97 – Market Shifts, Tech Layoffs, and Healthcare Innovations: A Deep Dive

[00:00:00] Marcus: If you enjoy this content, please take a moment to rate and review it. Your feedback will greatly impact our ability to reach more people. Thank you. All right. Live from, uh, the phone booth in the Centurion Lounge in LaGuardia Airport. This is Help Further. Pretty nice up there. That's pretty, it is pretty nice.

[00:00:16] Marcus: It is pretty nice. I didn't know if I was going to have a space. I knew they had one, but they only have like two. So when I came in, I just jumped in here, ate dinner, and I've been squatting on the space until we started hitting record. So how was New York? Uh, New York was great. Uh, I was up here for my first board meeting with Intuscare, a fund one portfolio company.

[00:00:35] Marcus: Um, they are so impressive. Uh, Deerfield is, is the lead. BC on the deal. Um, so I got to see the deer field office and, uh, the, the, the best thing, I mean, there's a lot of nice things about it, but for me, the best thing is they have a gym, like a full gym inside of the office, right next to the full chef, you know, kitchen and they've in the full gym, they've got [00:01:00] a jujitsu.

[00:01:01] Marcus: Uh, Matt. 

[00:01:03] Vic: Oh, that's pretty cool. 

[00:01:04] Marcus: Yes. It's so cool. So, so apparently, apparently the, one of the big MDs at Deerfield is a jujitsu player, brown belt. And so they have a club there and a bunch of people do it. So that was super cool. I'm going to have to email them and ask them if they ever have a co investor.

[00:01:20] Vic: Do you train and roll 

[00:01:20] Marcus: around a little bit or not? I didn't even know about it until I got there. It just sort of came up because we were, everyone was talking about what they were going to do for the weekend. And I was like, well, I'm going to Dallas for a competition. And they were like, what jujitsu? And then the.

[00:01:31] Marcus: The, the receptionist who was like setting us up was like, Oh, I'm going to jujitsu too. And then he starts telling me all this stuff. And then, you know, so it was, it was crazy. Um, but, uh, yeah, no, really excited about intense care. And then, you know, uh, fun too is in business now, right? So 

[00:01:46] Vic: yes. Yeah.

[00:01:46] Vic: Congratulations. You had your first close. 

[00:01:49] Marcus: So yeah. 

[00:01:49] Vic: Yeah. 

[00:01:50] Marcus: So we're just kind of doing all that, all that kind of stuff. So yeah. Yeah. 

[00:01:54] Vic: Good. stories. Um, so let's dig [00:02:00] into them. All right, let's dig in.

[00:02:11] Marcus: All right, let's, let's start with the economy, Vic. Uh, talk about what's going on with bond yields. 

[00:02:17] Vic: Yeah, so, um, the wall street journal had this story. Um, the deficit threat is driving bond yields higher So the fed of course cut rates a couple weeks ago, maybe a month ago now You would expect bond yields to go down And you can see from this chart.

[00:02:34] Vic: They did come down that this big down graph right here I think is right when they Did it, but they're coming back up. And I think it is, I mean, the story says it's because of the deficit and, uh, kind of inflation fears, although we'll have a story in a minute. Inflation has not really come back up. The bond yields are important because the, that's what actually drives the cost of borrowing in the market.

[00:02:58] Vic: Really the [00:03:00] fed funds rate is supposed to affect bond yields. Which then is what banks use to charge, you know, interest rates, 

[00:03:09] Marcus: right? 

[00:03:09] Vic: Um, so that is, You know, it's not going to be as accommodating if bond yields keep going up like that. 

[00:03:18] Marcus: Yeah. Yeah. I mean, you know, we we we cut rates. We've got inflation down Bond yields were going down, but now they've spiked back up throughout October.

[00:03:27] Marcus: I mean, how much of that do you think has to do with just volatility and fear around the election? I mean, and we're talking about the deficit, but it also feels like everyone's pretty on edge about the election. 

[00:03:37] Vic: Yeah, I think, uh, the election being over, assuming we know who has won by next week sometime, I don't know if we'll know Tuesday night, maybe we will, but I'm hopeful that Wednesday or maybe Thursday, we'll have a good understanding.

[00:03:53] Vic: I think that'll, that'll sort of just calm everyone. We can all get ready for the, whatever the new [00:04:00] administration is. Almost that I don't care necessarily which it is. Just the, the ending of all the mudslinging campaigns on both sides, I think, will be Part of what I think the bond market might be concerned about is that either way, whether it is Harris or Trump, the deficit is not likely to be addressed.

[00:04:23] Vic: I think both are gonna, I mean, the Republicans will cut taxes. Yeah, but they're both going to spend. And they're both going to spend. I mean, they'll have different, um, tactics, but I haven't seen a credible plan from either side to really cut the deficit in any meaning. Yeah, that's right. 

[00:04:40] Marcus: That's right. All right.

[00:04:41] Marcus: Let's, let's, let's move into GDP growth. 

[00:04:43] Vic: Yeah. So, um, GDP growth was pretty strong 2. 8 percent annualized rate, you know, a little bit less than last quarter, which was 3%. And people were expecting economists were expecting 3. 1, [00:05:00] still pretty strong growth. And so that, that's, that's pretty good. 

[00:05:04] Marcus: That's great.

