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

Show Notes

2:16 - Deficit Threat Drives Bond Yields Higher

4:43 - U.S. Economic Growth Extends Solid Streak

5:30 - The Fed’s Preferred Inflation Gauge Cooled Overall in September

6:56 - Bosses Are Calling Workers Back to the Office. That’s Good News for Landlords.

7:44 - Visa Plans to Lay Off Around 1,400 Employees and Contractors

9:24 - An update from Drew Dropbox

9:58 - Google’s Cloud Business Powers Accelerating Revenue Growth

14:35 - Microsoft Shares Slip as Forecast Sparks Concern About AI and Cloud Revenue

15:38 - Apple Sales Hit Quarterly Record as iPhone Business Rebounds

16:08 - Meta Reports Record Revenue, Slower Digital Advertising Growth

17:52 - Amazon beats Wall Street expectations with strong cloud business growth

18:17 - Even With Venture Slowdown, Megadeals Grow Crunchbase

20:33 - How a group of clinicians launched a VC firm

22:43 - Bipartisan legislation aims to block Medicare cuts, boost physician pay in 2025

23:54 - ACOs save Medicare $2.1B in 2023, the largest savings in program history

24:52 - AMA panel changes major reporting requirement for remote monitoring, removing barriers for the industry 

26:25 - Humana Scores an Earnings Beat. Why the Election Matters More.Barons

26:59 - Cigna shares jump as CEO dims outlook on Humana deal

29:22 - A look at Aetna's new, more transparent health plan, SimplePay Health

3046 - HCA Healthcare Beats on Q3 Earnings, Reaffirms 2024 EPS View Barchart

31:20 - Tenet Healthcare stock jumps 12% on Q3 earnings, raised guidance Seeking Alpha

33:11 - Pfizer’s Strong Quarter Bolsters CEO’s Comeback Efforts

33:39 - Eli Lilly Q3 Earnings: Mounjaro Sales More Than Double, Takes $2.98 Billion Hit To Profit, Cuts Annual Outlook, Stock Tanks

35:04 - Novartis Lifts Guidance Again After Key Drugs Help Results

35:20 - GSK Cuts Vaccine Sales Outlook Amid U.S. Weakness

36:26 - Oracle Health will offer next-gen EHR in 2025 embedded with AI and analytics tools

37:11 - Fireside Chat with Larry Ellison and Sir John Bell: Oracle Health Summit 2024 YouTube

41:20 - Healthcare Data Privacy and Security: Developments to Watch McDermott

42:21 - Elon Musk’s xAI in Talks to Raise Funding Valuing It at $40 Billion

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What is Health:Further?

Every week, healthcare VCs and Jumpstart Health Investors co-founders Vic Gatto and Marcus Whitney review and unpack the happenings in US Healthcare, finance, technology and policy. With a firm belief that our healthcare system is doomed without entrepreneurship, they work through the mud to find the jewels, highlight headwinds and tailwinds, and bring on the smartest guests to fill in the gaps.

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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.

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.

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 a jujitsu.

Uh, Matt.

Oh, that's pretty cool.

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.

Do you train and roll

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.

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

yes.

Yeah.

Congratulations.

You had your first close.

So yeah.

Yeah.

So we're just kind of doing all that, all that kind of stuff.

So yeah.

Yeah.

Good.

stories.

Um, so let's dig into them.

All right, let's dig in.

All right, let's, let's start with the economy, Vic.

Uh, talk about what's going on with bond yields.

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.

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.

Really the fed funds rate is supposed to affect bond yields.

Which then is what banks use to charge, you know, interest rates,

right?

Um, so that is, You know, it's not going to be as accommodating if bond yields keep going up like that.

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.

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.

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.

I think that'll, that'll sort of just calm everyone.

We can all get ready for the, whatever the new 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.

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.

That's right.

All right.

Let's, let's, let's move into GDP growth.

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, still pretty strong growth.

And so that, that's, that's pretty good.

That's great.

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?

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.

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.

You know, market based thing.

Everything seems to be headed in the right direction, really.

Yeah, I mean, if, if 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.

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.

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.

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 going to provide a better environment next year for for commercial real estate.

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.

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?

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.

They're still going up each year by a little bit.

That's sort of bearing out in this.

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?

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?

Yeah.

That's right.

I mean, I think we're, we're spending billions, probably, probably 30, 40 billion a quarter on AI kind of CapEx investment.

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.

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.

Yeah.

And so, uh, 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.

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 context of sort of how they're using Gemini and their A.

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.

That, that is, that is certainly the first step, isn't it?

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.

But it's going to have a, it's a double edged sword.

It's going to have pros and cons to it.

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.

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.

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.

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.

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.

They're not thinking about the destruction of existing 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.

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.

It's one of the two things, right?

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 business by getting more efficient.

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.

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.

Yes, I think they got expectations maybe ahead of where they were, but interestingly, they, they, um, 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.

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.

Yeah, it's good, but it's not product market fit, right?

It's just rolling out features.

This is going to be an issue for Microsoft for a little while.

So

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.

It's sort of a footnote, but they still were able to sell a lot of phones, which I was surprised about, but pleasantly surprised.

They seem like they're doing well.

I bet.

I bet you USB C is a bigger, is a bigger feature than Apple intelligence.

Right.

Right.

And so then Meta, they did fine, but they don't have a cloud product.

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.

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.

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 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.

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.

No, no, no.

That, that business will be fine.

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.

And then Amazon beat 159 billion in quarterly revenue.

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.

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.