America’s leading healthcare company, CVS Health, is all set to acquire Signify Health, the in-home healthcare company. It recently closed the deal amounting to $8 Billion—$30.50 per share—in cash.
Signify Health is a leading healthcare platform leveraging technology, analytics and network to provide value-based care. With its virtual and in-house health assessments, Signify Health’s physicians and nurse practitioners connect patients to appropriate follow-up care and community-based resources.
CVS Health, primarily the drug store giant with 9,900 retail stores, offers an array of healthcare services like pharmacy benefits manager under CVS Caremark, health insurance under Aetna, vaccination and emergency care at MinuteClinics in its stores and a lot more. With Signify Health, it plans to enter the primary care market.
About the acquisition
While CVS Health and Signify Health have entered into a definitive agreement, the acquisition is subjected to regulatory approval and Signify’s stockholder approval. New Mountain Capital, the company which owns 60% of Signify’s stock, has agreed to support the deal.
If all the customary approvals are received, the deal is expected to close by the first half of 2023. CVS Health plans to clear the all-cash transaction through its balance sheet without affecting its credit score.
Signify’s current CEO Kyle Armbrester will continue to lead the company under CVS Health after the acquisition.
Signify Health and its market position
Founded in 2017, Signify Health has quickly grown to become a leading healthcare platform providing value-based care powered by technology and analytics. With a network of over 10,000 clinicians across 50 states in the US, Signify Health provides in-home health evaluations for up to two million health plan members every year. It has 50+ health plans and expects to visit nearly 2.5 million patients this year.
“Our mission is to build trusted relationships to make people healthier by using actionable intelligence to understand what’s really impacting outcomes and cost today,”
Signify Health CEO Kyle Armbrester said in a statement.
Signify claims its in-house healthcare approach is beneficial for both healthcare providers and insurance payers. By meeting patients at home, Signify’s clinicians spend an average of 2.5x more time with the patient than in a doctor’s office. This enables them to intervene earlier or manage chronic conditions better, reducing costs for payers.
Signify has always focused on patients in Medicare and underserved communities. After acquiring Caravan Health earlier this year, its focus on value-based care and population health expanded. Caravan was in ties with 170+ providers who actively participate in Accountable Care Organisations (ACOs) serving Medicare beneficiaries. This year, these ACOs under Signify generated over $138 million in gross savings and are expected to grow further.
Signify was looking to explore strategic alternatives, including a sale, and attracted Amazon and UnitedHealth amongst its bidders. However, it chose to continue with CVS Health as an ideal partner. “We are both building an integrated experience that supports a more proactive, preventive and holistic approach to patient care and I look forward to executing on our shared vision for the future of care delivery.” Kyle Armbrester, CEO of Signify Health, said in the release.
CVS Health’s unique collection of assets will allow Signify’s network of healthcare providers to have a greater impact.
“As part of CVS Health, Signify will continue to advance its extensive primary care enablement capabilities, including turnkey analytics, network and practice improvement solutions, to help providers transition to value-based reimbursement and improve quality of care.” .
– Kyle Armbrester
CVS Health and its strategy with this acquisition
Founded in the 1960s, CVS Health has close to 60 years of a foothold in the American Healthcare space. It is one of the leading healthcare platforms providing multiple services under its belt. With more than 9,900 physical stores, it has expanded into pharmacy benefits manager, online pharmacy, online prescription refill, health insurance provider, vaccination and emergency care provider with MinuteClinic and now into home-health assessments by acquiring Signify Health.
The pandemic changed the way people looked at healthcare. Patients who visited drugstores started ordering their medicines online. They also started consulting doctors online. With bigger companies entering the healthcare space, the competition for CVS Health is enormous.
The news of CVS Health acquiring Signify Health came after other acquisitions in the US health market. Amazon acquired One Medical for $3.9 billion, and Walgreens announced several deals, including the acquisition of Carecentrix, another in-home healthcare provider.
However, CVS Health started expanding its roots further into healthcare a decade ago by acquiring Caremark Rx, pharmacy benefits manager. It also acquired Aetna for $69 million in 2018. Apart from these, CVS Health has acquired several clinics and pharmacy chains to expand its foothold across 50 states in the US since its very beginning.
By acquiring Signify Health, CVS entered the home-based healthcare market, which is seeing exponential growth after the pandemic. The company also described the acquisition as “an anchor asset” that will help it strengthen ties with its large customer base, which is now going online for things it used to visit CVS stores. With stores convenient to a large population, CVS Health has the potential to be a big player in the US healthcare space.
CVS Health has a network of over 40,000 physicians and nurse practitioners with 1,100 MinuteClinic locations that offer care.
“Signify Health will play a critical role in advancing CVS’s health care services strategy and gives it a platform to accelerate its growth in value-based care.”
Karen Lynch, CEO of CVS Health said in a statement.
Signify’s focus on reducing healthcare costs will also come as a benefit to Aetna, CVS Health’s insurance payer.
How will the acquisition impact the US healthcare space?
With CVS Health’s strong foothold in the US health market and Signify’s grip on home-based and value-based healthcare, the acquisition can change the way care is delivered in the US. Moving towards a consumer-centric model, the acquisition will also change the way people expect care. We can expect a good shift among other competitors to keep up.
