September 7, 2022
On Monday, September 5, the drugstore giant, CVS Health, announced that it would acquire Signify Health—which operates a network of doctors who make house calls—for roughly $8 billion in a deal that cements the pharmacy chain’s move away from its retail roots, reports The New York Times.
The deal, if approved by shareholders and regulators, would give CVS, which has nearly 10,000 stores nationwide, a new avenue to reach its customers: at home.
Pharmacies like CVS have been searching for new ways to strengthen ties with their large customer base, particularly as consumers increasingly head online for the everyday items that used to draw them into stores. In Signify, CVS is acquiring a company that offers analytics and technology to help a network of 10,000 doctors provide in-home healthcare to 2.5 million patients across the United States. Signify has a focus on those on Medicare and in underserved communities.
“Their interest is to take over the home,” said Dr. Eric Topol, a professor of molecular medicine at Scripps Research in San Diego, who noted that any care provided to patients at home, rather than in the hospital, lightens the financial load on insurance companies, including Aetna, the insurance business that CVS owns. Signify contracts with insurance providers, including Aetna.
“If you’re looking at it from Aetna’s standpoint, this is a way to save big, big expenditures for their people they cover,” Dr. Topol said.
CVS has been whittling down its store base as it has pushed further into healthcare. The retailer said last year that it would close roughly 900 stores over three years. Its executives told analysts last month that the chain was looking at deals as a way to tack on new health services and ways to deliver those services‚ including in the home.
Karen S. Lynch, the chief executive of CVS, reiterated that strategy in a statement on Monday. “Signify Health will play a critical role in advancing our health care services strategy and gives us a platform to accelerate our growth in value-based care,” she said.
CVS has roughly 40,000 physicians, pharmacists, nurses, and nurse practitioners, as well as 1,100 MinuteClinic locations, which offer care ranging from vaccinations to physicals.
The pharmacy giant will pay Signify $30.50 per share in cash. Signify’s shares jumped almost 7% in after-hours trading; CVS’s stock rose less than 1%. The two companies said they expected the deal to close in the second half of 2023, pending regulatory and shareholder approval.
Research contact: @nytimes