CVS Health agrees to acquire Signify Health
CVS Health and Signify Health have announced the two companies have entered into a definitive agreement, under which CVS is acquiring Signify in a transaction reportedly valued at about $8b USD.
Signify Health is a patient-centric technology company specializing in health-risk assessments, value-based care, and provider enablement. The company possesses a network of more than 10,000 clinicians across all 50 US states, along with analytics and technology platform solutions.
"Signify Health will play a critical role in advancing our health care services strategy and gives us a platform to accelerate our growth in value-based care," said CVS Health president and CEO Karen Lynch. "This acquisition will enhance our connection to consumers in the home and enables providers to better address patient needs as we execute our vision to redefine the health care experience.”
Further, Lynch added, the combination of CVS Health and Signify is intended to bolster the acquiring company’s “ability to expand and develop new product offerings in a multi-payor approach."
Signify Health has centered its efforts on improving patient engagement, patient outcomes, and care coordination for stakeholders across the health care system. According to CVS Health leadership, Signify's clinicians and providers hold the potential to make an even more significant impact by engaging with CVS Health's assets and connecting patients to care how and when they need it.
Signify Health's network of clinicians physicians, nurse practitioners, and physician assistants use home-based visits to determine a specific patient's clinical and social needs, then connect them to appropriate follow-up care and community-based resources in order for the patient to have a more connected, effective care experience. This year, the company reports it expects its clinician network anticipates connecting nearly 2.5m unique members in the home, both in-person and virtually, and on average they spend 2.5 times longer with a patient in the home than providers spend in the average primary care office visit.
Since it acquired Caravan Health in March 2022, Signify Health reportedly has further expanded its focus on value-based care and population health. Caravan is currently partnered with more than 170 providers participating in accountable care organizations (ACOs) serving Medicare beneficiaries with a focus on improving the health of underserved communities. Signify Health recently announced ACOs generated more than $138m USD in gross savings in 2021, and in 2023 the Caravan business is expected to serve ACOs representing over 700,000 people rivaling many standalone platforms.
Now that it is part of the CVS Health family, Signify Health reportedly will continue to work on advancing its primary care enablement capabilities, including turnkey analytics, network, and practice improvement solutions, to help providers transition to value-based reimbursement and improve quality of care.
"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. We are both building an integrated experience that supports a more proactive, preventive, and holistic approach to patient care, and I look forward to executing on our shared vision for the future of care delivery."
"We formed Signify Health and recruited Kyle and the team to build a strategic innovation platform focused on leveraging technology as a catalyst for connecting key health care stakeholders to drive better patient outcomes," said Matt Holt, chairman of the Signify Health board. "Together with CVS Health, Signify is uniquely positioned to continue to lead the transformation to value-based care. We look forward to the significant impact this transaction will make on health care for years to come."
CEO Armbrester will continue to lead Signify Health as part of CVS Health. The acquired company’s network of more than 50 health plan clients and their members will augment CVS Health's longstanding and leading offering of payor-agnostic solutions for a diverse set of health plan and employer clients.
CVS Health aims to acquire Signify Health's stock for $30.50 per share. CVS Health expects to fund the transaction with existing cash from its balance sheet and available resources and is committed to maintaining its current credit ratings.
The transaction was approved by the Board of Directors at each of the respective companies. It is subject to approval by a majority of Signify Health's stockholders, receipt of regulatory approval, and satisfaction of other customary closing conditions. Private equity funds affiliated with New Mountain Capital, which owns approximately 60% of the common stock of Signify Health, have agreed to vote the shares they own in favor of the transaction, subject to customary exceptions. CVS Health and Signify Health anticipate that the transaction will close in the first half of 2023.
"This is a major step as we continue to execute on our strategy," said CVS Health executive vice president and chief financial officer Shawn Guertin. "We expect the acquisition to be meaningfully accretive to earnings and, as a result, are increasingly confident we can achieve our long-term adjusted EPS goals as outlined at our Investor Day in December 2021."
