The deal should open doors for the pharmacy chain by allowing it to reach customers within their homes. Direct access can also help reduce long-term healthcare costs for patients by facilitating early intervention for clinicians or helping to manage chronic conditions.
“This deal will help ensure that no recipients fall through the cracks,” Jessica Tassan, analyst Piper Sandler & Co., told USA TODAY. “That everyone has diseases or adverse conditions identified and documented, that they actually get care for those diseases or conditions and have a chance of a better life at lower health care costs.”
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What kind of company is Signify Health?
Signify operates a network of over 10,000 physicians who can visit patients within their homes, either in person or virtually, to identify their needs and connect them with follow-up care. Home visits to physicians with a patient are on average 2.5 times longer than a primary care office visit, According to a press release issued on Monday.
The company expects to connect doctors with nearly 2.5 million members this year compared to 250,000 five years ago, when the company was first launched.
“This acquisition will enhance our connection to consumers at home and enable service providers to better meet patients’ needs, and represents an important step forward in our strategy to improve care delivery,” CVS said in an emailed statement.
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CVS Acquisition of $8 Billion
CVS announced Monday that it has agreed to acquire Signify for $30.50 per share in cash, or about $8 billion in total.
The transaction is expected to close in the first half of 2023, pending regulatory and shareholder approval. Signify CEO Kyle Armbrester is set to remain at the helm of the company under CVS.
JPMorgan analyst Lisa Gill described the deal as a “win/win/win” for patients, payers, and CVS in a note Monday.
“In our view, this brings CVS closer to their goal of managing more lives through Value-Based Care Relationships (VBC),” Gill said in the note. “CVS will have the opportunity to impact more lives.”
What companies has CVS bought?
CVS’s latest purchase agreement follows a number of other healthcare acquisitions including the Pharmacy Benefits Manager Caremark Rx in 2007more than 1,600 Target pharmacies in 2015 The health insurance company Aetna in 2018.
The Signify purchase is the latest sign that CVS is “definitely moving away from its traditional roots as a drugstore,” according to Leighton Coe, professor of health policy and management at George Washington University.
“Health care is a sector of the economy that continues to grow and grow,” he said. “They’re going in a direction where they know it’s going to continue to grow. As people get older, they’re going to need more health care, and we seem willing to spend more and more of it.”
What does this mean for consumers?
Because Signify can reach patients’ homes, Tassan said clinicians have more insight into underlying factors that are difficult or impossible to diagnose in a traditional healthcare setting, such as food insecurity.
After the doctor gives their diagnosis, CVS can make use of retail pharmacies to help follow up on the diagnosis.
“The CVS plus Signify system will become better equipped to bridge the gap between diagnosis and treatment,” Tassan said. “It’s an improvement in clinical outcomes, and ultimately these things translate into lower costs.”
Koo cited diabetes as a good example of patients who may end up saving on long-term health care costs through home visits.
“If people can find a way to intervene and prevent people more effectively from progressing to type 2 diabetes – or once they are diagnosed with type 2 diabetes, to better control that – that would be fantastic,” he said.
CVS share price and Signify Health
CVS shares closed 0.7% lower at $98.73 on Tuesday. Signify shares closed 1.2% higher at $29.10.
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