[00:05:05] Marcus: That's great for, for, you know, the U S economy in a time of a lot of instability really around the world. Uh, it's, it's, it's certainly a bright spot for us, right? 

[00:05:14] Vic: You can see that a lot. Some of it was the federal government consumer spending on goods. No, that's, um, was really high. So, um, investment, um, private inventories and investment were down, but overall good.

[00:05:30] Vic: And then inflation today, the PCE came out, which is. Different than CPI and, uh, this article, and I've heard rumors about this too, the Fed thinks that's a more accurate, uh, portrayal of inflation. Either way, it was, uh, it was good. 2. 1%. I think everything seems, except for the bond market, which, you know, no one controls, it's just like this.

[00:05:54] Vic: You know, market based thing. Everything seems to be headed in the right direction, really. 

[00:05:58] Marcus: Yeah, I mean, if, if [00:06:00] you're, if you're someone looking to the numbers for, um, how the U. S. economy is doing going into the election, between the, you know, stock market, inflation, um, and, uh, you know, and GDP growth, the, everything is in pretty good shape right now.

[00:06:19] Vic: Yeah, and with, there's a lot of earnings this week. And I'd say we'll go through them each, but in general, the earnings were pretty good. 

[00:06:28] Marcus: Now we talk about the K shaped economy and why, you know, it's hard for these numbers to actually mean exactly what we think they mean. Um, you know, there are also changes happening in the workforce.

[00:06:40] Marcus: We're, we're definitely seeing, uh, large companies get much more, Sort of bold in their demand for workers to come back to the office. We know Andy Jassy sort of said, Hey, you know, you got to get back to the office in January. Otherwise, you know, plan on having a different job. The Wall Street Journal had a story talking about that and how that's actually [00:07:00] going to provide a better environment next year for for commercial real estate.

[00:07:05] Vic: Yeah, that's right. So That is I mean, we see the high profile names like Amazon, but I think broadly, uh, this story is talking about the kind of work from home has peaked and now people are starting to be asked to come back, come back two days, come back three days, a few companies like Amazon come back full time.

[00:07:28] Vic: And so, well, that might be frustrating for an individual worker. It's, it's, I think it's good for the real estate market because you then need to have office space. So, um, hopefully that will help with the real estate challenges that we have. But yes, there's a couple layoff stories this week. So Visa, uh, laid off 1400 people, which is not a huge percent of their workforce, a few, I think it was single digit percentages, but still a large number of people, right?[00:08:00] 

[00:08:00] Vic: So again, the K shape economy is kind of bearing out. If you're, you have a lot of assets in the stock market and you have a job that's safe, you're okay. But if you get laid off and even inflation is down to 2%, that still remains The prices that were already high post the pandemic. They're not going down.

[00:08:20] Vic: They're still going up each year by a little bit. That's sort of bearing out in this. 

[00:08:26] Marcus: Yeah. And, and look, the, the, the stock market is also still very value oriented. I mean, I think we're going to go through the tech stuff and, and, and we'll start to see that, uh, they're starting to pick up. The, I think over the last couple of quarters, really some questions about AI in general, right?

[00:08:43] Marcus: You know, um, even for the invidious of the world where they, you know, the P ratio is probably pretty great. It's, it's also just a question of how sustainable is this? How good is the moat and how much is this actually going to get activated in the economy? 

[00:08:58] Vic: Yeah. That's right. I [00:09:00] mean, I think we're, we're spending billions, probably, probably 30, 40 billion a quarter on AI kind of CapEx investment.

[00:09:09] Vic: It hasn't really flowed through to revenue and earnings yet. Now, of course, if you get to AGI and you have a new tool that can do lots of things, you could catch up quickly. We'll talk about it in a minute, but Google, uh, talked about how they're using AI, but Dropbox had a layoff too. You found this story.

[00:09:29] Marcus: Uh, it's in the top. It's 20 percent, um, of their, of their staff. So 528, uh, employees, 20 percent of their business. And, you know, look, I mean, Dropbox is not Google, but I mean, you know, they, they, they had roughly 2, 500 people and, you know, 500 plus of them are no longer employed. So, uh, that's a, that's a big slug of people for, I think, a pretty, you know, well respected, you know, tech company out there.

[00:09:59] Vic: Yeah. And so, uh, [00:10:00] so now let's talk about Google did well, uh, their cloud revenue grew incredibly fast. Do you know, YouTube brought in for the last four quarters, so last year, 50 billion, just YouTube itself, which of course is part of Alphabet, but I looked it up Netflix, which is the second biggest video platform has like 37, 38 billion annualized revenue.

[00:10:28] Vic: So YouTube is, you know, if it was by itself, it would be the biggest, Streamer out there and it's part of Google. It's not even the biggest part of Google. It's incredible. But um one of the comments that they made is that 40 percent of all software internally done at Google is written by AI first and then humans Go in and and, you know, clean it up and optimize it and they said in the [00:11:00] context of sort of how they're using Gemini and their A.

[00:11:02] Vic: I. Tools internally to really drive productivity. Of course, the other side of that is. You need fewer, particularly junior developers, than you would otherwise. 

[00:11:14] Marcus: That, that is, that is certainly the first step, isn't it? 

[00:11:17] Vic: It's positive that Google can use their own tool to drive efficiency. Because if they can't use it, I don't know how we're going to use it.

