Gerbsman Partners has been retained by LifeNexus, Inc. (“LifeNexus”), to solicit interest for the acquisition of the assets of its Company, including its Intellectual Property (“IP”), in whole or in part (collectively, the “LifeNexus Assets”).
IMPORTANT LEGAL NOTICE
The information in this memorandum does not constitute the whole or any part of an offer or a contract.
The information contained in this memorandum relating to LifeNexus Assets has been supplied by third parties and obtained from a variety of sources. It has not been independently investigated or verified by Gerbsman Partners or their respective agents.
Potential purchasers should not rely on any information contained in this memorandum or provided by Gerbsman Partners (or their respective staff, agents, and attorneys) in connection herewith, whether transmitted orally or in writing (the “information”), as a statement, opinion, or representation of fact. Interested parties should satisfy themselves through independent investigations as they or their legal and financial advisors see fit.
Gerbsman Partners, and their respective staff, agents, and attorneys, (i) disclaim any and all implied warranties concerning the truth, accuracy, and completeness of any information provided in connection herewith and (ii) do not accept liability for the information, including that contained in this memorandum, whether that liability arises by reasons of Gerbsman Partners’ negligence or otherwise.
Any sale of the LifeNexus Assets will be made on an “as-is,” “where-is,” and “with all faults” basis, without any warranties, representations, or guarantees, either express or implied, of any kind, nature, or type whatsoever from, or on behalf of Gerbsman Partners. Without limiting the generality of the foregoing, Gerbsman Partners, and their respective staff, agents, and attorneys, hereby expressly disclaim any and all implied warranties concerning the condition of the LifeNexus Assets and any portions thereof, including, but not limited to, environmental conditions, compliance with any government regulations or requirements, the implied warranties of habitability, merchantability, or fitness for a particular purpose.
This memorandum contains confidential information and is not to be supplied to any person without Gerbsman Partners’ prior consent.
Background
LifeNexus is a privately-held company in the consumer healthcare technology space and creators of iChip®, headquartered in Mesa, AZ. iChip enables consumers to instantly access and share their personal health information when and where they need it. Leveraging payer data, analytics and programs, the technology automatically updates and populates an iChip Health Record that consumers can view, enhance and share using the iChip mobile app, web portal or chip-enabled benefits ID card.
LifeNexus has raised over $33M to develop the market, create the product and IP, and deploy iChip. The Company has incurred book net operating losses since its inception in excess of $38M. A section 382 analysis will be needed to determine the viability of tax attributes related to these book net operating losses. Preliminary analysis of the available research and development tax credits is approximately $1M. Key investors include: Camden Partners, Mosiac Health, Cambia Health, and Caldwell Management AG.
Incorporated in 2004, LifeNexus became the developer of the nation’s first multi-purpose consumer health card, the Personal Health Card®. Consumer-entered health information was stored on the physical card and shared during emergency situations. Through relationships with MasterCard and Visa, the Personal Health Card was expanded to include optional payment functionality.
Capitalizing on extensive testing and research and changing market opportunities, the product has evolved from a direct-to-consumer emergency card to a mass-market robust platform used for everyday healthcare needs. The most recent version of the company’s consumer engagement platform was released in the spring of 2013. The iChip platform uses cloud-based computing along with consumer tools, including a chip-enabled insurance card and smart-phone application to provide access to personal health information when and where it is needed. Through these technologies, a patient has anywhere, anytime access to his or her electronic healthcare record.
iChip is designed to improve healthcare experiences and outcomes by delivering consumer-controlled health information that is automatically updated and presented at the point of care. By putting the information in the hands of the consumer, iChip ensures that essential health information gets past the front desk and into the treatment room where it is most valuable. With iChip, health plans and other risk entities are better equipped to address many of today’s most pressing issues including improving quality metrics like Star ratings and HEDIS measures, closing gaps in care, improving risk score coding, improving member engagement and satisfaction rates, all which contribute to better diagnoses and treatments leading to better health outcomes.
LifeNexus implemented its beta test with HMSA in 2013 and has built a robust pipeline across health plans, Accountable Care Organizations and large self-insured employers.
