“People familiar with the matter” are hitting a hot streak with market moving healthcare news, especially after one of them informed the Wall Street Journal that CVS Health is in talks to acquire tech-driven value-based care enabler Signify Health.
The setup for this headline barrage started last week when the WSJ ran a separate piece about Signify enlisting Goldman Sachs and Deutsche Bank to help identify “strategic alternatives” that included a potential acquisition.
- Signify’s platform helps payors and providers establish in-home care programs and transition to VBC – a combination that could draw interest from both private equity and managed care organizations.
- The initial offers are due this coming week, and although there’s no guarantee any agreement will be reached, there’s also a non-zero chance that something gets announced and makes this old news before it reaches inboxes on Thursday.
It would be tough to come up with a better company than Signify to meet CVS Health CEO Karen Lynch’s description of an ideal acquisition target: “primary care, provider enablement, and home health… with a robust management team, background in tech, and that can grow quickly.”
- Signify’s core VBC business already checks a lot of boxes, and its recent $300M acquisition of Caravan Health added ACO management and population health icing to the cake.
- With a $135B market value and plans to expand its in-home operations by the end of this year, it makes sense why CVS has emerged as a frontrunner to scoop up Signify, which popped 20% to a ~$6B market value on the announcement.
The Takeaway
As CVS looks to expand into primary care and in-home health, it can either build or acquire the pieces to make it happen, and it’s been pretty transparent about which strategy it prefers. That said, the last time CVS threw its hat in the ring to acquire a high-profile company was for primary care provider One Medical, and we all know how that turned out.
