CVS to buy home health giant Signify Health for about $8 billion

Key Points
  • CVS said it would acquire Signify Health for $30.50 per share in cash.
  • The deal marks a big push by CVS into the in-home health care space.
  • Signify announced its decision to explore strategic alternatives in early August.

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CVS to acquire Signify Health for about $8 billion
CVS to acquire Signify Health for about $8 billion

CVS Health has reached a deal to acquire in-home health-care company Signify Health for about $8 billion, the companies said Monday.

CVS said it will pay $30.50 a share in cash for Signify, an acquisition that would build on its growing health-care services. Signify offers patient care through virtual and in-person visits, using technology and analytics to power its service.

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 on Tuesday.

The deal comes as competitors from Amazon to Walgreens are moving further into the health-care sector. Amazon announced in July it was acquiring One Medical, a membership-based chain of boutique doctor offices, for about $3.9 billion. Walgreens is building hundreds of doctor offices next to its drugstores through a partnership with VillageMD, a primary-care company that it acquired a majority stake in.

Signify Health's shares have surged nearly 45% over the last month to give it a market value of about $6.7 billion at $28.77 a share as of Friday's close, according to FactSet. The Wall Street Journal reported on Aug. 2 that Signify was exploring strategic alternatives, including a sale.

Shares of Signify, which went public in February 2021, surged in late August after reports that Amazon was among the bidders.

'Renaissance' of the house call

For the past several years, CVS has added to its portfolio of health-care companies and tacked on more services to its drugstores. It acquired insurer Aetna and pharmacy benefits manager Caremark. Customers can get vaccines or urgent care at MinuteClinic outposts inside its stores. It has recently introduced mental health therapy at some stores.

Then last month, CVS said it planned to acquire or take a stake in a primary-care company by year's end. It had announced its ambitions to expand into the area last year at an investor day.

With the acquisition of Signify, CVS will be able to offer care to more customers in their homes. Signify expects to visit nearly 2.5 million patients through in-person and virtual visits this year, its CEO Kyle Armbrester told investors on Tuesday.

Signify will operate as a separate business within the larger company and serve its existing network of clients from over 50 health plans, the company said.

The companies expect the acquisition, which is subject to regulatory approval, to close in the first half of next year.

Private equity firm New Mountain Capital owns about 60% of Signify's common stock and agreed to support the deal, the companies said.

Armbrester said Signify's approach works better for patients and insurance payers. He said its clinicians spend 2.5 times longer with a patient than during an average visit to a doctor's office. And by meeting people in their homes, he said health-care providers can intervene earlier or better manage a chronic condition to ultimately lower costs.

"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," he told investors.