CVS Health Corp (NYSE:CVS) said on Monday that it has agreed to acquire US home healthcare services company, Signify Health for about $8 billion in cash, after a bidding battle in which Amazon.com Inc (NASDAQ:AMZN) and UnitedHealth Inc were reportedly involved.
Signify Health will add a network of 10,000 clinicians who provide home-based assessments of patient health and social needs to CVS, which runs pharmacies, pharmacy benefits and the Aetna insurance plans.
The pharmacy company said it anticipates the deal closing in the first half of 2023 and that it expects the acquisition to be "meaningfully" accretive to earnings.
READ: Amazon.com, CVS Health, Option Care Health, and UnitedHealth all understood to be bidding for Signify Health - reports
CVS said it would pay $30.50 per share for the company, or about $7.6 billion in equity as well as about $400 million in equity appreciation rights.
"We’ve been very clear about what we were looking for in expanding our health services, either be it primary care, provider enablement or in the home, and Signify Health clearly checks off two boxes: into the home and provider enablement," CVS CEO Karen Lynch said in an interview reported by Reuters.
Lynch also said the companies would work with regulators who review deals for any antitrust issues, Reuters added.
Signify Health serves two groups of customers - about 50 US health insurance plans including CVS' Aetna division and rivals such as UnitedHealth Group Inc (NYSE:UNH) and groups of providers. It mostly serves the companies and providers associated with Medicare Advantage health plans, in which private insurers provide government-paid health benefits to people aged 65 and older. It also services Medicaid plans for people with low incomes.
Signify Health CEO Kyle Armbrester, who will remain as the head of the division, said the company plans to expand to commercial health plans.
The company went public in early 2021, but has struggled since its stock market launch and had announced a restructuring earlier this summer. Talks of the sale process were first reported in August.
New Mountain Capital, which owns 60% of Signify Health, said that it plans to vote for the deal. CVS and Signify Health said both boards of directors had approved the deals.
CVS also said in a statement that the company is "increasingly confident" it can achieve its long-term earnings goals. As outlined in December of 2021, that includes high single-digit year-over-year growth in 2023 and low double-digit year-over-year growth in 2024.
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