Fertility benefits company Progyny lost 85% of its business at the start of the pandemic. Here's how its CEO is ramping up an aggressive growth strategy fueled by acquisitions.

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Like many Americans, fertility benefits provider Progyny is dusting off its 2020 goals, many of which were sidelined at the onset of the coronavirus pandemic, heading into the new year.

The company, which went public in September 2019, saw an 85% decrease in its business in the early months of the pandemic, CEO David Schlanger told Business Insider. Across the country, fertility clinics closed to comply with regional stay-at-home orders in an effort to stretch meager supplies of personal protective equipment, and many treatments were considered non-essential by state and local governments wary of potential hospital surges.

Progyny works directly with companies to offer fertility benefits to employees. Companies pay Progyny for access to fertility treatment and pharmacy benefits based on how many employees choose to use those benefits. If fewer employees opted into treatment, either because clinics were closed or they simply delayed treatment during widespread uncertainty, the company would pay Progyny less than it had before.

“The period of time through COVID was stressful for us, especially when our revenues dropped by 85%,” Schlanger said.

Within four to six weeks, however, clinics started reopening and procedures picked back up, Schlanger said. He attributed that to the time-sensitive nature of fertility treatments that have improved odds of success the earlier in a person’s life they begin.

“Fertility treatments are not emergency treatments, but there is an urgency factor to it,” Schlanger said.

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Progyny is looking for acquisitions to expand Progyny’s reach

In the final quarter of 2020, Progyny’s revenue surpassed $98 million, exceeding expectations and growing nearly 62% year-over-year. The company lost most of its revenue in the second quarter of 2020, reporting just $64.61 million in revenue for the three-month period, a drop from the previous quarter’s roughly $81 million in revenue. 

The V-shaped recovery has placed Progyny in a good position to start reevaluating growth plans the team had abandoned in March.

Instead of focusing on keeping the business alive, Schlanger is able to set his sights on acquiring other businesses that could expand Progyny’s reach in the murky world of fertility healthcare. 

“The nice thing about being public is we can do strategic transactions with third parties to make ourselves better,” Schlanger said. 

Although Schlanger declined to specify which areas or companies he has an eye on, he said Progyny’s proximity to women’s health presents enough of an opportunity to expand into different kinds of benefits it can then sell to employers. 

“There are a lot of things we can pursue, but like anything else we have to prioritize them,” Schlanger said.

Schlanger said he doesn’t foresee the reverse happening, in which a large healthcare company purchases Progyny, now that it’s recovered from last year’s decline. He is focused mainly on transactions that “move the needle” for the company in a material way and building up a base of paying companies that has remained fairly resilient to layoffs and cost-cutting to date.

Since the pandemic began, he said Progyny has added 45 new clients and covered an additional 400,000 people.

“We really didn’t miss a beat,” Schlanger said of the company’s sales targets. “We really flourished. We got through it much better than other companies.”

SEE ALSO: One of digital health’s only dedicated early-stage venture firms just raised $200 million for its second fund. Here’s how founder Lynne Chou O’Keefe plans to spend it.

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Healthcare marketing giant W2O just snapped up two more companies as it seeks to take on consultancies like Accenture and Cognizant

Summary List PlacementW2O Group, one of the largest healthcare marketing and communications firms in the world, just acquired two more companies as it races to scale and take on large consultancies like Accenture and Cognizant and analytics firms like Komodo.
Swoop is a data and analytics company that helps healthcare clients identify potential patients for certain treatments, while data insights company IPM.ai provides data to speed up the research, development, and commercialization of therapies for patients affected by rare diseases.
The two companies, which collectively have a data pool of more than 300 million anonymous patients, will help expand W2O’s offerings to services like designing and executing clinical trials and launching products for clients. Previously, W2O got data from publicly available sources and social media through its own platform and Symplur, which it bought in 2020.
“Data is collected everywhere now,” W2O CEO Jim Weiss said. “It’s changed how we can leverage data and analytics and how we can find more efficient ways to target audiences, and market and communicate with them. The whole industry has been moving in this direction, and we modeled our business around those inevitabilities.”
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Most of W2O’s clients have been large biopharma companies like Astellas and Takeda, but it also wants to branch out to healthcare organizations like hospitals and medical technology companies, Weiss said.
W2O and Huntsworth Health have led consolidation in healthcare communications and marketing in recent years.
Healthcare marketing spending was a rare bright spot in the pandemic, and W2O flourished, with revenue up 50% to $350 million in 2020, in part on increased demand to promote telehealth clients to patients in lockdown, Weiss said. 
Growth also came from nine acquisitions W2O made since selling an undisclosed stake to private equity firm New Mountain Capital in 2019. W2O has acquired 11 companies since 2016.
Weiss projects the company will top $450 million in revenue in 2021; it’s hired McKinsey to help scale the company. Long term, W2O wants to expand to areas like healthcare e-commerce and launching therapeutic products through licensing agreements with pharmaceutical companies.Join the conversation about this story » NOW WATCH: Warren Buffett lives in a modest house that’s worth .001% of his total wealth

