CVS will acquire Signify Health in an 8 billion dollar deal

The CVS Health logo is displayed in this illustration taken on May 3, 2022. REUTERS / Dado Ruvic / Illustration

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NEW YORK, Sept. 5 (Reuters) – CVS Health Corp (CVS.N) on Monday agreed to buy home health care company Signify Health for about $ 8 billion in cash, a move that will allow one of the largest healthcare companies to provide additional care management to patients in their homes.

In recent years, healthcare companies like CVS have gone beyond managing health and pharmaceutical benefits by acquiring medical teams and surgical centers.

“We were very clear on what we were looking for to expand our health services, whether it be primary care, provider enablement or at home, and Signify Health clearly ticks two boxes: home and provider enablement,” CVS Lo Said. CEO Karen Lynch in an interview.

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Signify Health offers CVS, which manages Aetna Pharmacy, Pharmacy Benefits and Insurance Plans, a network of 10,000 physicians who provide home assessments of patient health and social needs.

CVS expects the deal to close in the first half of 2023 and said it expects the acquisition to increase earnings “significantly”.

CVS said it would pay $ 30.50 per share for the company, or about $ 7.6 billion in shares and about $ 400 million in capital appreciation rights.

Lynch said the companies will work with regulators who review the agreements for any antitrust issues.

“We are not competitors. We have no overlapping functions,” Lynch said.

Large mergers and acquisitions have been the subject of intense antitrust scrutiny, and reducing healthcare costs has been an important strategic mission for the Biden administration.

IT MEANS HEALTH

Signify Health serves two customer groups: approximately 50 U.S. health insurance plans, including CVS’s Aetna division and rivals such as UnitedHealth Group Inc (UNH.N) and provider groups. UnitedHealth and Amazon Inc. (AMZN.O) are among the companies interested in Signify, a source familiar with the discussions previously told Reuters.

Signify primarily serves companies and providers associated with Medicare Advantage health plans, where private insurers provide government-paid health benefits to people aged 65 and over. It also provides Medicaid plan services for low income people.

The company said it plans to assist 2.5 million people through annual in-person and virtual health assessments. The visits combine with technology and analytics to coordinate follow-up care and social services with the goal of improving the health of disadvantaged populations and reducing healthcare costs, Signify said.

Signify Health CEO Kyle Armbrester, who will remain head of the division, said the company plans to expand to commercial health plans.

The company, which went public in early 2021, has struggled since its stock market launch and announced a restructuring earlier this summer. Sales process talks were first reported in August.

CVS said in a statement that the company is “increasingly confident” that it can achieve its long-term earnings goals. As pointed out in December 2021, this includes high single-digit year-over-year growth in 2023 and low double-digit year-over-year growth in 2024.

New Mountain Capital, which owns 60% of Signify Health, said it would vote for the deal. CVS and Signify Health said both boards have approved the deals.

CVS was advised by BofA Securities (BAC.N) of Bank of America and Signify Health by Goldman Sachs (GS.N) and Deutsche Bank (DBKGn.DE).

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Reporting by Caroline Humer Editing by Alistair Bell

Our Standards: Thomson Reuters Trust Principles.

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