22 March 2020 Equity Research Americas | United States Healthcare Technology 3rd Healthcare Disruptive Technologies & Innovations (HCDT&I) Virtual Day Recap Healthcare Technology & Distribution | Management Meeting Last week, we hosted our 3rd Healthcare Disruptive Technologies & Innovations (HCDT&I) day Research Analysts virtually. Presenters included executives from Altruista Health, Buoy Health, Livongo, Quartet Health, Somatus, Welltok, Iora Health, and Heal. We also hosted sessions with Will Brady, the Jailendra Singh Chief of Staff to HHS Deputy Secretary, and Dr. Sylvia Romm, Atlantic Health System’s CIO. 212 325 8121 [email protected] Technology Playing a Critical Role in Dealing with the COVID-19 Pandemic. Dealing with the COVID-19 pandemic was a key discussion topic at our HCDT&I day. Jermaine Brown Artificial Intelligence (AI) focused companies, such as Buoy Health, released a COVID-19 212 325 8125 screening tool that took the CDC guidelines and layered them on top of the AI. Companies [email protected] such as Livongo and Somatus serve chronic care populations, which are most vulnerable to Adam Heussner the coronavirus. Their role and solutions in these circumstances vary from helping members 212 325 4727 manage stress/anxiety to sharing a detailed picture of member’s underlying conditions with [email protected] the appropriate provider to best inform the treatment (if needed). Livongo has not seen any disruption to date in sales activity. Quartet Health, which serves individuals with mental health conditions, is focused on the rapid acceleration of digital care options to help its members deal with fear and anxiety related to the pandemic. The COVID-19 pandemic has pushed Iora Health and Heal (both companies have historically relied on in-person interactions with members) to make changes to their clinical protocols, increase their focus on virtual care, etc. Finally, companies such as Welltok, are leveraging its consumer data and multi-channel communication platform to increase communication, education and support to its members and partners. Finally, Altruista Health noted that its RFP backlog has not been impacted by COVID-19. However, the company notes that the new sales may be impacted given that it’ll be difficult for people to come together to make decisions. Both Keynote Speakers Highlighted the Importance of Telehealth in the Current Circumstances. Dr. Romm noted that telehealth utilization has increased recently, driven by its usage to triage patients, patients avoiding crowded places, and physicians wanting to protect their staff/self. Dr. Romm also emphasized that, though an extremely valuable resource in the current environment, telehealth has been burdened by regulations which have hampered its adoption curve in recent years. Mr. Brady, in his session, noted that the Administration’s decision to waive several telehealth restrictions & expand the access to telehealth services will provide the incentives for physicians to provide virtual care & for patients to adopt telemedicine as a first line of defense. Mr. Brady also noted that the effectiveness of the role telehealth plays in these unusual circumstances will influence how the telehealth industry needs to be regulated going forward. Consumer Engagement Remains Critical. Several of the presenting companies highlighted the increasing importance of consumer engagement. Payers and providers are now increasingly evaluated through rating systems that incorporate customer satisfaction and engagement. The focus remains to deliver care in better, cheaper, and more efficient ways in locations that are easier to access and convenient for consumers. DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. 22 March 2020 Table of Contents Keynote Speakers 4 Will Brady (Chief of Staff to U.S. Department of Health and Human Services Deputy Secretary) ..................................................................................................................... 4 Dr. Sylvia Romm, Atlantic Health System’s CIO ............................................................... 6 Altruista Health 10 Business Model ........................................................................................................... 10 Market Opportunity ...................................................................................................... 10 Value Proposition ......................................................................................................... 11 Defined Initiatives to Drive Continued Growth ................................................................. 12 COVID-19 Impact to Business ...................................................................................... 12 Buoy Health 13 Creating A Front Door to Healthcare ............................................................................. 13 Role as a Health Navigator ........................................................................................... 13 Revenue Model ............................................................................................................ 14 Selling to Health Systems ............................................................................................. 15 Responding to COVID-19 Pandemic ............................................................................. 15 Heal 17 Business Model ........................................................................................................... 17 Physicians and Other Company Staff ............................................................................ 17 Financials .................................................................................................................... 18 Responding to COVID-19 Pandemic ............................................................................. 18 Iora Health 19 Business Model ........................................................................................................... 19 Focus on Medicare Advantage ...................................................................................... 19 Sourcing Patients......................................................................................................... 20 Target Markets & Hiring Physicians ............................................................................... 20 Responding to COVID-19 Pandemic ............................................................................. 21 Livongo Health 22 Business Model ........................................................................................................... 22 Roadmap to Growth ..................................................................................................... 23 Telehealth or Virtual Health? ......................................................................................... 24 Responding to COVID-19 Pandemic ............................................................................. 24 Financials .................................................................................................................... 24 Quartet Health 26 Two-Sided Business Model Treats Patients Holistically ................................................... 26 Healthcare Technology 2 22 March 2020 $5-10 Billion TAM with Few Competitors....................................................................... 27 Value Creation Opportunities ........................................................................................ 27 On Shortage of Mental Health Specialists ...................................................................... 27 Competing with Tele-Behavioral Services....................................................................... 28 Quartet’s Response to COVID-19 Pandemic ................................................................. 28 Thoughts on Regulations .............................................................................................. 28 Somatus 29 Business Profile and Market Opportunity ....................................................................... 29 Tech Platform Improves Network engagement and Proactive Outreach ........................... 30 Government Regulation ................................................................................................ 30 Update on Somatus’ Response to COVID-19 ................................................................ 30 Welltok 31 Well-Diversified Client base .......................................................................................... 31 5-15x ROI Across Market Segments ............................................................................. 31 Competitive Landscape ................................................................................................ 32 Integrated Partnerships ................................................................................................ 32 Responding to COVID-19 Pandemic ............................................................................. 32 Financials ...................................................................................................................