CVS Health Wins Bidding War for Signify Health

Sept. 5, 2022
CVS CEO says acquisition will give company a platform to accelerate its growth in value-based care

Pharmacy giant CVS Health (NYSE: CVS) has entered into an agreement to buy Signify Health (NYSE: SGFY) for $30.50 per share in cash, or approximately $8 billion.

News reports stated that there had been a bidding war for Dallas-based Signify between Rhode Island-based CVS Health, UnitedHealth Group and Amazon.

Signify Health is a provider of health risk assessments, value-based care and provider enablement. It has a network of more than 10,000 clinicians across all 50 states and a nationwide value-based provider network, combined with its proprietary analytics and technology platforms.

  CVS said that Signify Health's clinicians and providers can have an even greater impact by engaging with CVS Health's collection of assets and connecting patients to care how and when they need it.

"Signify Health will play a critical role in advancing our healthcare services strategy and gives us a platform to accelerate our growth in value-based care," said CVS Health President and CEO Karen Lynch, in a statement. "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. In addition, this combination will strengthen our ability to expand and develop new product offerings in a multi-payor approach."

Signify Health's network of clinicians physicians, nurse practitioners and physician assistants use home-based visits to identify a patient's clinical and social needs, and 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. In 2022, Signify Health's clinicians expect to connect with nearly 2.5 million 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.

Marc Rothman, M.D., chief medical officer at Signify Health, spoke to Healthcare Innovation last year about some of the benefits he has seen as his organization partners with Medicare Advantage plans to provide in-home evaluations to thousands of members.

Rothman sees the in-home assessments that Signify Health conducts are part of a larger trend of trying to deliver more care to patients in the home. “So much of American medicine has revolved around hospitals and clinics, where the physicians and nurse practitioners have traditionally been, but there is a real need to move to lower-cost settings to increase the convenience factor for the American consumer,” he said. Plus, there's so much innovation around remote technologies and remote diagnostics, and the pandemic accelerated that transformation from a telehealth perspective, he added, but there also is a movement to train the workforce to be savvy with visiting people in the home looking for problems, and trying to blend the social concerns with the clinical concerns.

“As a geriatrician, that speaks to me, because I'm used to treating Alzheimer's patients who have caregivers who are struggling and feel isolated, and not necessarily caring for themselves,” he said. “It is incredible what you can discern about a patient's actual healthcare situation by seeing them in their home environment as compared to the 20-minute visit at the clinic. There's no comparison really.”

Since acquiring Caravan Health in March 2022, Signify Health has further expanded its focus on value-based care and population health. Caravan is already a partner to over 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 that its ACOs generated more than $138 million in gross savings in 2021. As part of CVS Health, Signify Health will continue to advance its extensive 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, the companies said.

"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, in a statement. "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."

Following the close of the transaction, Armbrester will continue to lead Signify Health as part of CVS Health.

CVS Health will 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 percent 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.