CVS Health corp.
is in advanced talks to acquire the home health care company
It means health Inc.
SGFY 1.34%
for about $8 billion, according to people familiar with the matter.
CVS seems to have won other heavy blows inclusive
Amazon.com Inc.
and
UnitedHealth Group Inc.,
which has been circling Signify for a deal that could be announced soon. UnitedHealth never submitted a formal offer, one of the people said.
There is still no guarantee that CVS will reach a deal for Signify, which has been exploring strategic alternatives since earlier this summer.
Bids for the company were due on September 6, but people familiar with the matter said an eager buyer could make a move before then.
Signify’s valuation rose after The Wall Street Journal reported in August that it was for sale. The company’s stock closed at $28.77 on Friday, giving it a market capitalization of roughly $6.7 billion.
Signify works with a large group of doctors to make house calls easier. It uses analytics and technology to help physician groups, health plans, employers and health systems with home care. Offers health assessments for Medicare Advantage and other plans.
In closing its deal this year to buy Caravan Health, Signify said it underpinned roughly $10 billion in total medical spending.
The company went public in February 2021, raising more than $500 million as a result of the offering. On the day of the initial public offering, the company’s stock rose above the expected range of $24.
New York-based New Mountain Capital has backed Signify since 2017. The firm, which managed more than $37 billion in assets as of early August, has steadily expanded Signify through a series of mergers and acquisitions since its initial investment.
New Mountain is well versed in the healthcare sector. It previously sold healthcare payments firm Equian LLC to UnitedHealth for approximately $3.2 billion in 2019.
For CVS, the deal builds on years of efforts to transform itself into a major healthcare provider through acquisitions and expanded medical services. The company has struggled to counter slowing prescription drug revenue, which drives most of its sales, and to fend off competition from
for retail dollars.
CVS, the nation’s largest drugstore chain by stores and revenue, acquired Aetna in 2018arguing that merging the insurance company’s patient data with its network of nearly 10,000 physical sites would reduce costs while improving care and convenience.
The strategy has paid off, boosted by a surge in demand for Covid-19 vaccines and tests at the height of the pandemic. CVS’s market capitalization has grown to more than $130 billion from about $75 billion since the Aetna deal.
The company is performing better
Walgreens Boots Alliance Inc.,
which opted for major acquisitions in the years since. Walgreens, which is also racing to expand into health care, has focused largely on partnerships rather than deals. But last year it bought a controlling stake in the Village MD primary care network, giving it doctors’ offices that CVS said it could do without.
CVS CEO Karen Lynch has since said the company must have a foothold in primary care if it wants to become a full-service provider.
CVS has previously been interested in a deal for One Medical’s parent company, people familiar with the matter said.
agreed to buy the primary care clinic operator for about $3.9 billion in July.
Federal Trade Commission is currently exploring the deal. One Medical’s parent company,
1 Life Healthcare Inc.,
disclosed the investigation in a securities filing. The disclosure said One Medical and Amazon received a request for additional information about the deal from the FTC.
While Wall Street has largely focused on CVS’s efforts to acquire primary care practices, executives also discussed ambitions to expand its presence in home health care.
A deal for Signify would represent a bright spot in an otherwise lackluster deal streak of late. Global deal volumes are down about 30% this year after a flurry of activity last year, due to falling company valuations, market volatility and other factors, including Russia’s war in Ukraine.
Healthcare dealmaking in particular has slowed more than many other sectors. More than $200 billion in healthcare deals announced so far this year is up from more than $400 billion at this time last year, according to Dealogic. The biggest health care deal so far this year in the US is
Pfizer Inc
$11.6 billion settlement in May to buy the others on
Biohaven Pharmaceutical Holding Co.
Write to Laura Cooper c laura.cooper@wsj.comSharon Terlep c sharon.terlep@wsj.com and Cara Lombardo in cara.lombardo@wsj.com
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