JPM22, Day 2: Tenet says it’s full steam ahead on ASCs, Progyny’s fertility services ‘resilient’ during pandemic and more

Welcome to Day 2 of the annual J. P. Morgan Healthcare Conference. Here’s your need to know, as primary care enablement company Aledade announces its first tuck-in acquisition. We’re expecting news from CVS Health, Cigna, Walgreens, One Medical and many other companies today.

Want more? Catch the latest news from Fierce Biotech, and follow Fierce Pharma’s coverage here.

And check out tomorrow’s Day 3 roundup covering the latest news and developments on the ground from Wednesday’s action.

UPDATED: Tuesday, Jan. 11 at 4:35 p.m.

Tenet Healthcare CEO Saum Sutaria, M.D., used today’s virtual conference as a direct line to investors looking for a progress report on the chain’s ongoing restructure.

The executive said the company has divested from five hospital markets since 2017 for roughly $1.75 billion of proceeds (annual revenues of about $2.5 billion) and increased its investments in high acuity services.

Still, the company is on track to increase its adjusted net revenue for 2021 by 3% compared to 2017 and has increased same-hospital adjusted EBITDA more than 25% as of the third fiscal quarter of 2021.

Meanwhile USPI—Tenet’s “gem for the future”—hit 438 centers by the end of 2021 and is now well ahead of competitors Amsurg and Surgical Care Affiliates (SCA) in terms of locations due in no small part to last year’s deal with SurgCenter Development.

“Tenet is an attractive and investable growth company. We are more capital efficient, we produce greater free cash flow, we are committed to debt reduction and our business is aligned with the highest growth areas of the future,” Sutaria said. “We are energized by the opportunities ahead and I am confident in our ability to continue our positive trajectory.”

Alongside the presentation, the company submitted a filing stating that it believes it will meet Wall Street’s consensus earnings estimate for 2021. — Dave Muoio

UPDATED: Tuesday, Jan. 11 at 4:15 p.m.

Despite the impact of the COVID-19 pandemic on the overall healthcare market, the fertility market has been resilient, driving strong financial results for fertility benefits company Progyny, according to Pete Anevski, the company’s CEO.

Progyny signed on 85 new clients, representing 1.2 million covered lives during the 2022 selling season, Anevski told Fierce Healthcare on the virtual sidelines of the J.P. Morgan Healthcare Conference Tuesday.

New York-based Progyny manages fertility benefits for employees at large firms. When the company went public in 2019, it had 80 clients with 1.4 million covered lives. Today, Progyny has 265 clients, representing 4 million covered lives.

The company is projecting full-year 2021 revenue to be between $507 million to $514 million, reflecting growth of 47% to 49%, according to its third-quarter 2021 earnings results. Progyny is now profitable and expects to bring in net income between $51.5 million to $54.1 million for 2021. The company also projects adjusted EBITDA to be $69 million to $70.5 million for 2021.

Progyny also is forecasting 50% revenue growth in 2022, Anevski said.

That growth is driven by upselling activity with one-third of Progyny’s clients added services for 2022 along with organic growth as the corporations Progyny works with continue to expand their workforces. And the company sees a significant runway for organic growth as it eyes opportunities to offer fertility benefit services to government and union employers and university and school system employers.

“All of these employers have populations of people who have fertility challenges. We are beginning to invest in our go-to-market strategy around other addressable markets,” Anevski said.

Fertility medical services continue to be an under-penetrated market, as about 2% of all births in the United States result from the use of assisted reproductive technology, according to the company. One in eight couples face infertility issues and benefits offered by companies like Progyny are essential to help employees build their families, Anevski said.

The company also is eyeing M&A opportunities to expand its services and capabilities, with women’s health services top of mind, he said.

“If we can do it organically, or if it makes more sense to pilot and partner with someone first before we buy, we’ll do that. If it makes more sense to get to market faster with a solution, we’ll buy,” he said. 

He added, “We spent the last two years, give or take, focusing and managing through the pandemic. Now we’re researching other opportunities that make sense for us. We’re already addressing women’s health issues with infertility and we’ll look at how we can expand to other areas of women’s healthcare, looking at pre- and post-maternity care.” — Heather Landi

UPDATED: Tuesday, Jan. 11 at 3 p.m.

As it looks to continue investing in its Walgreens Health business, the Walgreens Boots Alliance has launched a strategic review of its United Kingdom-based Boots business.

CEO Roz Brewer said during the pharmacy giant’s JPM session on Tuesday afternoon that the effort is in its early stages, but updates are likely to come soon.

“While the process is in an exploratory stage, we do expect to move quickly,” Brewer said.

