Venture capital firm AlleyCorp is aiming to reshape the digital health landscape by giving it a New York state of mind.
It has incubated or invested in 33 healthcare-focused startups, including women’s health company Maven, physician enablement company Pearl Health and digital staffing company Nomad Health. Most of its portfolio companies are based in New York City and some work in AlleyCorp’s Flatiron offices.
AlleyCorp's push into healthcare after spending 14 years largely focused on consumer and tech investments represents a larger effort in the industry where stakeholders are looking build digital health hubs outside of Silicon Valley. While many of the efforts are led by hospitals and economic development leaders, investors like AlleyCorp are looking to create an ecosystem of digital health companies from the ground up in New York City.
AlleyCorp was founded in 2007 by Kevin Ryan, a serial entrepreneur behind the creation of online shopping platform Gilt Groupe, database company MongoDB and business publication Business Insider. He also led online advertising company DoubleClick before it was acquired by a private equity firm for $1.1 billion in 2005. In September 2021, he launched a $100 million healthcare venture fund to invest in and build New York City-based digital health startups.
Ryan recruited Dr. Brenton Fargnoli, AlleyCorp general partner, and Dr. Jeffrey De Flavio, entrepreneur-in-residence, to oversee the firm's healthcare investments. De Flavio previously launched Groups, a provider of value-based opiate addiction treatment that was backed by Kaiser Permanente Ventures.
Fargnoli was the senior medical director at cancer care company Flatiron Health. He said when he came to New York, there were only a few digital health companies such as Flatiron, insurtech Oscar Health and online scheduling company ZocDoc. The digital scene in New York City has since blossomed.
“I think part of it is the growth of that ecosystem through the Oscars, the Flatirons and others that have spawned talent," Fargnoli said. "But the other part is just folks are coming into healthcare from other industries now. Before you had to be in healthcare to play in healthcare. New York has a diversified talent pool where you can pull in people from outside healthcare.”
AlleyCorp's ambitions come during a challenging time for digital health startups, prompting some general tech investors to bail from the industry. Investors interested in digital health during the early months of the Covid-19 pandemic are exiting as telehealth adoption rates have dropped.
Earlier this month, AlleyCorp announced the launch of a $250 million fund, this one including outside investors, to invest in digital health well as tech sectors in different industries. Most of the earlier funding came out of Ryan’s personal wealth, which he accumulated after DoubleClick's sale.
AlleyCorp's portfolio startups have raised more than $1 billion. Of the 33 healthcare companies, eight were incubated within the company and given a initial investment of $1 million to $4 million. Alleycorp owns equity in the companies so it benefits from the exits.
The healthcare team develops a concept for a company and then finds the best CEO to lead it, Fargnoli said. The process then shifts to helping the CEO develop the product and find the first health system, health insurer or employer customer.
"In healthcare, reputation, credibility and relationships matter. The people on our team have those direct relationships [with providers and payers]," Fargnoli said.
Other times, AlleyCorp will connect with an entrepreneur working on a similar idea. Michael Kopko, CEO of physician enablement company Pearl Health, had an idea to help physicians be more proactive with high-need patients. AlleyCorp was working on something similar, Kopko said.
Kopko worked to develop the concept with Ryan and De Flavio, who is a co-founder and executive chairman of Pearl Health.
"Everyone thinks to start a company, you have to leave your job, survive on ramen for two years and then hope to get funded," Kopko said. "That's fine. It's a very noble path but that's not the only path anymore and I think this type of solution offers entrepreneurship and scale to people that don't want to fit into one path."
Pearl raised $75 million in a round led by venture capital firm Andreessen Horowitz in January 2023 and inked a partnership with Walgreens in September. Nomad Health scored a $105 million funding round in June 2022 led by venture capital firm Adams Street Partners.
Fargnoli said fewer than 10 of the companies AlleyCorp has invested in have failed.
While the CEOs it brings on board aren’t always former clinicians, it helps to have people with experience. Dr. Dave Chokshi, former health commissioner of New York City, is a board member at AlleyCorp portfolio company Yuvo Heath, which provides technical administrative support to community health centers.
Chokshi has seen the emergence of physician entrepreneurs in New York City and credits Fargnoli and AlleyCorp for leading that effort. He said the company understands the rare traits needed to succeed in digital health entrepreneurship.
