Health Tech: PillPack execs to vet

After defeat A medic CVS ​​has moved quickly to land an $8 billion deal for Signify Health — the first step in what executives say is an ambitious vision to reinvent how care delivery is managed. Sarah writes..

Why is it important? CVS Really Signify has found that it’s a good time to be a well-capitalized, strategic buyer that can pay all the cash it needs to arrange debt financing with private equity buyers.

Behind the scenes: Sources say CVS has already set up the sales process for Signify, with a final bid by the Dallas-based provider of home health assessments and value-based care services after Labor Day.

• The sources also indicated that a traditional LBO would have supported a deal valued in the mid-to-high $20 range at most — well below CVS’s $30.50 all-cash offer.
• A deal value of $8 billion is suggested at 35x EBITDA, but “it’s hard to see how the PE can get more than 20x,” one source added.

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

• “This wasn’t about looking for money… this was about unlocking another strategic growth vector that would deliver proportionately better outcomes for patients.”
• In a health care market saturated with high costs and quality, “we have to start thinking differently than we have been,” Armrester says. “We want to see [Signify] It was taken to the next level and CVS was the perfect place to make sure that happened.

💭 Our thought bubble:- CVS didn’t just have a lot of money or cars—it was probably the most reliable buyer.

Present: Check two of the three boxes on the CVS health care services agenda: home health and physician qualifications.

• It doesn’t fit the traditional definition of the third box — primary care — but Signify’s in-home assessments are “an extension of the primary care team,” CVS CMO Sree Chaguturu told Sarah.
• Signify is already doing hundreds of thousands of referrals out of home — one of the primary roles of PCPs, Armrester says, “I think we’re taking care of at home.”
• Mark, by identifying patients’ clinical and social needs, gives CVS the opportunity to connect members to primary care providers, specialists, virtual care or the CVS network as needed — through MinuteClinic or pharmacy services, Chaguturu says.
• “This will fundamentally help us deliver value-based care, but also help improve patient access and quality of care,” says Chaguturu.

💭 Our (second) thought bubble: The old primary care model is constantly evolving, and it can be considered a new version of the so-called quarterback of health care, where Apply—comes into a home, assesses a member, and decides what needs to happen next.

• Armbrester notes: “These steps help bring results at the end of the day.”

What’s next: CVS still wants to get directly into primary care, Chaguturu reiterated, with more M&A poised to follow. “The order of M&A is not important,” he says.

• Signify will eventually begin managing chronic conditions at home, especially for those who lack transportation or live in food deserts, Armbrester said.
• Drug treatment management at home can be another logical growth vector, another source suggests.