free counter

Health Tech: PillPack execs go vet

September 07, 2022

Axios Pro Exclusive Content

Erin Brodwin

Happy hump day, Health Tech readers. We’re already halfway through this short week.

Situational awareness: Erin will undoubtedly be in NORTH PARK tomorrow kicking off the center Rhythm Society’s annual digital health conference with a session on data ownership featuring execs from Medtronic and the Mayo Clinic.

1 big thing: Behind the scenes of CVS-Signify

Illustration of the CVS logo with dollar bills forming the heart.
Illustration: Shoshana Gordon/Axios

After losing from One Medical, CVS moved fast to land an $8 billion deal for Signify Health the initial move around in what executives indicate is really a bigger vision to reinvent how care delivery is orchestrated, Sarah writes.

Why it matters: CVS really wanted Signify and proved it is a good time and energy to be considered a well-capitalized strategic buyer that may pay all cash, versus private equity buyers which have to set up debt financing.

Behind the scenes: Sources say CVS preempted the sale process for Signify, with final bids due after Labor Day for the Dallas-based provider of in-home health assessments and value-based care enablement.

  • Sources also claim that a normal LBO could have likely supported, for the most part, a deal valued in the mid-to-high $20 per share range below CVS’ $30.50 all-cash offer.
  • The $8 billion deal values Signify at some 35x EBITDA, whereas “its hard to observe how PE could have gotten much above 20x,” one source adds.

What they’re saying: CVS and Signify declined to touch upon process dynamics, but Signify CEO Kyle Armbrester confirmed it had been “very competitive” with both strategics and private equity round the table.

  • “This wasnt about needing money… That is about unlocking another strategic vector of growth for all of us thats likely to drive better outcomes for patients at scale.”
  • In a healthcare market fraught with high costs and mixed quality, “we have to start out thinking radically not the same as where we have been,” Armbrester says. “We wished to see [Signify] taken up to another level and CVS was where to be sure that happened.”

Our thought bubble: CVS didn’t just have probably the most cash or drive it had been essentially the most reliable buyer.

  • The FTC is already investigating Amazon’s $4 billion One Medical purchase, while UnitedHealth Group’s fight the DOJ over its Change acquisition remains unresolved because the FTC requests more info around its pending LHC buy.

Zoom in: Signify checks two of three boxes on the CVS healthcare services agenda: home health insurance and physician enablement.

  • It generally does not fit the original definition of its third box primary care but Signify’s in-home evaluations are “an extension of the principal care team,” CVS CMO Sree Chaguturu tells Sarah.
  • Signify has already been making thousands of referrals out of homes today among the major roles of a PCP, Armbrester says, “I already think we do care in the house.”
  • Signify, by identifying patients’ clinical and social needs, gives CVS the chance for connecting members back again to primary care providers, specialists, virtual care, or in to the CVS network as appropriate via its MinuteClinic or pharmacy services, Chaguturu says.
  • “That fundamentally helps us deliver on value-based care, but additionally to boost patient usage of care and improve quality,” Chaguturu says.

Our (second) thought bubble: The old style of primary care is continually evolving, and Signify by entering the house, assessing the member, and deciding what must happen next could possibly be considered a fresh version of the so-called healthcare quarterback.

  • Armbrester notes: “Those actions being taken are what helps drive outcomes by the end of your day.”

What’s next: CVS still wants a primary entry into primary care, reiterates Chaguturu, with additional M&A poised to check out. “The order of M&A isn’t important,” he says.

  • Signify eventually really wants to start managing chronic conditions in the house, particularly for all those that lack transportation or reside in a food desert, Armbrester says.
  • Medication therapy management could possibly be another logical growth vector in the house, another source suggests.

View archive

Read More

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button

Adblock Detected

Please consider supporting us by disabling your ad blocker