Physicians Interactive snaps up physician social network QuantiaMD, but not everyone’s a winner

With a 42.3 percent stake in QuantiaMD, Safeguard Scientifics was the lead investor in the company.

An exit can be the ultimate goalpost for a company — validation that what its founders have built is worth owning. But in the world of healthcare deals, particularly digital health, there’s good reason for caution. Cue the acquisition announced this week of physicians’ social network QuantiaMD.

Here’s what Physicians Interactive Chairman and CEO Donato Tramuto said of the deal. “By bringing Physicians Interactive and Quantia together, we continue to develop new ways to provide our customers, including health systems and life sciences companies, with the leading digital and mobile engagement platforms to help improve the quality and value of healthcare delivery.”

QuantiaMD, like some other social networks for physicians, provides a way for pharmaceutical companies to reach this target audience through its mobile and Web-based physician relationship management platform since the Affordable Care Act made direct access to physicians through hospitals and practices more onerous.

Seems like a decent investment opportunity, no?  That’s what Safeguard Scientifics figured. With a 42.3 percent stake in the business, it was the lead investor in the company. It had invested a total of $12.5 million in business, and had also funded a $1.7 million bridge loan to the company, according to Safeguard’s first quarter earnings report. Most notably, it led a $10 million Series B round in the digital health company two years ago and gained two board seats in the process.

But following the deal, in Safeguard’s second quarter earnings report, the investment firm noted that it had incurred a $2.9 million impairment charge related to QuantiaMD.

The exit happened too fast for the value of the company to increase significantly. There’s also pharma’s pace of change to consider. Despite the interest in digital advertising and the opportunity to market to a social network of physicians, pharmaceutical companies are slow to change and continue to depend far more on TV, radio and other offline vehicles than online ones.

This is just one of what have been and will be several examples of why investing in digital health can be fraught with pitfalls. But while this investment failed to meet expectations, consider this. Safeguard is also an investor in Propeller Health, a digital health company that developed an FDA cleared remote monitoring platform to track adherence and other data for asthma and COPD patients through inhalers. It has a 24.6 percent stake in that business.

This week, the FDA greenlighted its platform for GlaxoSmithKline and Boehringer-Ingelheim inhalers. The goal is to improve adherence but also to help physicians spot medication problems earlier and avoid needless emergency room visits to reduce healthcare costs. That’s pretty good news for its investors.