It was a busy week for publicly-traded companies in the digital health services sector as many reported their third quarter earnings. Here’s a look at the results from a few notable companies.
Losses don’t derail Oak Street Health
Oak Street Health, a Chicago-based tech-enabled company that offers primary care for Medicare-aged patients, reported a net loss of $130.4 million in the third quarter. But experts said other metrics are more indicative of the company’s overall health.
“Things don’t move that quickly at Oak Street—the model doesn’t change that much,” said Sandy Draper, senior managing director at Guggenheim Partners, a global investment and advisory firm. “I sort of feel like you need to evaluate this company on an annual basis.”
Rather than focusing a great deal of attention on quarterly findings, Draper said he instead looks at how quickly the company is able add more physical centers, which appears to be an increasing focus.
“The general progression for Oak Street within any given year is going to be smaller losses at the beginning of the year and then bigger losses at the end of the year—that’s the normal cadence,” he said. Draper added that he anticipates growth to slow as macroeconomic challenges mount.
The company’s revenue was $545.7 million, up 40% year over year and it increased year-end revenue guidance. This helped boost the stock 10% from trading at $18.67 per share at close of business Monday to $21.61 per share at close of business Thursday.
Privia Health inches towards profitability
Privia Health, an Arlington, Virginia-based physician enablement company, has taken a different approach from Oak Street’s emphasis on quick growth. And Privia Health is one of the few companies to see stock price growth after going public.
The company posted a net loss of $26.4 million through the first the three quarters of 2022, which compared favorably to a net loss of $176.3 million in 2021. In the 24 hours since announcing its third quarter earnings, Privia’s stock increased 12% from $26.12 per share to $28.53 per share.
Privia’s adjusted earnings before interest, taxes, depreciation, and amortization increased to $46.6 million, compared with $33.9 million in last year’s third quarter. The company, which went public in April 2021, said it had no debt and $324 million in pro forma net cash.
Draper said the approaches each company takes are different.
“Privia came at this from the beginning as, ‘We want to get it to being a profitable model that we can be in control of our growth with our own capital as early as possible.’” Draper said. “They’re not beholden on the capital markets and they balance their risk.”
Babylon Health reverse split its shares
Babylon Health, a London-based company which offers AI-enabled virtual diagnosis and medical appointments, said Wednesday it would reverse split its shares 1-for-25. The move is expected to take place when markets open Dec. 16 and will keep the company listed after it fell below the $1.00 threshold.
Babylon is eyeing profitability sometime before 2025. Several moves, including its divestment last month of Meritage Medical Network, an independent physician association, were made to help the company to reach its profitability goals. The company announced a nearly 300% year-over-year increase in revenue from $74.5 million to $288.9 million. It also improved its operational margins.
Hims & Hers surges, partners with ChristianaCare
Hims & Hers, a San Francisco-based direct-to-consumer telehealth company, generated $144.8 million in revenue in the third quarter of 2021. The company added 170,000 new subscribers, bringing the total subscriber count to 991,000. It expects to achieve profitability by the end of this year and increased year-end revenue guidance.
The company also said it was partnering with ChristianaCare, a health system across the mid-Atlantic region. The partnership allows medical providers on the Hims & Hers platform to connect patients with ChristianaCare’s Center for Virtual Health and its primary and specialty care provider network. These developments helped boost the stock 43%, going from trading at $4.13 per share on Monday to $6.15 per share at the end of business Thursday.
Talkspace names new CEO, posts loss
Talkspace, a New York City-based online behavioral company, named Dr. Jon Cohen as its new CEO. Cohen is replacing interim CEO Doug Braunstein, who will continue to serve as board chairman. Cohen was most recently CEO of BioReference Laboratories, one of the nation’s four largest commercial laboratories.
The company posted a $18 million net loss in the third quarter of 2022 and $61 million overall for the year. It has begun to switch to an enterprise business model selling to employers and health plans and away from its direct-to-consumer model, which saw a 36% reduction in active members.
This story first appeared in Digital Health Business & Technology.