UPDATE: This post has been updated with comments from Mercom Capital Group C0-founder and CEO Raj Prabhu.
Sharecare has made a splashy expansion into population health management with the acquisition of Healthways’s population health division. The deal underscores the continued interest that healthcare companies have in adding population health management to their services and the easiest way for many to do that is through acquisition.
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The deal includes Healthways’s Total Population Health Services as well as its Blue Zones Project — a community well-being improvement initiative — and an intensive cardiac rehabilitation program intended to reverse heart disease developed by Dr. Dean Ornish, founder of the nonprofit Preventive Medicine Research Institute.
Atlanta-based Sharecare will give Healthways up to $30 million of Sharecare common stock and Healthways will pay Sharecare $25 million at closing to fund expected negative cash flow for the 12-month period following the closing, according to the news release.
The deal gives Sharecare stewardship of Healthways’s existing population health contracts with health plans such as Anthem, CareFirst BlueCross BlueShield (CareFirst), and the Hawaii Medical Service Association.
It is the biggest purchase for Sharecare since its acquisition of Feingold Technologies last year. That deal gave Sharecare a business steeped in artificial intelligence technology and a voice analysis tool to increase self awareness of emotions such as stress and depression.
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Sharecare was founded by CEO Jeff Arnold and talk show host Dr. Mehmet Oz in 2010. Last year at the Health 2.0 Fall conference, Arnold talked about the company’s plans to launch an app for users’ to take “emotional selfies.” Arnold’s vision is to set up a network for episodic and everyday health risk assessments. It wants to provide a way for users to track their data, not only through the app’s voice analysis technology, but eventually through activity trackers and wearables, such as smartwatches.
But Sharecare’s acquisition of Healthways also echoes the steady drumbeat of consolidation of population health management companies. There were four population health M&A deals in the first half of 2016, according to data from Mercom Capital Group’s Funding and M&A tracker. None of those deals disclosed acquisition value. GE Healthcare, a part owner of Caradigm, bought out Microsoft’s 50 percent stake and made the business an operating affiliate. Envera Health acquired InHealth and Apollo Care Connect purchased Healarium‘s population health management technology and operations platform. Earlier this month, HealthRight and HealthNEXT merged. HealthRight is a telehealth provider and HealthNEXT creates evidence-based employer roadmaps for benchmarking population health goals.
“The reasons for acquisitions differ from deal to deal,” commented Raj Prabhu, CEO and co-founder of Mercom Capital Group, a healthcare IT communications and research firm in an emailed response to questions. He described the Sharecare-Healthways deal as a strategic acquisition.
“Sharecare gets to integrate Healthways’s population health offerings on top of its platform, and it buys them growth by boosting [Sharecare’s] revenue and client base.”
In May, revenue cycle management business MedData acquired Duet Health, which provides white-labeled control centers for patient communication and population health management.
Welltok deepened its population health management capabilities with the acquisition of Predilytics in May last year.
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