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Tuesday, October 4, 2022
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CVS to Acquire Dallas-Based Signify Health

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CVS store | Image by Shutterstock

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CVS Health Corporation has announced plans to acquire Dallas-based Signify Health in an $8 billion deal.

CVS Health is a healthcare company that owns CVS Pharmacy, a drugstore retail chain, CVS Caremark, a pharmacy benefits manager, and other health-related brands. Now the company is looking to broaden its footprint and expand its pharmacy chain beyond retail, starting with home healthcare technology company Signify Health.

Signify Health, established in 2017, has a network of over 10,000 clinicians across all 50 states in the U.S. These clinicians, including physicians, nurse practitioners, and physician’s assistants, identify patients’ clinical and social needs using home-based visits. They then connect them to follow-up care and community resources.

Other corporate giants, such as Amazon, Option Care Health, and United Health, have also sought to acquire the company. However, on Monday, CVS emerged as the winner, agreeing to purchase the home healthcare technology company for $30.50 per share.

Signify Health CEO Kyle Armbrester told The Dallas Morning News that the deal is not about money but rather “building something better.”

Armbrester explained that Signify’s model benefits patients and insurance payers by enabling healthcare providers to intervene earlier or better manage a chronic condition while lowering costs. He added that the “home visit” approach to health care can make a “real Impact” on people’s lives.

Signify projected the company will conduct 2.5 million in-person and virtual visits this year.

CVS Health’s nearly 10,000 pharmacy and MinuteClinic retail locations would add immense value to its operations. The corporation’s MinuteClinics recorded 50 million patient visits in 2021.

“As we carefully considered our long-term strategic options, we determined that CVS Health is the ideal partner, given its focus on expanding access to health services and helping consumers navigate to the best sites of care,” Armbrester said.

According to the companies, private equity firm New Mountain Capital, which owns a majority stake in Signify Health, supports the deal. Matt Holt, chairman of the Signify Health board and president as well as managing director at New Mountain Capital, said combining the two companies will spearhead the transformation to value-based care.

The benefits would be mutual, advancing CVS’s healthcare services strategy, according to CVS Health Chief Executive Officer Karen S. Lynch.

“This acquisition will enhance our connection to consumers in the home and enables providers to better address patient needs as we execute our vision to redefine the healthcare experience,” Lynch said.

CVS Chief Financial Officer Shawn Guertin said the acquisition is an “anchor asset,” which he believes will help the company reach more patients and improve their quality of care.

As explained by Ambrester, the transaction will foster an “integrated experience that supports a more proactive, preventive and holistic approach to patient care.”

The two companies expect to close the transaction in the first half of 2023, subject to regulatory approval.    

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