CVS Health to Acquire Signify Health in $8 Billion Deal

CVS Health (NYSE: CVS) has agreed to purchase Signify Health (NYSE: SGFY) for a total transaction value of $8 billion.

Signify is a value-based care enablement company that concentrates on care in the home, including home health and palliative care. CVS indicated that the transaction will lay the foundation for further expansion in home-based health care.

The massive deal follows a months-long bidding process that included Amazon (NASDAQ: AMZN) and UnitedHealth Group (NYSE: UNH) as prospective buyers, among others.

“This transaction is a significant step forward in our strategy to enhance our care delivery for consumers and to be able to meet their needs when and where they want care, and the home is increasingly part of that choice,” CVS Health President and CEO Karen S. Lynch said in an investors conference call that followed the announcement. “Signify is a leader in value-based care with a rapidly growing provider ACO enablement business. They’re also a leader in health risk assessment, which brings clinicians in the home to identify chronic conditions, close gaps in care and address social determinants of health.”

Signify will remain payer-agnostic, according to statements from CVS, which also owns the insurance company Aetna.

The sale price amounts to $30.50 per share in cash.

Signify partners with payers and health systems to offer home-based care, using proprietary analytics and technology platforms. The company’s complex care management program mirrors the interdisciplinary palliative care model, including symptom management, addressing psychosocial needs, advance care planning, and social determinants of health.

Signify has a presence in all 50 states and employs more than 10,000 workers serving more than 2.5 million individuals in their homes.

“Signify Health’s mission is to build trusted relationships to make people healthier by using actionable intelligence to understand what’s really impacting outcomes and cost today,” said Kyle Armbrester, CEO of Signify Health. “As we carefully considered our long-term strategic options, 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.”

Private equity funds affiliated with New Mountain Capital own close to 60% of the common stock in Signify Health. Those funds have agreed to vote the shares they own in favor of the transaction. Signify Board Chair Matt Holt is also New Mountain’s president of private equity and managing director.

Armbrester will stay on as CEO after the transaction closes, which is expected to occur during the first half of 2023. The transaction is subject to customary regulatory and shareholder approvals.

Signify earned $246.2 million in revenue during the second quarter of 2022, up 16% from the same period in 2021.

The company last year launched its Transition to Home program, designed to prevent readmissions by filling gaps in patient care and keep them in their homes. During its first year in operation, for example, the program identified more than 3,000 social determinants of health gaps. In year one, Transition to Home reduced 30-day hospital readmissions and 90-day readmissions by 13%, Armbrester indicated in Q2 earnings.

The acquisition follows Signify’s decision in July to pull out of the U.S. Centers for Medicare & Medicaid Services’ (CMS) Bundled Payments for Care Improvement-Advanced (BPCI-A) program to refocus on expanding its home- and community-based services.

Sweetening the deal is the opportunity for CVS to leverage Signify’s tech platform, including those developed by Accountable Care Organization (ACO) management firm Caravan Health. Signify acquired Caravan earlier this year for $25 million.

Lynch indicated that these capabilities will allow CVS and its new assets to design new care models and help navigate patients to the best “site of care.”

“Signify’s recently acquired Caravan platform enables physicians to take risks and equips them with tools to provide value-based care,” Lynch said in the conference call. “By acquiring Signify’s Hometown platform, we gain a foundation for future expansion of home health care delivery.”