Highlights
Company built by a team of senior healthcare and technology executives, each with 20+ years of experience across payer, provider and consumer segments
iChip uses widely-adopted consumer technology to put personalized health information and analytics in the hands of consumers and their caregivers wherever and whenever they need it to improve the consumer’s healthcare experience, improve the caregiver’s ability to diagnose and treat, and foster engagement
Platform built end-to-end on HIPPA secure, cloud-based technology that leverages proprietary encryption techniques, leading-edge mobile capabilities such as geolocation-enabled rapid patient check-in
Underlying the iChip solution are patent-protected intellectual property (11 issued, 2 pending) and trademarks (8 registered, 1 pending)
The iChip solution leverages consumer-centric design founded on principles of accepted behavioral science to foster optimal patient engagement (specifically the motivations for participation, management, sustainment, self-efficacy, and well-being), while also addressing the emotional needs of patients
Value to industry stake-holders validated through 3rd party surveys conducted by organizations including AARP, Visa and Alliance Data
Implemented first client, Amerigroup NV, in February 2014
Potential significant net operating losses and research and development tax credits
LifeNexus Overview
LifeNexus uses a proprietary consumer technology platform, iChip, to put personalized health information and analytics in the hands of consumers and their caregivers wherever and whenever they need it to improve the consumer’s experience, improve the caregiver’s ability to diagnose and treat, and foster better engagement.
By ensuring that consumers’ health information shows up where and when they show up, LifeNexus has created the first consumer-enabled point of care channel, which provides value to all of healthcare’s stakeholders:
For Consumers: iChip makes healthcare more convenient and satisfying
For Payers: iChip engages consumers and promotes better results
For Providers: iChip informs diagnosis and treatment and improves the physician/patient relationship
Favorable Market Conditions
Market conditions are increasingly favorable:
1. Healthcare delivery is being “deconstructed”, requiring that consumers control and have access to their personal-health information
2. Consumerism in healthcare continues to accelerate
3. Technology (both consumer and provider based) is facilitating new ways for consumers to interact with the healthcare system
4. The Affordable Care Act (ACA) has changed the competitive landscape, requiring that health organizations of all types have better insight on the results they achieve:
– Reimbursement is increasingly based on the value of care delivered
– Competition is based on the ability to improve the health of populations and satisfy consumers
– Accelerated blurring of roles between payers and providers continues
– Risk-adjustment in exchange and senior markets drives increasing percentage of revenue
5. Consumer Engagement has become key to long term, sustainable cost trends and quality improvement at a time when there is a growing number of disengaged consumers
The iChip platform responds to these evolving demands of the market. Specifically, iChip:
1. Allows consumers and their caregivers to access personal health information whenever and wherever they need it using technology best suited to the consumer and provided to the caregiver in the way that best fits their workflow
2. Is fundamentally a consumer product with value for the consumer (convenience) but also utility for their caregiver (insight and information)
3. Utilizes the latest consumer and provider technologies to deliver value
4. Delivers insight that improves the metrics health organizations need to improve to be competitive and responsive to consumers, including HEDIS, STARS, and other health improvement, satisfaction and financial priorities
5. Is built on behavioral science using health information to capitalize on the trusted nature of the patient and provider relationship at the point and time of care (wherever that may be) to reliably facilitate positive healthcare experiences and help foster increased consumer engagement
6. Delivers appropriate diagnosis codes with every encounter improving coding accuracy and reducing costs associated with retrospective reviews and assessments
Current market approaches lack:
1. Effective timing and engagement – Payers are missing a primary opportunity to engage their consumer when it matters most – they are thinking and concerned about their health
2. Right information for physicians – Despite all the data, all the registries, all the EMRs and practice management systems, physicians still don’t have the information they need at the time of care
3. Consumer- involved, consumer-designed solutions – Consumers are not involved; solutions are not designed for consumers
How iChip Works:
The iChip platform draws relevant consumer health and insurance data, including administrative, clinical and analytic information from all available data sources (payer eligibility and claims database, provider EMR/EHR, consumer self-reported) and assembles it into a continuously updated, longitudinal health record that can be linked to family members, shared with remote care teams or pushed at the point of care to facilitate check-in.
Consumers can access their personal health information anytime on any web-enabled device and maintain complete control of when and where their information is shared. When consumers show up at iChip participating providers, they can use the smart-phone app or chip-enabled insurance card to facilitate a more seamless check-in.