[00:11:24] Vic: But it's going to have a, it's a double edged sword. It's going to have pros and cons to it. 

[00:11:28] Marcus: Well, I mean, it's, it's, it's truly the future is, is not distributed. Right. I mean, uh, we, we first saw this with Meta and how they applied AI to get past the sticky Apple problem on their, on their advertising engine.

[00:11:43] Marcus: Right. Um, from a targeting perspective. So we, we first saw this with. Now we're just going to see it across all of the Magnificent Seven. I mean, you know, you watch the Jensen Wang BG2 pod thing. [00:12:00] I mean, he's talking about, they already have agents, you know, assigned to different employees. So it's like, The difference in the way that these companies are going to operate their business.

[00:12:11] Marcus: I shouldn't say going to are currently operating their business versus the rest of the world. Um, and I think this is for the foreseeable future, right? Because when they roll something out to general availability, they have to have dog fooded it first to know that it's actually working. Um, So, yeah, I mean, I think that the really scary thing here is that we sort of put all these things together.

[00:12:33] Marcus: Productivity is actually gonna really be at all time highs. And so we're going to have GDP growth. We're going to have stock market growth. Um, and inflation is going to come down, but layoffs are going to be persistent. Right. I mean, because you're going to be able to do more with, with these machines, wall street is looking for the sale of it.

[00:12:56] Marcus: They're not thinking about the destruction of existing [00:13:00] businesses, uh, and how it's more of a winner take all kind of, kind of mentality. Uh, that's just not how they're oriented. They're not, they're not into the disruption business. They're into the growth business. Um, so they're looking for where's that net new revenue line.

[00:13:12] Marcus: Um, but, but Google understands what they're doing here. And, and, uh, Yeah, I think, I think it's look, I mean, what, what drove the 20 percent decrease, uh, in, in workforce at Dropbox one, two things. Their cloud is getting eaten by Google and, uh, and, and all the other players, right, or in Microsoft, or they've found a way to do the same work without those people.

[00:13:37] Marcus: It's one of the two things, right? 

[00:13:39] Vic: Yeah. I think it's probably both. I think their, their business is shrinking because why would I store all my files on Dropbox if I can put them on another cloud and have AI tools supporting it? And then I, I'm sure I don't have. Connections there, but I'm sure they are reacting to that challenge to their [00:14:00] business by getting more efficient.

[00:14:01] Vic: I mean, I think we've been talking about this for a year, maybe more than a year. It continues to remind me much more of the internet change in business models and approach to just how the Businesses delivered than kind of mobile phones and social media. There was a change where you ran your business differently after you got onto the internet than before.

[00:14:25] Vic: And I think AI is going to be that same kind of step function change. Um, people will adopt it. Companies will adopt it at different rates. So we've got a lot of, we've got a lot of earnings, so let's keep going. So, um, yeah. So Microsoft had strong results, but it was not as strong as expected on their AI tools, their cloud is growing, but they have, you know, they're the one that have been the most out front of our marketing co pilot.

[00:14:52] Vic: Yes, I think they got expectations maybe ahead of where they were, but interestingly, they, they, um, [00:15:00] GitHub, they now so GitHub is owned by Microsoft. I know you know that, but maybe the whole audience doesn't know that. And GitHub now offers as of yesterday or the day before, you can use any of the, uh, AI platforms, models, LLM models.

[00:15:15] Vic: On GitHub. So they're, they have opened it up to Gemini, Clawed, Llama, uh, whereas previously it was, um, only open AI and the internal tools. So I think that's probably healthy, but it continues to be a competitive space. 

[00:15:32] Marcus: Yeah, it's good, but it's not product market fit, right? It's just rolling out features.

[00:15:36] Marcus: This is going to be an issue for Microsoft for a little while. So 

[00:15:39] Vic: then Apple really did well. They had huge iPhone sales. Uh, record and they, you know, they've sold a lot of iPhones in other quarters. They haven't really, I mean, the Apple intelligence thing is rolled out, but it's, it's not that impressive.

[00:15:55] Vic: It's sort of a footnote, but they still were able to sell a lot of phones, which I was surprised about, but [00:16:00] pleasantly surprised. They seem like they're doing well. 

[00:16:03] Marcus: I bet. I bet you USB C is a bigger, is a bigger feature than Apple intelligence. Right. Right. 

[00:16:09] Vic: And so then Meta, they did fine, but they don't have a cloud product.

[00:16:14] Vic: And their revenue grew, but at a slower rate than previous, and so they were sort of the outlier as not, not really making Wall Street happy, that they are suffering, their, their stocks suffered on this. 

[00:16:29] Marcus: They've, they've had a really good two year run here. I mean, for, for X thing, it's, it's time for them to, you know, for their growth to kind of pump the brakes a little bit last two years have been unbelievable for them.

[00:16:41] Vic: Yeah. I mean, I, I think meta actually is, um, it's a much cleaner business model. Like they sell ads, they use AI to drive engagement and keep you on their various platforms longer, so they can sell you more or better targeted ads. That is going [00:17:00] to work what they are not benefiting from is this rush to get on the cloud and spin up servers and they don't have that ability to sort of sell picks and shovels to that gold rush that could benefit them.

