Signify uses a technology platform and visits by clinicians to support complex care at a patient’s home.
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CVS Health Corp. (NYSE: CVS) has agreed to purchase Signify Health Inc. (NYSE: SGFY), a technology-enabled home health services provider, for $30.50 per share in a cash deal valued at $8 billion.
The Dallas-based Signify uses a technology platform and visits by clinicians to support complex care at a patient’s home.
“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 Karen Lynch, president and CEO of Woonsocket-based CVS Health, in a news release.
Lynch stated that the 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. In addition, this combination will strengthen our ability to expand and develop new product offerings in a multi-payor approach.”
Other suitors for Signify had included UnitedHealth Group Inc., Amazon.com Inc. and Option Care Health Inc., Bloomberg News reported in August.
Kyle Armbrester, CEO of Signify, said Monday that Signify chose CVS after finding that the two companies hold “shared visions for the future of care delivery.” He said both companies are “building an integrated experience that supports a more proactive, preventive and holistic approach to patient care.”
Signify has been backed by the private equity firm New Mountain Capital since 2017. Funds managed by New Mountain currently own 60% of Signify’s shares.
Matt Holt, managing director of New Mountain, said Monday that his firm formed Signify and recruited Armbrester “to build a strategic innovation platform focused on leveraging technology as a catalyst for connecting key health care stakeholders to drive better patient outcomes.”
“Together with CVS Health, Signify is uniquely positioned to continue to lead the transformation to value-based care,” remarked Holt, who is also chairman of Signify.
On its website, New Mountain describes Signify as a “field-based, multidisciplinary complex care team (that) provides ongoing care to address chronic conditions, prevent hospitalizations, and integrate medical, behavioral, and social determinants of health.”
Signify went public in February 2021 and raised $564 million with a IPO price of $24. The stock spiked to $39.44 in the first week of trading but dove over the months, hitting a low of around $11 in mid-June. The price recovered last month upon news that suitors were in the wings. Signify was trading at around $29 on Friday with a reported market cap of nearly $6.7 billion.
CVS, with its national chain of retail pharmacy stores, its “Minute Clinics” and its Aetna insurance plans, is valued at over $130 billion.
Signify this year acquired the Kansas City-based Caravan Health, a company that operates accountable-care programs with an emphasis on Medicare beneficiaries in underserved communities. Caravan partners with around 170 providers and says its ACOs generated more than $138 million in gross savings last year.
In 2019 Signify merged with Remedy Partners, a software firm that works with health care organizations to provide bundled payment programs.
CVS and Signify 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,” stated CVS Health CFO 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.”
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