US Surgeon General C. Everett Koop reportedly first uttered his most famous one-liner: “Drugs don’t work in patients who don’t take them.”

In 2020, E&O would like to coin a new (and equally obvious) truism for the ages: Digital health programs don’t work for people who don’t enroll in them.

Little has been written about enrollment strategies for digital therapeutic programs that market to employee populations or health plan members. This article attempts to round-up the current practices around enrollment.

Enrollment can be a strategic differentiator and a selling point for digital health companies. It typically makes use of a variety of channels, but email marketing tends to be the most important. Read on for a better understanding of how Omada Health approaches enrollment along with additional metrics, details and case studies from Livongo Health plus quick mentions of Propeller Health, (pre-Welltok) Keas, and Virgin Pulse.

Omada calls enrollment marketing a “strategic differentiator”

In a recent job posting for a marketing operations associate, Omada Health explained that its marketing team is focused on a core part of Omada’s mission: “to inspire people everywhere to take the first step toward lasting, healthy change.” Omada entices would-be marketing associates by referring to enrollment as a “strategic differentiator” for the company that they are tasked with preserving. It’s also clear from the ad and other statements Omada has made in the past, that email marketing is the most important channel for its enrollment efforts (emphasis is mine):

“Your impact: As a Marketing Operations Associate at Omada Health, you’ll work with internal stakeholders to schedule, build, launch, and report on consumer-facing email campaigns in Marketo. Beyond your weekly campaign work, you’ll own strategic initiatives to evolve our craft and scale our efforts. Working in tandem with the Senior Marketing Operations Manager, this role is extremely important to the Enrollment Marketing team and Omada Health as a whole. Successful campaigns are integral to reaching enrollment and revenue targets, preserving enrollment marketing as a strategic differentiator, and most importantly helping more people learn about and sign up for the Omada program.”

Another job ad for a creative producer position at Omada refers to the creative campaigns that drive enrollment as a “crucial area” of Omada’s business:

We pride ourselves on brand and marketing innovation to deeply connect with people and to empower meaningful, lasting behavior change. That means reaching the right people, at the right time, with resonant campaigns: and we can’t achieve our mission without world-class creative, storytelling, and campaign work. As our offerings expand, so must our ongoing outreach to participants. And that’s where you come in. As the Creative Producer for the Marketing Creative team, you will… Empower some of the most crucial areas of Omada’s business: the creative campaigns we use to reach potential participants.

For Omada, email marketing is all-important, so they get creative to build lists

One of the case studies that Omada features on its site is focused on a safety net provider named Neighborhood Healthcare. The case study is particularly interesting when it comes to enrollment since this provider had not been able to use email as an enrollment marketing channel in the past because it didn’t have email information for many of its patients. That said, a digital version of the Diabetes Prevention Program was particularly well-suited in this case because of the flexibility the digital delivery provided to a patient population that was “transient, geographically isolated, and/or juggling family obligations with multiple, part-time jobs.”

Dr. Rakesh Patel, the medical director of operations at Neighborhood Healthcare explains:

“Historically, it’s taken a lot of phone calls to get people enrolled in a given program. But with Omada, we were able to enroll a significant number of people in a shorter period of time over just email, which didn’t require a lot of bandwidth from our staff.”

The case study says that the provider encouraged patients to use their patient portal to get lab results and to communicate with their doctors. Signing up for access to the patient portal required an email address, which the provider then leveraged to drive awareness of Omada’s program. Omada lists its demonstrated ability to drive enrollment as the number three reason that it won the contract with Neighborhood. Here’s how enrollment went:

“The four-email enrollment campaign Omada created and implemented for Neighborhood Healthcare resulted in an enrollment rate six times higher than direct mail campaigns typically deliver for health plans.”

Omada enrolled 6 percent of the at-risk population for this hard-to-reach group, which means, based on the claim in the quote above, the status quo at the time was just 1 percent. Omada has not officially posted its average enrollment rate across the at-risk populations it has marketed to over the life of the company, but it once noted it typically gets between 20 and 30 percent of an at-risk population to enroll. While Omada Health adapts the specifics of its approach to enrollment for each new customer, the four-email enrollment campaign that the Neighborhood case study referenced seems to be its typical plan.

Omada’s marketing team wrote a lengthy piece about its enrollment tactics in February 2016. By that date, Omada had enrolled approximately 31,000 participants into its diabetes prevention program overall. The marketing team sets off by noting that after talking to hundreds of employers they’ve found the number one complaint to be that it’s hard to get employees to sign up for health benefits programs.

As I noted in The Omada Health Report last month, Omada’s business model is in part a reaction to legacy employee wellness companies charging on a per employee per month basis. Historically, those models would contract something like 30 cents per employee per month for an employee population of 1 million. That business model misaligns the service provider with the payer, however, as it misaligns the revenue model and the cost of goods. In other words, as more employees sign up, the service provider’s margins are compressed. It sets up a perverse incentive to get just enough employees to sign up to make the numbers work and keep the payer relatively happy with the enrollment figure, but not so many it hurts the service provider’s profits.

Given all that, it’s no surprise there wasn’t as much of an emphasis on driving enrollment in creative ways. Back to Omada’s February 2016 blog post. It makes clear that Omada has a low opinion of legacy tactics for driving enrollment:

“Getting employees to engage in a new healthcare program or benefit is notoriously difficult. But that’s no excuse to give up. What’s our definition of giving up? Taping a black and white photocopy of a program one-pager to a wall in the employee break room. (We’ve seen that.) Sending out a single, text-heavy email. (Not going to work.) Leaving brochures on a table during Open Enrollment. (People barely notice those.)”

Omada’s customer base includes a diverse range of companies, including retail companies, truck driver associations, and aeronautics companies. Few of those give every employee a corporate email address and so reaching at-risk employees via email is not as straightforward as it would be for reaching employees at a tech company, for example.

“During a recent deployment with an innovative aeronautics company, we brainstormed ways to connect with every employee. The challenge? Get a compelling message to a team without company email addresses. The solution? Identify the locations everyone visited each day. That left us two good options: the cafeteria and the bathroom. We chose the former. We co-opted the napkin dispensers for one week to share bold, inspiring messages about the new benefit, all in the voice of the company’s leader.”

Ultimately, the messages on the napkin holders encourage employees to text Omada, which grants the company the ability to market their program to them via an email campaign. The company has made clear that it prefers these “on-the-ground” marketing campaigns to direct snail mail.

“Most of Omada’s retail industry customers don’t provide their employees with email addresses. But we refuse to throw up our hands and just churn out direct mail pieces that will wind up in the recycle bin. Instead, we run ground campaigns, like the one in the lunchroom, to build awareness. Then we encourage employees to send us a SMS. From there, we invite them to submit their email addresses and we’re good to go. The results have repeatedly exceeded our expectations. During a busy holiday season, we signed up 6x more participants than expected at a national retail chain.”

Omada enrollment: How many emails and how often?

In addition to the February 2016 blog post mentioned above, a training guide that Omada created for clients in Louisiana who use Blue Cross Blue Shield spells out a number of details around its enrollment tactics. Omada began working with BCBS Louisiana in 2014, so it’s possible the training guide is older than the 2016 blog post, but in any case, the details differ in each.

Here’s how Omada explains its email marketing campaigns in 2016:

At Omada, when we advise our customers to communicate persistently about reducing risk of certain chronic diseases like type 2 diabetes and heart disease, we get one predictable response: “We don’t want to over-communicate on this topic.” … Producers of processed food aren’t shy about telling the world to consume more of their unhealthy products… One of our best practices at Omada is to send a series of six beautiful email messages over the course of about four weeks. These emails describe elements of Omada’s products, outcomes that one can expect, experiences of delighted participants, and even give recipients that chance to “try out” some interactive features of our program right then and there. The result? Our conversion rate is 3x industry average.”

