The potential of Signify Health could be an indication that the health tech industry is in dealmaking mode, experts say.
CVS Health is planning to make a bid for the Dallas-based value-based care technology company, according to a report in The Wall Street Journal. Signify is said to have set a due date for bids, while CVS could face competition from other managed-care providers, the report said.
Both companies declined to comment on the possibility of a deal or a bid.
Signify Health’s CEO, Kyle Armbrester avoided the topic entirely during the company’s quarterly earnings call last week.
“Regarding recent media reports, focused on potential [mergers and acquisitions], we do not comment on market speculation and we will not answer questions on the topic,” he said.
Matt Wolf, a director and senior healthcare analyst at RSM, a healthcare consultancy, expects M&A activity to remain robust following the mega deal between One Medical and Amazon.
“We’re not done yet,” Wolf said. “We’ll see more of these types of deals in the short and medium term. What healthcare needs to figure out is what is the correct mix of physical and virtual care and that will look different for every patient.”
Despite posting a $490 million net loss in Q2, Signify Health remained bullish on growth after its February acquisition of Caravan Health. Signify said the acquisition will allow it to provide more home-visit consultations to at-risk patients in a value-based arrangement. That sentiment is common throughout the digital health landscape.
“Time and time again in the past few years we’ve seen if as a provider if you’re able to meet patients when its coinvent to them they will engage in healthcare,” Wolf said.
During last week’s call, Armbrester said the company continues to seek other acquisitions.
“We’ve got a good pipeline of organizations and companies that we’re engaged with. I mean, I think our focus on acquisitions is ones that have out the gate synergies,” Armbrester said. “We’re really excited about Caravan is that we landed integration materially in three months.”
In the past year, Signify has seen an overall 27% decrease in its share price from a high of $28.12 per share in August 2021. However, the rumors of the potential sale to CVS has boosted the stock price to $22.69 per share, up 14% from its opening price on Monday of $19.88.