“The people I’ve seen succeed can have this fierce conviction that things should be different but also a deep understanding of the system as it exists today,” Chokshi said. “What I’ve seen is there are a lot of people who have the former, but not as many who have the latter, and even fewer who are able to pair them both together.”
This article originally appeared in Modern Healthcare.
The case against one of New York’s “worst landlords” got much clearer Wednesday.
Manhattan District Attorney Alvin Bragg announced a wide-ranging indictment against Daniel Ohebshalom for allegedly letting some of his apartment buildings go to seed in order to harass rent-regulated tenants and force them to move out.
Ohebshalom, who is regularly called out on Public Advocate Jumaane Williams’ annual worst landlords list, individually faces 40 counts, and shell companies to which Ohebshalom is linked that own five Manhattan properties face another 40 counts, according to the indictment.
“He forced his tenants to live in unthinkable conditions,” Bragg said in a late-afternoon press conference announcing the charges.
And the conditions, which include broken doors, collapsed ceilings and a lack of heat, including at a pair of hard-hit buildings on West 46th Street in Hell’s Kitchen, were allowed to fester all in the name of “huge profits,” he added.
The charges are familiar, as Ohebshalom has been previously cited for hundreds of code violations by city housing agencies. But they do seem to mark a serious escalation of the case against Ohebshalom, who has been serving a 60-day sentence on Rikers Island since late March for alleged violations at a pair of Washington Heights properties. But those charges involved the housing division of Manhattan Supreme Court, while Bragg’s indictment represents a broader criminal push.
Bragg added that it’s the first time that a landlord has faced criminal charges for harassing rent-stabilized tenants.
It is exceedingly rare for a controversial landlord to head to prison, though East Village owner Steve Croman did serve time after pleading guilty to tax fraud and other charges in 2017.
The buildings cited in Bragg’s case are two that landed Ohebshalom, who also goes by Daniel Shalom, behind bars: 705 and 709 W. 170th St., which have racked up nearly 700 violations.
Also named were 410 and 412 W. 46th St., which Ohebshalom later tried to sell for nearly $12 million, though city officials ultimately wrested the sites away to put them under third-party control. The other apartment building is 331 E. 14th St. in the East Village.
Some of the charges that Ohebshalom faces involve filing false documents to obscure his ownership of the buildings. Indeed, he apparently had employees of a business associate sign papers on his behalf in order to conceal Ohebshalom's ties to the properties, according to Bragg. Ohebshalom could not immediately be reached for comment.
City lawmakers subjected one of Mayor Eric Adams’ top aides to a barrage of criticism on Wednesday during a contentious hearing about his administration’s new policy requiring elected officials to fill out a form to request meetings with or action from city agency leaders.
The launch of the so-called Elected Officials Agency Engagement Request portal earlier this month blindsided City Council leaders including Speaker Adrienne Adams, who said the process would upend the decades-old practice of lawmakers directly contacting agency officials to request a meeting or seek help for a constituent issue.
Critics see the move as gatekeeping by a micromanaging mayor. But Tiffany Raspberry, Adams’ senior advisor and director of his intergovernmental affairs office, characterized the form on Wednesday as an effort to streamline services, centralize requests and level the playing field to ensure that newly elected officials are not disadvantaged compared to government veterans with more extensive contacts.
“The form is not intended to stand in the way of elected officials picking up the phone to reach out to a commissioner, borough commissioner or any other official in the administration," said Raspberry, who is seen as the face of the new policy.
She downplayed the form’s impact, saying it had to be used only for formal meeting and service requests rather than inquiries for constituents or requests for information. Raspberry said she could not foresee any reason why a request made through the form would be denied.
That did little to dissuade City Council members. Brooklyn lawmaker Lincoln Restler, a frequent critic of Adams’, called the form “inane” and a “dangerous politicization of city government to prevent city agencies from doing their job based on the political whims of the mayor.”
Restler said he had spoken to more than a dozen Adams administration officials who admitted to being “embarrassed” by the policy, and referenced a Daily News report that Police Commissioner Edward Caban privately expressed reservations about it. Indeed, opposition to the policy has been unusually widespread — more than 60 officials from both parties at the city, state and federal levels signed onto a letter to Adams on Tuesday, urging him to reconsider it.
