The two companies announced on Monday that they have come to an agreement for CVS Health to acquire the in-house healthcare provider Signify Health for approximately $8 billion.
CVS announced that it would pay $30.50 per share in cash for Signify, an acquisition that may potentially build on the company’s growing number of health-care services. Patient care is provided by Signify through a combination of online and in-person interactions, with technology and analytics serving as the driving forces behind the service.
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This relatively unknown health care stock, according to Morgan Stanley, has the potential to increase by almost 80%.
CVS Chief Financial Officer Shawn Guertin referred to the acquisition as “an anchor asset,” indicating that it has the potential to assist the pharmacy giant in reaching more patients and improving the overall quality of treatment.
During a call with investors on Tuesday, he stated, “We Could Not Be More Happy to Have Signify Be Step One On Our Journey To Construct A Differentiated Health Services Group To Transform How Care Is Delivered.” “We Could Not Be More Happy To Have Signify Be Step One On Our Journey To Construct A Differentiated Well Being Services Group To
The transaction comes at a time when competitors such as Amazon and Walgreens are making further moves into the health-care industry. Amazon made the announcement in July that it will be purchasing One Medical for approximately $3.9 billion. One Medical is a membership-based brand of boutique physician workspaces. Walgreens has entered into a relationship with VillageMD, a primary care company, in which it has purchased a majority ownership, and as a result, the company is in the process of building a large number of physician offices adjacent to its drugstores.
According to FactSet, the market value of Signify Wellbeing was over $6.7 billion as of Friday’s closing price of $28.77 per share. Shares of the company’s stock have increased by nearly 45% over the course of the previous month. On August 2, it was announced in the Wall Street Journal that Signify was investigating several strategic options, including a potential sale.
After reports surfaced in late August that Amazon was among the several bids for Signify, the price of the company’s shares skyrocketed. Signify went public in February 2021.
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CVS has been beefing up its portfolio of health-care companies and expanding the range of services offered in its pharmacies over the course of the past few years. It bought the insurance company Aetna as well as the pharmaceutical benefits manager Caremark. Within its retail locations, MinuteClinic outposts provide patients with access to urgent care and vaccinations for prospective customers. Recent developments include the introduction of mental health treatment in select locations.
The following month, CVS announced that by the end of this year, it planned to either fully acquire a primary care company or take a minority investment in one. At an investor day the previous year, it had discussed its plans to expand throughout the world.
CVS will be able to provide care to a greater number of customers in the comfort of their own homes after completing the acquisition of Signify. It was announced on Tuesday by the CEO of Signify, Kyle Armbrester, to the company’s investors that the company anticipates making almost 2.5 million visits to patients in 2018, including both in-person and digital consultations.
According to the announcement made by the parent company, Signify will operate independently as a business unit inside the larger organization and will continue to serve its existing clientele, which includes members of more than 50 different health plans.
The companies anticipate that the transaction, which is contingent on the permission of regulatory authorities, will be finalized within the first half of the year following the current one.
According to statements made by both companies, New Mountain Capital, a private equity firm, owns approximately sixty percent of Signify’s common stock and has agreed to support the purchase.
According to Armbrester, the approach that Signify takes is advantageous for both patients and the insurance companies who pay for their care. According to him, the amount of time spent by its professionals with a patient is approximately 2.5 times greater than the typical length of time spent in a doctor’s office. In addition, he claimed that by visiting people in their homes, health care providers are able to act earlier or better manage a critical condition, which would ultimately result in lower costs.
He explained to prospective purchasers that “there is a revival occurring with the home name,” and that “we’re truly pushing it throughout the market and making an actual influence on people’s lives.”
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Zbout was the first publication to announce that CVS would be purchasing the home healthcare giant Signify Health for approximately $8 billion.