Omada’s Louisiana training guide has the numbers reversed: a series of four emails sent out over the course of six weeks. The guide also includes images of the emails, so if one of the two is a typo, it’s the six emails in four weeks — but I’d wager they evolved their tactics from four to six emails over that two-year period.

The subject lines of the four emails above are each very different from each other. They are as follows:

  • You’re Invited: New Program Available at No Cost to You
  • 3 reasons to try Omada
  • Play the Don’t Buy the Baloney Game
  • Take 3 mins: Prioritize Yourself

Omada has said that the majority of its customers start out wanting to take the lead on enrollment. They prefer to create their own communication materials because they argue they have a better idea of how to communicate with their employees. Omada doesn’t argue with that mindset, but the company has found that when it goes down that route with a customer it leads to a dead-end:

“But the practical reality is it’s not that simple. One telling symptom of this: every time we begin work on a communication campaign, the words ‘priority’ and ‘resources’ take over the conversation. Who will design the campaign? Who will write the copy? Who’s responsible for QA? How will the materials be tested? How much time will it take to produce the final materials? These questions invariably transform excitement about launching a terrific health benefit to gripes about how hard it is to get anything done.”

Omada also has found that its own enrollment tactics have driven “three times the number of employees in half the time” vs. a customer who tried to do it on their own at first.

Interestingly, Omada notes that customers often suggest rolling out Omada during open enrollment for health insurance instead of right away. Omada pushes back on this: “That wouldn’t be acceptable when the topic is a product launch, profits, or efficiency improvements. Why should we accept that when it comes to health?”

Livongo sees email marketing as key but encourages a combo that includes direct mail and an HR announcement:

Livongo Health has not shared as many details about the email marketing piece of its enrollment strategy, but it has made a number of general statements about it. Livongo has also discussed the opportunity enrollment presents for driving additional revenue for the company within existing customers. Like Omada, Livongo has discussed case studies that demonstrate its creativity when it comes to enrollment, but in Livongo’s case, it was a small innovation via direct mail. However, the most revealing insights Livongo has shared about its enrollment tactics are displayed in the chart above, which comes from a 2018 Livongo white paper.

As the chart shows, Livongo is not as flippant as Omada about the importance of direct mail. Livongo encourages its clients to help it market to potential participants via direct mailing, email marketing, and HR announcements. Enrollment rates are twice as high among customers who take advantage of all three channels, vs. those that rely solely on direct mailings, according to the company.

In a different case study, Livongo listed out the various marketing channels it uses: “marketing materials developed by Livongo, including emails, direct mailers, digital banners, posters, and table tents.”

Propeller Health has a similar more-is-more approach to marketing channels. The asthma and COPD-focused company has mentioned direct marketing via mailers, banner ads, emails, lab/clinic displays, web pages, SMS text messages, presentations, handouts, and social media ads.

In the months before Livongo went public, it shared a few details about its enrollment strategy in its S-1:

“We then use a variety of personalized and targeted marketing vehicles to notify potential members of their eligibility to enroll in the solution and encourage them to sign up, typically through a tailored combination of enrollment methods, which include email, direct mail, and company communications. We have extensive experience targeting and onboarding members, and we leverage our AI+AI engine to test and iterate messaging and channels in order to drive increasing results.

For example, when we have supplemented our outreach efforts with email, we have experienced a year-over-year increase of 38% in average enrollment rates for Livongo for Diabetes from 2017 to 2018, and when using direct mail outreach, we have experienced a year-over-year increase of 13% in average enrollment rates for the same period. We have also seen a 39% year-over-year increase in average enrollment rates for Livongo for Diabetes when using workplace communication channels to distribute information about our solution for the same period. We continue to spend significant time and effort improving the technology infrastructure of our enrollment process with automated features including pre-populating member and payor eligibility information to ensure that the member enrollment experience is frictionless, quick, and simple.”

The percent increases Livongo mentions above are a bit confusing, but they refer to the three different enrollment rates the company uses in its S-1. When Livongo has the optimal outreach situation, which I take it means it has email, direct mail, and an HR announcement, its enrollment rate for 2017 was 34 percent vs 47 percent in 2018. That’s a 39 percent improvement for the optimal outreach group of customers.

Among customers who only let Livongo use a limited mix of the three channels, the company had a 31 percent enrollment rate in 2017 vs 35 percent in 2018.

Finally, for the limited outreach group of customers, enrollment rates were 23 percent in 2017 vs 32 percent in 2018. Improvements across the board, but this is really just a cute way to show how effective Livongo’s enrollment practice is under the right circumstances.

Here’s how they summed up their average enrollment rate for 2018:

“At the end of twelve months, our average enrollment rate for Livongo for Diabetes clients who launched enrollment in 2018 is 34% of the total recruitable individuals at a client.”

While I don’t have any examples of Livongo’s email outreach that I can share, I have read a few sent from Livongo to an Express Scripts member. Livongo markets its diabetes prevention product to Express Scripts members using the PBM’s StepIn brand. Subject lines for these campaigns have included:

  • [Name], you need to see this transformation…
  • You don’t have to do it alone!

The email with the “transformation” subject line features the tried-and-true “before” and “after” set-up of a man who had reportedly lost a lot of weight thanks to the program, complete with the requisite photos side-by-side. The “don’t have to do it alone” email was from a registered dietician health coach who made clear the program wouldn’t cost the participant anything and it included one-on-one sessions with her.

One final detail about email marketing from Livongo: In its S-1, the company disclosed one reason its channel partnering prowess is such an advantage:

“We recently entered into an agreement with one of our channel partners that allows us to access all available emails from our joint clients, which provides us another pathway for member outreach and increased enrollment.”

For Livongo, enrollment rate accrues over a long time period

When comparing enrollment rates it would only be fair to ensure that the numbers are based on enrollment during the same set periods of time, but among the companies I researched, only Livongo gets into how long it can take to enroll. Its metrics are based on a 12-month period, but some of its case studies show a much longer timeline. This case study on Jefferson Health detailed the cumulative enrollment in Livongo’s program over a (longer than) two-year period. It took that long to enroll just over 150 people:

Livongo has explained that it can take 11 weeks from signing to launch a program with a customer. The length of an enrollment period varies by customer:

“For commercial clients, it’s typically two to three months after signing or in January of the following year if the contract is signed in the latter half of a given year. For health plans, the time to enrollment could begin six to nine months after signing, with a majority of them starting in either January or July. The final phase is the enrollment ramp. This is the 9-month period after launch when we see new members ramp on our platform. During this period, we have seen commercial clients of Livongo for Diabetes at 34% enrollment and some gradually increasing thereafter. For health plan and government clients, the enrollment percentages could be lower.”

Livongo’s innovative direct mail campaign: A cardboard cutout of its meter?

In November, Livongo shared details on an innovative enrollment project that focused on direct mailings to potential participants. Livongo’s marketing team used a behavioral economics tactic called the endowment effect, which describes how an individual who already owns something ascribes more value to it than someone who doesn’t own it. Livongo wondered if they could get a potential participant to experience the value of being in their program before enrolling in an effort to get them to enroll:

“The team set up an A/B experiment to test two different kinds of direct mail assets. Prospective members would receive one of these two marketing flyers in the mail, and our team would measure the response rate to see which piece performed better. As you can see here, the first mailer was a traditional tri-fold brochure that contained information about Livongo and our smart meter.