Restler said he and his colleagues have needed to use the form to request meetings on issues like illegal dumping, a cannabis store near an elementary school and requests for agency heads to attend local events. Raspberry countered that the administration has fielded 182 requests since the form went live this month and responded to all of them, with an average turnaround time between 24 and 48 hours.
“It’s unfortunate that you are not open to exploring how efficient this is,” Raspberry told Restler. In another tense moment, Raspberry added that “It’s hurtful to hear you reduce the work we’re trying to do in the Adams administration.”
Mayor Adams himself has defended the form, saying earlier this month that it was meant to give each elected official the same amount of attention from city agencies. At one point, Adams appeared to tell reporters that he was personally reviewing each submission made using the form, but Raspberry said Wednesday that the mayor only “has access to the form and reserves the right to look at it whenever he wants to.”
Restler and fellow lawmaker Gale Brewer both suggested the administration should have focused instead on improving the Green Book, a widely used reference guide of city employees that has suffered from infrequent updates.
“Half of city government, I have their cell number,” said Brewer, a Manhattan council member who has spent decades in city government. “So the notion that to talk to them, I have to fill out a form — you can't imagine how it feels.”
Raspberry defended the form as part of Adams’ well-known affinity for new technologies — although Restler rejected the idea that “a multiple-page Microsoft Office form is new technology.”
Others who joined the hearing to testify against the form included former Manhattan Borough President Ruth Messinger and former Public Advocate Betsy Gotbaum, now the executive director of good-government group Citizens Union, who called it “unnecessary and unreasonable red tape.”
Boston Properties said higher borrowing costs would take a bite out of its financial results this year.
“High interest rates are our biggest earnings challenge,” Chief Financial Officer Michael LaBelle said on an earnings call Wednesday.
The owner of the GM Building and other premiere Midtown office towers said interest expense jumped by nearly $30 million last quarter, devouring its almost $15 million increase in rental income and then some. While costs rose, occupancy rates slipped to 88.2% from 88.6% in the prior-year period and 88.4% in the fourth quarter last year.
Expenses rising faster than incomes are raising the blood pressure of landlords everywhere, and the pressure won’t abate until the Federal Reserve starts cutting rates. In light of that, Boston Properties lowered its 2024 forecast for funds from operations to about $7.04 a share from $7.10. A cap that limits interest expense on a $1.2 billion term loan expires this month and is expected to reset 75 basis points higher.
The firm leased 900,000 square feet of space last quarter, slightly below 2023’s average of 1 million square per quarter. Officials said demand for space in its 10 million square-foot Manhattan office portfolio remains strong, and they are optimistic they can replace tenants who move out.
One hopeful sign was at 360 Park Ave. South, a vacant office building that Boston Properties acquired for one dollar from a partner who wanted out. The 450,000 square-foot building at East 28th Street is 23% leased, up from 18% in the fourth quarter.
“Occupancy will drop in the second quarter and recover as we move into the fourth,” President Douglas Linde said on the earnings call.
BMO Capital Markets analyst John Kim suggested the firm should consider selling office buildings in suburban markets such as Princeton, N.J., and focus on its portfolio in New York, Boston, San Francisco and Washington, D.C.
“This might be an ideal time to plan an exit,” Kim said, though Linde said the firm is committed to the markets it’s in.
Boston Properties’ stock fell by 3% Wednesday, to $60 a share. It traded for nearly $150 a share in early 2020.
Impatience appears to be on the rise among some investors.
“Is there a scenario where the BXP story can still work long-term if we’re looking at a permanent condition of under-utilization of office?” an analyst asked.
CEO Owen Thomas said its Manhattan buildings are as filled up as they ever were Tuesdays through Thursdays.
“New York is basically back the way it was, certainly three days a week,” he said. “We see improvement.”
Boston Properties said higher borrowing costs would take a bite out of its financial results this year.
“High interest rates are our biggest earnings challenge,” Chief Financial Officer Michael LaBelle said on an earnings call Wednesday.
The owner of the GM Building and other premiere Midtown office towers said interest expense jumped by nearly $30 million last quarter, devouring its almost $15 million increase in rental income and then some. While costs rose, occupancy rates slipped to 88.2% from 88.6% in the prior-year period and 88.4% in the fourth quarter last year.
