Dive Brief:
- CVS has agreed to acquire Signify Health for $8 billion, winning out over potential buyers including Amazon and UnitedHealth in a bidding war for the home healthcare company.
- The retail pharmacy giant’s deal to acquire Dallas-based Signify will add 10,000 clinicians under CVS’ umbrella, along with technology to help providers, plans and employers coordinate in-home care.
- CVS has been angling to become a full-service healthcare provider, a step that management has said necessitates a foothold in primary care and the addition of in-house doctors.
Dive Insight:
CVS said Monday it agreed to acquire Signify for $30.50 a share in an all-cash deal that the healthcare company expects to close in the first half of 2023. The acquisition should be “meaningfully” accretive to CVS’ earnings, CFO Shawn Guertin said.
The Wall Street Journal earlier this month reported that CVS was the frontrunner in acquisition talks for Signify, which included other heavy hitters like Amazon, fresh off the announcement it plans to acquire primary care network One Medical in July.
CVS is paying a premium for Signify, which has seen its value balloon since reports first emerged in August the company was pursuing a sale, sending its shares jumping from $17.15 on Aug. 1 to $28.77 at Friday’s close.
Signify went public in February 2021, raising more than $500 million. The company’s network of clinicians meet patients in their homes to identify their medical and social needs, then connect them with any needed follow-up services. Signify has grown to serve more than 2.5 million homes, creating a valuable referral stream to other CVS services, according to a release.
With the Signify acquisition, CVS is also acquiring accountable care organization Caravan Health, which Signify acquired in March. Caravan currently partners with more than 170 providers in Medicare accountable care organizations representing more than 700,000 people.
CVS has muscled to become a massive vertically integrated medical service provider since its acquisition of health insurer Aetna in 2018 for $69 billion. Since then, CVS has expanded its network of urgent care clinics and pharmacies and set out to build its presence in home health and primary care as consumers increasingly seek low-cost care in their communities.
In a statement, CVS CEO Karen Lynch said the addition of Signify will help CVS play a “critical role” in advancing its healthcare services strategy, growth in value-based care and new product offerings for other payers. Signify currently has more than 50 health plans clients.
It’s the latest big-ticket deal for a home health company. Just last week, Walgreens finalized its $330 million acquisition of a majority stake in home healthcare platform CareCentrix, while UnitedHealth agreed to buy home health firm LHC Group for $5.4 billion this spring and Humana nabbed home healthcare business Kindred at Home last year for $5.7 billion.
Signify CEO Kyle Aembrester will continue to lead the the company in CVS following the close of the transaction.
