After teasing last week that it may purchase a home healthcare firm this year, CVS Health may be close to doing just that. The Wall Street Journal has reported that CVS is attempting to buy Signify Health, a tech-enabled home care firm.
CVS has been on the hunt for a company to expand its delivery of healthcare services. Earlier this year, the company expressed an interest in buying One Medical Care, a technology-powered primary care firm. It lost out to Amazon, which bought it last month for $3.9 billion.
Analysts following the home care industry think the possible Signify Health purchase makes sense for CVS, given the firm’s efforts to transform from a pharmacy to a healthcare company.
“CVS Health continues to look for small acquisitions to expand in caregiving services,” Julie Utterback, senior equity analyst for healthcare for Morningstar Research Services, told McKnight’s Home Care Daily Pulse in an email. ”The company had previously highlighted an interest in buying primary care practices to support its HealthHUB strategy within its retail stores. While the acquisition of Signify Health may not necessarily support that objective, enabling and expanding into in-home healthcare services could also be a decent fit for CVS, which wants to be the most consumer-centric health company in the U.S. Meeting consumers where they want to be served is part of CVS’s objective, and CVS customers may appreciate an in-home healthcare option.”
Tom Lillis, a partner with healthcare mergers and acquisitions advisory firm Stoneridge Partners, noted the similarities between Signify Health and One Medical Care, including Signify’s emphasis on remote patient monitoring and behavioral health.
“It’s not traditional Medicare home health and hospice,” he told McKnight’s Home Care Daily Pulse, adding, “At the end of the day it’s all about controlling the patient. They’re not buying physician groups; they’re not buying health systems … They’re targeting part of the decentralization of healthcare.”
The scale of the investments also may be similar, he said.
“Like Walgreens beforehand, if they’re going to do it, they’re going to do it in major way,” he said. “You can’t put your toe in the water. You have to jump into the pool because you’re CVS.”
Signify Health, which reportedly is valued at $4.7 billion, is a healthcare platform that combines technology, analytics and networks to power and create value-based payment programs. Last month, the company exited the Centers for Medicare & Medicaid Services’ bundled payments program, citing the agency’s unsustainable pricing model. It said it wants to focus instead on its core businesses, its home and community services (HCS) segment, and Caravan Health, an accountable care organization.
“Our HCS segment is experiencing tremendous growth as our health plan clients have prioritized access to the home as part of their focus on closing clinical, behavioral and social care gaps,” Kyle Armbrester, Signify Health CEO, said in a statement.
Just last week, during its second-quarter earnings call, CVS said home health is one of three acquisition targets the company is considering this year. CVS CEO Karen Lynch said the company wanted to expand its community healthcare strategy through primary care, provider enablement and home health.
Lillis is interested to find out about CVS’ second purchase, if there is one, to shed further light on the company’s strategy. The first acquisition gets a company get into the market, the second tells you where they’re going, he commented.
“Why now, why this and what’s next?” he asked.