The second mailer contained a cardboard cutout rendition of our Livongo blood glucose monitor. On the back side was a sample Health Nudge that an actual member might receive on their Livongo meter. The idea here was to invoke the endowment effect by simulating what it would feel like for a person to own and use an actual Livongo smart meter. By helping them experience the value of the meter and the Livongo program, the individual would be prompted to enroll.”

Livongo said the cardboard cutout drove 35 percent higher enrollment than the regular brochure. Livongo now uses the cutout in all of its standard enrollment campaigns.

Enrollment rates: Omada, Livongo, Keas, Virgin Pulse

There aren’t any enrollment rate figures floating around, but here are a few touchpoints, including two already mentioned above:

  • Omada has said its enrollment rate is typically between 20 and 30 percent of an at-risk population (over no specific time period)
  • Livongo has reported a 2018 average enrollment rate of 34 percent for its diabetes customers
  • Keas, an employee wellness offering now owned by Welltok, typically enrolled about half of an eligible population (pre-Welltok), according to a former executive
  • Virgin Pulse has not shared an average enrollment rate, but one client, Timberland, said they had enrolled 67 percent of their employees in the program (Virgin hosts its enrollment materials and templates online here.)
6 min. read

FDA asks Congress for new SaMD pathway. Headspace $93M.

Paying Subscribers Only

It's a good one, too.
This digital health research is for paying Exits & Outcomes subscribers only. Subscribe now to read this article, get the weekly newsletter, and receive unrestricted access to past and future research from the Exits & Outcomes archives. Smash the link above or below to subscribe yourself -- or head over to our pricing page to subscribe your team or your whole company!

Issue 039. Get E&O weekly. | Subscribe

Digital health research from Brian Dolan.

Welcome to E&O.

Last week’s newsletter had a 53 percent open rate. Here’s what’s happening this week:

  • My first journalism job out of school was writing about the mobile industry, which has always centered on the big annual event, Mobile World Congress in Barcelona each February. If you haven’t heard, the event organizers canceled it at the last minute because of coronavirus fears. Curious how this plays out in the coming years — will epidemic-phobia crush the in-person meeting industry? (Travel industry pub Skift has a good piece on this if you’re interested.)
  • This overview of reimbursement for mental health apps by Dr. John Torous is worth a quick read. It covers the current status of reimbursement in US (brief mentions of international efforts), including a list of relevant CPT codes. Torous argues that prescription DTx fails to take advantage of the inherent scalability of app distribution. In the end, he calls for a new reimbursement pathway for apps instead of trying to “shoehorn” them into existing ones.
  • FDA granted “Breakthrough Device” designation to nQ Medical’s neuroQWERTY brain health software, which is “intended to characterize abnormalities in psychomotor performance and fine motor function by analyzing mechanical keyboard and touchscreen device interactions in adults with, or suspected of having, Parkinson’s Disease (PD).”
  • Law professors make the case that Congress should limit digital health companies’ ability to change their terms of service without getting a new opt-in from users. (via STAT)
  • No revelations in here, but Torreya just published a great snapshot of the current state of digital therapeutics.
  • Research published in Nature finds that walking vs sitting has an impact on wearable heart rate-sensing accuracy but skin tone may not: “Debunking speculations, at least for the wearable devices that we tested in this study, we showed that skin tone does not in fact significantly affect the accuracy of optical heart rate measurements.”
  • Oxford University spin-out Oxford VR raised $12.5 million in a Series A led by Optum. The mental health-focused DTx company will use the funds to expand its reach in the US. Related: Dr. Brennan Spiegel at Cedars wrote a book on VR in medicine set to publish this fall.
  • A recent presentation by the Digital Therapeutics Alliance’s European lead, Jessica Shull gets into regulation and reimbursement for DTx in the UK, Belgium, France, Germany, and a few of the Nordics. Shull notes that France is currently reimbursing for two DTx products and Belgium has set-up a regulatory pathway for DTx to get into the market with reimbursement. Skip to 16:45 in the video here.
  • Where are they now: Stephen Friend — who is believed to have helped Apple create HealthKit, ResearchKit, and CareKit during his two years there — is now building on that work by running a non-profit called 4YouandMe: “We are actively developing research cohorts around the world to understand the feasibility of connected digital tools including mobile phone apps and wearable devices to detect and track stress and individual symptom trajectories of disease.”
  • The founder of Canadian health tech startup (e-referral platform) ConsultLoop, wrote a post about why they failed.
  • Finally, a reader pointed out that the Google founder quote I included last week (the one from 2014 about maybe someday receiving notifications when medical researchers use data from our medical records) actually got a mention in Politico at the time, but that publication weirdly removed the sentence about patients getting notified and added an ellipse instead. Please hold me to this: E&O will never censor Google founders’ health-related daydreams.

Did this get forwarded to you? You can sign up as a paying subscriber and get full access to E&O by clicking here and then clicking just another time or two after that.

FDA asks Congress for a new SaMD pathway

The FDA’s proposed budget for 2021 is a good resource for getting a better sense of what the agency hopes to focus on in the year ahead as well as to discern any requests beyond appropriations that the agency may want to be sure to get in front of lawmakers.

For example, last year, the FDA asked for $55 million to build a platform that would help the agency better monitor safety issues related to medical devices throughout their entire lifecycle, including for postmarket adverse events and via real-world evidence. This year the FDA is asking for just $18 million to help bring that portal to fruition. Important to remember: these numbers are just budget requests, not actual allocations.

The other section of the FDA’s 2021 budget proposal that caught my eye was focused on AI. The agency is asking for $5 million and 10 new full-time employees to help it build out more resources around AI. The FDA seems to want the funding to develop technical standards as well as to promote the development of better UI. (Read more on page 186 here) The ask is a bit vague, but here are two sentences from the proposal that sort of capture what FDA is trying to do:

“To encourage breakthroughs in AI technologies in healthcare, it is critical that we develop appropriate technical standards and reduce unnecessary barriers.”

“FDA proposes building on the Agency’s Digital Health Center of Excellence by creating a program that focuses specifically on advancing and promoting the development of consumer-friendly AI/digital health medical devices through improved device-user interfaces.”

Here’s what I found most interesting: The FDA added a new proposal to its catch-all section of “Other Proposals” that wasn’t included in last year’s budget proposal: And its focused on SaMD. Obviously, the FDA has been sharpening and refining its approach to regulating software as a medical device for nearly 10 years. The FDA seems ready to help Congress create a tailor-made, digital health pathway now, which would mean no more trying to retrofit SaMD into decades-old medical device regulations.

Read the excerpt below and let me know if I’m reading this right: Is this a call to Congress to grant it the authority to implement Pre-Cert beyond the pilot stage?

“Establishing a Regulatory Framework for Digital Health Medical Devices Regulatory pathways under current authority do not promote flexibility for FDA to optimally regulate emerging technologies. This is exemplified in the digital health space, where the current statutory framework for regulation of medical devices is not well suited to the faster cycle of innovation, iterative design and development, and validation approaches used for digital health devices. FDA proposes establishing a framework that would allow FDA to tailor and apply the appropriate requirements for the reasonable assurance of safety and effectiveness for a software as a medical device product based on the risk of the product and throughout the product lifecycle.”

That’s the entirety of the proposal, but you can see it in context on page 37.