[00:17:15] Vic: They're not they're not sort of expecting their cloud to take over, but they're still doing a lot of cap X. And so, yeah. You know, can they, can they keep up? I think they will. Cause they have a very, I mean, it's a good advertising platform, but it's a good, it's, it's, it makes money. 

[00:17:35] Marcus: No, no, no. That, that business will be fine.

[00:17:37] Marcus: Uh, and, and they'll, they'll continue to find. New ways to capture people's attention and continue to raise the rates on advertisers. I'm not, I'm not worried about them, but, but it was time for them to, you know, get knocked down a peg in terms of the analysts for sure. 

[00:17:53] Vic: And then Amazon beat 159 billion in quarterly revenue.[00:18:00] 

[00:18:01] Vic: It's hard to get my head around how big Amazon is. But they, they beat by a lot and the stock is up. It just came out, you know, about half an hour ago, they sort of round out the group with a big, big beat. Uh, so any of the minutes of the seven and the tech. Is doing well moving to the venture side. Uh, so we have covered that the, the number of deals has slowed this year.

[00:18:26] Vic: Yeah. But crunch base came out with a pretty good analysis of what they call mega deals, which are capital of a hundred million or more raised. And even though the total number of deals are down, uh, the, the mega deals are still, we're still doing a lot of. Mega deals. Now, not, you can see on the screen here, if you're watching, I'll describe it in 2021, we had sort of a historically high number of 800 deals, each of which that raised more than a hundred [00:19:00] million dollars.

[00:19:01] Vic: That is an outlier, but last year there was a little less than 200 and we've already surpassed that. So, I mean, it's almost like the venture version of the K shape economy. Like if you get scale and you, it's almost easier to raise a really big round. In a funny way than it is to raise a two million dollar round.

[00:19:20] Marcus: Well, the, the, the question is, is maybe not so much about scale, but maybe what the type of business is, right? Cause my guess is that, uh, most of the mega deals are either AI or biotech. 

[00:19:35] Vic: Yeah. So here's the, here, here you go. Biotech and healthcare. 

[00:19:39] Marcus: Yeah. 

[00:19:40] Vic: But 

[00:19:40] Marcus: yeah, it's, it's really 

[00:19:42] Vic: biotech. I mean, And then AI is, um, it has its own.

[00:19:50] Vic: Big breakthrough technologies and it also uses a lot of AI and technology and then cyber Is pretty expensive too and energy and fintech. So [00:20:00] there these are capital intensive businesses 

[00:20:03] Marcus: Yeah, I mean, I guess I guess the point I was trying to make, though, is that I think the biotech businesses and the AI businesses are not actually scaled businesses.

[00:20:10] Marcus: They're just capital guzzlers. You know, they just they just require a ton of capital. And there's a lot of capital sitting on the sidelines that needs to get put to work. But it's definitely a barbell world. I mean, you know, a ton of deals at the seed series A and then, you know, you know, While deal count is down, these mega deals are propping up the total capital being deployed in the private market.

[00:20:33] Marcus: Right, 

[00:20:34] Vic: right. And then a group of clinicians is launching a new firm, new VC firm. So this is not a VC deal. It's a new firm being created called scrub capital. I think, you know, maybe, you know, Chrissy Farr, you know, one 

[00:20:50] Marcus: of them. Yeah, yeah, yeah. Yeah. Chrissy Farr has been, um, you know, a. health tech journalist for a long time.

[00:20:58] Marcus: Um, she, she made [00:21:00] her name initially at tech crunch. Then she went over to CNBC and then she became an investor at O'Mears. And I think she did that like during the pandemic. Um, and so she was over at O'Mears kind of, you know, I think, I think this is true. She, cause she was talking about it. She was like learning the investment business, right.

[00:21:17] Marcus: You know, from inside of a very, very big Investment firm. Um, and now she's spun out and she's starting a preceding seed fund. So, you know, she's directly in our space now working with two doctors. So I mean, I think this is great. She's whip smart. She knows the space and she's very well connected. Uh, part of her, her value proposition is going to be media.

[00:21:38] Marcus: So she's got a bigger audience than you and I do. Um, and, uh, I think it's really smart to sort of, you know, focus on engaging clinicians into, into early stage investing. 

[00:21:48] Vic: Yeah, and I mean, it'll be competitive with us, but I think there's plenty to go around. Like, I welcome new firms, especially if they bring doctors into the investment process, because we need [00:22:00] more physicians helping to shape the innovation so they actually work.

[00:22:05] Marcus: Yeah. And if I had to guess, she's pretty smart. I would imagine she left O'Meara's on on decent terms and probably is, you know, kind of at least a quasi scout for for some of their growth capital, you know, aspirations. But, you know, to your point about, you know, being competitive in their space for all of us.

[00:22:24] Marcus: I mean, everyone who's actually in the space knows None of these deals get done without syndication, so it's actually just another co investor, you know, that we need to, you know, try to build a relationship with. 

[00:22:33] Vic: Yeah, their first fund's gonna be 10 million. That's the, that's the target. It'll be small, and I think mayors will view it as a scout fund.

[00:22:44] Vic: Yeah, 

[00:22:44] Marcus: that's scout. 

