Healthcare automation service Olive AI is reportedly planning for the sell-off of its utilisation management service line.
Utilisation Management is the company’s prior customer-facing authorisation system with solutions that accelerate the manual operations in GreenLight laser treatment.
The divestiture is part of this Columbus-based tech unicorn’s effort to centre its focus on administrative automation for healthcare, according to THE BUSINESS JOURNALS.
“Earlier this month, [CEO Sean Lane] announced that Olive would no longer be offering UM solutions to allow the company to strengthen its core area of focus, building automation and intelligence technology for health systems that make their revenue cycle operate more effectively and efficiently,” according to a spokesperson from Olive AI.
Why Divest Now??
Sean Lane, co-founder and CEO of Olive AI, blamed tough economic headwinds for the divestiture. The CEO also mentioned that the Columbus health IT business made mistakes when it was in high-growth mode.
In an all-staff memo published on February 09, 2023, the CEO shed light on the substantial and unexpected shortfall in the capital plan now facing the company, two years after it brought in around USD 400M to turbocharge the growth of ‘humanised’ AI for healthcare.
“In our current position, we cannot make the necessary investments to be successful in transforming both Autonomous Revenue Cycle and Utilisation Management journeys for our customers,” Lane said in the memo. “We must prioritise and direct our critical resources toward Olive’s established strengths.”
“This means a return to our core area of focus: building automation and intelligence technology for health systems that make their revenue cycle operate more effectively and efficiently.”
Consequences of the Carve-out Transaction on Employees
According to the memo, Olive AI Inc. is set to lay off 215 employees as it seeks to eke out growth by cutting costs and shifting the focus to its core product lines. The recent reduction in staff comprises around 35% of its workforce, leaving approximately 630 staffers.
This declaration of workforce reduction came on Thursday, February 2, 2022. In July 2022, the company cut around 450 staff who accounted for 31% of the total workforce.
However, the Columbus company refused to provide any further details on the specifics of the equity carve-out—such as the approximate time and size of the division, prospective buyers, etc.
According to the notice filed with the Ohio Department of Job and Family Services, in order to notify receivers of the upcoming cut in workforce, the layoff would involve a total of 209 positions, including an EVP (executive vice president) and some senior staff.
“I know this is not easy news to hear,” Lane stated. “I regret that we are in this position, and I apologise for the impact it will have on the lives of our team members. I’d like to express my gratitude for everything you’ve done to make an impact in healthcare.”
The company is committed to keeping the customers and the remaining staffer updated on the details of the transaction as it takes shape.
In October 2022, Olive divested its population health and $340B product lines to sister company Rotera, as two of its customers had ceased doing business with Olive.
Overcoming Divestiture Challenges
Irrespective of the size of the division, carving out the equity of a company is a complex task that requires an effort in coordination to be successful.
For companies looking to ensure a seamless divestiture with minimum business disruption, investing in a high-end carve-out service like Fission Consulting is a sensible decision.
A class-leading service helps clients evade uncertainty while also accelerating the timeline.
The CEO of Olive AI hopes the divestiture would help the company defy the current economic downturn by enabling the employees to focus more on strengthening Olive’s core services and product lines.