Drugstore giant CVS Health said on monday It will buy Signify Health, which operates a network of house-calling doctors, for about $8 billion, which it says will solidify the pharmacy chain’s departure from its retail roots.
If the deal is approved by shareholders and regulators, it will give CVS, which has nearly 10,000 stores nationwide, a new way to reach customers: their home.
Pharmacies like CVS have been looking for new ways to strengthen relationships with their large customer base. This is because more consumers are buying groceries online that were previously gravitated to stores. In Signify, CVS is about to acquire a company that provides analytics and technology to help a network of 10,000 doctors deliver home care to her 2.5 million patients across the United States. Signify focuses on people in Medicare and underserved communities.
“Their interest is to take over the house,” said Dr. Eric Topol, professor of molecular medicine at Scripps Research in San Diego, noting that care provided to patients at home rather than in a hospital reduces the financial burden. did. About insurance companies, including Aetna, an insurance business owned by CVS. Enter into contracts with insurance companies, including Aetna.
“From Etna’s perspective, this is a way to save a huge amount of money for the people they cover,” Dr. Topol said.
CVS is shrinking its store base as it focuses more on healthcare. The company announced last year that it would close about 900 stores over three years. Company management told analysts last month that the chain is looking at the deal as a way to tackle new medical services and how to provide those services, including in the home.
CVS Chief Executive Karen S. Lynch reiterated that strategy in a statement Monday. “Signify Health will play a key role in advancing our healthcare services strategy and provides us with a platform to accelerate the growth of value-based care,” she said.
CVS has approximately 40,000 doctors, pharmacists, nurses and nurse practitioners, and 1,100 MinuteClinic locations, providing care from vaccinations to checkups.
The pharmacy giant will pay Signify $30.50 per share in cash. Signify’s stock rose about 7% in after-hours trading. CVS stock price he rose less than 1%. The companies said they expect the transaction to close in the second half of 2023, pending regulatory and shareholder approval.
Kyle Armbrester, CEO of Signify, said: in a statement on Monday.
CVS’ move into healthcare began in earnest about a decade ago with its $21 billion acquisition of pharmacy benefits manager Caremark Rx. Acquired more than 1,000 target pharmacy In 2015, it invested $69 billion in 2018 in health insurance company Aetna.
Medicare and Medicaid Service Centers in 2019 national medical expenses As baby boomers age and services become more expensive, they will reach $6 trillion by 2027, consuming a greater proportion of gross domestic expenditure. However, many Americans are still not receiving treatment. One reason is cost and inconvenience.
The pandemic has changed the way people think about seeking medical care and how companies provide it, as many patients seek new alternatives to traditional hospital care. Other retailers like CVS and Walmart have played key roles in the Biden administration’s coronavirus vaccination campaign, and the White House has also “Test to Treat” Program Patients will be tested for the virus, and if they test positive, they will be able to get a prescription for an antiviral drug at the same outlet.
Changes across healthcare are leading to deals in the industry. Amazon announced in July that it plans to acquire One Medical, a chain of primary care clinics across the country, for $3.9 billion.Walgreens announces a series of deals, including recent acquisitions care centricanother company that provides services at home.
And CVS is trying to position itself as the deal heats up.
“CVS doesn’t just want to sell prescriptions and toothpaste,” said Eric Gordon, a professor at the University of Michigan’s Ross School of Business. will be.”