Earlier in the day on Tuesday, British outlet Sky News reported that firms Bain Capital and CVC Capital Partners were working on a joint bid for Boots, which operates more than 2,000 stores and employs more than 50,000 people. Boots also manages multiple global beauty brands, such as No7 and Soap & Glory.

Brewer did not specify in the presentation if Walgreens was considering a sale as the next step for the Boots business, and did not name any potential buyers for the segment.

During the company’s first-quarter earnings call last week, WBA executives touted strong performance at Boots, which included an 8.8% increase year over year in pharmacy sales and a 16.3% increase in retail sales.

Online sales are growing, WBA said, and are nearly two times pre-COVID levels. Online sales now account for 15% of Boots’ total retail sales, according to the earnings report.

Walgreens also said that it is increasing its stateside goals on its joint facilities with VillageMD. The company had initially planned for about 160 new co-located clinics to open in 2022, and is now upping that to more than 200 such clinics.

“We are connecting the care journey across the continuum,” Brewer said. — Paige Minemyer

UPDATED: Tuesday, Jan. 11 at 12:50 p.m.

Executives from Mass General Brigham say that the integrated health system is viewing the bulk of its growth investments in two buckets separate from the traditional approach of horizontal acquisitions or integration.

The first focuses on virtual care, digital tools and novel care models such as hospital at home that are “filling in the components of the care continuum” and revamping patients’ end-to-end care, Niyum Gandhi, chief financial officer and treasurer, said.

“We are transforming our core operations, we’re making them more efficient but also more effective,” Gandhi said during the system’s J.P. Morgan presentation. “This is going to improve the quality, comprehensiveness, efficiency and the value, importantly, of the care that we deliver to the communities we serve.”

The other growth bucket, said President and CEO Anne Klibanski, is the system’s cutting-edge research into “big bet” areas like gene and cell therapy that can translate into commercial revenues. Already, Mass General Brigham has about $500 million in venture capital assets under management and an 18.2% net internal rate of return on these projects since inception, she said.

Both areas of investment are part of a long-term strategy that lean on the system’s strengths as an integrated academic provider, Gandhi said, and will ultimately help the system diversify its margin and extend the reach of its care. — Dave Muoio

UPDATED: Tuesday, Jan. 11 at 12:30 p.m.

Cigna CEO David Cordani echoed CVS Health executives Tuesday morning at the insurer’s conference session, saying that the company needs time to evaluate the impact of the feds’ new requirement that insurers cover COVID-19 home tests.

On one hand, Cordani said, over-the-counter tests cost far less than laboratory tests. However, if demand stays high — as it has skyrocketed under the spread of omicron — those savings may be less than one might expect.

He said that Cigna saw the highest number of confirmed COVID-19 cases since the start of the pandemic in December thanks to the omicron variant. However, he said that the insurer saw the lowest number of those cases converting into hospitalizations.

Expect talk of the COVID-19 testing requirements to be a continuing theme throughout payer sessions for the rest of the week. Story — Paige Minemyer

UPDATED: Tuesday, Jan. 11 at 11:26 a.m.

Cano Health is entering the new year with significant market expansion, now operating 130 medical centers across eight states plus Puerto Rico.

While the value-based primary care provider previously directed its focus on its growth in Florida, CEO Marlow Hernandez says the company expects most of its 2022 growth to occur outside the Sunshine State.

“In the ten years since I founded Cano, I have never been more enthusiastic about what we’re going to accomplish this year and beyond,” he said.

Founded in 2009 and backed by billionaire Barry Sternlicht, Cano Health runs primary care centers and supports specialized primary care practices for seniors. The company went public last June in a $4.4 billion SPAC deal with Jaws Acquisition Corp.

As of Jan. 1, 2022, Cano’s membership has soared to 253,000, including 152,000 Medicare members. The primary care group previously projected 218,000 members through 2021.

Hernandez said the company expects to report more figures that exceed previous full-year guidance in its upcoming fourth-quarter earnings call.

The Miami-biased provider still operates most of its centers in Florida. Last year, Cano Health acquired Doctor’s Medical Center for $300 million and University Health Care for $600 million, adding 31 total facilities to its South Florida network. — Rebecca Torrence

UPDATED: Tuesday, Jan. 11 at 11:24 a.m.

A byproduct of the COVID-19 pandemic is that it helped the Jefferson Health hospital chain integrate with newly acquired sites, system executives said.

Bruce Meyer, the system’s senior executive vice president, said that the pandemic has accelerated integration “by several degrees.”

“We have been able to move layers and respiratory therapists and support staff from site to site based on the need and able to do that with six hours of notice, two hours of notice, 24 hours of notice,” he said, adding that staff can be credentialed at any site in 24 hours.

Philadelphia-based Jefferson Health also was able to implement the EPIC electronic health record system across seven hospitals during the pandemic, with complete virtual instruction for all of its staff. — Robert King

UPDATED: Tuesday, Jan. 11 at 10:45 a.m.