Expenses rising faster than incomes are raising the blood pressure of landlords everywhere, and the pressure won’t abate until the Federal Reserve starts cutting rates. In light of that, Boston Properties lowered its 2024 forecast for funds from operations to about $7.04 a share from $7.10. A cap that limits interest expense on a $1.2 billion term loan expires this month and is expected to reset 75 basis points higher.
The firm leased 900,000 square feet of space last quarter, slightly below 2023’s average of 1 million square per quarter. Officials said demand for space in its 10 million square-foot Manhattan office portfolio remains strong, and they are optimistic they can replace tenants who move out.
One hopeful sign was at 360 Park Ave. South, a vacant office building that Boston Properties acquired for one dollar from a partner who wanted out. The 450,000 square-foot building at East 28th Street is 23% leased, up from 18% in the fourth quarter.
“Occupancy will drop in the second quarter and recover as we move into the fourth,” President Douglas Linde said on the earnings call.
BMO Capital Markets analyst John Kim suggested the firm should consider selling office buildings in suburban markets such as Princeton, N.J., and focus on its portfolio in New York, Boston, San Francisco and Washington, D.C.
“This might be an ideal time to plan an exit,” Kim said, though Linde said the firm is committed to the markets it’s in.
Boston Properties’ stock fell by 3% Wednesday, to $60 a share. It traded for nearly $150 a share in early 2020.
Impatience appears to be on the rise among some investors.
“Is there a scenario where the BXP story can still work long-term if we’re looking at a permanent condition of under-utilization of office?” an analyst asked.
CEO Owen Thomas said its Manhattan buildings are as filled up as they ever were Tuesdays through Thursdays.
“New York is basically back the way it was, certainly three days a week,” he said. “We see improvement.”
A Manhattan real estate developer with dreams of revitalizing Canal Street is looking to demolish a pair of historic buildings and construct a new building from the ground up, according to a notice that appeared in the city register this week.
United American Land, a firm owned by the Laboz family, wants to take a wrecking ball to the dilapidated structures at 301 Canal St. and 419-421 Broadway — both of which fall within the SoHo-Cast Iron Historic District — right above the Canal Street subway station that serves the N, Q, R and W trains. But before any work can begin, the Landmarks Preservation Commission must sign off on the plans because the buildings, dating back to the 1800s and the mid-1900s, sit within the historic district.
United American Land bought the two properties, as well 423 Broadway next door, in 2017 for $5.4 million, according to city records. And the three brothers who serve as the firm's principals — Albert, Jason and Jody Laboz — didn't waste time in filing plans to renovate the corner. That same year, they first went before the Landmarks Preservation Commission with an application to demolish the two buildings on Broadway and erect a 9-story structure, designed by Morris Adjmi Architects that would include office space with retail on the ground floor. The commission approved a modified version of the application in December, though it had rejected a first iteration months earlier, Curbed reported at the time.
Now the Laboz family is slated to go before the Landmarks Preservation Commission on May 7 with newly tweaked plans that call instead for a 1-story building in accordance with the fact that the "office market [is] not viable at present," said Bridget Moriarity, a spokeswoman for Morris Adjmi Architects. The federal townhouse next door, 423 Broadway, will not be demolished but will be renovated with a small addition, she said.
"This 1-story building will be contextually appropriate and inspired by the cast-iron architecture of SoHo," Moriarity said.
In 2021 the city controversially rezoned the area to allow for building housing as of right as part of the SoHo/NoHo Neighborhood Plan, said Casey Berkowitz, a spokesman for the Department of City Planning. The Laboz family currently doesn't have plans to include apartments at their new development at the corner of Canal and Broadway but are working with the same architect on a large residential project with 100 units of housing, a quarter of which will be below market rate, just across Broadway at 277 Canal St., Moriarity said. That project is expected to be the first one completed following the neighborhood rezoning.
United American Land did not respond to a request for comment by press time.
A Manhattan real estate developer with dreams of revitalizing Canal Street is looking to demolish a pair of historic buildings and construct a new building from the ground up, according to a notice that appeared in the city register this week.
United American Land, a firm owned by the Laboz family, wants to take a wrecking ball to the dilapidated structures at 301 Canal St. and 419-421 Broadway — both of which fall within the SoHo-Cast Iron Historic District — right above the Canal Street subway station that serves the N, Q, R and W trains. But before any work can begin, the Landmarks Preservation Commission must sign off on the plans because the buildings, dating back to the 1800s and the mid-1900s, sit within the historic district.
