Signify Health, a home health care company, will be purchased by CVS for approximately $8 billion.

One of CVS’s locations in the Bloomsburg area features a prominently placed logo.

Getty Images/Paul Weaver/Lightrocket

On Monday, the two businesses announced that they had reached an agreement for CVS Health to buy Signify Health, a provider of home health care services, for around $8 billion.

CVS has announced an all-cash acquisition of Signify for $30.50 per share in an effort to expand its health care offerings. Signify’s technological innovations and analytic insights support healthcare delivery in the home.

CVS Health President and CEO Karen Lynch stated in a press release that “this acquisition will deepen our relationship to consumers in the home and enable providers to better address patient needs as we execute our mission to transform the health care experience.”

This merger occurs at a time when several companies, like Amazon and Walgreens, are expanding their presence in the healthcare industry. Amazon made public in July that it had acquired primary care provider One Medical for $3.9 billion.

FactSet estimates that at Friday’s closing price of $28.77 per share, Signify Health has a market capitalization of around $6.7 billion. This is a month-over-month increase of nearly 45% for the stock price. As reported by the Wall Street Journal on August 2nd, Signify is considering various strategic options, including a potential sale.

Signify’s stock price, which went public in February 2021, jumped towards the end of August on speculation that Amazon might be one of the potential buyers.

CVS announced last month that by year’s end, it intends to acquire or take a share in a primary-care company.

The purchase of Signify is consistent with previous mergers, divestures, and expansions into primary care. Patients can get immunizations or get urgent care at MinuteClinic locations inside CVS stores, and the company has already bought both insurance provider Aetna and pharmacy benefits manager Caremark. Several locations have been offering counselling for mental health issues recently.

Closing of the transaction is contingent on receiving the necessary approvals from regulatory authorities, although the businesses anticipate this will occur in the first half of 2019.

The firms claimed that New Mountain Capital, a private equity group that holds approximately 60% of Signify’s common stock, had agreed to approve the deal.

On Tuesday morning at 8:30 a.m. ET, CVS Health and Signify Health will host a conference call for analysts and investors to discuss the merger.

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