SensorTower: Headspace’s DTC global revenues and downloads are second only to Calm’s

Headspace raises $93M (debt and equity) for international expansion, digital therapeutic push

Headspace raised a $93 million Series C round this week, which included $40 million of debt capital. The $53 million equity portion was led by blisce/, which is the family office fund from French entrepreneur Alexandre Mars. Waverly Capital, a media industry-focused fund led by Edgar Bronfman, Jr., the former CEO of Warner Music Group, also contributed along with Times Bridge, the venture arm of Indian media company, The Times Group of India.

Times Bridge will help Headspace expand in Asia after big launches in Europe and Latin America in recent years.

As the chart above shows, direct-to-consumer meditation apps now drive significant revenues, and according to SensorTower, Headspace is only second to Calm in terms of downloads and revenue generated. As I noted in a newsletter issue a few weeks back, one of Calm’s investors shared revenue numbers for the company as of September: “$7m in 2016, $20m in 2017, $80m in 2018 and an estimate of $150m in 2019.” The 2019 figure was an estimate based on the first three quarters of that year, but if those numbers are accurate and the chart above is accurate it leaves a much smaller revenue share (less than $45 million in 2019?) for Headspace.

Headspace has at least three business models that it is currently pursuing: direct-to-consumer (Headspace), employer benefits (Headspace for Work), and prescription digital therapeutics (Headspace Health). Here are some other metrics the company shared along with its funding announcement:

  • The company has been DTC from the very beginning and it says it has more than 62 million downloads to date in 190 different countries.
  • More than 2 million users are paid subscribers.
  • More than 600 employers are customers, including Starbucks, Adobe, Hyatt, and GE
  • Revenue for Headspace for Work doubled y-o-y between 2017-2018 and 2018-2019

Quick links to E&O research reports

The links below aim to make it easier for paying subscribers to find the long-form research reports on the E&O site:

The Omada Health Report (Subscribers-only Link)
The Google Health Report (Subscribers-only Link)
The Pear Therapeutics Report (Subscribers-only Link)
The AliveCor Report (Subscribers-only Link)
Apple’s Healthcare Work Experience (Subscribers-only Link)
Approximating Livongo’s S-1 (Subscribers-only Link)

That’s a wrap on Issue 039 of Exits & Outcomes. Had a number of calls with subscribers this week, please don’t hesitate hit reply if you ever want to chat.

6 min. read

Google’s EHR patient notification idea. Bayer-One Drop. Novartis-Pear.

Paying Subscribers Only

It's a good one, too.
This digital health research is for paying Exits & Outcomes subscribers only. Subscribe now to read this article, get the weekly newsletter, and receive unrestricted access to past and future research from the Exits & Outcomes archives. Smash the link above or below to subscribe yourself -- or head over to our pricing page to subscribe your team or your whole company!

Issue 038. Get E&O weekly. | Subscribe

Digital health research from Brian Dolan.

Welcome to E&O.

Last week’s newsletter had a 60 percent open rate. Here’s what’s happening this week:

  • Welcome to all the new readers! Spikes in subscribers are always attributable to current readers mentioning E&O on Twitter or forwarding these newsletters to their smartest, most-accomplished colleagues. So, thanks for doing your part to spin this here flywheel with me…
  • Lots of great calls this week with current subscribers about trends in digital health (as well as conversations about ways to deepen and expand E&O). One particularly succinct line I heard sums up the tension digital health will have to navigate this decade: “There is no precision medicine without surveillance.” ‘Shivers down the spine’ kind of one-liner.
  • Speaking of surveillance, Google Health has yet to reveal a health-sensing, Nest-branded device (yet) — like the stealthy project I covered in-depth in The Google Health Report — but the business unit continues to eke out its provider-facing strategy and it’s sharing more about it via short YouTube videos with Google Health head Dr. David Feinberg. In this latest one, Feinberg makes the case for how searchable medical records might benefit patients.
  • Related: I believe this on-stage interview back in 2014 was the first time Google’s founders discussed the “searchable EHR” opportunity (since shutting down the original Google Health years before). Here’s Larry Page in 2014: “Imagine you had the ability to search people’s medical records in the US and that any medical researcher could do it. Maybe they have the names removed. Maybe when the medical researcher searches your data, you get to see which researcher searched it and why. I imagine that would save like 10,000 lives in the first year.”
  • The FDA cleared Eko Devices’ AFib and heart murmur suite of algorithms, which work in tandem with the company’s smart stethoscope device. Eko just announced that the FDA had granted breakthrough device status in January.
  • Following its GreatCall acquisition a few years ago, Best Buy is looking to hire a Boston-based Director of Data Science to help it continue to build out its digital health products for seniors that include “wearable and IoT sensors to track activity, detect emergency events, and assess the current and future physical and mental health of seniors.”
  • CVS-owned Aetna is looking to hire an executive director for its Mental Wellbeing organization, which is working to augment in-person provider networks with digital services. The job ad offers up “expanding virtual care and digital therapeutics options” as one tactic the yet-to-be-hired strategist might consider.
  • AppliedVR and UCSF announced a joint research project “to identify barriers and facilitators to digital therapeutics, including VR treatment from AppliedVR, for vulnerable populations such as Medicaid patients.”
  • ICON posted a worthwhile whitepaper that includes high-level perspectives from ten payers (health plans and PBMs) on digital therapeutics. According to those interviewed, surprisingly, digital health formularies seemed to be three to five years away from adoption. That said, they believed they had the resources in place to launch one within 12 to 18 months.
  • Bunny Ellerin’s annual healthcare venture capital in the state of New York report is out this week — read it here.
  • Mercer published results from a massive global survey that found 68 percent of employers plan to invest more in digital health offerings over the next five years.
  • Finally, the AMA published survey results on physician adoption of digital health — an update to its first such survey from 2016. It found, among other metrics, that physician adoption of virtual visits has doubled from 14 percent to 28 percent during the three-year period.

Did this get forwarded to you? You can sign up as a paying subscriber and get full access to E&O by clicking here and then clicking just another time or two after that.

Why didn’t Bayer just buy One Drop?

On his podcast, This Week in Startups, angel investor Jason Calcanis asked One Drop CEO and Founder Jeff Dachis the question in the headline above. Bayer made a $20 million contribution to the startup’s Series B round in September. Why not just acquire the company outright? (As part of that deal, Bayer also inked a $10 million licensing agreement with Bayer.)

As you might expect, Dachis didn’t really answer the question about a Bayer buyout, but, maybe more interestingly, he explained the origins of the relationship and a little bit about how One Drop might fit into Bayer’s digital strategy:

“First, there is a personal relationship. [Stefan Oelrich], the [chief] of Bayer’s Pharmaceutical Division used to be the [head] of Sanofi [Diabetes], the French pharmaceutical company’s diabetes unit. I’d been doing work with Sanofi for several years now, and their teams, so [Oelrich] and I developed a personal relationship. He was at Bayer, went to Sanofi, then went back to Bayer as the [chief] of Bayer Pharmaceutical. When he shifted roles, I started talking to him about what we could do together. We kept our energy and rapport going and that was sort of the seed and germination of how we were able to get there with the Series B.”

“And then, as [Bayer] was working through their strategy about ‘what do we want to do in digital: Do we want to be doing digital therapeutics inside each — as a companion to every drug that we have? Or do we want to have a broader digital platform that could focus on health and wellness for people? Or?’ So, they’re working through their strategy and I just said, ‘Hey, I think we could fill a very big chunk of your strategic hole, if we can work together.'”

“So that’s how the Series B germinated. It was an investment and then there was a huge commercial licensing agreement that they did with us.”

