Signify Health CEO says CVS deal will 'turbocharge' home health provider's road map

Signify Health launched in 2017, went public in 2021 during the height of the COVID-19 pandemic—through an IPO, not a SPAC—and recently was the target of a bidding war as retailers and health plans eye opportunities in home health.

With Signify Health now in the fold, CVS Health is significantly expanding its footprint into the home health and managed service organization markets.

Signify Health will remain an independent entity under the CVS umbrella and continue to focus on its strategy to be a "multi-payer, technology-enabled services company," said Kyle Armbrester, who was CEO of the standalone company and will continue to lead Signify Health.

“This transaction advances our value-based care strategy by enhancing our presence in the home,” said CVS Health President and CEO Karen Lynch in a statement.

Launched in December 2017 as the result of a merger between CenseoHealth and Advance Health, Signify Health offers health risk assessments, value-based care and provider enablement services. The company acquired Caravan Health for $250 million last year to further expand its reach in value-based care and home health.

Signify has a network of more than 10,000 clinicians in all 50 states and serves about 2.5 million patients. The company brings providers into the home to identify chronic conditions, close gaps in care and address social determinants of health. 

The company claims that its clinicians spend an average of 2.5 times longer with a member during home visits than an average visit with a primary care provider.

Joining up with CVS enables the company to accelerate its push in home health and value-based care, according to Armbrester.

CVS and Signify Health represent a "good cultural fit," he noted, and operating as an independent entity enables the five-year-old company to continue focusing on what it does best.

"We had a lot of folks bidding on us and looking at us during this process, but our mission, vision and strategy aligned with [CVS] really nicely," Armbrester said in an interview. "I feel very confident that we're all swimming in the same direction and want to continue to pursue a strategy that's focused on value-based care and improving consumers' health."

CVS will add Signify Health's capabilities and clinician network to its existing portfolio of 40,000 providers, 1,100 MinuteClinic locations, 9,000 retail drugstores and the nation’s third-largest health insurer, Aetna. 

Signify Health now has access to CVS' expansive pharmacy network.

"The one big thing that I'm excited about is that we're going to bring their pharmacy services, the pharmacists virtually, into a lot of our relationships. That's one of the synergies we want to build out to help with drug administration and drug adherence in the millions of homes and hundreds of facilities that we work in each and every day," Armbrester said.

Focusing on value-based care is "core" to both CVS and Signify Health's strategies, he noted.

"I think they realized through this deal with us that having an alternative site of care like the home, which is strategic in value-based care, not everything has to happen at facilities. Also our alignment services on the ACO side of the house. We work with physicians and hospitals as well and blending that whole continuum of care, playing across everywhere, bringing healthcare to people in a preventative way, that's how you really drive better patient outcomes and better results in value-based care," Armbrester said.

Signify Health brought in $805 million in revenue last year, up 23% from $651 million in 2021, according to its full-year 2022 earnings report (PDF). The company's customers are primarily Medicare Advantage health plans and managed Medicaid organizations. It currently serves 51 health plans in the U.S. including 26 of the 50 largest Medicare Advantage plans, according to the earnings report.

Signify leverages advanced analytics, technology and nationwide healthcare provider networks to create and power value-based payment programs.

Armbrester said the acquisition will not involve a lot of tech integrations.

"We're going to be our own independent entity. Aetna will still be a customer of ours. I think a better way to think of it is they want to turbocharge our product and technology roadmap and help us accelerate it by investing more in capital into the business, growing the business, doing more partnerships and more M&A down the line well," he said.

Future M&A opportunities could involve "good tuck-ins that are synergistic with our home business or ACO enablement business," he noted.

CVS Health is not alone in its ambitions to push further into healthcare services. Walgreens, Walmart and Amazon also are ramping up their focus on in-home medical services and primary care.

The global healthcare market was valued at $301 billion in 2021 and is anticipated to reach $813 billion by 2028. Close to 12 million Americans receive some kind of home healthcare each year, according to the National Association for Home Care and Hospice.

Armbrester believes a number of factors make Signify Health unique and poised for further growth. "We're all iPad-based, we have a light footprint, the devices have gotten a lot smaller, so we're doing great diagnostic work into the home," he said. "I think what providers really like is that we take a lot of the administrative burden off of them. Whether they're in the home or in our ACO-enabled hospital, they're going to spend more high-quality time with patients and health consumers and driving better outcomes for them. Versus so much of the healthcare environment, especially in fee-for-service, which feels rushed and utilization-based, but this is a more humanized version of healthcare."

In February, CVS announced its intention to buy Medicare-focused primary care company Oak Street Health for $10.6 billion. 

If the deal were to go through, Armbrester says he sees potential synergies to focus on the continuum of care.

"[Oak Street Health] has a clinic-based model focused on Medicare Advantage and we're obviously in the home. Being there when and where I'm meeting patients with healthcare, I think they help with that tremendously," he said.