CVS Health has taken the first step in its bid to branch further into healthcare services with its acquisition of Signify Health, executives said Tuesday.
CVS announced late Monday that it will buy home health company Signify in a deal valued at about $8 billion in cash. The retail healthcare giant beat out a number of competitors including big names like Amazon and UnitedHealth Group to snap up Signify.
Bringing Signify into the fold advances the company further into both the home health and the managed service organization (MSO) markets, Sree Chaguturu, M.D., CVS Health's chief medical officer, told Fierce Healthcare. It also builds on the foundation CVS has built in retail health through its pharmacies and MinuteClinic locations.
"Our relationship with Signify Health helps us meaningfully advance that strategy in two of the three verticals, MSO and home health, so we're really excited about that," he said.
In addition to home health and value-based care, CVS flagged primary care as a focus for its expansion efforts. On its second-quarter earnings call, executives said that the company was eyeing a major play in the primary care market by the end of this year.
On a call with investors Tuesday morning, CVS Health Chief Financial Officer Shawn Guertin said that investors shouldn't read too deeply into the company's decision to first move forward with an acquisition in home health and value-based care. He said that CVS has focused on finding potential acquisition targets that are the right fit.
"It's far more important for us to find the right asset with the right scale, the right tech and the right team," Guertin said on the call.
CVS' scale and assets also put it in a strong position to support Signify Health's own growth goals, as the company has a long history of offering payer-agnostic services, Chaguturu added.
Signify is planning to be in 2.5 million homes this year, and joining up with CVS enables it to accelerate that push, Kyle Armbrester, CEO of Signify Health, told Fierce. When the deal closes, Armbrester will stay on as CEO of Signify, and he said that finding a place where the team could largely stay together was also key.
"We really view this accelerating our road map, and it will multiply our ability to make a positive impact on consumers’ lives," Armbrester said.
Both companies expect the merger to close in the first half of 2023.