The CEO of major health insurer Humana laid out why he's betting big on primary care

Summary List PlacementLong before Humana became the dominant health insurer it is today, its business revolved around operating hospitals.
Now, decades later, Humana is getting back to its roots of providing medical care.
This time, the company is hyper-focused on transforming primary care for older people.
The national health insurer is investing heavily in building clinics in underserved areas across the country. It’s also partnering with primary-care startups like Oak Street Health, ChenMed, and Iora Health to reach more seniors. And last year, Humana pumped $100 million into telehealth startup Heal to bring primary care into patient’s homes.
Humana’s quest, CEO Bruce Broussard told Insider, is to weave together health insurance with the delivery of healthcare. Integrating the two could lead to lower costs and better health outcomes, he said.
The insurer is focusing on primary care because that’s one type of clinical care that has shown to reduce costs in the long run. Various studies have demonstrated that investing more money into primary care is associated with fewer costly hospitalizations and emergency department visits.
“We’re big believers in primary care,” Broussard told Insider in an interview on Friday. “We see great results, high satisfaction scores, high quality scores, and in addition, from a cost point of view, some really great outcomes there.”
Over the next decade, as Humana continues to invest in primary-care clinics, along with home-based and virtual care, the company may start to look different, Broussard said. Soon, it could employ as many clinicians as it does other types of employees, he said.
“Over the longer run, a decade, you’ll see a very substantial healthcare service business within Humana,” Broussard said. “I think you’ll see considerably larger platform and a changing organization.
Humana got serious about primary care after its Aetna break-up
Humana began buying primary-care clinics about a decade ago, but it became “intentional” about its clinic strategy when it called off its planned merger with rival insurer Aetna in 2017 after a federal judge blocked the deal, Broussard said.
After the break-up, Humana did some soul-searching. It looked to big, integrated health systems like Kaiser Permanente in California and University of Pittsburgh Medical Center and Geisinger in Pennsylvania and concluded that delivering healthcare is most successful when integrated with insurance under one organization.
Primary care was one clinical area Humana decided to focus on. In 2018, Humana moved the various primary-care groups it had acquired under one brand called Conviva. Those clinics were largely concentrated in South Florida.
For a time, Broussard said Humana doubted that a clinic strategy would work outside of Florida, where the strategy had proven successful because people from Cuba and other Hispanic backgrounds who have a large presence in Florida were already used to getting care in clinics, he said.
Humana wanted to see where else a primary-care clinic strategy would work, but there weren’t a lot of senior-focused clinics out there. So it began investing in other primary-care startups like Oak Street, ChenMed and Iora. According to Oak Street’s latest earnings report, Humana comprised nearly half of the startup’s revenue for the first nine months of 2020.
“We wanted to fund a number of different companies, both to see who was going to be successful or not and also to get capacity in the marketplace,” Broussard said.
Humana then started building its own clinics under the brand Partners in Primary Care “both for defensive and offensive reasons,” Broussard said. It struck a deal last year with private equity company Welsh Carson to build out 50 more clinics over three years.