What iChip Delivers:
iChip delivers relevant, personalized information that provides meaningful insight into a member’s health in a way that it can be quickly reviewed, assessed and acted upon when a member needs their information or when they arrive for healthcare services.
iChip Health Record
The iChip Health Record (iHR) is a powerful and insightful tool that gives members and their providers an up-to-date, deeper look at the individual’s health. Data elements in the iHR are organized and targeted to specific audiences to enable an improved healthcare experience and positive results. Such elements include, but are not limited to administrative and clinical data and analytics. Specifically, iChip:
1. Streamlines check-in procedures and decreases processing time by providing front office staff with administrative data such as demographic data, confirmed eligibility, primary care provider, emergency contact and advance directives
2. Decreases the need for the “clipboard exercise,” informs member-provider conversations and improves diagnosis and treatment by providing doctors and clinical staff with member-specific clinical data like health encounters from the last 90-days, medical history, medication lists and allergies
3. Helps doctors identify and close gaps in care and provider staff appropriately code risk at the point of care by pushing health plan analytics such as care reminders, risk adjustment diagnosis codes, predictive analytics and other health outcome priorities to providers when the member arrives for care
Market Differentiation
The iChip solution is highly differentiated in the market as the only consumer solution that allows consumers and their caregivers access to personal health information anywhere, anytime using technology the consumer chooses, delivered at the point of care in a manner that the care giver choose:
1. Simplicity – Simple design is easy and convenient for members to use and eases administrative hassle for physicians
2. Engagement – With one card/mobile app solution, members know more about their health and are able to have more productive conversations with their caregiver at the point of card
3. Better Decisions – Physicians are able to make more informed decisions related to care gaps, medication management and diagnoses
Market Opportunity
Within the core market segments (payers, providers, large ASO employers) several sub-segments have evolved that derive exceptional value from the platform due to specific market sub-segment problems:
1. Medicare Advantage Health Plans: Improved risk-adjustment and STAR ratings
2. Accountable Care Organizations: Improved patient engagement, monitoring and care management
3. Health Insurance Exchange Payers: Improved risk-adjustment and STAR ratings. Improved direct to consumer sales and member persistency
4. Large Self-Insured Employers: Improved member engagement, improved employee satisfaction rates, higher employee retention rates
Recent statistics from the CDC (Centers for Disease Control and Prevention) indicate that there are more than 1.2 billion provider visits per year. This includes visits to physician offices, hospital outpatient and emergency departments. Based on that statistic, American consumers conduct an average of 4 visits per year. iChip has opened the point of care as an additional communication channel, creating millions of new and highly impactful opportunities to connect with consumers and influence how they experience healthcare and manage their health. Consumers can also access their health information anytime, creating millions of additional touchpoints.
Addressable Market Opportunity
Total Addressable U.S. Market = 260,096,015 Insured* Americans. Sales channels include:
Recent statistics from the CDC (Centers for Disease Control and Prevention) indicate that there are more than 1.2 billion provider visits per year. This includes visits to physician offices, hospital outpatient and emergency departments. Based on that statistic, American consumers conduct an average of 4 visits per year. iChip has opened the point of care as an additional communication channel, creating millions of new and highly impactful opportunities to connect with consumers and influence how they experience healthcare and manage their health. Consumers can also access their health information anytime, creating millions of additional touchpoints.
Market Adoption
Amerigroup NV implemented iChip’s card product in their Medicaid population in 2013. LifeNexus is currently in various stages of contracting and implementation with a Co-op (e.g. New Mexico Health Connections) and Blues plans (e.g. Blue Cross Blue Shield of North Carolina and Blue Cross Blue Shield of Tennessee). The robust pipeline confirms strong interest among LifeNexus core market segments (payers, providers, large ASO employers).
Market Research Confirms iChip Appeal
Providers and consumers both agree that iChip has strong appeal.
LifeNexus along with AARP, Visa, and Alliance Data, have conducted independent studies with over 5,000 consumers. The results confirm universal appeal of 90% across all demographics (e.g. age, sex, income). Appeal increases for individuals with chronic health conditions (self or immediate family member) or who act as a caregiver. Convenience is cited as the primary benefit.
Over 330 physicians and office administrators were surveyed and physicians indicated that the iChip Health Record would:
1. Be used by them in the treatment of their patient – 88%
2. Help to inform diagnosis and treatment decisions – 90%
3. Assist with coordination of care among various providers – 90%
4. Enhance communication between them and their patient – 91%
Intellectual Property
The iChip solution implements patent-protected intellectual property described in Attachment B. LifeNexus has 11 issued patents and 2 pending. LifeNexus has 8 registered trademarks and one pending as described in Attachment C. In addition to iChip and related trademarks, Personal Health Card is also a registered trademark of LifeNexus.
Why LifeNexus is so Attractive?
· Attractive Industry – iChip’s mobile health technology is poised to capitalize on favorable market trends uniquely addressing real problems. As a result of ACA implementation and evolving consumer expectations, the $3 Trillion healthcare market is going through unprecedented change. As it is changing nearly every other business, the revolution in mobile communications and information technology is changing the way healthcare is delivered, consumed, and managed. Healthcare information is quickly transitioning from its traditional repository in static, handwritten charts that reside in a doctor’s office. It is moving to devices that sit in the palm of the hand while reaching back into the cloud, where patients can access and add to their records at any time. Continuous monitoring through wearable technologies and smartphone apps is creating a wholly novel, totally accessible, 24/7 digitized picture of people’s health. The volume of health and medical app downloads is projected to reach 142 million in 2016, according to Juniper Research. By 2018, IDC Health Insights predicts, 65 percent of consumer transactions involving healthcare will make use of a mobile device.
