CVS Health (CVS) shares edged higher Tuesday after the pharmacy group agreed to buy healthcare services specialists Signify Health (SGFY) for around $8 billion.
CVS said the deal, which it expects to close early next year, will be "meaningfully" accretive to earnings as it tacks on Signify's network of 10,000 physicians, nurse practitioners and physician assistants to its rapidly-expanding Aetna insurance business and its pharmacy benefits operations.
The group will pay the equivalent of $30.50 per share for Signify, valuing the Dallas-based company at $7.6 billion, with a further $400 million set aside for equity appreciation rights.
CVS appears to have outbid both sector rival UnitedHealth Group (UNH), which was prepared to pay more than $30 a share for Signify, according to a Bloomberg report from late August, as well as Amazon (AMZN), which is looking to extend its push into healthcare follow this summer's $3.5 billion purchase of One Medical .
“Signify Health will play a critical role in advancing our health care services strategy and gives us a platform to accelerate our growth in value-based care,” said CVS CEO Karen Lynch. “This 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."
CVS shares were marked 0.34% higher in early Tuesday trading to change hands at $99.93 each. Signify shares were marked 0.24% lower at $28.69 each.
Last month, CVS posted stronger-than-expected second quarter earnings of $2.40 per share, on revenues of $80.6 billion, and boosted its full-year profit outlook thanks in part to a bump in demand for sales of its over-the-counter Covid tests.
The group's Health Care Benefits division saw revenues grow 11.8%, to $22.76 billion, while its benchmark pharmacy services saw sales rise 10.3% to $42.8 billion.
Looking into the back half of the year, CVS said it sees profits in the region of $8.40-$8.60 per share, a 20 cent improvement from its prior forecast, with cashflows from its overall business expected to come in between $12.5 billion to $13.5 billion.
