CVS Health continues its expansion into primary care through an $8 billion, all cash acquisition of Signify Health. The drugstore giant outbid other potential buyers such as UnitedHealth Group and Amazon, and hopes the purchase will accelerate their growth in value-based care. It is the latest corporation to stake a claim in the primary care market following recent activity from Amazon and Walgreen.
Why it’s Notable:
Signify Health’s platform uses analytics and technology to help their network of 10,000 clinicians provide virtual and in-person visits across the US. The company expects to provide visits to nearly 2.5 million patients this year, and this move will provide CVS with a platform for value-based care, and expand their reach to customers’ homes.
This represents one of CVS' largest healthcare acquisitions, after the purchase of healthcare insurer Aetna in 2018, and pharmacy benefits manager, Caremark, in 2006. It comes as CVS are adopting new strategies to meet evolving consumer needs, expanding into the provider space with MinuteClinics, and recently partnering with telehealth company Amwell. With plans to move further into primary-care by the year end, CVS is moving away from brick-and-mortar retail, with the closure of 900 stores over the next 3 years.
Industry Implications:
As the race for primary care heats up, smaller companies demonstrating success in this space are becoming more attractive. Following Amazon’s acquisition of OneMedical, companies such as CareMax, Oak Street Health and Cano Health experienced greater interest from potential investors. This demand may subsequently drive up the valuation of primary care players.
We will likely see more mergers and acquisitions (M&As) in the primary care space, in the wake of this activity by Amazon, Walmart, Walgreen and CVS. As more companies pivot their strategies to get closer to patients, M&As may provide them with a clear route to move into this active field.
Primary care physicians are known to take responsibility for individuals' all-round health. It will be interesting to see if this recent interest in primary care capabilities actually brings value and benefit to the patient. Ideally, patients should have better, cost effective, consumer experience in healthcare, yet whether the race for primary care ultimately yields this more positive, patient-centric experience remains to be seen.
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