Everyone in the industry should be paying attention to the Talkspace acquisition because it’s emblematic of a lot of the deals that I suspect will happen in the next 12 months. It’s a relatively healthy outcome for the industry, so it might also inspire some IPOs for companies that are waiting in the wings. 

It shows a few things about what the market is rewarding: 

Read the full analysis that I wrote with equities research analyst Stephanie Davis here.

Aside from looking at health-tech deals, I’m continuing to spend time thinking about how healthcare will be transformed in an era of AI. The Citrini memo may have been off base and outlandish with some of its predictions, but it got people talking. Healthcare needs its own memo that takes an intellectually honest look at where all this could be going.

So I’m teaming up with my friend Mike Desjadon, CEO of Anomaly Insights, to anonymously survey our community to gather feedback on what could happen. Our goal is a memo that we could publish that pushes us to imagine what healthcare could look like in a few years, and inspires dialogue and debate. 

If you’d like to participate in that, your contributions would be highly appreciated. Please fill out the form here. 

And now for the news of the week, featuring Annalisa Merelli and our HBS intern Meredith Nolan.

The news: The largest reproductive health provider affiliate is looking to make up for a $100 million revenue gap by adding cosmetic and lifestyle services.

What PP Mar Monte said: “We know we have to face reality to keep our doors open. “That’s where these new services come in,” Stacy Cross, president and chief executive officer of Planned Parenthood Mar Monte, told the Wall Street Journal.

What’s on the menu: Botox, IV hydration, and soon, laser hair removal and fillers.

The news: After Hims & Hers agreed to sell Wegovy at the same price of other online platforms and halting the promotion of compounded GLP-1, Novo Nordisk dropped their lawsuit against the telehealth company. 

What Novo Nordisk said: Novo CEO Mike Doustdar told CNBC that he reserves the option to bring the lawsuit back “if needed.”

Stock reaction: Hims shares went up 40%. Novo went up 2.1% in Copenhagen. 

The news: Scientist Semay Chou believes the scientific process needs an AI-era revamp, and has launched a $500 million for a startup to do so within her AI-focused foundation, Astera Institute.

What Radial will do: The company will deal with what its CEO, Becky Pferdehirt, calls the “unglamorous, unsexy infrastructure and tools. ” 

What Chou said: “If we don’t fix those things soon, we’ll never see the value of AI fully, whether it’s science or biotech or whatever. So, it’s really forcing us to grapple with how the systems need to be updated,” Chou told STAT in an exclusive interview.

Cylinder Health is hiring a Strategic Account Executive, Health Plans. Together with the commercial team, you will drive growth with health plans and channel partners by managing strategic relationships, activating ASO opportunities, and scaling employer adoption through partnership channels.

Cylinder Health has helped 145,000 people suffering from digestive health issues find personalized, clinician-backed care through its virtual health platform.

Other cool jobs of the week:

$150 million for Grow Therapy: The mental health startup closed a Series D led by TCV and Goldman Sachs Alternatives. The company’s evaluation reached $3 billion. 

$65 million for Sage: The company offering AI-assisted care for the elderly closed a Series C funding round led by Goldman Sachs Alternatives. The round brings the company’s total capital raised to $124 million.

$50 million for Eight Sleep: The company offering predictive AI for sleep received a strategic investment from Tether Investments at a  $1.5 billion valuation. This comes just months after the company raised $100M for its Series D in August.

KeyCare gets $27.4 million: The nation’s first Epic-based virtual care company closed a financing round led by HealthX Ventures.

Ease Health raises $41 million: The company, offering an AI-native operating system for behavioral health providers, closed a Series A founding round led by Andreessen Horowitz.

$80 million for Salma Health: The company emerged from stealth with a Series A funding co-led by Mubadala Capital and ARCH Venture Partners. It plans to launch a rain health company designed to unify diagnostics, rapid-acting treatments, and coordinated care.

$11 million for Amigo AI: The platform, which trains and deploys patient-facing clinical AI agents, announced a Series A round led by Madrona.

CVS and Google Cloud team up to launch Health 100: The new health tech unit will work on creating an AI-enabled healthcare engagement platform, providing patients with the data they need to track down their healthcare needs. 

Eli Lilly launches Employer Connect: The direct-to-employer platform will market obesity drugs and is beginning testing rollout later this year. 

Nabla partners with Advanced Machine Intelligence: The AI scribe will have access to AMI’s “word model,” which just raised $1 billion. AMI’s new CEO is Nabla’s co-founder. 

1. You’ve long had a relationship with Walmart as the former chief medical officer for the clinics. Then the retailer became an early customer for Embold in helping steer its employees to better quality, lower cost providers. Was there anything foundational about what you learned in the consumer and retail space that proved to be instrumental for your decision to start Embold? And can you speak to the power of having an early believer?