Spectrum Health leaders told attendees that their organization’s integrated approach to care and coverage came with clear advantages when preparing and responding to the COVID-19 pandemic.

“We were able to understand what the dynamics were going against care delivery or going against coverage and hedge some of what we needed to do,” President and CEO Tina Freese Decker said during a presentation. “We also heard from various stakeholders throughout our communities about what was going on and that allowed us to better prepare and better communicate to our communities about what they could do for prevention, how they could find certain services. [We also benefitted from] the data that we could collect to understand and then anticipate and take action moving forward.”

In a more general sense, Decker also noted that an integrated care organization is in a better position to discover and test innovative product offerings that focus on returning value, as well as to share best practices across business lines and to the community.

Praveen Thadani, president of Priority Health, the system’s health plan, doubled down on the data and decision-making advantages of the organization’s two-pronged approach.

“[We have] an ability to really think hard about what’s the right site of service for a specific individual—should we do more care at home, as an example, and is a member going to recovery best in a different setting or in a different operation. I think that’s the power of an integrated system and we’re leveraging data and analytics in a very deep capacity to ensure that we’re thinking about our members—not only thinking about the best outcomes but how do we best impact the cost of care.”

Priority Health has developed into a key part of Spectrum’s bottom line, with coverage contributing 61% of the organization’s revenue. The executives said they hope to bring the care delivery side of the business up in the coming years for a more even 50-50 split.

Coverage revenue percentage would certainly dip down should Spectrum complete its proposed merger with Beaumont Health. Decker said that the potential partners are still waiting to hear from regulators on their $13 billion revenue arrangement and are hoping to receive their review before the end of the first quarter. — Dave Muoio

UPDATED: Tuesday, Jan. 11 at 10:28 a.m.

Bon Secours Mercy Health’s CEO John Starcher admitted that one thing has been keeping him up at night: rising labor expenses. 

The non-profit system’s leader said that Bon Secours is expecting additional labor expenses to add $200 million to the balance sheet and has caused the system to be more disciplined in the investments it makes in alternative revenue sources. 

The comments come as Bon Secours has made strides to invest in and create new companies such as the employer solutions provider Harness Health Partners. Story — Robert King

UPDATED: Tuesday, Jan. 11 at 9:20 a.m. ET

CVS Health executives said early Tuesday that the company would boost its guidance for the year following better than expected performance in its retail segment.

CFO Shawn Guertin said that 80% of the boost in performance for the fourth quarter is attributable to its retail business, as demand for COVID-19 vaccines outpaced expectations in November and December. In addition, sales for COVID-19 tests, particularly over-the-counter options, also surged in Q4.

Guertin said that the company is also taking a close look at new guidance from the Centers for Medicare & Medicaid Services that requires insurers to cover such tests beginning Jan. 15. He said that the company’s unique position as both a major retail chain and a major insurer means that requirement could have both positive and negative effects.

Executives said to stay tuned to the company’s upcoming earnings call, slated for Feb. 9, for more. Story — Paige Minemyer

UPDATED: Tuesday, Jan. 11 at 8:50 a.m. ET

Universal Health Services Chief Financial Officer Steve Filton said that his company’s hopes for COVID-19 recovery have been put on pause for at least three months due to the unexpected omicron surge.

“As we think about 2022, we feel like our overall view of the businesses have not changed dramatically but the timeline has been elongated and the recovery we thought was going to occur throughout the fourth quarter has now been postponed to sometime in the first quarter,” he said.

The company’s acute care operations are being challenged, but not quite to the extent they were one year prior, Filton said.

The high transmissibility but relatively less severe nature of omicron infections means that acute volumes are high but proportional ICU utilization is lower during the current surge, he said.

Although patients are healthier this time around, Filton noted that length of stay has remained long at UHS hospitals due to challenges discharging patients into downstream care settings such as nursing homes or rehab facilities.

Labor challenges have also persisted during the last few months across UHS’ acute and behavioral care segments alike, with the added wrinkle of more workers than ever being sidelined by their own infections, he said. The company is continuing to eat the increased costs of contract workers, he said, and is working under the assumption that the labor market will restabilize during the months after national COVID-19 cases have finally wound down. Story — Dave Muoio

UPDATED: Tuesday, Jan. 11 at 7:50 a.m. ET

Aledade announced its first tuck-in acquisition by scooping up Iris Healthcare, the company announced Tuesday.

Austin, Texas-based Iris Healthcare provides advance care planning technology solutions, and Aledade will fold the company’s technology into its new health services unit, called Aledade Care Solutions, the company said.

Aledade did not disclose financial details of the transaction. Story — Heather Landi

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