CVS nabs home healthcare company Signify for $8 billion after bidding war

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Diving brief:

  • CVS has agreed to acquire Signify Health for $8 billion, beating potential buyers including Amazon and UnitedHealth in a bidding war for the home healthcare company.
  • Retail pharmacy giant’s deal to acquire Dallas-based Signify will add 10,000 clinicians under the CVS umbrella, plus technology to help providers, plans and employers coordinate home care .
  • CVS is looking to become a full-service healthcare provider, a step that management says requires a foothold in primary care and the addition of in-house physicians.

Overview of the dive:

SVC said on Monday that he agreed to acquire Signify for $30.50 per share in an all-cash deal the healthcare company expects to complete in the first half of 2023. The acquisition is expected to be “significantly” accretive to CVS earnings , said chief financial officer Shawn Guertin.

The Wall Street Journal reported earlier this month that CVS was the frontrunner in talks to acquire Signify, which included other heavyweights like Amazon, after it announced plans to acquire the network. One Medical primary care in July.

CVS is paying a premium for Signify, which has seen its value skyrocket since first reports emerged in August that the company was pursuing a sell-off, pushing its shares from $17.15 on Aug. 1 to $28.77 at the time. Friday closing.

Signify went public in February 2021, raising over $500 million. The company’s network of clinicians meet with patients in their homes to identify their medical and social needs, then connect them with the necessary follow-up services. Signify has grown to serve more than 2.5 million homes, creating a valuable referral flow to other CVS services, according to a statement.

With the acquisition of Signify, CVS is also acquiring responsible care organization Caravan Health, which Signify acquired in March. Caravan currently partners with more than 170 providers in responsible Medicare care organizations representing more than 700,000 people.

CVS has muscled itself into a massive vertically integrated medical services 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 moved to strengthen its presence in home health care 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, growing value-based care and new product offerings for other payers. Signify currently has over 50 health plan customers.

This is the latest big deal for a home health business. Just last week, Walgreens completed its acquisition of a $330 million majority stake in home healthcare platform CareCentrix, while UnitedHealth agreed to buy the healthcare company at-home LHC Group for $5.4 billion this spring and Humana acquired home healthcare company Kindred at Home last year for $5.7 billion.

Signify CEO Kyle Aembrester will continue to lead the company in CVS after the transaction closes.