What happened
Shares of Signify Health (SGFY +0.00%) soared this month after the company's decision to entertain buyout offers attracted several interested bidders, including CVS Health (CVS 0.98%) and Amazon (AMZN 1.08%).
The stock leaped with every report of buyout interest, and finished the month up 63%, according to data from S&P Global Market Intelligence.
As the chart below shows, the stock rallied over the first week of August on reports of a potential sale, and then spiked when it became clear that Amazon was interested in making an offer:
So what
Signify, a health tech company focused on home care, first started rising on high volume on Aug. 2 after The Wall Street Journal reported that the company was considering strategic alternatives, including a sale, just 18 months after its initial public offering.
The stock moved higher again after the company's second-quarter earnings report, which showed results mostly in line with estimates as revenue increased 15% to $246.2 million, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 15% to $62.6 million, giving it an EBITDA margin of 25%.
The next boost for the stock came on Aug. 8, when shares jumped 11% on news that CVS Health was interested in acquiring Signify. According to the Journal, a deal for Signify would help CVS fulfill its ambitions in home healthcare, and it noted that initial bids for the company were due that week.
Finally, the stock jumped 32% on Aug. 22 when news broke that Amazon and UnitedHealth Group (UNH 0.59%) were also looking to making a play for Signify, indicating a likely bidding war for the health tech prize. Bloomberg reported that UnitedHealth had made the highest bid thus far, over $30 a share, with Amazon's offer not far behind. Home healthcare provider Option Care Health was also among the interested parties.
NYSE: SGFY
Key Data Points
Now what
Signify has attracted interest from some deep-pocketed suitors -- CVS, UnitedHealth, and Amazon are all leaders in their respective industries, and each has its own strategic rationale for buying Signify. CVS is looking to diversify beyond storefronts, pharmacy benefits management, and its Aetna insurance business. UnitedHealth sees home healthcare as a growing field, and could use Signify's technology to lower costs. Amazon, meanwhile, appears to be on a buying spree in health after saying it would acquire 1LifeHealthcare (also known as One Medical) for $3.9 billion, and then announcing plans to shutter its Amazon Care business. The tech giant seems to want to buy, rather than build, in the healthcare industry.
Bids for Signify are reportedly due by Labor Day, so there could be news of a deal soon. Though the stock is already trading at a premium, a bidding war could send shares even higher.
