- CVS announced a cash acquisition of Signify Health for $30.50 per share.
- CVS’s entry into the in-home health care market is significant.
- In early August, Signify announced its intention to explore strategic alternatives.
CVS Health has agreed to buy Signify Health, an in-home health-care company, for approximately $8 billion, the companies announced a few days back.
CVS said it will pay $30.50 per share in cash for Signify, which will help it expand its health-care services. Signify provides patient care via virtual and in-person visits, leveraging technology and analytics to do so.
An anchor asset
CVS Chief Financial Officer Shawn Guertin described the acquisition as “an anchor asset” that would help the drugstore giant reach more patients and improve the quality of care.
“We could not be more pleased to have Signify be the first step on our journey to build a differentiated health services organization to transform how care is delivered,” he said on an investor call.
What is the reason for the acquisition?
The transaction comes as competitors ranging from Amazon to Walgreens expand their presence in the health-care sector.
In July, Amazon announced the acquisition of One Medical, a membership-based chain of boutique doctor offices, for approximately $3.9 billion. Walgreens is partnering with VillageMD, a primary-care company in which it owns a majority stake, to build hundreds of doctor offices next to its drugstores.
According to FactSet, Signify Health’s shares have increased nearly 45% in the last month, giving it a market value of about $6.7 billion at $28.77 per share as of Friday’s close. On August 2nd, the Wall Street Journal reported that Signify was considering strategic alternatives, including a sale.
Signify shares, which went public in February 2021, soared in late August following reports that Amazon was among the bidders.
CVS will be able to provide care to more customers in their homes after acquiring Signify. The company expects to visit nearly 2.5 million patients this year through in-person and virtual visits.
More expansion to come
CVS has been expanding its portfolio of health-care companies and adding more services to its drugstores over the last few years. It acquired insurer Aetna and the pharmacy benefit manager Caremark. Customers can get vaccines or urgent care at MinuteClinic locations within the company’s stores. It has recently begun offering mental health therapy at some of its stores.
Then, last month, CVS announced plans to acquire or invest in a primary-care company by the end of the year. At an investor day last year, it announced its plans to expand into the area.
The acquisition is expected to close next year
According to the company, Signify will operate as a separate business within the larger company, serving its existing network of clients from over 50 health plans.
The acquisition, which is subject to regulatory approval, is expected to close in the first half of next year.
According to the company, private equity firm New Mountain Capital owns approximately 60% of Signify’s common stock and has agreed to support the transaction.
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