Chart of the Week
Congress.
American Rescue Act
- The American Rescue Act was signed by President Biden. It represents more money pouring into testing, surveillance, tracing, sequencing, vaccination and supply chain. More analysis to be done. Feel free to read it here. (ILMN, LH, DGX)
Sequester & PAYGO
- The sequester moratorium, which has been a tailwind for some of the Medicare-centric providers like Home Health and Medicare Advantage, is set to sunset March 31. House Democrats are planning to take up an extension until the end of 2021 as part of a larger effort to waive PAYGO scorecard for the recently passed American Rescue Act. (If you are not familiar with the PAYGO law The Tax Policy Center has a great explanation here.)
- If the PAYGO scorecard procedure is not waived, the Office of Management and Budget would be required to issue a sequestration order within 15 days of the Congressional Session’s end to reduce spending by $381B. Medicare cuts can only amount to $36B so the balance would need to come from other mandatory accounts excluding low-income programs and Social Security. The CBO estimates that only $80-$90 billion is sequester-able. Regardless, $36B from Medicare is not an insignificant amount of money. You can read CBO's explanation here.
- The burning question is whether the Senate will go along with waiving PAYGO. I tend to think not without extracting a ton of flesh. By the time summer rolls around, there is likely to be a bit of indigestion over the spending-a-looza on Capitol Hill and Republicans and moderate Democrats may take advantage (AMED, HUM, ANTM, EHC, LHCG).
The White House.
Rules Action.
Vaccine Providers
- HHS expanded the list of providers who can administer vaccinations. In addition to pharmacists, physicians, nurses, etc., now midwives, paramedics, physician’s assistants, respiratory therapists, dentists, podiatrists, optometrists and veterinarians are permitted to administer the vaccine.
- Additionally, any physician, APRN, RN, LPN, pharmacist, pharmacy intern, midwife, paramedic, respiratory therapist, dentists, PA, podiatrist, optometrists and veterinarian whose license is now inactive but was valid within the last 5 years may also administer vaccines.
- Students in the medical, nursing, pharmacy, midwife, EMT, physician assistant, respiratory therapy, dental, podiatry, optometry or veterinary fields may also administer vaccines after proper training.
- The idea here is to get a little more slack in the labor demand by pulling in additional supply. (AMN)
Annual Rulemaking
- The Hospice Wage Index, Payment Rate Update Rule was sent to White House and joins those for Inpatient Hospitals, Skilled Nursing, Inpatient Psychiatric, and Inpatient Rehabilitation Facilities. No surprises expected as we are early in the term. (CHE, AMED, LHCG)
Other Stuff.
- Woodcock for FDA Commission? In 2016, Scott Gottlieb made no secret of his interest in heading the FDA, lobbying pretty effectively for the nomination and served with distinction. I do not recall a time when a long-standing member of the bureaucracy was the object of so much advocacy in broad daylight. Janet Woodcock is getting a lot of support from past FDA commissioners to head the agency. After 37 years, she comes with her advocates and detractors. Some in Congress hold her responsible for some ill-advised approvals of opioids. Others have questioned her greenlighting certain cancer drugs. She is, however, without a doubt well-respected and quite capable.
- ESG Investing. The Labor Department announced they would not be enforcing a Trump era rule that prohibited the use of nonfinancial goals by certain fund managers. This rule was interpreted by many to target ESG priorities. We continue to anticipate the Biden administration will be moving forward with regulations to encourage ESG investing. (Stay tuned for our ESG framework which should be out this spring!)
Replays
On Wednesday, Matthew Holt, of SMAC(K) Health and I covered the waterfront on Health Care SPAC names. Replay note here for Health Policy Subs. You can access the replay directly here. (JWS, FCAC, VGAC, FAII, BFLY)
Today, we had our inaugural voyage for Health Care Unplugged monthly subscriber Q & A. Health Policy Unplugged subs can access replay here. It was fun. Thanks for all the nice words and great questions. I have saved them and will follow-up on the ones where I need to do more work.
Upcoming Events.
March 31 – Tom Tobin and I will welcome to the Hedgeye Studio our friend John Quinn of Wellnecity to talk about pent-up health care demand for employer sponsored insurance. Details to come.
SPAC and S-1 Corner.
Filed S-1s This Week
Alexandria AgTech Innovation Acquisition Corp. (GS - $250M) Life sciences as applied to agtech, food supply chain
BCC Investment Corp. (GS - $200M) General but sponsored by Bain Capital Credit which implies wide range of possibilities.
