Welcome back to E&O Mondays, the free newsletter from Exits & Outcomes that (usually) features the world’s most complete weekly health tech funding round-up, but this week I changed it up. See below for an excerpt and a link to a new, free 2,500-word report digging into why I think the Livongo founders’ SPAC will acquire Color. (A super long funding round-up will return next week.)
In this issue:
- The answer to last week’s trivia question is below, but first…
- I wrote a speculative piece on the Health Assurance Acquisition Corp. SPAC and the company I think it will acquire: Color.
- The SPAC has an unusual setup that includes a 10 percent stake for a charitable organization. I think the proceeds from that 10 percent stake will subsidize access to the company’s digital health services to Medicaid patients.
- Besides Color, I think the SPAC will roll-up at least two other General Catalyst-affiliated startups: Tendo and Commure.
- Scroll down for more or just click here to read the whole thing on the E&O website (open access on this one.)
Why Livongo founders’ SPAC will acquire Color
Over the past few weeks, a couple of E&O subscribers wrote in to ask if I’d heard whether the Health Assurance Acquisition Corp. SPAC run by a team comprised mostly of ex-Livongo founders and executives was eyeing Virta Health or Omada Health. While I don’t have any inside information on their SPAC’s acquisition target, my guess is it will be Color, formerly known as Color Genomics. This 2,500-word report is a quick investigation into the HAAC SPAC and why my pick is Color.
(But first, a note on sources: Health Assurance Acquisition Corp. (HAAC) might be the only SPAC that filed its paperwork after publishing its thesis as a 134-page book called UnHealthcare: A Manifestor for Health Assurance. The team behind the HAAC SPAC also writes a Medium blog and produces a podcast — both under the Health Assurance brand. The sources for this report also include a number of documents I found after digging around the internet as well as the book, blog posts, and podcast mentioned above.)
Why they won’t buy Virta or Omada
The two Livongo co-founders who are still on the Teladoc board post-merger, Glen Tullman and Hemant Taneja, are unlikely to acquire one of Livongo’s big competitors so soon after the $18.5 billion merger and while still sitting on the combined companies’ board. If that’s not enough for you to believe a Virta or Omada acquisition is unlikely, consider that they have said — repeatedly — that their next focus will be to make it easier for more Livongos to scale and succeed. Here’s a quote from Taneja from a Jessica DaMassa-led THCB video interview in August 2020 — just a few weeks before they filed their draft statement for the SPAC:
“Frankly, it was very intentional that we wanted Livongo to become a blueprint for how companies are built in this space. Companies that truly don’t have the mindset of disrupting. They have the mindset of partnering. Companies that have the mindset of serving the consumer first and foremost, the mindset of bringing rational economic behavior in the space so it’s ROI-driven, clinical outcomes-driven, bending the cost curve. For the next decade, the three of us, the way we think about our work is: ‘How do we get a thousand Livongos to bloom? How do we make sure that the transgender community gets the same kind of consumer-directed virtual care? How do we make sure that women’s health is delivered in the same way?”
You don’t get a thousand Livongos to bloom by acquiring a thousand Livongo competitors. So, despite the chatter, that’s not the move. Their next company will focus on the underlying infrastructure that they believe is missing to enable digital health companies like Livongo. Read the free 2,500-word report here (even if you’re not a paying subscriber yet).
Health Tech Trivia Answer
Here’s this week’s health tech trivia question… Question: Which well-known company did American Well remove from its list of competitors in an amendment to its S-1 just before its IPO? (Bonus points if you know why they removed them too.)
Answer: Google. If you recall, Google made a big investment in Amwell’s IPO. As a result, Amwell removed them from their list of competitors in an amended S-1 just before the company went public. Most of the wrong answers were Livongo/Teladoc because of that merger, but that’s backward. Livongo was never really a competitor to Amwell so it wouldn’t have had that brand name on there to begin with. And, of course, Teladoc remains their biggest competitor.
To my great surprise: Only one anonymous reader answered correctly.
Next Monday: Another question coming your way…