Last week, CNBC health tech journalist Christina Farr, who has a steady and engaged following on social media, announced that she was leaving the fourth estate for greener pastures.
Literally, a pasture potentially laden with greenbacks. She became the latest addition to a small, but notable group of journalists-turned investors. Farr is joining OMERS Ventures, the venture capital arm of the pension fund of the Ontario Municipal Employees Retirement System. OMERS Ventures has a billion under management and Farr’s plan is to focus on health tech as she joins the Bay Area team. As she gets up to speed on writing that first check, she plans to continue to write — this time, in the form of a newsletter with co-author Michael Yang, managing partner, who leads OMERS Ventures’ investment efforts in Silicon Valley. Called Second Opinion, the newsletter would allow Farr to analyze the market and industry trends in the industry she has been reporting on for a decade.
In a recent phone interview with MedCity News, she explained that the world of venture capital has one thing in common with journalism: diligence. And that is what attracted her as she mulled a change.
“They meet a company and they spend weeks just kind pf researching whether it’s a good product-market fit and whether or not it’s a good team, whether this is a company that could do well and I felt that my skills would be well suited to doing something like that,” Farr said in a phone interview last week. “I think every so often in life when you start feeling comfortable something or someone comes along and says here’s an opportunity to do something scary and try something new.”
Given that Farr has followed developments in the health tech world so closely over the last several years and developed a reputation for being insightful, I asked her what 2021 might bring in the world of health tech IPOs and M&As. She rattled off a few companies with a few predictions.
Crossover Health
Farr believes Crossover Health is a company that is definitely thinking about an IPO and certainly that would come as no surprise, given the company’s growth this year. This national medical group based in San Clemente, California, provides direct primary care to large self-insured companies using a “virtual first” philosophy. Employees of companies on the Crossover Health platform can avail of an integrated care team of primary care doctors, nurses, physical therapists, mental health professionals while offering them care navigation as well as health coaching. The company counts Apple and Amazon as clients and recently announced that Amazon will open four primary care clinics for its employees in Texas. More are planned in Arizona, Kentucky and Michigan over the next year. A 2017 survey found that a third of companies with more than 5,000 employees offer general medical clinics at their worksites, a heartening trend for companies like Crossover.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
TalkSpace
Farr believes TalkSpace, the online mental health therapy company based in New York, is further along in its quest to become a public company although Bloomberg has reported that the company is exploring a sale. In August, New York Times ran an expose that showed former employees of the company that allows people to talk to therapists using their app, allege that it made burner phones for fake reviews and didn’t care that much about user’s privacy. Irrespective of what happens to TalkSpace — whether a sale or an IPO —the broader category of behavioral health technology has seen increasing interest and attention from investors and others due to Covid. Mental health startups have a big target market as the pandemic-enforced social isolation has only heightened the rates of depression and the consequent diseases of despair.
Teladoc/Livongo
Farr fully expects the combined telehealth leader to make acquisitions next year. They could be in the musculoskeletal field, mimicking a competitor Omada Health, which bought a remote MSK company in May. Acquisitions could also be in the field of behavioral health, Farr said.
One Medical
One Medical went public this year and has seen its stock price rise given the shot in the arm that virtual care received this year due to Covid. Farr believes the company is ready to do some deals especially in the field of women’s health and pediatrics.
Amazon
Amazon hasn’t done any major healthcare deals since announcing the acquisition of Pillpack back in 2018 but Farr thinks that might change next year.
“I wouldn’t be surprised if Amazon made an acquisition in primary care or telemedicine,” she declared. “Or maybe something else in pharmacy because I think they are putting together a really compelling strategy around healthcare that would be very full-stack. They have a telemedicine product for employees – Amazon care services – and they have pharmacy. So I could see them doing diagnostics, labwork, which they’ve already been dabbling in with Covid, so I see them sort of put all the pieces together now.”
And who knows, as a new VC — once she earns her stripes of course— Farr might be funding one of those companies that later get acquired by Amazon or other takers looking for the next new thing.
Photo: rudall30, Getty Images
Correction: An earlier version of the story mistakenly stated the company that is expanding primary healthcare clinics in Texas with the Crossover Health platform. It is Amazon.
