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🐪 Have a nice bump day, Health Tech readers. We are already halfway through this short week.

Situational awareness: Erin will be in San Diego tomorrow to kick off the Heart Rhythm Society’s annual digital health conference with a data ownership session with executives from Medtronic and Mayo Clinic.

1 big thing: Behind the scenes of CVS-Signify

Illustration: Shoshana Gordon/Axios

after losing One Medical, CVS moved quickly to land an $8 billion deal for Signify Health – the first step in what executives say is a broader vision to reinvent how care delivery is orchestrated, Sarah writes.

Why is this important: SVC really wanted Signify – and proved it was a good time to be a well-capitalized strategic buyer who can pay everything in cash, as opposed to private equity buyers who have to arrange debt financing.

In the wings: Sources say CVS has preempted the Signify sale process, with final offers due after Labor Day for the Dallas-based provider of value-based home health assessments and care activation.

  • Sources also suggest that a traditional LBO would likely have supported, at most, a deal valued in the mid-to-high range of $20 per share – below CVS’s $30.50 cash offer.
  • The $8 billion deal values ​​Signify at around 35x EBITDA, while “it’s hard to see how the PE could have exceeded 20x,” adds a source.

What they say : CVS and Signify declined to comment on process dynamics, but Signify CEO Kyle Armbrester confirmed it was “very competitive” with both strategies and private equity around the table.

  • “It wasn’t about needing the money…It was about unlocking another strategic growth driver for us that will drive better patient outcomes at scale.”
  • In a healthcare market characterized by high costs and mixed quality, “we need to start thinking radically differently than we have been,” Armbrester says. “We wanted to see [Signify] taken to the next level and CVS was the best place to make sure that happened.”

💭 Our thought bubble: CVS didn’t just have the most money or motivation – it was probably the most reliable buyer.

Enlarge: Signify ticks two of the three boxes of the CVS Healthcare Services program: Home Health and Physician Empowerment.

  • It doesn’t fit the traditional definition of its third box – primary care – but Signify’s home assessments are “an extension of the primary care team”, CVS CMO Sree Chaguturu told Sarah.
  • Signify already does hundreds of thousands of home referrals today – one of the major roles of a PCP, Armbrester says, “I already think we’re taking care of the home.”
  • Signify, by identifying the clinical and social needs of patients, gives CVS the ability to connect members to primary care providers, specialists, virtual care or the CVS network as appropriate – through its MinuteClinic or pharmacy services, explains Chaguturu.
  • “It fundamentally helps us deliver value-based care, but also improves patient access to care and improves quality,” Chaguturu said.

💭 Our (second) thought bubble: The old model of primary care is constantly evolving, and Signify—walking into the house, assessing the member, then deciding what needs to happen next—could be seen as a new version of the so-called care quarterback. health.

  • Armbrester notes, “These actions taken are what ultimately help get results.”

And after: CVS still wants a direct entry into primary care, Chaguturu reiterates, with more mergers and acquisitions set to follow. “The order of mergers and acquisitions is not important,” he says.

  • Signify eventually wants to start managing chronic conditions at home, especially for those who don’t have transportation or live in a food desert, says Armbrester.
  • Managing drug therapy could be another logical growth driver at home, another source suggests.