HEALTH CVS could look to regional purchases as it plans...

CVS could look to regional purchases as it plans primary care acquisitions

-

- Advertisment -

This audio is generated automatically. Please let us know if you have feedback.

Since its goal is to compete with its peers and strengthen its primary care network, CVS Health said it would use acquisitions to expand its primary care network and could use smaller, regional purchases over larger ones to make your health care footprint more vertical.

The health care giant, while building out its virtual care network, MinuteClinics and retail presence, has fallen behind its competitors in the primary care space as companies like Walgreens, Amazon and Walmart have made significant inroads in primary care with multimillion dollar associations and deals

That could change this year. Executives teased a possible acquisition during the company’s second-quarter earnings call on Wednesday, with CVS CEO Karen Lynch saying the company would take its next steps toward primary care by the end of the year.

“We can’t be in… primary care without mergers and acquisitions. We’ve been very clear about that,” Lynch said.

Primary care has exploded with regional players as private capital has focused on the primary care space, transforming the least paid medical specialty in a market full of cash. Between 2010 and 2020 alone, researchers from NEJMin an analysis of tone book data, found that the total capital raised in the primary care space increased from $15 million to $3.83 billionand that deals involving the backing of private investors soared from two to 46. And, in the first half of 2021, primary care deals totaled $8.4 billion.

There is a huge footprint of players that we are not even aware of on a national scale. said Matthew Bates, managing director and line leader for medical business services at Kaufman Hall. “If I had to place a bet, I would place a bet on a series of rollups.”

Multiple acquisitions or regional associations would solve a problem of scale with the companies in the primary care network. Bates pointed to One Medical, which Amazon announced would acquire for $3.9 billion. One Medical has a presence in less than half of the states in the country. The acquisition comes with a hefty price tag, and Amazon will have to pay even more to scale the company given its modest footprint. For example, Walgreens invested $5.2 billion in VillageMD to scale its primary care practices, Bates said.

Regional purchases would also capitalize on existing serving relationships in established markets without the company having to funnel additional cash into penetrating new markets. And, if it wanted, CVS could use its large health care technology stack, like its virtual primary care service, to rapidly scale regional models.

CVS senior vice president of business development and investor relations Larry McGrath opened up the possibility of multiple acquisitions during the company’s earnings call, adding that “there was no one and no asset made” in the space to grow its primary care network.

“We have been very active in evaluating a wide range of assets in and around the care delivery space,” said McGrath. “And what I would reiterate is that our priority areas remain primary care.”

A regional, or multiple, acquisition would open up new acquisition targets for CVS as few national primary care targets remain that have not gone public or been acquired. Companies that have come out with a public debut include oak street healthwhich went public in 2020 and P3 Health Partners, which went public through a merger with a special purpose acquisition company.

“There isn’t a national player who is in all 50 states and is a natural target,” Bates said.

Leave a reply

Please enter your comment!
Please enter your name here

Latest news

Too late for Watson to “accept” an 8-game suspension, a $5 million fine?

Initially, NFL disciplinary officer Sue L. Robinson recommended that Cleveland Browns starting quarterback Deshaun Watson be suspended for six...

The NBA will retire the jersey of the pioneer Russell in the entire league

The National Basketball Association (NBA) will retire the No. 6 jersey worn by Boston Celtics great civil rights icon...

“We blow you!… You’re a disgrace! You make Joe Biden look like a man!”

"We blow you!... You're a disgrace! You make Joe Biden look like a man!" - Steve Bannon DOWNLOAD...

Nightdive explains what went wrong with the release of ‘Blade Runner: Enhanced Edition’

It's safe to say that Nightdive's initial release of Blade Runner: Enhanced Edition it didn't go...
- Advertisement -

Must read

Too late for Watson to “accept” an 8-game suspension, a $5 million fine?

Initially, NFL disciplinary officer Sue L. Robinson recommended that...

The NBA will retire the jersey of the pioneer Russell in the entire league

The National Basketball Association (NBA) will retire the No....

DON'T MISSRELATED