CVS Health Plans to Bid on Signify Health

WOONSOCKET, R.I & DALLAS (August 9, 2022)—CVS Health is planning to make a bid on Signify Health, a technology company focused on shifting the health care continuum to value-based care, the Wall Street Journal reported, citing unnamed sources. 

CVS Health announced its intentions to expand into homecare and primary care on its second quarter earnings call, a strategy that will include mergers and acquisitions, CEO Karen Lynch said.

“We are being very disciplined, both strategically and financially, as we pursue our M&A strategy,” Lynch said.

She said that CVS is looking for providers with a strong management team and a robust tech stack. 

“Obviously, the ability to scale, given the size of the company that we are and a pathway to profitability,” she said.

The company would like to have a deal in place by the end of the year. 

Signify Health, which went public in 2021, is reportedly working with its bankers to explore strategic alternatives, including a sale, the Journal reported. 

The initial bids are due this week, and sources told the Journal CVS was about to submit one. However, CVS might face some competition from other managed-care providers and private equity firms, and Signify has not made any decisions yet.

Signify has a market cap of around $4.66 billion based on its stock closing price on Friday, according to Refinitiv calculations, though shares have fallen from its initial public offering. The company announced in July that is was exiting the Episodes of Care Services segment due to changes in the government payment model. This resulted in a $519.9 million loss on impairment in the second quarter, the company reported. 

Spokespeople for both CVS Health and Signify told Reuters they do not comment on rumors or market speculation.