[00:22:45] Vic: Okay, so shifting into policy, there was a lot of concern over the physician pay schedule for 2025. And so there's a group of legislators from both sides, bipartisan, trying to [00:23:00] stop the cut from going through. Um, it is not, it's not a approved, you know, law that could be signed, but they're trying to build momentum to keep the physician pay schedule where it is as opposed to cut it.

[00:23:13] Vic: I think it's worthwhile to track whether they can get it done or not. I don't know how likely it'll be in a lame duck session to get much done at all, but Well, 

[00:23:23] Marcus: it got 

[00:23:24] Vic: cut 

[00:23:24] Marcus: last year, right? I mean, 

[00:23:26] Vic: It got cut last year, but it hasn't gone into place yet. It's, it's, it'll go into place in, uh, in January. 

[00:23:32] Marcus: Yeah, I mean, gosh, all I mean, this, this is why innovation and AI and healthcare venture has a future, right?

[00:23:44] Marcus: Clearly, the trend is, the government knows it's out of money, and it's going to make cuts because it has no choice. It can't, you know, the spending cannot continue to just run away. Like, like it has been right. Just can't. 

[00:23:56] Vic: And then on that front, the ACOs released the, [00:24:00] well, CMMI released the savings from the ACO programs.

[00:24:05] Vic: For 2023, which is they sort of are, you know, it takes a while to gather all the information, but but they were able to save 2 billion for that year, which is the highest it's ever hit. And so that, you know, the CEOs are starting to gain momentum. And it's really it's exciting. I mean, we should have more people enrolled in.

[00:24:23] Vic: Thank you. And then the ACOs will get stronger so that I think these records should keep getting beat over time, I think. 

[00:24:32] Marcus: Yeah, and a huge opportunity for innovation here with MCOs, MCOs, I'm sorry, with ACOs. ACOs are pretty tech forward, um, you know, they're kind of like, uh, I don't know, value based care, but like logical at scale.

[00:24:45] Marcus: Um, you know, and just really, really big opportunities for healthcare venture to play a role here. 

[00:24:50] Vic: Yeah, yeah, definitely. And the line of interest I think is good overall. Yeah. Okay. And then the a MA is working on changing the [00:25:00] reimbursement rules for remote patient monitoring 

[00:25:03] Marcus: hall. Yeah. 

[00:25:04] Vic: Uh, yeah, it's, so for five or six years, the RR uh, RPM codes have been out and you have to collect 16 days of, um, biometric reading.

[00:25:17] Vic: So a scale or, or blood pressure or so, um, you know, any kind of biometrics. Each month in order to bill and uh, one that's hard to get and to a lot of the doctors and AMA came out with, they don't necessarily need 16 days. You don't have to track your weight every day to see the trend line. We 

[00:25:38] Marcus: have technology to model this stuff.

[00:25:40] Marcus: Like you don't need that much. 

[00:25:44] Vic: And so they are, they haven't, um, set it in stone and it won't go into effect until January, 2026. But it's looking like I think there's gonna be two tiers where if you get 16 days, you get X reimbursement, you get [00:26:00] five or two. There's debate between if it's two, five or eight, you'd have a slightly lower reimbursement.

[00:26:05] Marcus: Seems to me once a week is probably what you ought to be targeting. I mean, you probably could get it done with two times a month, but like once a week is probably great. 

[00:26:14] Vic: Yeah. Yeah, I agree. And it probably does make sense to change the reimbursement level, but if you get 15 days having no reimbursement, it seems like a little draconian.

[00:26:26] Vic: Yeah, it's crazy. Okay, so now we're going into the payer earnings. Humana beat earnings. And the stock's done well, uh, so that's good. They've had a hard year, or even a couple years, so it's good to see them doing better. 

[00:26:41] Marcus: Well, you know, uh, you'd like to say nowhere but up. I mean, almost down 50 percent over the last 12 months.

[00:26:47] Marcus: Just brutal. 

[00:26:48] Vic: Yeah, I think, I think basically the expectations have been cut so low that they, was not such a high hurdle to beat, uh, but still good, good that they were able to. [00:27:00] Cigna beat as well, uh, but then they made, their CEO made comments, he didn't say directly, but he made comments indicating that the Humana deal was less likely than people were talking about.

[00:27:14] Marcus: Advertising? Okay. 

[00:27:16] Vic: And that's really booing the stock. It's been, um, 

[00:27:19] Marcus: Well, he probably said that on earnings because they, they trial ballooned the acquisition and the Cygnus stock got, got slammed. So he was like, okay, that that's not popular. Yeah. And it's not, it doesn't, it doesn't make any sense. It's like, when you and I were talking about, we're like, hold on, didn't they, aren't they selling health spring?

[00:27:39] Marcus: Aren't they getting out of this? Aren't they becoming a clean commercial? Like Insurer just like best of breed commercial insurer. Why would they get back into the space? I mean You might say for scale Okay, but it's two different kinds of business, right? I mean, 

[00:27:57] Vic: yeah, that's the question. I mean they have [00:28:00] North, which is their, um, non regulated business, similar to opt and they do a good job there.

[00:28:08] Vic: I know some of those folks, but it's, it's much smaller than, I mean, everything's smaller than you. 

[00:28:15] Marcus: Everything is small though. Yes. 

[00:28:16] Vic: Um, but yeah, that, that's the question. Can they be sort of a commercial insurance? Focused business with enough scale to be that pure play. Um, maybe, um, I 

[00:28:29] Marcus: mean, I mean, they're publicly traded and I think that's what the public markets are going to want from them.