HighCape Capital Acquisition Corp. II (Cantor - $200M) Life Sciences and related businesses
S-I Notice of Effectiveness
Agile Growth Corp. (Citi - $300M – AGGRU) – Health IT (3/9/2021)
CF Acquisition Corp. VIII (Cantor - $200M) Health care, generally (3/11/2021)
Digital Transformation Opportunities (Barclays - $250M- DTOCU) Health technology and adjacent verticals (3/9/2021)
Longboard Pharmaceuticals (Citi - $92M - LBPH) clinical-stage biopharmaceutical company focused on developing novel, transformative medicines for neurological diseases (3/11/2021)
Prometheus BioSiences, Inc. (SVB Leelink – $200M - RXDX) 3/11/2021
PWP Forward Acquisition Corp. I (Citi - $200M FRWAU) Health & wellness for women (3/9/2021)
Silver Spike Acquisition Corp II. ($250M – SSPKU) Alternative wellness, Cannabis (3/10/2021)
Initial Business Combinations in Process
ARYA Sciences Acquisition Corp III – ARYA - Nautilus Biotechnology ($900)
Alpha Healthcare Acquisition Corp - AHAC – Humacyte
Big Rock Partners Acquisition Corp – BRPA NeuroRX
Our Take = NeuroRX is developing a drug regime for the treatment of bipolar disorder and Acute Suicidal Ideation/Behavior. Reported this week preliminary results from their Phase 2b/3 trial of ZYESAMI™ (aviptadil, previously RLF-100) performed in collaboration with Relief Therapeutics Holdings, AG (SIX:RLF; OTCQB:RLFTF) in patients with respiratory failure due to Critical COVID-19. The study showed that patients who were treated with the maximal standard of care plus ZYESAMI were discharged sooner from the hospital compared to those treated with placebo plus maximal standard of care (SOC)
Deerfield Healthcare Technology Acquisition – DFHT - CareMax/IMC Medical
Our Take = Caremax’s TAM is the Medicare Advantage market like $CLOV, $OSH and they appear to be establishing themselves as a risk bearing entity in partnership with health plans and providers. IMC Health is a primary care practice, that paired with CareMax’s risk-bearing solutions might make a good combination. We will reiterate, the MA market is getting highly penetrated, especially in urban areas and the competition for patients will be fierce. Both companies are based in Florida. New: Preliminary Proxy Statement
Falcon Capital Acquisition – FCAC Sharecare ($3.8B)
Our Take = We have been familiar with Sharecare for years and remain a little dubious. Sure, employers are getting more involved in managing their health care spend. Yes, digital therapeutics are a thing. Yet, we remain skeptical. Perhaps a deep dive into the proxy statement will help. Yesterday, Sharecare completed its umpteenth acquisition, doc.ai, an enterprise artificial intelligence platform.
Fortress Value Acquisition Corp. – FAII ATI Physical Therapy ($2.5B) Link to press release.
Our Take = The company operates 900 physical therapy clinics in 25 states focused on MSK treatment. Their client base includes employers, sports teams and individuals. Policy is pushing MSK procedures out of the hospital setting and away from captive sports medicine departments.
GigCapital2– GIX Uphealth/Cloudbreak Health
Our Take = Uphealth is a digital platform designed to manage chronic and complex care, medications and behavioral health. Cloudbreak provides a telehealth solution that includes quarantined inpatients. One of Cloudbreak’s most interesting features is its multilingual capabilities which should be accretive for providers in communities with non-English speaking patients. Not sure Uphealth offers enough to get behavior to change or encourage adoption.
GX Acquisition Corp – GXGXU Celularity ($1.7B)
Our Take = We love anything that pushes cell-level therapies and diagnostics forward. The company has several cell therapies in clinical and pre-clinical development that deploy allogeneic placenta derived cells.
Hudson Executive Investment Corp – HECCU Talkspace ($1.4B)
Our Take = Behavioral health via telemedicine will prove to be one of those COVID-19 trends that endures. It solves several problems for the incumbent system: availability of providers, cost and productivity. Behavioral/mental health services largely exist outside the health insurance system which eliminates a lot of regulatory risk
JAWS Acquisition Corp – JWS Cano Health
Our Take = Cano represents what we believe will be the most formidable Direct Contracting model in Medicare. Cano is participating in the implementation stage of the first two Direct Contracting Models. The primary care focus gives maximum insight into patient condition, needs and behaviors that can be influenced to avoid high cost care. One caveat since we still bear the scars of PhyCor: physicians drive patient flow and if you don’t keep them happy, they go elsewhere.
Leisure Acquisition Corp – LACQU Ensysce Biosciences ($207M)
Longview Acquisition Corp – BFLY Butterfly Network
Our Take = Butterfly makes portable ultrasound devices for the human and animal health markets. Portable means greater efficiency which is going to continue to be important as the health care delivery system works through the backlog of cases created by COVID. The Teleguidance system could prove to be valuable in areas with limited access to advanced technology.
Motion Acquisition Corp – MOTNU Ambulz (d.b.a DocGo)
Our Take = The company is working with Medicaid agencies to provide non-emergency transportation using modern app discharge tools. There is no doubt that NEMT in Medicaid is needed and the supply chain is decentralized, often undependable and frequently poorly trained. However, we need to see more as ambulance services had had a lot of reimbursement difficulties in years past.
VG Acquisition Corp. – VGAC 23andMe
Out Take = 23andMe plans on a future in drug development using their extensive library of genetic data. It seems like a reasonable plan, but privacy concerns are likely to be a feature of this company’s regulatory environment for some time to come.
If you are investing in SPACs but not super familiar with health care, hit and we can help.
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Emily Evans
Managing Director – Health Policy
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