CVS Health (NYSE:CVS) announced that it entered into an agreement to acquire Signify Health for approximately $8 billion.
Home healthcare services company Signify Health offers clinical, social, and behavioral services to support value-based healthcare. It provides a mobile network of 10,000 credentialed clinicians who offer in-home evaluations of Medicare Advantage and Medicaid plan members.
CVS said in a news release that Signify Health’s clinicians and providers will engage with CVS Health’s collection of assets, connecting patients to care how and when they need it.
“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 S. 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. In addition, this combination will strengthen our ability to expand and develop new product offerings in a multi-payor approach.”
CVS may heave beaten Amazon to major healthcare acquisition
Media reports last month suggested that Amazon was eyeing Signify Health as its next multibillion-dollar healthcare buy. In July, Amazon announced plans to acquire primary care provider One Medical in a nearly $4 billion deal. That deal is currently under review by the FTC, which recently requested more information from each company.
In February, it said it was making its Amazon Care virtual health services available nationwide. However, reports from late August said the company will stop offering Amazon Care services at the end of 2022.
However, it appears CVS may have beat out Amazon for Signify, which has this year expanded its focus on value-based care and population health. As part of CVS Health, SIgnify will advance its primary care enablement capabilities. That includes 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.”
Details for the acquisition
CVS Health will acquire Signify Health’s stock for $30.50 per share. CVS plans to fund the acquisition with existing cash and available resources. Each company’s board approved the transaction, though it remains subject to approval by a majority of Signify Health stockholders. It also requires the receipt of regulatory approval and satisfaction of other customary closing conditions.
Private equity funds affiliated with New Mountain Capital — which owns approximately 60% of Signify’s common stock — agreed to vote the shares they own in favor of the transaction. The companies expect the deal to close in the first half of 2023.
Armbrester will continue to lead Signify as part of CVS after the transaction closes.
“This is a major step as we continue to execute on our strategy,” said CVS Health EVP and 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.”
