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CVS Health is best known for its ubiquitous namesake drugstore, but what it really seems to want to do is make house calls.

According to The Wall Street Journal, the drugstore and insurance giant is attempting to buy Signify Health, whose large mobile network of healthcare professionals do in-home checkups.

Financial Health

Signify, with a market value of $4.7 billion, has tumbled since its IPO in February 2021 -- shares were $19.87 on Friday, compared to their $24 IPO price. Last month, the company exited the Centers for Medicare & Medicaid Services bundled payments program, a big part of its business, calling the agency's pricing model unsustainable.

Signify, which intends to focus solely on its more profitable home care businesses, rather than a government payment model, has been looking for a buyer. Although other bidders could surface, CVS, a $134 billion giant eyeing an expansion of its medical services business, is a motivated buyer:

  • CVS struck out earlier this year when it joined the mix to acquire the parent of primary care clinic operator One Medical, according to the WSJ's sources. Ultimately, Amazon inked a deal to buy the company for $3.9 billion.
  • Signify, which uses analytics to help health plans, employers, and physician groups manage in-home care, bought Caravan Health, another health analytics firm, for $250 million earlier this year. That CVS could nab a two-for-one after missing out on One Medical.

The Bottom Line: Last week, CVS Health announced it beat Wall Street earnings expectations in the second quarter, pulling in $80.6 billion vs. $76.4 billion expected. The company also raised its full-year guidance despite declines in its retail segment -- the star was its insurance subsidiary Aetna, which boosted earnings by picking up 922,000 members compared to a year earlier. That's a healthy clip.