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Humana owns 150 primary-care clinics and partners with about 100 more
Humana’s primary-care clinics cater to seniors enrolled in Medicare Advantage, which is a private alternative to the traditional government-run Medicare program that provides health coverage to older people. Humana serves about 4.7 million people in Medicare Advantage plans.
The clinics are paid in a nontraditional way. Insurers give them set monthly fees to care for each patient, so the clinics make money by keeping patients healthy and out of the expensive hospital or emergency room. Doctors see fewer patients than normal so they can give each patient more attention.
Broussard said the company would continue to open clinics in areas that are starved for primary care, both by building its own centers and partnering with startups.
Humana owns about 150 clinics that serve seniors enrolled in multiple health plans and boasts partnerships with 108 additional clinics operated by other companies. It aims to open about 50 to 60 more clinics with partners in 2021, a Humana spokeswoman confirmed.
About 8%, or 300,000, of Humana’s Advantage members, get care in owned and partnership clinics, and company executives have expressed plans to grow that figure.
Beyond primary care, Humana is also pushing deeper into delivering care in patients’ homes.
It bought a 40% stake in Kindred Healthcare’s home health business in 2018 for about $800 million, with a right to buy the whole business after a few years. In addition to its investment in Heal, Humana last year put money into DispatchHealth, which provides urgent medical care in the home.
Broussard said the insurer is testing a model in Atlanta that integrates the services of Kindred, DispatchHealth and Heal so that seniors can see a nurse or doctor, or even “visit” the emergency room, all without leaving the couch.
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Humana’s transformation is emblematic of an industry-wide shift toward integrated healthcare companies
Humana’s focus on delivering healthcare is part of a broader movement among health insurers to become more that just intermediaries who pay medical bills.
This industry-wide shift has been happening for some time, but it seems to be speeding up as insurers look for ways to control runaway healthcare costs.
The poster child for this trend is UnitedHealth Group, the healthcare behemoth that houses insurance company UnitedHealthcare and Optum, a company that manages pharmacy benefits and provides care, under one roof. Optum generates about 45% of UnitedHealth’s total earnings from operations.
Optum includes 1,400 medical clinics and employs or partners with 50,000 doctors. It aims to add at least another 10,000 doctors to its roster in the next year, UnitedHealth CEO David Wichmann said in January.
Broussard told Insider that Optum is a more diverse business than Humana’s healthcare services division aims to be. Humana is focusing more narrowly on integrating clinical services to deliver holistic care to seniors.
Still, Broussard wants to grow the care-delivery side of Humana over the next decade. The insurer’s healthcare services segment collected $25.8 billion in revenue and $789 million in earnings in 2019, driven in large part by its pharmacy benefit management business. Humana’s total revenue that year was $64.9 billion and its net income was $2.7 billion.
He noted that when Humana acquires the rest of Kindred Healthcare’s home health business, Humana will employ as many clinicians as it does other workers. Kindred’s home health operation employs 50,000 clinicians.
The COVID-19 pandemic is accelerating the changes underway at Humana
Broussard said the coronavirus crisis has bolstered the case for offering care through multiple channels, whether in person in a patient’s home or virtually.
“There are many things that are done in the hospital that can be done in someone’s home,” he said. “I think the ability to serve the population in a broader way I think it was coming, but it just wasn’t coming fast enough, and the pandemic pushed that.”
The pandemic also highlighted the benefits of moving away from the traditional way of paying for care based on the volume of services provided, toward a model that pays doctors set amounts to keep patients healthy.
Doctors in such value-based arrangements continued to receive payments when patients stopped coming to the clinic for fear of contracting the coronavirus. Other healthcare providers saw their revenues plummet. Value-based clinics were also able to pivot quicker to telehealth and were more proactive about reaching out to patients, Broussard said.
As a result, Humana is pushing faster and faster into providing care in different settings. It’s also investing heavily in its technology, and launched a new internal Medicare company called Author, which will provide digitally-enabled health plans for seniors.
“I just feel that we’re at this cusp here,” Broussard said. “We still have a lot of development and organic build to do, but the energy level and the effort and the focus and the prioritization is much different.”

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$1.5 billion digital-health startup Ro wants to be your online doctor. Here's how its coronavirus response rooted in rapid at-home testing fits into the new unicorn's long-term strategy.