DS: Yes, I originally joined [Walmart] to help them start a primary care business. The premise was to make high-quality, affordable primary care more accessible. But the full vision was: don’t just stop at primary care. Going back to my doctor training and putting my clinical hat on, I had seen firsthand that different doctors care for the same patient differently. That made me think about the data and whether we could use data to identify certain providers as preferred referral partners, and maybe even eventually start to take on risk.

The question became: how can we figure out who the high-quality providers are? I started working closely with the benefits team at Walmart. That team had recently launched a Centers of Excellence program, and early on, they saw they were getting very different outcomes when patients were treated by Centers of Excellence providers. In many cases, their Associates were being told by the Centers of Excellence that they didn’t actually need the procedure they had been referred for – it was inappropriate.

In the benefits world, they accessed providers through a network or Centers of Excellence programs. In the primary care world, I accessed providers through a referral. But fundamentally, even though the words were different, I realized we were looking for the same thing: an objective source of information around who is a high-quality provider that you can direct patients toward. So, we started jointly exploring the space.

What became clear was that it didn’t really exist in the industry. That’s when I decided to leave and try to fill that void. When I left, I didn’t know if it was a solvable problem, but I hoped it would be.

Working with large companies has been a huge benefit. We’ve had the privilege of working closely with Microsoft, Walmart, and other large employers, and they’ve been incredibly helpful development and thought partners, iterating with us and helping us improve. For other start-up companies reading this Q&A, I would recommend to anyone the advantage of working with a large, sophisticated employer.  Be prepared – they're going to push you. And they are such incredible partners helping you improve your offering.

2. Everyone and their mother is using AI these days for something. Can you share where you’ve specifically found it useful & (even more importantly) not useful? 

DS: This is a space where we partnered really deeply with Microsoft to bring out an AI solution two years ago. What I believe is unique about our approach is the marriage of clinical validation with AI personalization. The the ability of AI to make tailored recommendations, while understanding the context and preferences of the member, is unparalleled. We introduced a virtual tool called EVA (Embold Virtual Assistant) 18 months ago and teamed up with Microsoft to validate it through 10,000 different clinical scenarios to test out different recommendations. To offer one example, we spent a lot of time thinking through the appropriate level of triage. A member’s stomachache could be anything from super mild and stay home to recover to go to the hospital immediately!  

3. As a cofounder of Scrub Capital, a fund that brings more clinicians into the investing process, I’m no stranger to hearing that ‘doctors are bad businesspeople.’ Clearly, I disagree with that, especially given all the fantastic founders that are also physicians. Do you hear that refrain, and how do you respond to it?

DS: Obviously, I’m biased as a physician founder, but I think the view that doctors are not good businesspeople is outdated… if it was ever true. There’s so many examples of successful physician CEO’s that dispel the myth. Care delivery is complex, and having that nuanced understanding of how it works on the inside is invaluable. If you're a good doctor, you’re highly attuned to what your patients are experiencing. It gives you this very natural lens to approach problems in a much more patient-centric way. Where doctors can get into trouble as leaders, although I’m sure this is true for any other professional career progression paths that involve moving from individual contributor (IC) to a leader, is when they feel solely responsible and accountable for everything in the business. Anyone moving into leadership roles needs to learn how to share the load by recruiting a great team and building an aligned culture. I’m a huge fan of doctors taking on more leadership roles and know we’ll see more of it. Really, what it takes is a strong sense of empathy or EQ. 

4. You mentioned that you weren’t certain that the concept of discerning provider quality using data could work, but chose to try nonetheless. What gave you the confidence that it could be done? 

DS: Thinking back on my decision to start Embold, I really had two questions to answer. Firstly, is this possible? And linked to that, can you get enough data? Can you statistically and reliably assess providers at the individual level? I knew it took a tremendous amount of data to evaluate individual providers. When we were able to amass the dataset that cut across government and commercial lives, I was confident we could solve this problem. And then secondly, the question was, could we reliably build analytics based on the latest clinical evidence to capture provider practice patterns and compare them? As we started working with academic researchers to help us develop and vet our methodology, this gave us confidence that we could build scalable measures and assessments that accurately reflected the latest evidence. Could they take into account patient severity, case mix complexity, and risk adjustment? The answer turned out to be yes. 

Early on, we made the decision we would be fully transparent with the measures, with the methodology, with the risk adjustment. Because we had heard that when you share metrics with a provider, which shows they are anything other than that they’re an across-the-board exceptional performer, they’ll push on you and on the data and on the methodology. The only way to withstand that is to be transparent. It turns out that most providers, like all of us, have strengths and weaknesses, so most providers will perform better than others in certain areas and underperform in others. If you’re transparent, you’re enabling a different type of dynamic and creating the opportunity and visibility for them to focus on areas where they can improve. Providers at this very moment can go to our website at any moment to view their scores.