Nashville-based employee wellness company Healthways has agreed to sell its population health business to Atlanta-based Sharecare. In an interview with MobiHealthNews, Sharecare CEO Jeff Arnold called it "by far our biggest acquisition."
Sharecare will give Healthways $30 million in common stock in exchange for the population health business, which includes 1,700 employees and, according to Arnold, does about $259 million annually in revenue. Healthways will also pay Sharecare $25 million upfront to fund an expected negative cash flow. If losses exceed $25 million, Sharecare can also reduce the stock payment to as little as $10 million.
"Our vision is we want to be the only health app on your phone. The same way you don’t have 12 apps to manage your money, you’re not going to have 12 apps to manage your health," Arnold said. "We have made 10 acquisitions over the last several years putting together what we think the key pieces are that are going to enable you to manage all your health and wellness in one place."
One piece that was missing, that Healthways' business will help fill in, is chronic disease management and outcomes-based coaching, Arnold said. The Healthways business includes several smaller assets: Gallup-Healthways Well-Being Index; Innergy Healthier Weight, a weight loss-focused collaboration with Johns Hopkins Medicine, Dan Buettner’s Blue Zones, a community health project; Dr. Ornish’s Program for Reversing Heart Disease; and Healthways’ stake in Healthways Brasil Servicos de Consultoria Ltda., its Brazil-based joint venture and innovation lab with SulAmerica Servicos de Saude S.A., a subsidiary of the largest independent insurer in Brazil. These businesses will be integrated into existing Sharecare offerings as appropriate -- for instance, the Gallup index will be merged with Sharecare's RealAge assessment tool.
"So that was the primary reason," Arnold said. "The second reason is they have a massive customer base. Over a quarter billion dollars in revenue, huge clients from the state of Hawaii to CareFirst in DC to FedEx to Lockheed Martin. We wanted to be able to deploy our Sharecare assets into those populations."
Healthways, which also divested its MeYou Health subsidiary in a deal MobiHealthNews covered last week, is getting out of population health in order to focus on its network solutions business, which includes the Silver Sneakers program, a fitness program for older adults.
“Our strategic review of the business has confirmed that our Network Solutions business has an attractive financial profile, high-quality assets and an excellent platform for growth,” Healthways CEO Donato Tramuto said in a statement. “We will have greater focus and the flexibility to invest in what we believe has been an underappreciated, high growth set of services and capabilities."
Tramuto will join Sharecare's board of directors. All 1,700 employees of Healthways' population health business will join Sharecare, including Total Population Health Service president Sean Slovenski, who will move to Sharecare as president of its population health business and Healthways CFO Alfred Lumsdaine, who will become chief operating and financial officer of the population health group at Sharecare. The hope of both companies is that they will have a close working relationship going forward, Arnold told MobiHealthNews.
"If you look, the way we won this transaction — and there were other bidders for this — is we sold them on ‘this is what’s best for the employees, this was best for the clients, and this is a longterm partnership, not just divesting of an asset’," he said. "We’re going to be in the same office space together, let’s work together. You guys have been pioneering in disease management since the 90s, let’s make that vision come to life."