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September 6, 2022

CVS Health acquires Signify Health for $8B

Daily Briefing

    CVS Health on Monday announced it had purchased home health care company Signify Health for roughly $8 billion, a move that experts say shows CVS is focused on home health care.

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    CVS acquires Signify

    Last month, the Wall Street Journal reported that CVS planned to enter a bid for Signify Health, a home health company that uses analytics and technology to help health plans and providers with in-home care.

    Following that news, the Journal also reported that several other large companies, including Amazon, UnitedHealth Group*, and Option Care Health, had submitted their own bids for Signify.

    On Monday, CVS announced it has finalized a deal to acquire Signify for $30.50 per share—which amounts to roughly $8 billion—in an all-cash deal. With Signify, CVS also is acquiring Caravan Health, which manages accountable care organizations. CVS said it anticipates the deal will close in the first half of 2023. The companies said that Signify's CEO Kyle Armbrester will continue leading Signify after the deal closes.

    "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," Armbrester said. "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."

    Karen Lynch, CEO and president of CVS, said CVS will be the care coordinator for Signify's home health clients, and will be able to direct more patients to other CVS services, which Lynch said will generate savings for those patients.

    "The house call is having what I'd characterize as a renaissance," Lynch said. "This deal enhances the connection to consumers in the home."

    Matt Holt, Signify chair and president of private equity at New Mountain Capital, said CVS "should be able to amplify the scale of the Signify network, reach more patients, then integrate pharmacy and broader care management into the company's service lines."

    Sree Chaguturu, CVS Health's CMO, said that as CVS talked with Armbrester and the rest of the company, "we got excited about what Signify has built, as well as the strategic and cultural fit between our two organizations."

    "There's two connection points here," Chaguturu added. "It's the ability for us to connect to consumers in the home as well as enable providers to better address patient needs across the care continuum."

    Reaction

    Experts say the deal shows CVS is focused on the home health care space. "Their interest is to take over the home," said Eric Topol, a professor of molecular medicine at Scripps Research. He added that any care provided to patients at home instead of in the hospital will lighten the financial load on insurers, including Aetna, which CVS owns.

    "If you're looking at it from Aetna's standpoint, this is a way to save big, big expenditures for their people they cover," Topol said.

    Adam Block, a health care economist and associate professor at New York Medical College, said he believes the deal shows Aetna is specifically targeting more patients who are dually eligible for Medicare and Medicaid.

    "More and more people are receiving care inside their homes and it has been evident that nursing home care is not optimal for many people," Block said. "There's a wide gap of people who need some care but they do not need to be living in a nursing home. This is probably targeting those patients." (Terlep, Wall Street Journal, 9/5; Hirsch, New York Times, 9/6; Tepper/Perna, Modern Healthcare, 9/5; Japsen, Forbes, 9/5)

    *Daily Briefing is published by Advisory Board, a division of Optum, which is a wholly owned subsidiary of UnitedHealth Group.

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