CVS wins bidding war for Signify Health, will acquire company in $8B deal

CVS Health has won the bidding war for home health and technology services company Signify Health.

The healthcare giant announced Monday that it will acquire Signify in a deal valued at $8 billion, or $30.50 per share, in cash. The deal is subject to approval from Signify Health's shareholders, and the companies expect that it will close in the first half of 2023.

"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 CEO Karen Lynch in a press release. "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 healthcare experience. In addition, this combination will strengthen our ability to expand and develop new product offerings in a multi-payer approach."

Signify Health offers health risk assessments, value-based care and provider enablement services, including a network of 10,000 providers across all 50 states. The company acquired Caravan Health earlier this year to further expand its reach in value-based care and home health.

CFO Shawn Guertin told investors Tuesday morning that the deal is one of the first moves under CVS Health's plan to extend further into healthcare services, which it first unveiled at the company's investor day earlier this year.

Guertin said that Signify's home health capabilities as well as the services offered by Caravan represent significant opportunities to push toward the company's long-term goals. The value-based care programs at Caravan in particular "is where a lot of the power is, I think, for the long haul," Guertin said.

He also said investors shouldn't read too deeply into CVS' decision to begin in the home health space as it builds out the healthcare services it offers, rather than making a primary care buy or focusing in other markets first.

"It's far more important for us to find the right asset with the right scale, the right tech and the right team," Guertin said on the call.

Signify drew interest from multiple competitors including Amazon and UnitedHealth Group, both of which are companies that have been active in healthcare M&A.

When the deal closes, Armbrester will continue as CEO of Signify under CVS 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," Kyle Armbrester, CEO of Signify Health, said in the release. "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."