[00:28:34] Marcus: Bottom line, you know, I think the public markets are looking right now and saying you, you are. You're out of the woods. Like you're not in the crosshairs of all this crazy, uh, government pay stuff. Why the heck would you muddy the waters? Right? Why would you do it? The economy is doing really great.

[00:28:54] Marcus: Employers are mad about how much they have to pay, but they're paying, you know, [00:29:00] uh, they can't really do much about it. Um, they're not organized enough to do anything about it. So why the heck would you put yourself back in the line of fire with with government pay? Right. 

[00:29:08] Vic: Yeah, that's right. And that's why I went to Evernorth.

[00:29:12] Vic: If they're going to be a pure play like that, they're going to have to bring other tools, data, other support services to help their, their customers, their large employees, to be able to progress on this. Okay. Then Aetna did not have an earnings release today, but they, they came out with a new health plan that is really interesting and it is designed to be.

[00:29:33] Vic: A hundred percent transparent. It's called simple pay health. And they are just showing you exactly what, what they are covering and passing through the, the bills in a much more transparent way. And I haven't seen the reports other than these, you know, pictures they released. But I love the concept. It's way too complicated to [00:30:00] understand.

[00:30:00] Vic: And so I think there's a big market if they can, if they can pull that off, it could be great. 

[00:30:04] Marcus: Yeah. And I also think that this is becoming a trend of, um, large, uh, old school insurers creating these new sort of mobile first transparent, um, health plan models. Um, so I think, I think It's, it's, it's good news for Aetna and, uh, you know, a month that has been absolutely terrible for them.

[00:30:26] Marcus: So that's, you know, that's a good thing. 

[00:30:29] Vic: Yeah. It's kind of, uh, four or five years ago, we had all these tech forward startups go public. We were kind of small subscale payers. Didn't work because they were subscale. And I think Aetna is kind of stealing from that playbook a little bit and bring it to market, which is smart.

[00:30:48] Vic: Okay. Moving to the provider health systems. HCA beat earnings and it was, it was a great set of earnings. Uh, the stock [00:31:00] was down, I think just because of the kind of the environment, the growth and, you know, are they at the peak of earnings and is it going to turn, you know, kind of turn, I didn't see much.

[00:31:14] Vic: In the way of problems, um, you know, they beat earnings, they reaffirmed guidance, but the stock was down. So, yeah. Tenet, uh, also beat, but then they, they have a much stronger outpatient kind of outpatient surgery center and facility. Yeah, the 

[00:31:30] Marcus: ASC business. Yeah, 

[00:31:31] Vic: ASC. So, um, they have more, more kind of growthy, uh, aspects to their business and Wall Street like, like that, but much more.

[00:31:41] Vic: Yeah. 

[00:31:42] Marcus: 10. 10 tenants. Tenants a beast. . Yeah. You know, in terms of, for-profit healthcare tenant is just really well positioned. Um, you know, kind, kind of visionary for them to have done the, uh, uh, that, that acquisition when they did, how, how long ago was it that they, that they bought USP? That was probably six, seven years ago.[00:32:00] 

[00:32:00] Vic: Uh, they bought Vanguard and USP, uh, like a year, like back to back years. It really changed the business. 

[00:32:10] Marcus: They look brilliant for having done that. That's for sure. 

[00:32:12] Vic: Yeah, I think, I think a tenant is a little more volatile, a little more beta. Like, if we have a downturn in the economy, I think they'll go down further.

[00:32:20] Vic: But then in good times, they go up further too than HCA. 

[00:32:24] Marcus: Well, I think, I think the thing is that the, the, the, the mainstream hospital business, just because of labor pressures, um, you know, if you've got a sizable percentage of your overall mix, that is ASC, you know, that's just, it's a nice balance, right?

[00:32:44] Marcus: It's a nice offset to, to that, that run of the mill inpatient business. That's pretty predictable. And as long as the volume is good, it's, it's a good business, but, um, you know, Margins matter and labor is tough. And, and, and, you know, Wall Street analysts know that [00:33:00] they, they know the labor issues that are out there right now.

[00:33:02] Vic: Yeah. And HCA has a lot of outpatient surgery centers, but they have built them organically. Just, it just takes longer to do that. So it's not the same percentage of their revenue. That's right. Um, okay. Moving over to pharma, Pfizer did well in the quarter. But they're, they are struggling, so, uh, their stock was down.

[00:33:23] Vic: They, they don't have a lot of growth engines. 

[00:33:26] Marcus: Yeah. 

[00:33:26] Vic: So, um, they, they, they met the quarter, but they just don't have a big pipeline of exciting new products. And so, and they're under pressure from this outside, you know, uh, starboard activists, right. Exactly. Lily missed earnings and so they, you know, suffered today their, their, their GLP ones are doing great.

[00:33:51] Vic: Um, but they did not make Wall Street happy. Um, so I don't exactly know why. They, they [00:34:00] lowered guidance, which I think was, you know, probably the, the reason that people were upset with them. 

[00:34:06] Marcus: Yeah, I, I think, I, well, you know, we, we've talked about this with Emily. I think the compounders are, are eating into the, you know, they're, they're flooding the market.

