CVS Health uses Signify Health as a rebound after losing One Medical to Amazon

Last month, Amazon announced plans to buy healthcare provider One Medical for $3.9B. This sparked urgency among healthcare companies — notably CVS Health (NYSE:CVS) — who were also looking to buy One Medical. But CVS moves on fast – reportedly looking to get in bed with another healthtech platform…

90% off is better than full price

The massive $4.1T U.S. healthcare industry – notorious for its lack of affordability, efficiency, and transparency – is prime for disruption, and tech is the solution. COVID forced healthcare organizations to pull their digital efforts forward, but as the economy opened up, in-person doctor visits began rising.

Healthcare giants haven’t given up on their digital plans, though – with many circling in on fallen healthtech companies — fueling acquisition speculations.

Most stocks in high-growth industries are down bad, so what makes healthtech buyouts so interesting?

• Per Intel chairperson Omar Ishrak, acquisitions are regulatory shortcuts to help companies bypass the heavily regulated industry.
• Several major players like Amazon, Walmart and CVS are expanding their healthcare efforts – with boatloads of cash.

A deal signifies further upside

Shortly after Amazon’s acquisition, Gordon Haskett’s Head of Event-Driven Research, Don Bilson, noted Teladoc (NYSE:TDOC) as an interesting acquisition target. But today’s focus is on a different company… CVS’ rebound…

• Signify Health (NYSE:SGFY) – a tech platform that helps healthcare providers deliver better in-home services.
• Signify has an extensive network of 10,000+ providers completing over 1.9M in-home health evaluations.

Yesterday, WSJ reported that CVS is planning to bid for Signify – after last week’s report that said Signify was looking to be sold — sending $SGFY up 11% yesterday.

If we see a similar acquisition price to One Medical’s 70% premium from when the news first broke, a Signify sale could be at 41% above yesterday’s closing price. But like any other acquisition talks, anything can happen (Elon Musk 👀)  – and a deal is far from guaranteed.

Investors: CVS is looking for its Signify-cant other

CVS — the world’s second-largest healthcare company — is looking to expand both its primary care and in-home business. Last year, CVS announced plans to shut down ~9% of its 9,900 stores — prioritizing efforts towards three store models: primary care services (i.e., clinics), specialized HealthHubs and traditional pharmacies.

CVS said it was open to acquiring primary care businesses to accomplish its goals. While Signify doesn’t provide what One Medical can, it’s not too shabby of an acquisition to help accelerate CVS’ healthcare plans.