The whole conversation is an hour-long and covers a lot about One Drop’s business — watch the video version of it here on YouTube.

Novartis highlights partnerships with Verily, Pear Therapeutics in its 2019 annual review report

In the “data science and digital technologies” section of its annual review report (page 24), Novartis highlighted its partnerships with Alphabet/Google’s Verily and Pear Therapeutics. The pharmaco also wrote that it has now “collected approximately 2 million patient-years of data through our clinical trials alone,” and it’s building much of its digital strategy on this “data asset”.

Here’s how it summed up its “alliance” with Verily:

“Verily has built a platform that fosters the testing of patient-centric, technology-enabled research approaches. Initially, we’re using it to test digital recruitment for clinical trials. Pharmaceutical companies have historically relied on doctors at a limited number of sites to identify participants for clinical trials. We might be able to improve patient participation in research by connecting with them in new ways, including through online health registries.”

Novartis also noted its work with Pear on a digital therapeutic to treat depression among patients with MS, but hinted the therapeutic could be used with other patient populations, too:

“[Pear and Novartis are] working together to design and test a prescription digital therapeutic to treat depressive symptoms in patients with multiple sclerosis, a project with potential applications in other diseases.”

Finally, Novartis said it had digital ambitions across its portfolio of therapeutics:

“We’ve started to convene agile teams of digital experts to identify and prioritize risks and opportunities for each molecule during development and for clinical care. In 2019, we examined the possibilities for our most promising assets, including CFZ533 (iscalimab), an experimental immunomodulatory therapy with the potential to make kidney and liver transplants durable. And we plan to routinely take this approach in the future.”

Tracking the lay-offs: Proteus Digital Health headcount down by 80 since October

Swedish biopharma Orexo to launch two GAIA DTx products in the US over the next three years

Based on a presentation Swedish biopharma Orexo gave at the end of 2019, it expects to commercially launch the first digital therapeutic to come out of its partnership with GAIA as soon as this year.

GAIA and Orexo are developing two DTx offerings: OXD01 for opioid use disorder (OUD) and OXD02 (branded as “vorvida”) for alcohol use disorder (AUD). Orexo has a global license to GAIA’s OUD DTx, but plans to launch it first in the US in 2022. It expects to launch the AUD DTx (which it only hold a US license for) as soon as this year or next. The companies are planning a discussion with the FDA to determine whether the AUD DTx will require an additional study before it can secure market authorization from the agency.

Read through the presentation here (slide 7 is dedicated to DTx products).

Quick links to E&O research reports

The links below aim to make it easier for paying subscribers to find the long-form research reports on the E&O site:

The Omada Health Report (Subscribers-only Link)
The Google Health Report (Subscribers-only Link)
The Pear Therapeutics Report (Subscribers-only Link)
The AliveCor Report (Subscribers-only Link)
Apple’s Healthcare Work Experience (Subscribers-only Link)
Approximating Livongo’s S-1 (Subscribers-only Link)

That’s a wrap on (the actual) Issue 038 of Exits & Outcomes. If you’re especially attentive to detail, you likely noticed last week’s issue was mislabeled as “Issue 038” when it should have been “Issue 037”. E&O regrets the error.

20 min. read

The Omada Health Report

In this article:

Omada Health is widely expected to go public later this year. In anticipation of the company’s S-1 filing, E&O has put together this 5,200-word report, including year-over-year growth in participants, estimates for annual revenue figures going back to 2015, which medical conditions the company could target next, and much, much more.

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I first met Sean Duffy — the health entrepreneur, not the US congressman — at TEDMED 2009. That was the year the founder of TED helped resurrect the medical version of his famed event after a long hiatus. Duffy and I were there for the same reason: He was writing for Medgadget (and he had just started as an MD-MBA candidate at Harvard). I was finishing up my first year as co-founder of MobiHealthNews.

Packed with celebrities, TEDMED had a circus-like atmosphere. Martha Stewart gave a poignant talk about her time in prison. Magician David Blaine taught attendees how to hold our breath for 17-minutes. Even the real Patch Adams bounced around the event’s venue. It was surreal.

While I was probably on minute two of a Blaine-sanctioned, breath-holding exercise, Sean Duffy was in the shrimp cocktail line. He was having — what would turn out to be — a life-changing conversation with Dennis Boyle, founding member of renowned design firm IDEO. That conversation led to a summer internship at IDEO that grew into a year-long gig. Ultimately, Duffy dropped out of Harvard to pursue Omada Health, a startup idea he developed as a skunkworks project while at the design firm.

Omada Health’s Origin Story

Boyle tasked Duffy and another IDEO colleague, Adrian James, to use IDEO’s human-centered design principles to take a clinically-proven, in-person intervention and translate it into a digital program that had a focus on preventing chronic disease. Stanford University’s Byers Center for Biodesign has an excellent case study on the origins of Omada, and it explains how Duffy and James applied IDEO’s frameworks to develop the technical and business cases for the potential startup.

After a few weeks of research, Duffy discovered the landmark NIH-backed Diabetes Prevention Program (DPP) study from 2002:

“Duffy and James were impressed by the effectiveness of the behavioral interventions in the DPP. Even more importantly, they knew they had found the clinical evidence base from which they could begin to address diabetes prevention. ‘We could imagine an online version of the coaching and guidance provided in the DPP trial that would leverage human-centered design and digital technology. But we wouldn’t have to prove the value of those interventions. We wouldn’t have to run our own randomized controlled trial to have a starting point,’ remembered James. Instead, they could use the compelling results from the DPP as a foundation from which to build in both developing their offering and driving its adoption.”

Omada Health went on to join Rock Health’s very first accelerator class — back when the venture capital firm was a non-profit. Omada has come a long way since. It remains one of the few success stories from those early days of digital health. This report aims to chronicle some of Omada Health’s accomplishments. In these pages we’ll cover:

  • Omada Health’s Growth Metrics
  • Omada Health’s Investors and Funding
  • Omada’s Current Product Line-up
  • Omada Health’s Business Model
  • Operational Innovation
  • Omada Health: Digital Provider
  • Omada’s Approach to Regulators
  • Medicare’s Big Mistake
  • Omada’s Evidence Generation Strategy
  • Omada’s Competition
  • What’s Next for Omada?

Omada Health’s Growth Metrics

Like most private companies Omada Health shies away from sharing financial numbers, but it frequently shares the cumulative number of participants that have gone through its programs. Using this data as a starting point, I’ve put together estimates for the company’s annual revenue figures, but these carry a few important caveats, as discussed below.

In the business model section below, I’ll discuss details on how Omada prices its programs as well as when and how it bills payers. It’s important to know that Omada bills per actual participant. In its prevention programs, Omada only bills for a given month for three types of events: when the participant has enrolled, if they have engaged with the program up to a certain threshold that month, and based on the percentage of weight the participant lost that month.


An important caveat to keep in mind with the estimated annual revenue figures in the chart below is that I calculated revenue per participant and accounted for it in its entirety for the year in which they enrolled. That means if a participant started in December of 2018, my numbers show revenue from that participant in the 2018 figure, instead of the 2019 figure where most of it likely booked since Omada charges on a monthly basis. Therefore, an unknown (but possibly significant) amount of revenue should be shifted to the year ahead.

I’ll be interested to see how these numbers compare to the official ones Omada releases in its S-1, if it decides to go public this year. That document will only include the two most recent years of financial data, however, which won’t show the company’s slower-growth years in 2016 and 2017. They would show the 2018 numbers but only in comparison to 2019, which would point to high-growth:


The other assumptions built into the estimated annual revenue numbers above come from the scant details the company has shared about how it prices its various programs.

