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Motley Fool Issues Rare “All In” Buy Alert
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Monster retailer Amazon (AMZN -1.05%) doesn’t often lose, so shareholders get discouraged when the company doesn’t come in first in a contest. That was the situation on Tuesday, when a rival’s bid was selected for a big healthcare asset that was in play. As a result, Amazon’s share price closed the day over 1% lower, a steeper fall than that of the S&P 500 index.
Amazon was vying for healthcare services company Signify Health, but the nod ended up going to CVS Health, whose bid was worth roughly $8 billion. Other companies participating in the effort to acquire Signify were UnitedHealth Group and Option Care Health.
Among that crowd, Amazon was a bit of an outlier. UnitedHealth and Option Care are pure-play healthcare companies. Amazon, which has always aimed to be a retailer of any product or service imaginable, is still considered by many to be more of a giant online shopping outlet than a provider of healthcare services.
In Signify’s press release announcing its selection of CVS, CEO Kyle Armbrester said that “we determined that CVS Health is the ideal partner, given its focus on expanding access to health services and helping consumers navigate to the best sites of care.”
While Amazon has indisputably made strides in its medical business efforts — witness its $3.9 billion deal for primary care provider 1Life Healthcare earlier this year — it still isn’t readily identified with that sector. It wouldn’t be surprising if this made the company a dark horse candidate, at best, in the Signify bidding.
Amazon isn’t known for setbacks and management probably isn’t too fond of them, so we can expect the company to make fresh bids for other healthcare businesses that come into play. But other entities with deep pockets will also be looking to buy, so Signify might not be the last of its defeats in the sector.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends CVS Health, CVS Health Corporation, and UnitedHealth Group. The Motley Fool has a disclosure policy.
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