United American Land bought the two properties, as well 423 Broadway next door, in 2017 for $5.4 million, according to city records. And the three brothers who serve as the firm's principals — Albert, Jason and Jody Laboz — didn't waste time in filing plans to renovate the corner. That same year, they first went before the Landmarks Preservation Commission with an application to demolish the two buildings on Broadway and erect a 9-story structure, designed by Morris Adjmi Architects that would include office space with retail on the ground floor. The commission approved a modified version of the application in December, though it had rejected a first iteration months earlier, Curbed reported at the time.
Now the Laboz family is slated to go before the Landmarks Preservation Commission on May 7 with newly tweaked plans that call instead for a 1-story building in accordance with the fact that the "office market [is] not viable at present," said Bridget Moriarity, a spokeswoman for Morris Adjmi Architects. The federal townhouse next door, 423 Broadway, will not be demolished but will be renovated with a small addition, she said.
"This 1-story building will be contextually appropriate and inspired by the cast-iron architecture of SoHo," Moriarity said.
In 2021 the city controversially rezoned the area to allow for building housing as of right as part of the SoHo/NoHo Neighborhood Plan, said Casey Berkowitz, a spokesman for the Department of City Planning. The Laboz family currently doesn't have plans to include apartments at their new development at the corner of Canal and Broadway but are working with the same architect on a large residential project with 100 units of housing, a quarter of which will be below market rate, just across Broadway at 277 Canal St., Moriarity said. That project is expected to be the first one completed following the neighborhood rezoning.
United American Land did not respond to a request for comment by press time.
Corporate cannabis, small business owners, and advocates alike had a lot to say on Tuesday, after the U.S. Drug Enforcement Administration confirmed it will put forth a proposal to reschedule cannabis from its current Schedule I classification to Schedule III under the Controlled Substances Act.
The proposed rule, which would recognize cannabis as having a lower potential for abuse compared to its current status, will have to first undergo a review by the White House Office of Management and Budget and then a public comment period before the DEA ultimately publishes out a final rule.
Still, while the process could end up playing out in arduous fashion, as it often does in the government, folks are just glad the feds are making moves.
Market booms in response
Cannabis stocks regained some steam on Tuesday following the news. Both the AdvisorShares Pure US Cannabis ETF and Amplify U.S. Alternative Harvest ETF rose by more than 20% in afternoon trading.
Individual cannabis stocks with smaller market caps and corporate giants alike also posted big gains. New York-based multistate operator Curaleaf Holdings climbed 21% to reach a new 52-week high, and Florida-based Trulieve Cannabis surged nearly 40% by the close.
Interest in the sector has been waning, noted Morgan Paxhia, managing director of Poseidon Investment Management. But this move could reinvigorate it.
“Pessimism and skepticism is plentiful as many have written off the sector focusing on the wrong things like low quality/speculative companies or non-catalysts like SAFER Banking,” he said. “Rescheduling is likely to bring a vibrant return of investor interest that could quickly move the sector back to robust optimism.”
Is it enough?
But not everyone was as enthusiastic as the stock market on Tuesday. For some, the move falls significantly short.
“This is a positive step forward for federal cannabis policy, however it is a rather modest step given the strong support among American voters for comprehensive cannabis reform,” said Matthew Schweich, executive director of the Marijuana Policy Project.
Rescheduling doesn’t eliminate the “criminalization of medical cannabis patients and cannabis consumers under state laws,” he said. So work still remains to move the industry forward.
That sentiment was echoed by Gretchen Gailey, co-founder of the American Cannabis Collective: “While this move is undoubtedly a huge win for patients, we must not lose sight of the broader context. Moving cannabis to Schedule III does not mark the end of prohibition. We caution against any attempts to overstate the significance of this decision.”
However, most people agree that once the final rule is published, plant-touching businesses will see immediate results for their bottom lines, and the industry will have more opportunities for growth.
“Reclassifying cannabis from a Schedule I to a Schedule III means so much for our dispensary and New Jersey,” said Alyza Brevard Rodriguez, owner of The Other Side Dispensary in Jersey City.