[00:34:16] Marcus: It's becoming, um, you know, harder to, to control The channel, it's becoming harder to control the channel. And like, it's a, it's a relatively new drug that they should have more control over. You know, market share just traditionally from a farmer perspective, but, but the compounders are really kind of changing the game this time around, you know?

[00:34:43] Vic: Yeah. And there's a lot of different flavors of GLP ones that you can pick and choose around. It's different than like Humira or something where it's, um, like you, just one drug is all you can use. There's [00:35:00] lots of options, whether it's a compounder or there's four or five brands for different, different takes on GLP 1.

[00:35:06] Vic: Yep. Uh, Novartis did well. They don't have 

[00:35:09] Marcus: GLP 

[00:35:09] Vic: 1. 

[00:35:11] Marcus: Not to my knowledge. I mean, they might, but I don't, I don't know the brand. I don't, I don't 

[00:35:15] Vic: think they do. Uh, but they beat earnings and, and, um, raised their full guidance. And so the stock was good. Okay. GSK cut their vaccine sales outlook. I don't know. I mean, I don't know why anyone thought they were going to sell a lot of COVID vaccines in the U.

[00:35:35] Vic: S. this year, uh, but, but apparently they thought they would, they predicted they would, and they're not doing that. Um, so they, they were down. 

[00:35:48] Marcus: Well, they're not in the U. S., so maybe they have not been able to read the room as well. 

[00:35:53] Vic: Yeah. So those are all the earnings. So we had, uh, the tech side was up.

[00:35:58] Vic: Hospitals [00:36:00] were, you know, hit earnings, but mixed based on sort of how their, their outpatient was, um, payers were, they met earnings, but were sort of, you know, mixed based on their positioning in the market. Yep. And pharma in general. Yeah, sort of down flat to flat to down. I mean, Novartis was was the one bright light in the in the farmer space.

[00:36:27] Vic: Um, Oracle held their Oracle Health Summit in Nashville this week. I went to it. And they unveiled their new, um, EHR, sort of the next version. Uh, they're calling Oracle Health. So the Cerner brand is, is gone. And, you know, I went to this event really not expecting very much. It, it was, there wasn't a lot of fanfare.

[00:36:54] Vic: It was a pretty small, I mean, it was at the Hyatt here, it wasn't at the big conference. Uh mm-hmm. 

[00:36:59] Marcus: Center. [00:37:00] 

[00:37:01] Vic: But it was, it was really impressive that they, it's not released yet. So it's hard to tell. Um, but the firepower, like Larry Ellison was here and they had all of their, uh, executives here. We'll link to the fireside chat.

[00:37:15] Vic: It's about an hour long. Um, and I think worth listening to my takeaway was that Oracle has turned its attention to healthcare and they are redesigning the Cerner platform almost completely. I mean, it is sort of, they're trying to embed all of the existing Oracle suite of tools. So they have a lot of kind of ERP tools, HR and payment and all that stuff.

[00:37:46] Vic: They have clinical trials and biotech existing platforms. They have a lot of security and privacy and, and cyber assets. And then they, they claim to have invested a lot in AI [00:38:00] and voice recognition, and they're integrating all of that together to create really a new approach to a healthcare platform. I think it's going to be not that similar to Cerner.

[00:38:12] Vic: It's going to be much more productivity tool. It'll have kind of your health record information, but it's going to be much more of a, um, productivity tool for physicians and nurses. Um, where you don't have to key in a lot, and it automatically syncs to the billing department. Um, so, it was an impressive vision.

[00:38:35] Vic: Uh, now whether they can pull it off or not, I don't know, but pretty exciting to see someone with enough resources to be able to challenge Epic and, you know, maybe have a competitive product, which, you know, Turner, I don't think, really did. 

[00:38:51] Marcus: Well, let's talk about some exciting things for us. First of all, you know, Oracle Health moving its global headquarters to Nashville, Oracle moving its global headquarters to [00:39:00] Nashville, but clearly the strategic imperative there is to be in the center of a healthcare city.

[00:39:08] Marcus: I think that this really feels like the definitive next phase of Nashville as a healthcare city, right? I mean, we spent the last 60 years, uh, as a healthcare city really because of hospitals, um, change healthcare, which you had a lot to do with is, is, Was sort of the beginning of, of the, the seed change there, but you look at all the capital players that have, that have grown out of their, um, you know, credit to, to first Cressy and, and the, the big hits that they've, you know, knocked out of the park.

[00:39:38] Marcus: But Oracle coming to town is a, is a big deal. And I think today, you know, The Oracle Health Summit wasn't that big really because, you know, the office is not open yet. Yeah. The office is not 

[00:39:50] Vic: open. The product is 

[00:39:52] Marcus: not 

[00:39:52] Vic: live. Yeah. 

[00:39:53] Marcus: Give it two years though, right? I mean, and I think it'll be a, it'll be a very different story.

[00:39:57] Marcus: Um, so that's really exciting. The other thing, [00:40:00] which is a little bit of, I don't know if you want to call it inside baseball, but just, you know, Sort of Nashville knowledge is, um, Ascension is on Cerner and the St. Thomas health system, which is Ascension's Nashville, um, uh, outpost is like their designated innovation health system, you know, for hot to hear as the CEO, good friend of ours.

