CVS Health Corp. CVS 0.38% is seeking to buy Signify Health Inc., SGFY 2.32% according to people familiar with the matter, as the drugstore and insurance giant looks to expand in home-health services.
Signify Health is exploring strategic alternatives including a sale, The Wall Street Journal reported this past week. Initial bids are due this coming week and CVS is planning to enter one, some of the people said. Others also are in the mix, they said, and CVS could face competition from other managed-care providers and private-equity firms.
There is no guarantee any of them will reach a deal for Signify, which has a market value of around $4.7 billion after its shares rose on the news of a potential sale.
For Woonsocket, R.I.-based CVS, which has a market value of $134 billion, a deal would help fulfill its stated ambition to become an even bigger provider of medical services. The company has indicated it hopes to have a deal in place to help it do so by year-end. Wall Street has largely focused on CVS’s efforts to add primary-care practices and doctors to its payroll, though executives have also discussed their ambitions to expand its in-home health presence.
CVS, parent of the eponymous drugstores and the Aetna health-insurance operation, had eyed a deal for the parent of One Medical, people familiar with the matter said, before Amazon.com Inc. agreed to buy the primary-care clinic operator for about $3.9 billion last month.
Signify uses analytics and technology to help health plans, employers, physician groups and health systems with in-home care. It also offers in-home health evaluations for Medicare Advantage and other government-run managed-care plans. At the close of its deal this year to buy Caravan Health Inc., Signify said it supported roughly $10 billion in total medical spending.
Signify went public in February 2021. Even after rallying recently, the shares, which closed Friday at $19.87, are below their $24 IPO price. In July, the company said it planned to wind down one of its units after changes to a government-payment model and focus on more-profitable businesses.
New York-based private-equity firm New Mountain Capital is an investor in Signify after first backing it in 2017. The firm is well-versed in the sector, having sold healthcare payments firm Equian LLC to UnitedHealth Group Inc. for about $3.2 billion in 2019.
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8