Signify Health raises $564M in its IPO driven by investor interest in home care, value-based models

Executives (from left) Adam McAnaney, general counsel; Steve Senneff, CFO; Kyle Armbrester, CEO; and Victoria Bartolome, senior vice president for strategic initiatives, of Signify Health, which made its public debut on the New York Stock Exchange Thursday (Signify Health)

Technology company Signify Health saw its stock spike 33% on its first day of trading Thursday after raising $564 million in its initial public offering.

Shares opened at $32, well above their raised IPO price of $24 apiece. The price range was initially set at between $20 and $21 per share. The company originally planned to offer 23.5 million shares at $17 to $19 before raising the range Wednesday, according to a company press release.

The IPO raised about $564 million through the sale of 23.5 million shares.

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Based on its public debut, Signify Health has a market capitalization of $7.12 billion, according to Reuters.

The company is listed on the New York Stock Exchange under the symbol "SGFY." Goldman Sachs, JPMorgan, Barclays and Deutsche Bank Securities are among the underwriters of the IPO.

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The IPO filing comes just a year and a half after the Dallas-based company merged with Remedy Partners.

Signify Health launched in December 2017 as the result of a merger between CenseoHealth and Advance Health. The company provides a value-based care platform that uses advanced analytics and other technology to shift health services toward the home. 

Its customers include health plans, governments, employers, health systems and physician groups. The company conducts in-home visits to assess the need for specific health and social determinants of health services on behalf of its customers. 

Signify Health CEO Kyle Armbrester said 2021 was the right time to go public because the company has reached a size and scale where the public market can help it serve new clients and more quickly expand its capabilities.

Going public also enables Signify Health to use capital to accelerate its product road map and look for potential mergers and acquisitions to expand its services. Areas for future M&A activity include medication management and connected devices along with remote patient monitoring that complements the company's in-home care, Armbrester told Fierce Healthcare.

Signify Health also is interested in software services to push further into the employer market, he said.

"Employers are waking up to the power of value-based care. They've seen the government be successful with it and are saying 'We want those guaranteed savings and our employees to be happy and healthy," Armbrester said.

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With more healthcare services shifting to the home, Signify Health is well ahead of this trend, he noted.

The company is a market leader in two fast-growing segments of the value-based healthcare payment industry: payment models based on individual episodes of care and in-home health evaluations.

Signify Health's business model resonated with investors during its roadshow leading up to the IPO, Armbrester said.

"It boiled down to three things. Folks like our aligned incentive model; we only make money when driving positive patient outcomes. We're bullish on the home as a site of care, and we have a nationwide network of 9,000 providers that we deploy in the home. And they loved our financial payment platform aligned around episodes of care," he said.

The company's episode payment platform managed $6.1 billion of spending under the Medicare Bundled Payment for Care Improvement Advanced (BPCI-A) program in 2019, and the BPCI-A episodes it managed, initiated in the fourth quarter of 2019, resulted in approximately 15% greater discharges home from acute-care facilities and approximately 10% lower readmissions, according to documents filed with the U.S. Securities and Exchange Commission (SEC).

Its mobile network of providers completed 1.4 million in-home evaluations for individuals in Medicare Advantage and other managed care plans in 2020.

The company serves 47 Medicare Advantage health plans ranging from the largest national organizations to smaller regional and provider-owned entities. And it serves thousands of healthcare provider organizations ranging from large integrated delivery systems to midsize and small urban and rural entities. 

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Signify's broad customer base includes Humana, Optum, Aetna, Oak Street Health, Ascension, Oscar, Geisinger and the state of Connecticut.

Signify Health has been ramping up its focus on addressing social determinants of health and acquired TAV Health in 2019 to build up those capabilities.

The company continues to make significant investments in its data and advanced analytics technology, to the tune of $100 million a year, Armbrester said.

Signify Health has 35 million longitudinal records on members and leverages these data to build decision-support algorithms and predictive modeling tools. These data assets and decision support tools are designed to in turn help providers succeed in value-based payment programs, according to the company.

Signify’s total revenue was $502 million for the year ended Dec. 31, 2019, up 48% from $338 million in 2018, according to the S-1. For the nine months ended Sept. 30, 2020, its total revenue was $417 million. The company has sizable losses, reporting a net loss of $28 million in 2019 and losses of $15 million in the nine months ending Sept. 30, 2020.