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Why J.P. Morgan, Berkshire Hathaway, and Amazon’s plan to shake up healthcare fell apart

January 5, 2021, 3:52 PM UTC

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When J.P. Morgan, Berkshire Hathaway, and Amazon announced a joint venture aimed at upending healthcare costs in 2018, investors immediately had high expectations.

Insurance company stocks sank in droves on the news, mirroring the shockwave Amazon’s acquisition of Whole Foods sent through grocery stores shares. 

But markets aren’t always great predictors for how things pan out. On Monday, the joint venture known as Haven announced plans to shut down after falling short of its ambitions.

It was a lofty goal, and as a result, a terribly difficult one. Part of the reason for Haven’s shuttering appears to be that each of the companies, with their geographically disparate workforces, struggled to pool their resources as different areas required different solutions, per the Wall Street Journal.

And while J.P. Morgan, Amazon, and Berkshire Hathaway all hold significant financial firepower and manpower (with a combined 1.5 million employees)— perhaps it was not the kind necessary for pressuring hospitals to change.

Few seemed surprised that this attempt at revolutionizing the healthcare system and lowering costs from major heavyweights fell apart for Haven. Venrock Partner Bob Kocher and Bryan Roberts explained it like this over the phone late Monday: You can pull a couple of levers to lower the cost of healthcare from an employer perspective. One is by directly negotiating lower costs through hospitals and healthcare providers. But a problem for J.P. Morgan, Amazon, and Berkshire Hathaway is that the majority of their employees are likely healthy and skew young—individuals that are not very lucrative for most healthcare providers. “Hospitals won’t change for the minority and the ones that are not profitable,” says Roberts.

At any rate, each of the companies seem to be carrying on with plans to “collaborate informally” going forward, per a Haven spokesperson to CNBC, with the three firms seeking to split the remaining Haven staff.

And Amazon is still barrelling ahead with separate plans to become a pharmaceutical juggernaut, with its foray into selling prescription drugs. It also acquired PillPack for upward of $750 million in 2019.

CHINA: A lot is happening in China at the moment. Alibaba founder Jack Ma, who recently stepped into the crosshairs of Chinese regulators after criticizing the government for stifling innovation, has not been seen by the public in quite a while—kicking off a spiral of speculations about whether his disappearing act is voluntary or not. 

Meanwhile, in an interesting about-face, the New York Stock Exchange said it no longer plans to delist three Chinese telecom companies. Following an executive order from President Trump barring U.S. investments in Chinese firms with ties to the military, the bourse announced at the end of 2020 plans to delist China Mobile, China Telecom, and China Unicom. But in a vague announcement citing “consultation with the relevant regulatory authorities,” the exchange said delisting was no longer necessary on late Monday. In short: Confusion still reigns over how to comply with the executive order. (The NYSE is helmed by CEO Jeffrey Sprecher, who is married to Sen. Kelly Loeffler (R-Ga.).)

Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com

VENTURE DEALS

- ShareChat, an Indian social media company, is reportedly in talks with investors including Google and Snap about a potential $200 million Series E round, per TechCrunch. Read more.

- Color, a San Francisco-based genomics and health company, raised $167 million in Series D funding valuing it at $1.5 billion. General Catalyst led the round and was joined by investors including T. Rowe Price Associates and Viking Global Investors.

- Divvy, a Draper, Ut.-based corporate spend management company, raised $165 million at a valuation of $1.6 billion. Investors included Hanaco, PayPal Ventures, Whale Rock, Schonfeld, NEA, Insight Venture Partners, Acrew, and Pelion.

- SimpleNexus, a Lehi, Ut.-based home sale and mortgage platform, raised $108 million in Series B funding. Insight Partners led the round.

- Immuneering Corporation, a Cambridge, Mass.-based drug discovery company, raised $62 million in Series B funding. Cormorant Asset Management led the round and was joined by investors including Surveyor Capital (a Citadel company), Rock Springs Capital, T. Rowe Price Associates, BlackRock, Perceptive Advisors and LYFE Capital

- IconOVir Bio, a San Diego-based biotechnology firm developing cancer treatments, raised $77 million in Series A funding. Nextech and Vida Ventures led the round and were joined by investors including Two River Group, Bellco Capital, Polaris Partners, GV, Wellington Partners Venture Capital and Logos Capital.

- Metcela, a Japan-based clinical-stage biotech startup focused on fibroblast-based cell therapy, raised $12.7 million in Series B funding. The University of Tokyo Edge Capital Partners led the round and was joined by investors including Alfresa Corporation, The Dai-ichi Life Insurance Company, MAKOTO Capita and KSP.

- Kyte, a Brazilian inventory management software maker, raised $9 million from investors including DN Capital and Amplo VC.

NearSt, a U.K.-based e-commerce company, raised £2.2 million ($3 million) in seed funding. Grosvenor Group, True Global, YYX Capital, and Moscar Capital invested.

PRIVATE EQUITY

- Paycor, a Norwood, Oh.-based payroll services company backed by Apax Partners, raised $270 million in funding. Neuberger Berman and Qatar Investment Authority led the round and were joined by ClearBridge Investments, Franklin Templeton, Leumi Partners, and Teca Partners. 

- BayoTech, an Albuquerque, N.M.-based hydrogen production company, will raise up to $157 million from Newlight Partners. Cottonwood Technology Funds, Sun Mountain Capital and Fortistar also participated.

- AEA Investors invested in Meritus Gas Partners, a gas distribution business formed by Willingham Welding Solution and Atlas Welding Supply Co. Financial terms weren't disclosed.

- Ampersand Capital Partners invested in Genezen Laboratories, a Fishers, Ind.-based cell and gene therapy company. Financial terms weren't disclosed.