Summary List PlacementRo, a hot digital health startup best known for selling generic Viagra, is taking another big step in expanding its healthcare ambitions.
Ro is teaming up with computer vision startup Gauss to offer at-home rapid COVID-19 antigen tests that provide results in 15 minutes, the companies announced Wednesday. The test is still awaiting emergency clearance from the US Food and Drug Administration. Ro doesn’t take insurance and declined to say how much it’ll charge for the test. 
The launch comes just a month after Ro announced it acquired Workpath, a startup that allows hospitals and clinics to send phlebotomists into patients’ homes to perform routine blood tests, furthering its goals to expand beyond its initial suite of mail-order pharmaceuticals for conditions such as hair loss or erectile dysfunction.
Ro’s aggressive moves into all parts of healthcare come at a pivotal moment for the industry, which has been upended by the coronavirus pandemic. Unlike hospitals or clinics, Ro’s virtual care model combined with its network of real-world pharmacies and logistics makes it poised to tackle distribution for rapid tests and eventually vaccines, cofounder and CEO Zachariah Reitano told Business Insider.
“Right now there are two things universally needed in healthcare: access to the vaccine and easy access to rapid testing,” Reitano said. “We have the technology and the infrastructure to distribute tests to patients across the country, and we have the unique capability to facilitate a connection to a doctor if it requires a prescription to get the test. We can mail it to them and guide them through the next steps. Not many other companies can do that.”
Read more: The 26 billion-dollar startups to watch that are revolutionizing healthcare in 2021
Ro’s ambitions extend well beyond telemedicine
Ro started with a modest proposal: patients could virtually meet with a care provider and get generic prescription medications for conditions like hair loss or erectile dysfunction sent to their homes for a nominal fee.
Nearly four years later and the startup has skyrocketed to a $1.5 billion valuation while aggressively adding new products and services for its growing group of patients. 
When the coronavirus pandemic took root, companies like Ro and its competitor Hims added new patients as doctors’ offices shuttered and people remained hesitant to venture out to a nearby pharmacy, Reitano said. The virtual care model and easy shipping appeared tailor-made for a pandemic that left most Americans house-bound.
“Growth isn’t a problem right now,” Reitano said. “We’re going to expand and add services to try and keep up with the demand of the country.”
At present, that means building specifically for the coronavirus pandemic, Reitano said. The Gauss partnership is the first step in what Reitano said was his company’s responsibility in lowering transmission rates and saving peoples’ lives.
Reitano also said Ro is interested in helping with vaccine distribution, but declined to discuss the plans.
Ro’s future lies in testing
A more ambitious future for Ro could rely heavily on building a network of traditional healthcare services instead of relying on the partnership model it’s worked on in the past, repeat healthcare founder and investor Nikhil Krishnan said.
The ability to control pricing and cut out middlemen is key to the company’s long-term success because it relies on patients paying cash for services instead of working with insurance plans. The lower Ro’s costs, the lower it can keep prices.
“Lab testing, depending on how it’s structured, can be really expensive to outsource so it makes sense to bring it in-house at some point,” Krishnan said. “Ro has been pretty ahead of the curve in bringing those pieces of the value chain in-house.”
Part of the appeal of launching an at-home COVID-19 test is that Ro can substantially cut costs of currently available at-home tests that retail for between $100 and $150 per testing kit. 
“We’d like to put pressure on the market and bring the prices down across the board,” Reitano said.
To stay competitive, Ro wants to play a bigger role in its customers’ lives but needs more patient data to be effective. For instance, by offering lab tests and screenings from Workpath, it can help treat a larger variety of conditions through telemedicine and eventually in-person, Reitano said.
Krishnan said Ro is building an experience for patients in the real world after establishing a relationship with them online. Testing, and to some extent screening, can help companies like Ro gather more information on patients and better compete with physical healthcare practices.
“I don’t know if there’s necessarily a right way to strike a partnership, but I definitely think a lot of the telemedicine companies will have to figure out how to get this information eventually,” Krishnan said.
Reitano said he is eager to expand into other forms of testing with the goal of becoming what he calls a “fully integrated” primary care provider that can host virtual visits and ship a host of medications directly to patients while freeing up in-person care for those patients that truly need it.
“It’s just the beginning of us for testing,” Reitano said.SEE ALSO: 2 former Sequoia VCs just raised $500 million for their firm’s second fund. Here’s how they plan to spend the funds.
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