“It’s not only the potential tax benefits and financial relief through write-offs, especially during the crucial early years of opening a business, but it also opens doors for more research opportunities, reducing stigmatization, and legitimizing the industry further.”
This article originally ran in Green Market Report.
New York Community Bancorp shares soared after the troubled lender posted results that were better than feared and executives outlined a plan for transitioning the company into a more diversified bank.
Charge-offs and provisions for potential loan losses dropped in the first quarter from the previous three months, which could help allay commercial-property concerns that have hounded the lender since it last reported results. Under a new chief executive, the lender will seek to diversify its loan portfolio and bolster its funding profile with a goal of being profitable in 2025 following expected losses this year.
“Since taking on the CEO role, my focus has been on transforming New York Community Bank into a high-performing, well-diversified regional bank,” Chief Executive Joseph Otting, who took over leadership of the company at the beginning of April, said in a statement. “While this year will be a transitional year for the company, we have a clear path to profitability over the following two years.”
Shares of Long Island-based lender gained as much as 30%, their biggest increase in intraday trading since the company’s capital injection was announced on March 6. The stock had plunged 74% this year through Tuesday.
NYCB took a $315 million provision for potential credit losses, more than analysts’ expectations of nearly $250 million yet still less than the prior quarter’s $552 million and the highest estimates. NYCB also wrote off more for bad loans in the first quarter than estimated, with net charge-offs totaling $81 million, but they came in lower than the fourth-quarter total as well.
The lender’s total deposits of $74.9 billion at the end of March were lower than the $77.2 billion given in an investor update earlier that month. Questions around the levels rose throughout the quarter as the bank grappled with rapid management changes, credit downgrades, stock volatility and banker exits.
‘Quite early’
“While we are still quite early in this turnaround story, we believe shares are likely to move higher today from the smaller than feared deposit mix shift trend plus a formal three-year goal of profitability improvement,” Citigroup analyst Benjamin Gerlinger, who has a neutral rating on shares, wrote in a note to clients.
In a presentation to investors Wednesday, NYCB outlined a strategy to transform the lender into a diversified bank, including aims to “develop a realistic operating plan” and focus on “rigorous credit-risk management.” In the medium term, the bank intends to diversify its loan portfolio toward less concentration and geographic risk, and improve its funding profile by increasing core deposits.
Discussing asset sales and the runoff of nonstrategic assets, management said on a conference call with analysts that the company is at the “doorstep” of a $5 billion transaction at par value, minus a transaction fee.
“We anticipate an elevated level of loan-loss provision over the remainder of 2024 related to the potential for market and rate conditions to impact borrower performance on certain portions of our loan portfolio,” Otting said in the statement.
Real estate owners are grappling with the fallout from higher borrowing costs and a shift in demand for properties such as offices. Refinancing property debt has become more challenging, in part because of higher rates and a pullback from lenders. And valuations have taken a hit, with office prices dropping 16% in the past year through March and apartment prices falling 8%, according to real estate data provider Green Street.
NYCB’s nonperforming commercial real estate loans more than doubled in the first quarter from the previous three months to $264 million. The bank also was a big lender to New York City’s rent-stabilized apartment market, which has come under pressure due to higher rates, costs and a 2019 rent law. NYCB said it conducted a due diligence process on those loans. In total, the bank’s multifamily loans considered nonperforming also more than doubled, to $339 million.
NYCB had been a relative winner among regional banks last year in the wake of its deal for parts of failed Signature Bank. That changed in January, when an earnings shock sent shares into a tailspin and ultimately drove the lender to seek a rapid capital injection.
The lender spooked investors when its fourth-quarter earnings report included a sharp dividend cut, higher provisions for credit losses than analysts expected and a surprise loss per share. The stock tumbled by a record 38% in one day amid concerns about deterioration in the lender’s property-loan portfolio.
In the weeks that followed, NYCB disclosed it had identified material weaknesses in its internal controls over loan review and switched CEOs. With the stock tumbling, a group of investors helmed by former Treasury Secretary Steven Mnuchin interceded to inject more than $1 billion of capital into the lender.
Otting was installed as CEO — the second time the bank’s leader was replaced in days — and Mnuchin and other investors joined the board. Otting was quick to shake up NYCB’s top ranks, including naming a new chief financial officer and head of commercial real estate lending.