Up until 2019, Omada only offered programs that were permutations of its core prevention offerings, so the pricing was assumed to be the same on average for all participants those years.

Starting in 2019 Omada began offering additional programs, including one for managing Type II diabetes that operates on a per member per month model instead of Omada’s outcomes-based model. I kept the calculations above simple by applying the same average pricing across all participants.

A few of the key pricing (and other) numbers Omada or its customers have shared over the years:

  • a range of $650 to $800 per participant that completes the program
  • an employer referring to the cost of the free-to-the-participant program as $600 to entice enrollments
  • a stat that implied 10,000 enrollments was worth $6.5 million in revenue between 2015 and 2017
  • finally, Omada has often noted that about 80 percent of participants complete the program
  • while it doesn’t factor into these models because we have participants numbers, worth noting that Omada once said their enrollment rate for most at-risk populations is between 20 and 30 percent, which is high.

I put together a few different simple models based on the relevant metrics above, including:

  • a straight $600 times the number of net new participants each year
  • another that assumed 80 percent of  net new participants completed the program for $725 each + remaining 20 percent only triggered bills between $140 and $420 based on one to three months of engagement

If you can ballpark those, you can tell these various models yielded relatively similar annual revenue figures. As mentioned before, the important caveat here is that participants trigger billing events every month, so attributing the entirety of their revenue as booked during the year they enrolled is sure to lead to time-shifted dollars that will be at odds with Omada’s actual books. Directionally, however, these numbers help us better understand the company’s narrative so far, and I’ll refer to the estimated annual revenue chart throughout the report below.

Employer customer growth: 2019 was clearly a breakout year for Omada Health as it went live with an expanded relationship with longtime partner Cigna that essentially made it a covered benefit available to any employer customer who worked with Cigna. Omada said it started 2019 with a little more than 400 employer customers, topped 550 by mid-year and at the beginning of 2020, it crossed the 1,000-mark.

Headcount growth: Omada’s team has more or less doubled in size over the past two years. In 2018 Omada’s headcount grew from about 218 at the beginning of the year to 273 by year’s end, based on LinkedIn data, which often includes advisors and part-timers, too. That made for a 25 percent year-over-year jump. Last year brought the company up to about 398 employees, which marked a 45 percent year-over-year growth.

Omada tends to add a higher number of new employees between December and January, which is why it is already up over 425 employees in 2020, according to LinkedIn. Omada does not publicly discuss the number of coaches it has on hand, but it does stress that it believes in a high-touch service that relies on real live coaches more than its competitors. LinkedIn data shows about 144 coaches work at Omada, but that assumes all coaches have the title “coach” and all their coaches use LinkedIn.

Omada Health’s Investors and Funding

Omada has raised at least $199.5 million over the course of eight rounds of funding, including its most recent — a strategic and undisclosed investment from Intermountain Ventures. Prior to that Omada Health closed a $73 million Series D in mid-2019. Omada’s list of investors is lengthy but it also includes Andreessen Horrowitz, Norwest Venture Partners, Kaiser Permanente, Cigna Ventures, Sanofi Ventures, Civilization Ventures, Providence Ventures, Wellington Management, Vertical Group, Founder Collective, NEA, TriplePoint Capital, Kapor Capital, Rock Health, dRx Capital, GE Ventures, and more.

Early days for digital health funding: USVP’s General Partner Dr. John Root led Omada’s Series A round, which was announced in March 2013, but Root invested before Omada had figured out its business model. Duffy has said that the best seed investors bet on the problem and the team. Duffy also said that when Omada was first raising money, few investors had an appetite for digital health startups. Life sciences-focused investors wanted to see a startup’s monopolistic IP, while tech-focused investors couldn’t get over how long it would take to generate an evidence base via clinical trials. Omada’s earliest investors usually were from either healthcare or tech but had already dabbled a bit in the other sector.

Omada’s Current Products

Omada’s core offering is its digital diabetes prevention program (DPP), which it launched in 2012. In the early years this program was called simply Prevent, but now Omada refers to it as “Omada for Prevention”. Since weight loss is beneficial to preventing a number of metabolic diseases, by 2015 Omada also marketed its prevention program to people with high blood pressure, high cholesterol, as well as metabolic syndrome. At times the company swapped in other conditions or names for the same ones, like high blood sugar instead of prediabetes, high blood fats instead of high cholesterol, and obesity instead of metabolic syndrome.

By the end of 2018, the mix of conditions and preconditions that Omada mentioned on its homepage changed to include, prediabetes, Type II diabetes, hypertension, and high cholesterol. It wasn’t until the beginning of 2019 that Omada launched its behavioral coaching for people with Type II and with hypertension. These programs maintained the general structure of the original Prevent, but they are billed on a PMPM basis instead of on an enrollment plus outcomes-based model.

At the end of 2019, Omada began to integrate more sophisticated cognitive behavioral therapy content into its programs, which it licensed from Lantern. These interventions added mental health support to participants in its various programs, but they also would lead to a dedicated mental health intervention offering that Omada is likely to take the wrapper off soon.

Omada Mind, which includes programs focused on anxiety and depression, marks the first fully separate program that breaks away from Omada’s original Prevent model. As a result, the Omada Mind service comes with the first new app from Omada since the company’s original one. A key difference between Omada Mind and Omada’s other programs is that Mind does not appear to include a group feature, it’s just the participant and a coach in this program. It’s unclear how the business model for Omada Mind will work but it is likely PMPM.

Five programs as of January 2020: In summary, the company’s current and (soon-to-be-announced) offerings include: Omada for Prevention, Omada for Type II Diabetes, Omada for Behavioral Health, Omada Mind, and Omada for Hypertension. The company has described Omada for Behavioral Health as an “Intel-inside” digital intervention that it embeds into its various programs.

Key features of Omada’s core prevention program:

  • Omada’s prevention program includes an intensive 16-week lifestyle change program, based on CDC’s curriculum for diabetes prevention. It includes instruction on diet and exercise as well as guidance for sleep and stress management along with lessons on breaking unhealthy habits and avoiding triggers. When it comes to dieting, the program focuses on positive psychology to help encourage participants to eat more of the healthy foods they already like to fill up vs. focusing on cutting out unhealthy foods.
  • Following this 16-week program is an ongoing maintenance program designed to sustain these lifestyle and behavior changes.
  • Participants are put into a peer group of between 18 and 24 other participants, who are matched based on BMI, location, and age. While the group members do not compete, they can see a progress bar for how close each member is to the shared weight loss goal of 7 percent of their body weight.
  • Each group is led by a professional coach who has been trained by a Diabetes Technical Training Assistance Center Master Trainer.
  • Each participant is sent a weight scale with cellular-connectivity embedded so that the device is already set-up and sending data to the participant’s account right out-of-the-box. Participants also receive a pedometer.
  • Finally, the participants complete lessons on a weekly basis but asynchronously. They have continuous access to message their coach.

Omada Health’s Business Model

Omada’s founders spent the first year of the company better understanding how dollars flow in healthcare and wondering why disease management companies and other health-related companies sell into employers using a per employee per month (PEPM) model.

Omada’s early assessment of the legacy/incumbent business model: Historically, those models would contract something like 30 cents per employee per month for an employee population of 1 million. That business model misaligns the service provider with the payer, however, as it misaligns the revenue model and the cost of goods. In other words, as more employees sign up, the service provider’s margins are compressed. It sets up a perverse incentive to get just enough employees to sign up to make the numbers work and keep the payer relatively happy with the enrollment figure, but not so many it hurts the service provider’s profits.

