CVS Makes $8 Billion Agreement to Purchase Signify Health

The deal is the latest from a pharmaceutical retailer moving further into the healthcare sector.

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CVS plans to acquire Signify Health in a cash deal which will allow the pharmaceutical giant to buy the healthcare platform at $30.50 per share. The $8 billion deal will help CVS build on its aspirations to delve deeper into the healthcare industry. Signify offers virtual and in-person home and community health services that include preventative and diagnostic services, health evaluations in the home, and coordinated social care services.

Shawn Guertin, CVS’s CFO, said the acquisition is “an anchor asset” that would facilitate the pharmacy chain in reaching more patients and helping to improve their quality of health care.

During an investor call Tuesday morning, Guertin said, “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.”

Other retail giants, such as Walgreens and Amazon, have made strategic moves into the healthcare space. In its partnership with VillageMD, Walgreens plans to build hundreds of healthcare facilities near its drugstores that would grant patients access to a primary care provider. Amazon announced two months ago that it had a $3.9 billion deal with One Medical, a boutique chain of doctor’s offices.

In the past month, Signify’s shares have risen by almost 45 percent, bringing its market value to nearly $6.7 billion. Its shares closed at $28.77 a share on Friday.

Signify shares went public in February of last year, with its shares skyrocketing in late August when rumors that Amazon was bidding on the healthcare company were leaked.

CVS has made other moves into the healthcare space over the past several years, including its acquisition of pharmacy benefits management company Caremark and insurer Aetna. CVS also provides urgent care services at its MinuteClinic outposts that can be found in its stores as well as vaccination services. More recently, the company has started offering mental health therapy at some of its locations.

In August, CVS announced that it was planning to make a stake in or acquire a primary company by the end of 2022.

With its Signify acquisition, CVS will have more reach with home healthcare services. Signify said almost 2.5 million patients would be serviced virtually and in-person in this year. The healthcare services provider will operate as a separate entity within CVS and continue to service its existing clients.

The deal is still subject to regulatory approval, however. But if all goes as planned, the acquisition should close during the first half of 2023.

Nearly 60 percent of Signify Health is owned by New Mountain Capital, a private equity firm. The firm said that it is supportive of Signify’s deal with CVS.

Kyle Ambrester, CEO of Signify Health, said that his company’s approach is more beneficial for both insurance payers and patients alike. Signify’s clinicians spend more than twice the amount of time with their patients than most patients do with a doctor’s visit. Plus, when healthcare providers are able to meet people in their homes, they can address concerns more timely and manage chronic conditions better at a fraction of the cost.

Ambrester said, “There’s a renaissance going on with the house call, and we’re really pushing it across the market and making a real impact in individuals’ lives.”



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