· Market Development – LifeNexus has raised over $33M to develop the product, IP, and market. The opportunity now exists to capitalize on this extensive development, market experience, and knowledge gained. Many organizations are developing mobile health strategies and platforms. The iChip platform could serve as their primary mobile technology or easily fit into their existing technology.
· Extensible Healthcare Technology Platform – LifeNexus has invested significant time and financial resources to leverage software architects and developers, led by Dr. Kris Jamsa, a renowned computer scientist and technology author, to secure intellectual property and to create a robust and extensible healthcare architecture, with agnostic data-integration capabilities, which may support future integration potential for key healthcare market needs. As an illustration of the potential opportunities for near-term expansion of the iChip platform could include:
– Integrating wearable-device data (such as FitBit) into a patient’s health record which will bring real-time historical data on patient exercise practices, heart rate, and sleep patterns to healthcare providers
– integrating card- or mobile-based point-of-care payment through common payment providers such as Visa, MasterCard, and PayPal
– Integrating health-savings accounts for provider payment and patient utilization thereof
– Providing a patient’s insurance deductibles and estimated spend to date at time of care to facilitate more effective revenue cycle for providers
– Providing tele-doc practitioners with improved real-time insight into a patient’s medical history
– Providing emergency-service providers with improved insights into a patient’s medical history and allergies
– Providing support to the growing market of Spanish-speaking patients through a Spanish-language-based Web and mobile solution
– Integrating appointment reminders and physician messaging capabilities
Numerous other opportunities exist for short term and long term opportunities to leverage the iChip platform.
· Market Adoption and Validation – iChip delivers a strong, balanced value prop for all of healthcare stakeholders.
– Amerigroup NV implemented iChip’s card product in their Medicaid population in 2014. LifeNexus is currently in various stages of contracting and implementation with a Co-op (e.g. New Mexico Health Connections) and Blues plans (e.g. Blue Cross Blue Shield of North Carolina and Blue Cross Blue Shield of Tennessee). The robust pipeline confirms strong interest among LifeNexus core market segments (payers, providers, large ASO employers).
– Consumer research conducted with leading independent organizations (e.g. AARP, VISA, Alliance Data) validates that iChip has strong appeal among all demographic segments, citing convenience as the primary benefit
– Provider research coupled with extensive discussions confirms providers see significant value in iChip indicating it will help to inform diagnosis and treatment decisions, assist with coordination of care among various providers, enhance communication between them and their patient, and more
· Opportunity for Growth – The US market for iChip alone is extensive; however, the product has international potential as well. Within the US, iChip has gained traction across target markets as evidenced by a robust pipeline. iChip has the flexibility to be both a population-based solution or a targeted solution for high value sub-segments such as Medicare Advantage, commercial exchange and Accountable Care Organizations.
Excellent Supply Chain Relationships and Smartcard Experience – LifeNexus has built excellent partnerships with industry leading, global companies for smartcard manufacturing and supporting products. These relationships include CPI Card Group (card manufacturing), Cherry (readers), and STMicro (modules). LifeNexus has experience producing both financial and non-financial iChip cards.
Key Management
Kris Jamsa, Chief Technology Officer
Kris Jamsa, PhD, MBA, has twenty-five years of leadership and P&L responsibility specifically in the healthcare, computer, retail and publishing industries. His extensive knowledge and passion for computing has led him to author more than 100 books covering topics such as security, wireless, hand-held devices, network protocols, operating systems, programming languages and hardware internals. In the 1990s, he built a two-person start-up into a multimillion-dollar global organization with product distribution to 70 countries in 28 languages; it was later acquired by a major publisher. Dr. Jamsa currently serves as the Chief Technology Officer – putting both his technology background and start-up expertise into leading the LifeNexus development team. He holds several advanced degrees, including an MBA from San Diego State University, a PhD in Computer Science from Arizona State and a second PhD in Education.