“We are in a neat moment in digital health where, because of the data you can collect from these interventions, you can create new business models.” — Sean Duffy, 2017

Omada’s first innovation was to only bill when participants enrolled in the program, engaged in the program, or lost weight from the program. Furthermore, the company says if a participant only enrolls and engages but does not lose weight, Omada turns no profit from that participant. All of Omada’s upside is in helping the participant lose weight, the fees from enrollment and engagement only cover Omada’s costs. One reason Omada charges an enrollment fee at the start of the program is each participant receives a cellular-enabled weight scale, which the company says costs under $100.

In the best-case scenario, 55 percent of the revenue from a participant who loses a significant amount of weight in Omada’s prevention program accrues to Omada’s profit margin, while the remaining 44 percent of the revenue from that participant covers the costs of their participation. Omada charges a monthly fee based on the percent of weight lost, which Omada has said averages around 5 percent for the participants who complete the program.

A key benefit of Omada’s model over PEPM is that the company can calculate exactly how much more revenue it could bring in if it helped a particular participant lose an additional percentage point of weight. This aligned incentive pushes Omada to find ways within that budgeted revenue to nudge the participant toward success.

CPT 0488T: First digital health billing code from American Medical Association: Omada Health was instrumental in convincing the AMA to create a digital-specific CPT code, 0488T, for billing claims from digital diabetes prevention programs. Digital providers are currently excluded from Medicare reimbursement for diabetes prevention programs, but the CPT code above is helpful in streamlining payment from commercial payers based on pricing and contracts negotiated between them and Omada — as well as other DPP providers. In September 2019, Omada said it has sent 500,000 billing claims to commercial payers since it started filing claims in 2013. 

Self-pay: From the very beginning Omada Health decided it would not be a direct-to-consumer weight loss company. However, Omada Health has always offered the option to self-pay for its prevention programs, which started out at $120 a month for the first four months in the early years, but now run $140 a month for the first four months followed by $20 a month thereafter for the maintenance phase of the program. Omada has said it only offers this program to either help people who switch jobs but want to stay in the program or to allow significant others to join to go through it with their partners.

Operational Innovation

More than anything else, Omada Health prides itself on what it calls “operational innovation”. One clear example of operational excellence is the company’s ability to pull off its complex digital programs, as Duffy explained in an interview once:

“On the product side, and the operational side, we have a very intricate operational model by design, because we think it’s the right experience for the person. But I don’t think there’s another company that I know of out there that literally matches people up, mails them equipment, bills it, makes sure it’s registered to the right person, deals with hardware, supply chain, a warehouse, gets it there on time, launches people on Sunday, makes sure there’s a coach that’s trained and available, balances forecasting capacity, has a code that’s on a clock base where each week something changes, packages that are mailed. It’s very intricate.”

Omada’s other key operational innovation may have been more difficult to execute: It’s clear from the number of net new participants in Omada’s programs that the company’s growth slowed between 2016 and 2018. In 2017, the slowing growth is what led Omada to announce its only round of layoffs in the company history.

Part of what caused the stagnancy those years was a change in strategy. From 2013 until 2016, most of Omada’s revenue came from direct contracts with self-insured employers, but the company understood that employers’ HR departments generally did not have the staff or budget to maintain direct contracts with more than a few vendors. Starting in 2017 Omada began to focus more on setting up relationships with health plans and other channel partners to remove the sales friction from selling into employers. While it was easier now for employers who worked with the health plans and TPAs Omada Health contracted with, it was unusual — and still is — for a digital health company to have an NPI and file claims just like it was an in-person provider. The transition may have led to slower sales in the near-term, but the strategy helped propel Omada’s gains in 2019.

“I do think that health plans, three or four years out from now, will have contracting groups that setup in-network relationships with in-person providers and they will have contracting teams that setup with digital providers. We are not there yet. We had to jury-rig it like that scene in Apollo 13.” — Sean Duffy, December 2019

Omada Health: Digital Provider

Over the years, Omada has described itself in a variety of ways:

  • 2011: “Among the first to apply the principles of social networking to the legitimate clinical treatment of a disease”.
  • 2015: “The pioneer of the emerging category of digital therapeutics.”
  • 2018: “Weirdly, the best way to think about Omada is almost as a digital hospital for early metabolic disease”.
  • 2020: “A digital care provider.”

NPI since 2013: Despite its morphing marketing language, Omada Health has had a National Provider Identifier (NPI) number since 2013. It’s officially listed as a “health educator”. NPIs are a standard created under HIPAA and they make it easier for providers to bill for services without giving away any potentially PHI sensitive information about which services the provider specializes in. As such, Omada Health has operated as a covered entity under HIPAA as defined by 45 CFR 160.103 since its founding.

Growing into digital provider from digital therapeutic: Omada Health described itself as a digital therapeutic company back when it was wholly focused on diabetes prevention. When it had one specific protocol and one specific clinical outcome that it published clinical research against, that moniker fit. As Omada has evolved to help provide care for more diverse patient populations, like people with Type II diabetes, by creating personalized pathways based on where they are at clinically, the company believes that isn’t too different from what a provider might do for a patient with Type II diabetes who walks into the Mayo Clinic.

High touch and patient-centric: Omada has also increasingly referred to seeing itself as a provider when it stresses the importance of how high touch its programs are and how important real-live coaches are to its programs vs. automated scripts.

It also often mentions its provider identity when the question of who owns the data in its servers. Omada actually changes its terms of service in 2018 to make clear and confirm that every Omada participant owns the information they supply to Omada or that Omada collects about them with their permission. The company said such a stance is just part of being a provider.

Even the FDA’s head of digital health Bakul Patel noticed Omada’s evolution and hinted at the company’s regulatory status with the agency:

“If you think about the folks like Google and Omada Health and others who have not really been in this space and purely [been] in general wellness, are now moving quickly into [the] medical device space, and how do you sort of provide a path for them so they can actually deliver products, bring that innovation to healthcare that we all [hope] for?” Bakul Patel, FDA, October 2017

Omada’s Approach to the Regulators

In 2016, Duffy wrote that three things Omada Health had committed to since its founding were to gather evidence, embrace incumbents, and make nice with the regulators:

“We insisted on proactively engaging policymakers that set the rules of the road for our industry. This meant understanding how regulations that were written before the advent of digital healthcare would apply to a new company during the greatest upheaval of the healthcare system in a generation. It also meant educating regulators on where we fit within that changing landscape.”

Omada Health has been an active participant in Washington’s discussions about the future of digital health. As noted above, the FDA has tracked Omada’s evolution from a prevention program into a digital provider. Omada has actually registered its weight scale with the FDA as a Class I medical device for years — likely as a prerequisite for filing billing claims on it. Omada has weighed in on the FDA’s Pre-Cert program, its hands-off approach to General Wellness devices and apps, as well as its oversight of clinical decision support software.

In addition to the FDA, Omada Health has worked closely with the CDC on its certification process for diabetes prevention programs, and it has participated in policy discussions around information blocking, HIPAA and more with ONC and the HHS Office of Civil Rights.

Since Omada has been operating as a digital health company longer than most, a key theme across much of its policy work and commentary is to encourage various government agencies to coordinate better when it comes to policy that relates to digital health. For example, why should CMS re-evaluate what standards should be for diabetes prevention programs if the CDC has already worked for years to establish them?

Medicare’s reimbursement of the DPP — and digital programs’ exclusion from that reimbursement — might be the policy issue that Omada has spent the most time and lobbying dollars on to date. More on that below.

