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Kevin O'Leary

Amazon, CVS, and UHG: Exploring Signify's Significance

August 28, 2022
Company Research

The Wall Street Journal and Bloomberg reported this week that the auction process for Signify Health, a home health business helping payors and providers succeed in managing value-based contracts, is heating up quickly. Bloomberg reports that four groups are bidding for Signify - Amazon, CVS, Option Care Health, and UHG. Apparently UHG currently has the highest bid, with Amazon a close second in a process that is expected to wrap in the coming weeks. For a lot of reasons, this auction process comes at an interesting strategic inflection point for Amazon, CVS, and UHG. Certainly, it feels like we might be seeing these three emerge as a new set of competitors if Amazon keeps up this activity (more on that below). We thought we’d break down our thoughts on the strategic implications for each. 

And before we do, if you’re looking for more on what Signify does, this investor presentation from 2021 provides a nice overview of the business. As a key player in the home health space, it is a nice asset for insurers looking to manage total cost of care. Just keep in mind that it exited BPCI a few months ago, which was a major business driver for them back in 2021. 

Jumping into the big three:


For UHG, this almost seems like a defensive maneuver at this point. Of course, in recent earnings calls, UHG has talked about home health being a priority for its Medicare Advantage members, so Signify would fit nicely in that regard. But UHG has had a seemingly insurmountable lead for so long and very little in the way of weakness. Now you have CVS / Aetna which are gaining ground in terms of capabilities, and it appears Amazon is looming after the One Medical. For the first time in a while, it feels like UHG might have some real competition. It seems important to remember UHG's relatively recent investor day comments about wanting to leverage Optum to "meet" consumers before selling them on UHC insurance. The below paragraph from our UHG Investor Day Highlights write up seems particularly relevant here:

Witty made some really bold comments about how, moving forward, UHG expects to shift from UHC as the consumer entry point toward Optum. UHG's historical approach has always been getting people in UHC insurance plans first and then selling through Optum products. In the future, Witty sees consumers meeting UHG via the Optum brand, whether thats through clinics, pharmacy assets, or the Optum Store. Once Optum builds relationships with those consumers, then they'll look to sell UHC plans. It makes sense that UHG wants to head this way, as it views the Optum target market as a way to get the organization in front of all 330 million people in the US, whereas UHC serves 45 million people today

Optum’s ability to meet consumers is one of the weaker parts of UHG’s capabilities. Keep in mind it recently divested the Optum Store into a JV with Red Ventures, a signal of just how hard it is to build a consumer brand. Meanwhile,  Amazon and CVS know exactly how to do that, and as such each present a major strategic threat to UHG’s future vision where it meets consumers not as an insurer, but rather as a healthcare company. 

If CVS and Amazon organizations are able to build out the same sort of healthcare infrastructure UHG has spent years piecing together, all of a sudden what has looked like an insurmountable lead for UHG dwindles quickly. Obviously Signify by itself isn’t going to make a huge change, but losing this deal would represent a rare sign of weakness for an organization that has been so dominant over the past decade.  


After losing out on One Medical to Amazon, CVS obviously committed to a big acquisition in primary care / home health during Q2 earnings.On the call, CEO Karen Lynch noted that “we are very encouraged and confident that we'll take the next step on this journey by the end of this year,” referring to acquiring a primary care or home health company. Given the state of play in the space, you can’t have a CEO making a declaration like that on an earnings call and then not come through before the end of the year. So CVS has to hit on something big, and if it’s not Signify, something else must be pretty far along if it's going to close before the end of the year. Keep in mind that it appears CVS walked away from the Amazon deal over concerns with moving too quickly through diligence.

You have to imagine there’s some internal unease at CVS over getting beat out by Amazon in the One Medical deal, particularly given CVS was in the driver’s seat for months and offered the same price per share Amazon acquired One Medical for, with the primary issue seeming to be how quickly One Medical wanted to move. It'd be one thing to get outbid, but it's another thing to be too slow on diligence. 

I'd think that acquiring a primary care asset would be slightly higher on the wish list for CVS leadership than a home health asset like Signify, but if it loses these two deals and then isn’t able to announce a big deal before the end of the year it seems like a major blunder on CVS's part. 

Either way, it seems like a lot of pressure on the corporate development team to get a deal done before the end of the year.


Amazon sure seems like the wild card here in that it doesn’t seem like anyone has any clue what hand they're playing at the moment. Do they have a grand plan in healthcare that includes the One Medical and Signify acquisition? Who knows. 

But… why bid on Signify? It’s not an asset you’d go after if you’re just looking at this as a retailer. There’s a reason why it’s UHG, CVS, and Option Care Health as the three other bidders here. Owning home health is a key strategic imperative for any insurer looking to manage full risk via a care delivery arm. Between home and primary care, those are the two assets an insurer needs as core elements of this strategy. Which just so happens to be the two assets Amazon would have acquired now over the past quarter if it adds Signify to One Medical. All of a sudden, Amazon has the makings of a meaningful healthcare business that can work to manage cost of care. 

It’s not hard to sketch out a narrative where Amazon has advisors pitching it on going big in healthcare and attempting to manage the overall cost of care. One Medical and Signify are both meaningful assets here that have come up for sale in the past few months, and Amazon opportunistically pounced. However, that doesn’t mean it’s necessarily how Amazon would have sequenced it. It begs the question whether Amazon is thinking about the next logical step here: becoming an insurer itself to manage the entire healthcare dollar. We mentioned this concept in our recent write-up of the Amazon / One Medical deal, pondering what Amazon might do with Iora:

In the current state, it’s hard to envision Amazon leaning into growing a capitated Medicare Advantage primary care business. Unless, of course, this is just the first strategic move for Amazon and it follows it up by acquiring an insurer to give it a footprint in the Medicare Advantage space. While it might seem far-fetched, it wasn’t all that long ago that we were talking about a Walmart and Humana merger (and then Walmart subsequently launched and exited a rather ill-timed partnership with Clover Health to offer MA plans). What if Amazon and Humana started having conversations about going down a route similar to CVS and Aetna? If you haven’t read Mark Bertolini’s take on why he sold Aetna to CVS and the logic between combining a retailer and a health insurer, it’s worth reading here.

While it certainly still seems far-fetched, acquiring an insurer to round out the offering here would make a lot of sense if it is sitting on Signify and One Medical assets. 

So, it seems like the Signify bid is either a sign that Amazon is here to stay and growing out a larger healthcare strategy, or it’s a great smokescreen to put strategic pressure on the industry. My bet at this point is it’s the former.


It’s anyone’s guess how the auction will play out from here. As mentioned in the {XXX} article, UHG is apparently leading the bid now, and most HTNer’s expect UHG to win the deal. 56% of people who responded to our poll think UHG will win, 23% think CVS, 19% think Amazon, 3% think Other (Humana), and 0% think Option Care Health. But as discussed above, all the players seem to have their motivations for winning the deal.

Regardless of how this specifically plays out, it seems like a sign that we might be seeing these three players emerge as a distinct set of competitors all seeking to be the roll-up of healthcare that achieves the quadruple aim - better experience for consumers, better health outcomes, lower costs, and better experience for providers. It’s a nice utopia to dream about, but it seems unlikely that any of them are going to get there while racing to acquire as many assets as they can. Buy now, integrate later is not a motto that ends up working out well for patients, even if it is a profitable one.