CVS Health (NYSE:CVS) and Signify Health (NYSE:SGFY) have entered into a definitive agreement under which CVS Health will acquire Signify Health for $30.50 per share in cash, representing a total transaction value of around $8 billion. Companies in the healthcare industry, like CVS, have recently acquired surgical facilities and doctor’s groups as part of their expansion beyond the management of health and pharmacy benefits.
About 50 U.S. health insurance companies, including CVS’ Aetna business and competitors like UnitedHealth Group Inc., as well as provider organizations, are served by Signify Health. A person familiar with the conversations earlier told Reuters that firms interested in Signify included UnitedHealth and Amazon Inc.
According to Karen S. Lynch, president and chief executive officer of CVS Health, “Signify Health will play a vital role in furthering our plan for providing health care services and offers us a platform to drive our development in value-based care.” “As we implement our ambition to transform the health care experience, this purchase will strengthen our relationship with customers in the home and allow clinicians to more effectively meet patient needs. Additionally, by combining these two resources, we will be better able to extend and create new product offers using a multi-payor strategy.”
The business stated that it plans to provide annual in-person and online health examinations for 2.5 million people. In order to organize follow-up treatment and social services with the aim of improving the health of marginalized people and reducing health expenditures, the visits work in conjunction with technology and analytics, according to Signify.
Kyle Armbrester, CEO of Signify Health, who will continue to lead the business, stated that the firm intends to grow to commercial health insurance.
The business, which first listed on the stock market in early 2021, has experienced difficulties since then and announced a restructure earlier this summer. The selling process was initially mentioned in reports in August.
BofA Securities, a division of Bank of America, advised CVS, and Goldman Sachs and Deutsche Bank advised Signify Health.
As we continue to carry out our plan, this is a significant milestone, according to CVS Health Executive Vice President and Chief Financial Officer Shawn Guertin. We anticipate that the acquisition will have a material positive impact on profits, which gives us further hope that we will meet the long-term adjusted EPS targets we set at our Investor Day in December 2021.
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