Medicare’s Big Mistake

During the Obama administration, specifically on March 23, 2016, HHS Secretary Sylvia Burwell announced that Medicare would begin the process of reimbursing providers for delivering the diabetes prevention program to at-risk beneficiaries. The plan was to reimburse for both in-person and digital programs. The day of the announcement, Duffy wrote:

“Today’s news is also hugely important for our company and our mission of inspiring and enabling people everywhere to live free of chronic disease. As the largest CDC-recognized DPP provider in the United States — in-person or digital — our data set on the engagement and weight loss outcomes of more than 50,000 participants in all 50 states can be a valuable resource as CMS implements this new benefit. Omada Health’s Mike Payne, Chris McGowen, and the public policy team have already [held] multiple conversations with CMS about how seniors will integrate a digital diabetes prevention benefit into their daily routines, and how programs can be designed to get optimal results for those over 65.”

By May 2016, Omada Health had posted a job opening for a Senior Manager of Medicare Development.

However, when the Trump administration took office in 2017, the new leadership at HHS and CMS reviewed the plans to reimburse for DPP. By July 2017, CMS proposed that the reimbursement program should not include digital or virtual programs. Since the original DPP study did not include digital programs, CMS argued they did not have the statutory authority to include them in the reimbursement policy. The new leadership also had concerns about providing potentially valuable devices, like cellular-enabled weight scales, to Medicare beneficiaries as incentives to sign up. CMS also raised concerns around fraudulently billing for weight loss not verified by an in-person coach.

In August 2017, Duffy wrote:

“In the July 13 rule, CMS proposed only making in-person DPP providers eligible for reimbursement, despite enormous evidence that virtual providers can achieve equal, or even better, results with senior populations. In addition, CMS’ sister agency, the Centers for Disease Control and Prevention, has been recognizing digital programs for more than two years while also collecting data demonstrating these programs’ effectiveness.”

Initial enrollment numbers showed that only 202 Medicare beneficiaries had participated in the new MDPP program during its first calendar year of availability, from April to December 2018. About 400 beneficiaries were enrolled during the first quarter of 2019 — a far cry from the 110,000 people the MDPP had hoped to reach during its first year.

According to lobbying records, Omada Health spent $215,000 in 2017 to lobby Congress and HHS to expand the diabetes prevention program to include digital providers. The company only spent $8,000 on lobbying in 2016, and it didn’t spend any direct dollars in 2018 or 2019. Since 2017, Omada’s lobbying strategy has focused on joining and working through advocacy groups instead of going it alone.

CMS made a promise to announce a path to reimbursement for digital providers by the end of 2017, but the agency has not made good on it. Additionally, because CMS has excluded digital DPPs from becoming Medicare suppliers, administrators of Medicare Advantage plans are hesitant to offer digital DPPs to their beneficiaries, too. Omada and others have argued that allowing Medicare Advantage plans to offer digital DPPs would be one way to help build the evidence base that digital DPPs will work for the broader Medicare population in the future.

Coincidentally, this Medicare saga hit Omada Health during its difficult and pivotal year — 2017. It had just announced a small round of lay-offs (about 20 people) and was quietly working to re-jigger its sales team to move away from direct contracts with employers to focus on health plans and billing like a true provider.

Omada’s Evidence Generation Strategy

As mentioned above, Omada Health exists because the founders discovered the results of the 2002 Diabetes Prevention Program, a randomized control trial that included 3,000 people with diabetes and showed that a high-touch, in-person lifestyle and behavior change program (similar to Omada’s digital version) could help prevent the onset of diabetes better than a placebo or a medicine, Metformin. At a high level, Omada’s genesis is somewhat similar to Pear Therapeutics’ strategy of acquiring digital interventions that have already proven themselves via an RCT.

The chart below is a bit dated as it was created in 2017, but it’s a helpful visual to better understand Omada’s evidence roadmap. While the chart mentions 9 peer-reviewed publications to date, Omada now has 14-peer reviewed studies published. It’s also expecting to complete its first RCT in March of this year.

Omada has found that cohort studies have worked well in its case because no payers are worried that people are going to automatically lose weight without some kind of intervention. There are countless randomized studies for in-person weight loss interventions with control arms that show this never happens. As a result, Omada has not felt compelled to run its own RCT until recently. RCTs take a long time because they are best used to show multi-year results, but that also means they are expensive. Omada said the RCT is not required in its case but it will be helpful to convince the small slice of the health plan market that raises it as an objection.

Omada’s focus on evidence generation paid off from the very beginning. In its early days, Omada’s biggest internal champions at health plans and IDNs were the medical directors and clinical directors, because they could see via the published studies that Omada’s intervention worked.

Omada Health’s Competition

The number of companies and organizations that have filed with the CDC to gain certification as a diabetes prevention program is now up over 1,500. Of those only 35 are digital programs delivered online like Omada, and only 14 of those have secured full recognition from the CDC. What’s more, Omada Health’s DPP appears to be the market leader in terms of the number of participants it has served.

Livongo Health, which IPO’d last year, started with a focus on diabetes management but entered the prevention space via its acquisition of Retrofit. Like Omada, Livongo also has programs targeting hypertension and behavioral health. Overall, Livongo is Omada’s biggest competitor, but each still has a larger stronghold with its original program’s market.

Livongo has mentioned that being a public company helps bolster its standing with self-insured employers that might trust a public company more than a private one. Livongo has also managed to secure “preferred status” for its various programs — including its prediabetes program — in Express Scripts’ new Digital Health Formulary. While Omada is featured in the formulary with its various programs, Express Scripts is contractually obligated to pitch its clients Livongo’s programs first.

Virgin Pulse is another company that is eyeing Omada. Virgin Pulse recently acquired Blue Mesa, one of the 14 digital-only DPP companies to have secured full recognition from the CDC. While Blue Mesa has relatively few customers compared to Omada, Virgin Pulse claims to serve 4,000 clients in 190 countries around the world. Virgin Pulse started as an employee wellness solution but has quickly added on digital therapeutics services via partnerships and is now entering the DPP market directly with its Blue Mesa acquisition.

What’s next for Omada Health?

Three quick areas of discussion for Omada’s future: New programs, internationalization, and a potential 2020 IPO.

According to an Omada slide deck from November 2016, the company planned on adding new program modules focused on depression (which it has done), nicotine, and COPD.

I’m curious whether pressure from Virgin Pulse, which is very much a global company as described above, will push Omada to consider international expansion soon. Omada actually incorporated in the UK years ago when that country was rolling out its own version of a national diabetes prevention program, but Omada UK has since gone dormant. In 2015, Duffy also indicated that he planned to set his sights on international markets in 2017. More recently Duffy has said that while Omada absolutely has global ambitions still, in healthcare you need to be careful about when and how you go global:

“It is hard enough when you are a software business to take your business to the rest of the world. I’ve heard so many stories of CEOs of SaaS companies massively underestimating the challenge of entering these markets just with software. Healthcare is different and the bar is higher.” — Sean Duffy, 2020

Omada is widely expected to IPO in 2020. Like most private companies weighing that decision, Omada has not said much about an IPO besides describing it as just another financing event. Interestingly, Livongo’s annual revenue numbers for the two years leading up to its IPO tracked closely to the estimated annual revenue figures for Omada in the chart at the top of this report. Livongo posted $30.9 million in revenue for 2017 and $68 million in revenue for 2018 before IPOing in 2019. By my estimates, Omada posted around $39 million in revenue for 2018 and around $72 million in revenue around 2019 before possibly IPOing in 2020.