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Amazon eyeing Signify

Illustration of an empty doctor's outfit with the Amazon smile logo as the face.
Illustration: Aïda Amer/Axios

Amazon, CVS, Option Care Health and United Health are among the reported bidders for Signify Health (NYSE: SGFY), a Dallas value-based care company that could fetch up to $8 billion.

Why it matters: After emerging as a health care player over the past several years, the new reports — combined with Amazon's recent One Medical buy — cement the tech giant as a major player in health-related M&A.

  • Amazon's proposed ONEM deal would grant it major scale — helping shore up its expertise in consumer preferences, expand existing efforts in primary care and gain a foothold in Medicare Advantage.

Yes, and: Amazon has made moves in the value-based care space before via its failed cost-savings venture with JPMorgan and Berkshire Hathaway.

Yes, but: Amazon's potential Signify bid could also give antitrust regulators new avenues to pursue — and the retail giant is already fending off the FTC with its proposed acquisition of Roomba.

  • Speaking of, while UNH is a prolific health care buyer, its ongoing antitrust trial on its proposed merger with Change Healthcare casts a cloud on a potential Signify deal.

Of note: Sources say private equity has been circling Signify as well, but many financial sponsors have been cut from the process — even at strong valuation levels.

  • Goldman Sachs and Deutsche Bank are advising Signify on the process, Axios previously reported.

How (Signify) works: The company helps health systems and health plans move to VBC arrangements by creating risk contracts where it shares in both upside and downside risk.

By the numbers: New Mountain Capital holds a 54.7% stake in Signify and the company has a reported market value of $5 billion, per the WSJ yesterday.

  • Shares of Signify jumped more than 39% Monday morning on the latest reports.

Flashback: Signify last year raised $564 million in its IPO.

Prime threat level: Amazon already has access to roughly 44% of U.S. residents through Prime, according to a recent Trilliant Health report.

  • In comparison, the largest health system in the country is HCA, which serves just 1% of Americans.
  • "No health system can match Amazon's ... scale in terms of the next interaction," Trilliant Health president and CEO Hal Andrews previously told Axios.

Between the lines: Signify would give Amazon access to yet another clinical network alongside the one it's gaining with One Medical — plus a mound of extra data from what Signify gathers to identify and prioritize patients who need care.

  • "Amazon's interest would seem to be about Signify's clinical network and data," write Cowen analysts Gary Taylor, Charles Rhyee, and others in a Monday note.

The intrigue: As disclosed in a recent SEC filing, Amazon previously indicated it would terminate conversations with One Medical if its interest was leaked. Does it care this time around? TBD.

💭 Our thought bubble: Now that Amazon has cast its health care anchor with ONEM, we suspect the retail health giant could look at buying a TPA in a bid to enter the health insurance market (particularly after Haven failed to take off).

  • Independent TPAs include the likes of VC-backed Collective Health, and scaled PE-backed players such as New Mountain's HealthComp and Water Street Capital's EMBS.
  • "They don't need it to be a big [TPA] — they can scale it themselves," one industry banker tells us. "They need to pay for know-how."
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