CVS Health to purchase Signify Health for $8B

In an effort to strengthen its presence in the healthcare technology sector, CVS Health has announced plans to acquire Signify Health for $8 billion. CVS will be acquiring Signify from private equity firm TPG and other Signify shareholders. As a result of this acquisition, CVS will now have access to Signify’s enterprise-grade software solutions for clinical assessment, population health management, care coordination, and patient experience monitoring. Given that Signify is a provider of telemedicine services, the combination of these two companies will give CVC a greater nationwide presence. For example, CVS has 2,300 retail locations where it could place telemedicine kiosks or stations.

 

And remember, it was just mid-February 2022 that Signify Health announced plans to acquire Caravan Heath for $250 million with $50 million in additional payments depending on performance. This previous merger created one of the nation’s largest provider networks engaging in risk-based payment models. So with the Signify acquisition, CVS will be gaining a considerable share of the Medicare Advantage market, making them one of the biggest players in value-based care. 

Why is CVS making this acquisition?

CVS Health’s acquisition of Signify Health will expand its telehealth offerings, increase its reach in the healthcare market, and support its aim to become a one-stop shop for healthcare and health insurance services. Currently, Signify works with approximately 100 health systems and approximately 1,000 physicians. CVS Health currently offers health insurance, retail pharmacy, and other nonclinical services. By bringing Signify on board, CVS Health will be able to connect Signify’s technology with its retail locations to provide customers with a one-stop shop for their healthcare services. CVS Health is also aiming to expand its product offerings to include prescription delivery and doctor’s appointments. If successful, these efforts could further shore up CVS Health’s position in the healthcare market amid an increasingly competitive environment.

What does CVS get from Signify?

With the acquisition of Signify, CVS will gain access to a variety of healthcare products and services. These include enterprise-grade clinical assessment software, population health management services, care coordination software, and patient experience monitoring solutions. The clinical assessment software helps healthcare organizations identify gaps in their care delivery process, while the population health management software enables them to understand their patients’ needs, preferences, and health goals. The care coordination software is used to enhance communication between physicians and patients, while the patient experience monitoring solutions provide real-time insights into patient-facing services.

What does Signify get from this acquisition?

As mentioned above, Signify Health is a telemedicine services provider. It uses AI-powered technology to connect patients with healthcare professionals via virtual consultation. By acquiring Signify Health, CVS Health will be able to expand its telemedicine services to an increased number of customers. CVS Health’s acquisition of Signify Health will increase its reach in the healthcare sector, allowing it to deliver cost-effective and convenient care to a larger number of patients nationwide. In particular, CVS will be able to provide patients with greater access to its pharmacy services.

What does this mean for consumers?

CVS Health’s acquisition of Signify Health could mean greater convenience and lower costs for patients. The health insurer is in the process of integrating Signify’s technology into its own platform. Once this is complete, customers will be able to connect with medical professionals via virtual consultation. These virtual consultations are expected to be offered at CVS Health retail locations or online. Currently, CVS’s customers must travel to its retail locations to access prescription medication and professional health advice. With the Signify acquisition, the health insurer hopes to allow customers to access prescription delivery, health advice, and virtual consultations from a single platform. This is expected to reduce travel costs for customers and enable them to receive quick and accurate health advice from medical professionals.

How will this benefit TPG?

TPG is a private equity firm that has been investing significantly in the healthcare sector over the past decade. Currently, TPG owns approximately a 45% stake in Signify Health. The health insurer’s acquisition of Signify will enable TPG to receive an attractive exit. This exit could come in the form of a cash payout or a partial cash-and-stock transaction. CVS Health’s acquisition of Signify Health is expected to close during the second half of 2019. Once the acquisition is complete, TPG will be able to reap the benefits of its substantial investment in Signify Health.

Final Words: Will we see more healthcare mergers?

CVS Health’s acquisition of Signify Health is the latest in a series of healthcare mergers and acquisitions. For example, in April 2019, CVS Health announced that it would be acquiring Aetna for $69 billion. As the healthcare industry becomes increasingly competitive, we can expect that more mergers and acquisitions will take place. These acquisitions may involve healthcare providers and technology companies or pharmaceutical companies and health insurers. As the healthcare industry undergoes these changes, we can expect to see new healthcare delivery models and solutions emerging. And, with mergers and acquisitions, these solutions can be brought to market faster and at a lower cost.

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