In the latest blockbuster healthcare industry deal, CVS Health (NYSE: CVS) announced its $8 billion all cash acquisition of Signify Health (NYSE: SGFY). Healthcare technology companies have become attractive targets as the industry increasingly looks to harness innovation to remake the healthcare landscape. This merger arrives on the heels of CVS’s loss in its bidding war with Amazon to buy OneMedical.
As stated in the joint press release, CVS anticipates “[t]his acquisition will enhance our connection to consumers in the home and enables providers to better address patient needs as we execute our vision to redefine the health care experience.” Signify touts a network of over 10,000 clinicians and harnesses its proprietary analytics and technology platforms to “improv[e] patient engagement, patient outcomes and care coordination for stakeholders across the health care system.” Their network physicians, nurse practitioners, and physician assistants to provide in home care and then connect those patients with the proper follow-up care.
CVS has been looking to spend its deep cash reserves since at least last October. Bloomberg revealed that CVS was the “mystery bidder” who had sought to buy One Medical. Referred to in a regulatory filing only as “Party A,” CVS negotiated for months before Amazon commenced negotiations in February. Amazon reportedly paused discussions in April and only restarted them after learning there was another offer for OneMedical on the table. Ultimately, Amazon reached an agreement to buy One Medical in July.
But this latest round of large acquisitions is not going unnoticed by regulators. As anticipated, the Federal Trade Commission announced it is investigating the deal. The FTC requested that the companies provide additional information as it probes the merger. This move may delay or halt the deal.
As Geoffrey A. Fowler, a tech columnist with The Washington Post summarizes, “First, Amazon learned what I read. Then Amazon learned what I put in my home. It tracked what I covet as gifts. It started watching what I watch on TV. Next, Amazon bought my grocery to learn what I eat. Now Amazon wants to own my doctor’s office, too.” In a similar vein, regulators may worry that Signify’s network will be more likely to prescribe medicine to boost CVS’s revenues.
U.S. pharmacies ranked by prescription drugs market share in 2021
Source: https://www.statista.com/statistics/734171/pharmacies-ranked-by-rx-market-share-in-us/
According to Matterhorn’s M&A database, which harnesses both AI and attorneys to digest the granular deal points of publicly announced transactions, CVS was advised by law firms Fried, Frank, Harris, Shriver & Jacobson LLP, Dechert LLP, and McDermott Will & Emery, as well as financial adviser BoA Securities, Inc. Signify was advised by law firm Ropes & Gray LLP, and financial advisors Goldman Sachs & Co. LLC and Deutsche Bank Securities Inc.