Angie Fyfe, Chief Operating Officer
Angie Fyfe brings 25 years of executive experience in diverse industries including healthcare, financial services, and retail, serving in a variety of leadership positions within operations, customer care, sales, marketing, and client services. Most recently, she led a $50M business unit for SHPS Carewise Health, a leader in health and wellness solutions for large employers. Prior to SHPS, Ms. Fyfe served in various executive positions at LifeMasters, including Chief Growth Officer and Vice President of Operations. Previously to joining LifeMasters, Ms. Fyfe was employed at Deluxe Corporation where she served for 16 years in progressive leadership roles, most recently as Director of Operations for Customer Care. Her operations were recognized as World Class by the Brady Group, a leading call center consulting firm, placing them in the top 3 percent of all call centers in the United States. Ms. Fyfe earned her B.A. in marketing at the University of Tulsa and her MBA from the University of Phoenix.
Tana Gummere, VP of Finance
As a Certified Public Accountant and financial manager, Tana Gummere has over 30 years of experience in finance and both public and private accounting. She has provided senior leadership through debt and equity financing and contract negotiations for transactions of over $160M. Her many accomplishments include implementing accounting systems and internal controls for high growth companies that have grown to over $250M in sales in under 5 years. Prior to 1988, she served as a senior auditor at KPMG Peat Marwick, where she had a wide range of responsibilities, including business consulting, and managing client audits and financial reporting services. Tana holds a B.S. in Business Administration from California State University, Hayward and is a member of the California Society of CPAs.
Board of Directors
Bill Jacobs (Chairman) – Former Chief Operating Officer for MasterCard International
Christopher W. Kersey, MD, MBA – Partner and Managing Member of Camden Partners
John Grotting – Operating Partner for Frazier Healthcare
Maureen K. O’Connor – President of Mosaic Health Solutions
Philip Caldwell – Founding Board Member and Shareholder of CKP Fiduciaries AG
Rob Coppedge – SVP of Strategic Investment and Corporate Development for Cambia Health Solutions
Bidding Process for Interested Buyers
The Bidding Process for Interested Buyers
Interested and qualified parties will be expected to sign a nondisclosure agreement (attached hereto as Attachment A) to have access to key members of the management and intellectual capital teams and the due diligence “war room” documentation (the “Due Diligence Access”). Each interested party, as a consequence of the Due Diligence Access granted to it, shall be deemed to acknowledge and represent (i) that it is bound by the bidding procedures described herein; (ii) that it has an opportunity to inspect and examine the LifeNexus Assets and to review all pertinent documents and information with respect thereto; (iii) that it is not relying upon any written or oral statements, representations, or warranties of Gerbsman Partners or LifeNexus, or their respective staff, agents, or attorneys; and (iv) all such documents and reports have been provided solely for the convenience of the interested party, and LifeNexus and Gerbsman Partners (and their respective, staff, agents, or attorneys) do not make any representations as to the accuracy or completeness of the same.
Following an initial round of due diligence, interested parties will be invited to participate with a sealed bid, for the acquisition of the LifeNexus Assets. Sealed bids must be submitted so that they are actually received by Gerbsman Partners no later than Tuesday, December 22, 2015 at 3:00 p.m. Mountain Time (the “Bid Deadline”) at Gerbsman Partners office, located at 211 Laurel Grove Avenue, Kentfield, CA 94904. Please also email steve@gerbsmanpartners.com with any bid.
Bids should identify those assets being tendered for in a specific and identifiable way.
Any person or other entity making a bid must be prepared to provide independent confirmation that they possess the financial resources to complete the purchase where applicable. All bids must be accompanied by a refundable deposit check in the amount of $200,000 (the refundable deposit will be held in LifeNexus’ legal counsel trust account). The winning bidder will be notified within 3 business days of the Bid Deadline. Unsuccessful bidders will have their deposits returned to them within 3 business days of notification that they are an unsuccessful bidder.
LifeNexus reserves the right to, in its sole discretion, accept or reject any bid, or withdraw any or all of the assets from sale. Interested parties should understand that it is expected that the highest and best bid submitted will be chosen as the winning bidder and bidders may not have the opportunity to improve their bids after submission.
LifeNexus will require the successful bidder to close within a 7 day period. Any or all of the assets of LifeNexus will be sold on an “as is, where is” basis, with no representation or warranties whatsoever.
All sales, transfer, and recording taxes, stamp taxes, or similar taxes, if any, relating to the sale of the LifeNexus Assets shall be the sole responsibility of the successful bidder and shall be paid LifeNexus at the closing of each transaction. For additional information, please see below and/or contact:
For additional information, please see below and/or contact:
Steven R. Gerbsman
Gerbsman Partners
(415) 456- 0628
steve@gerbsmanpartners.com
Kenneth Hardesty
Gerbsman Partners
(408) 591-7528
ken@gerbsmanpartners.com
