Topline
Shares of Signify Health skyrocketed Monday after the Wall Street Journal reported e-commerce giant Amazon is reportedly looking into acquiring the at-home health services provider, joining a crop of other corporate giants—including CVS and UnitedHealth—in a potential bidding war that could value the firm at more than $8 billion.
Share of Signify jumped 40% on reports that a bidding war could value the firm at more than $8 … [+]
Key Facts
Shares of Signify jumped as much as 40% early Monday to reach their highest level since July after WSJ reported over the weekend that Amazon is among firms looking to strike a deal to buy Signify within the next few weeks; Signify’s market cap climbed to about $6.8 billion amid the stock surge.
Earlier this month, WSJ reported CVS Health was also seeking to buy Signify, which provides its technology services to the government, insurers and private employers, after the firm started working with bankers to explore a potential sale.
In a note Monday morning, William Blair analyst Matt Larew said Signify gathers vast amounts of data on the health status and needs of the Medicare Advantage population, which would make it a valuable acquisition for any large retailer intent on diving into the demographic and broadening its reach in healthcare.
He notes an acquisition valued at more than $8 billion would imply a stock price of about $34—roughly 17% more than current levels; shares are now up 94% this year, compared to a 13% decline for the S&P 500.
A potential bid would mark only the latest healthcare play from Amazon, whose CEO Andy Jassy has made expanding into the industry a top priority: Last month, the company paid about $3.9 billion in cash to acquire healthcare technology startup One Medical.
A representative for Signify declined to comment on the potential bid; Amazon did not immediately respond to Forbes‘ request for comment.
Key Background
Signify stock struggled after the Dallas-based firm’s buzzy initial public offering in February 2021, when the firm raised some $564 million from investors and nabbed a market value of more than $7 billion. Even with the Monday surge, the stock is down about 20% from its peak just days after the IPO. Earlier this month, the company laid off 489 employees across the nation as part of its plan to discontinue its episodes of care services in favor of the fast-growing and profitable home-services segment.
Surprising Fact
Signify is one of Ark Invest’s top holdings. The investment firm helmed by high-profile stock picker Cathie Wood owns a more than $200 million stake in Signify, but offloaded roughly $12 million worth of shares last week. It also holds a large position in Teladoc.
Further Reading
Amazon Among Bidders for Signify Health (WSJ)
Wayfair Laying Off 870 Employees—Here Are The Major U.S. Job Cuts As Recession Fears Grow (Forbes)
Source: https://www.forbes.com/sites/jonathanponciano/2022/08/22/signify-health-stock-surges-as-amazon-reportedly-joins-potential-bidding-war-with-cvs-unitedhealth/