[00:40:20] Vic: He's great. So they, they might be, there's going to be five to eight customers next year, they launch with. 

[00:40:27] Marcus: I bet, I bet Fahad is one of them. 

[00:40:29] Vic: I haven't released who that'll be yet, but it'd be great to have, uh, St. Thomas. Fahad has 

[00:40:32] Marcus: not told me, but I cannot see a world in which Fahad is not at the edge of this kind of innovation.

[00:40:38] Marcus: It just, it would just be shocking to me if that, if that was not true, so. 

[00:40:43] Vic: Yeah, and I think the other thing that, that they really kind of brought, Out that we know, but I haven't heard Oracle talk about so openly is the, the need to sort of understand the federal regulation and reimbursement and align with that.[00:41:00] 

[00:41:00] Vic: Of course, they have seem to Verde, and they also were talking about Nashville's connections and that in that light, which, yes, we have health systems, but we also really understand. Kind of how the reimbursement evolution needs to be followed and kind of build innovation alongside that. So good to see.

[00:41:20] Vic: We'll have to follow it for next year. It's awesome. Okay. And you found this summary of cyber privacy things from McDermott, which is a law firm. Really strong law firm. 

[00:41:31] Marcus: Yeah. And this, there's nothing really to report here other than to say, we're going to include a link in the show notes, this email that they sent out, um, you know, hat tip to Judith bird at the GNV CA for sending this over to me.

[00:41:42] Marcus: Um, Um, but it's a really nice rundown of all of the different, um, regulatory efforts that are underway across the country, you know, happening in California, happening in New York, et cetera, around AI and health care data. So, if you're, if you're interested in just kind of having a nice [00:42:00] rundown of, hey, what is underway and what jurisdictions and what, what are legislators concerned about this email is a really nice, um, you know, rundown for that.

[00:42:09] Marcus: And so we'll just include the link and I just, I just. Thought it was a, it was a nice service from McDermott to do this roundup and it was worth sharing with our audience. 

[00:42:17] Vic: It's almost a reference document where you could refer back to it too. Yeah. 

[00:42:21] Marcus: Yeah. Really cool. Really cool. 

[00:42:24] Vic: Um, and then we'll end on, on AI with Elon Musk.

[00:42:27] Vic: So he's raising, uh, more capital. I think it's going to be five to 8 billion. For his AI fund called XAI. I was really not giving Elon that much credit just because I'm tired of X and all the political stuff until I heard the podcast with Jensen from, uh, NVIDIA, who, you know, on the podcast, he called out how impressive Elon's cluster, which is in Memphis here, here in 

[00:42:57] Marcus: Chesapeake.

[00:42:58] Vic: Is, and that [00:43:00] just got my attention. So now he's, now he's raising capital to sort of build on that. And Elon is a great, uh, leader of engineers. Great, great. And, you know, big builder. And so it's just worth tracking really. 

[00:43:14] Marcus: Yeah. And also it's, it's a nice sort of closed loop on your mega deal story. I mean, this is a mega deal, right?

[00:43:20] Marcus: 5 billion for an AI company. How much revenue are they generating? I mean, none, right? So it's, it's scale, but it's scale for the promise of the future. And really, you know, Elon, I mean, I think, I think one of the most incredible things is, even though he has destroyed so much value at Twitter, he is, Undeniably such a marvel at engineering that it doesn't matter.

[00:43:42] Marcus: You can still raise billions of dollars for an AI company, right? It doesn't matter. You can just look at what he's doing with SpaceX Tesla, and you can just sort of write off X is like this, this weird fever dream he has with politics and Trump and, and sort of the town square, but you can't deny his engineering capabilities.[00:44:00] 

[00:44:00] Vic: Yeah. Yeah, I think that's right. And, and good. I mean, for me, for any, all of us as users of AI, having more models out there that are pushing the frontier is a good thing. And not having it in only two, three systems is probably good for everyone. 

[00:44:19] Marcus: Well, Vic, thank you for putting the story, the show together today and, uh, and running through it quickly so I can make my flight back home tonight.

[00:44:26] Marcus: I appreciate it. 

[00:44:27] Vic: Yeah. So safe travels. Happy Halloween. Uh, when people listen to this, we will be past Halloween, but, uh, you're flying a Halloween night. So, uh, 

[00:44:37] Marcus: and, uh, for the listeners, you've been along for the journey next week. Yes, it is the election, but forget that next week. Episode 100. Yeah. Big mouth.

[00:44:48] Marcus: Yes. We've got, we've got a, we've got a big, uh, uh, we've got one more guest episode and hopefully y'all, y'all listened to the David Dill episode that came out earlier this week. Um, fantastic having an opportunity to [00:45:00] spend, you know, 45 minutes with David and listen to, uh, you know, his vision and what him and his team at life point are doing.

[00:45:07] Marcus: I think it was, it was really inspiring. Um, we have one more guest we're going to roll out next week and then, um, episode 100 after the election. 

[00:45:17] Vic: Yeah. Yes. So it'll be great to hit a hundred and I'll be, I'll be happy. The election's over, but it'll be celebrating both probably equally. 

[00:45:27] Marcus: Uh, all right, man.

[00:45:28] Marcus: Well, look, great show and talk to you next week. 

[00:45:30] Vic: Okay. All right. Safe travels.