- AutoVitals, backed by Tritium Partners, acquisition of BayIQ, a Phoenix, Ariz.-based provider of marketing software for the tire and automotive repair industry. Financial terms weren't disclosed.

- CORA Health Services, backed by Gryphon Investors, acquired Volk Physical Therapy & Sports Medicine and Advanced Physical Therapy Center, N.C.-based physical therapy clinics. It also acquired Hometown Rehab of Florida. Financial terms weren't disclosed.

- The Cynosure Group invested in Black Rock Coffee Bar, a Portland, Ore.-based coffee shop operator. Financial terms weren't disclosed.

- Distribution International, backed by Advent International, acquired RB, a North American marine specialty insulation distributor and fabricator. Financial terms weren't disclosed.

- The Emmes Company, a portfolio company of Behrman Capital, acquired Neox S.R.O., a Prague, Czech Republic-based clinical trials company for the biotechnology, pharmaceutical, and medical device sector. Financial terms weren't disclosed.

- Frontline Road Safety, a portfolio company of The Sterling Group, acquired Hi-Lite Airfield Services,  a Watertown, N.Y.- and Bradenton, Fla.-based airfield-focused pavement marking contractor. Financial terms weren't disclosed.

- Khoros, backed by Vista Equity Partners, acquired Topbox, a Potomac, Md.-based customer analytics software maker and received an investment from Vista. Financial terms weren't disclosed.

- MidOcean Partners acquired LYNX Franchising, a  Alpharetta Ga.-based franchisor of cleaning and disinfecting, disaster remediation, and virtual office services. Financial terms weren't disclosed.

- Mercer Global Advisors, majority owned by Oak Hill Capital and Genstar Capital, acquired Kays Financial Advisory Corporation, an Atlanta, Ga.-based wealth management firm. Financial terms weren't disclosed.

- One GI indirectly acquired Associates in Gastroenterology of in Nashville, Tenn. and Gastroenterology Associates and Endoscopy Center of North Mississippi based in Oxford, Miss. Financial terms weren't disclosed.

- Platinum Equity acquired a controlling stake in Mad Engine, a San Diego, Calif.-based maker of licensed apparel. Financial terms weren't disclosed.

EXITS

- Dentsply Sirona acquired Byte, a Santa Monica, Calif.-based startup with invisible braces, for about $1 billion in cash. Thermal backed the firm.

- Central Garden & Pet (Nasdaq: CENT) has agreed to acquire Green Garden Products, a Norton, Mass.-based provider of gardening products, for 532 million from Freeman Spogli.

- Frontline Education, a portfolio company of Thoma Bravo, acquired Forecast5 Analytics, a Naperville, Ill.-based provider of data analytics software for K-12 schools, from Riverwood Capital. Financial terms weren't disclosed.

- Kinderhook Industries acquired Vesta Housing Solutions, a Southfield, Mich.-based provider of temporary and permanent housing solutions, from Balmoral Funds. Financial terms weren't disclosed.

OTHER

- Brookfield Asset Management offered to acquire the stake it does not own in Brookfield Property Partners, its commercial real estate business, for $5.9 billion.

- SVB Financial Group (NASDAQ: SIVB) agreed to acquire Boston Private Financial Holdings (NASDAQ: BPFH), a Boston-based provider of wealth management, trust, and banking services for about $900 million.

- Mondelez International (Nasdaq: MDLZ) is nearing a deal to acquire all of Hu Master Holdings, a New York-based chocolate-bar maker, valuing it at over $250 million, per the Wall Street Journal. Read more.

- LafargeHolcim (SIX: LHN) is in talks to acquire Bridgestone Corp.’s Firestone Building Products unit, per Bloomberg in a deal that could value the company at $2.5 billion. Read more.

- Chinese regulators are weighing plans to force Ant Group,  the Chinese fintech giant, to divest equity investments in some financial companies, per Bloomberg. Read more.

IPOs

- AmeriHome, a Thousand Oaks, Calif.-based residential mortgage company, revived plans for its IPO. Apollo backs the firm. Read more.

- Cullinan Oncology, a Cambridge, Mass.-based oncology biotech, plans to raise $150 million in an offering of 8.3 million priced between $17 to $19. F2 Ventures, the UBS Oncology Impact Fund, and Foresite Capital back the firm. Read more.

- Gracell Biotechnologies, a Suzhou, China-based maker of cancer therapies, says it plans to raise $150 million in an IPO of 8.8 million ADSs priced between $16 to $18 apiece. Temasek, Lilly Asia Ventures, and Orbimed back the firm. Read more.

- Vinci Partners Investments, a Brazilian private asset manager, filed to raise $100 million. Read more.

SPAC

- Centricus Acquisition, a U.K.-based SPAC formed by Heritage Group Chairman Manfredi Lefebvre d’Ovidio and Centricus’ Head of Capital Markets Garth Ritchie, plans to raise $250 million in its IPO. Read more.

- Bridgetown 2 Holdings, a SPAC formed by Pacific Century and Thiel Capital seeking a target in Southeast Asia, filed to raise $200 million. Read more.

- Hudson Executive Investment II, a SPAC formed by Hudson Executive Capital, filed to raise $200 million. Read more.

F+FS

- One Way Ventures, a venture capital firm backing immigrant founders, raised $57.5 million for its second fund. Read more.

PEOPLE

- Long Ridge Equity Partners, a New York-based private equity firm, promoted Andrew Cedar and Jason Melton to principal.

- Silversmith Capital Partners, a Boston-based private equity firm, promoted Brian Peterson to general partner.

- Ten Eleven Ventures, a Boston-based venture capital firm specializing in cybersecurity, promoted Kaiti Delaney to principal.