CVS to buy Signify Health in $8 bln deal

CVS Well being emblem is seen displayed on this illustration taken, Might 3, 2022. REUTERS/Dado Ruvic/Illustration

NEW YORK, Sept 5 (Reuters) – CVS Well being Corp (CVS.N) on Monday agreed to purchase house healthcare providers firm Signify Well being for about $8 billion in money, a transfer that may allow one of many largest U.S. healthcare corporations to offer additional care administration to sufferers of their properties.

Healthcare corporations like CVS have been increasing past managing well being and pharmacy advantages with acquisitions of docs teams and surgical facilities in recent times.

“We’ve been very clear about what we have been in search of in increasing our well being providers, both be it major care, supplier enablement or within the house, and Signify Well being clearly checks off two bins: into the house and supplier enablement,” CVS CEO Karen Lynch stated in an interview.

Signify Well being brings CVS, which runs pharmacies, pharmacy advantages and the Aetna insurance policy, a community of 10,000 clinicians who present home-based assessments of affected person well being and social wants.

CVS expects the deal to shut within the first half of 2023 and stated that it expects the acquisition to be “meaningfully” accretive to earnings.

CVS stated it could pay $30.50 per share for the corporate, or about $7.6 billion in fairness in addition to about $400 million in fairness appreciation rights.

Lynch stated the businesses would work with regulators who evaluate offers for any antitrust points.

“We aren’t rivals. We don’t have any overlapping capabilities,” Lynch stated.

Giant mergers and acquisitions have come below intense antitrust scrutiny and decreasing healthcare prices has been an necessary strategic mission for the Biden Administration.

SIGNIFY HEALTH

Signify Well being serves two teams of consumers: about 50 U.S. medical insurance plans together with CVS’ Aetna division and rivals reminiscent of UnitedHealth Group Inc (UNH.N) and teams of suppliers. UnitedHealth and Amazon Inc. (AMZN.O) are amongst corporations that have been considering Signify, a supply accustomed to the discussions beforehand advised Reuters.

Signify principally serves the businesses and suppliers related to Medicare Benefit well being plans, through which personal insurers present government-paid well being advantages to individuals aged 65 and older. It additionally providers Medicaid plans for individuals with low incomes.

The corporate stated it expects to service 2.5 million individuals by way of annual in-person and digital well being assessments. The visits mix with know-how and analytics to coordinate comply with up care and social providers with the objective of enhancing well being of underserved populations and decreasing well being prices, Signify stated.

Signify Well being CEO Kyle Armbrester, who will stay as the top of the division, stated the corporate plans to increase to business well being plans.

The corporate, which went public in early 2021, has struggled since its inventory market launch and had introduced a restructuring earlier this summer time. Talks of the sale course of have been first reported in August.

CVS stated in a press release that the corporate is “more and more assured” it could obtain its long-term earnings targets. As outlined in December of 2021, that features excessive single-digit year-over yr development in 2023 and low double-digit year-over-year development in 2024.

New Mountain Capital, which owns 60% of Signify Well being, stated that it deliberate to vote for the deal. CVS and Signify Well being stated each boards of administrators had accredited the offers.

CVS was suggested by Financial institution of America’s BofA Securities (BAC.N) and Signify Well being by Goldman Sachs (GS.N) and Deutsche Financial institution (DBKGn.DE).

Reporting by Caroline Humer
Enhancing by Alistair Bell

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