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Signify Health to Acquire Caravan Health, Accelerating the Movement to Value-Based Healthcare

Signify Health announced it has signed an agreement to acquire Caravan Health for an initial purchase price of approximately $250 million in a combination of cash and Signify Health common stock. The transaction also includes contingent additional payments of up to $50 million based on the future performance of Caravan. Caravan Health will join Signify Health in supporting a wide spectrum of advanced payment models, enabling providers to assume various levels of risk and collaborate in ways that support their goals to improve health outcomes while lowering costs across the care continuum.

This combination unites two leaders in value-based payment models covering a broad range of risk-based and shared savings models, from advanced primary care payment to specialty care bundles to total cost of care contracts. Caravan Health brings key technology, insights, and transformation services to community hospitals, physician practices and clinics looking to succeed in accountable care and other commercial risk arrangements. Signify Health brings technology, analytics, and management expertise in episodes of care and bundled payments. Together, the companies will be supporting approximately $10 billion in total medical spend under management.

Upon closing, Caravan Health and Signify Health will have one of the largest national networks of providers engaged in risk-based payment models. Beyond Signify’s current network of over 3,000 physician practices and facilities contracted in value-based arrangements, Caravan adds more than 200 health systems and 100 Federally Qualified Health Centers with more than 10,000 primary care providers that collectively manage over 500,000 patients, most of whom are medically underserved and struggle to access care. Signify is well positioned to address these persistent access issues by assisting these providers, extending their capacity to engage patients in the home and virtually through Signify Health’s national mobile network of approximately 10,000 credentialed physicians and nurse practitioners, and over 600 engagement, clinical, and social care coordinators. In conjunction with Caravan Health’s proprietary software, Signify’s mobile network can be aimed at helping the patients that need it most, extending the resources of often-stretched local care teams, and giving patients the care they need, when and where they need it.

The companies also will focus on leveraging Signify Health’s deep payor relationships to increase provider participation in, and access to, commercial value-based care programs. Combining Signify Health’s and Caravan Health’s value-based offerings increases the percentage of patients in a provider’s panel that are covered by value-based arrangements, thereby making them more attractive and helping to drive care redesign.

“A strategic focus for Signify Health has been driving more participation and success in value-based payment arrangements in alignment with our commercial payor clients. This focus also supports critical imperatives from the Centers for Medicare & Medicaid Services (CMS) to improve health equity and have everyone in Medicare fee-for-service aligned to an accountable relationship by 2030,” said Kyle Armbrester, CEO of Signify Health. “We are thrilled to welcome Caravan Health’s team as we build the infrastructure and payment models that are needed to achieve patient-centric, holistic care and better outcomes for everyone, especially the underserved.”

“This is an exciting opportunity to leverage the combined technology, tools and expertise of Caravan and Signify to all move forward toward better patient care while helping providers achieve financial sustainability,” said Lynn Barr, Founder and Chairwoman of Caravan Health.  “We share with Signify Health a deep commitment to doing everything possible to help those we serve live their best life and look forward to accelerating our collective mission to create a healthcare system that works better for all of us.” Upon closing, Ms. Barr will become Chief Innovation Officer of Signify Health and Tim Gronniger, CEO of Caravan Health, will become EVP, Accountable Care and CEO of Caravan Health.

Strategic and Financial Benefits

  • Accelerates Diversification Strategy:  The combination supports Signify Health’s diversification strategy to offer a comprehensive platform and solution set supporting and integrating episodes and total cost of care risk arrangements across Medicare programs (namely, Bundled Payments for Care Improvement – Advanced and the Medicare Shared Savings Program) and commercial payors with Medicare Advantage, Commercial, and Managed Medicaid lines of business.
  • Creates an End-to-End Suite of Value-Based Care Enablement Capabilities: The combined company will be well-positioned to manage total cost of care through an integrated suite of capabilities. These capabilities include Caravan Health’s population-based insights and management expertise to promote prevention and wellness and manage chronic disease, while Signify Health brings episodes of care analytics to support the identification and management of specialty care needs. Additionally, Signify Health’s expertise in post-acute performance management, care transition services, and in-home evaluations will help drive more coordinated care within and beyond the clinical environment. 
  • Advances Value Proposition to Drive Growth: Together, Signify Health and Caravan Health will be better positioned to enable organizations to manage larger populations covered by value-based arrangements, and to drive more coordinated clinical and social care across the healthcare continuum. Signify Health’s customers and program sponsors, which are composed of Medicare Advantage, Medicaid, and Commercial managed care organizations, as well as state governments and employers, have been asking the Company to broaden the scope of its risk contracts to encompass a greater portion of the total medical spend in a health plan. Caravan Health brings complementary expertise in practice transformation and helping providers succeed in total costs of care risk-sharing models. The integration of two leading value-based payment conveners will increase the depth and breadth of a combined network of at-risk care providers ready to engage on advanced alternative payment models where providers and payers are aligned toward achieving better outcomes for a lower cost.
  • Creates Significant Financial Benefits: The addition of Caravan Health will expand Signify Health’s addressable market by creating new opportunities through ACOs while also providing expanded services for Signify Health customers. Signify Health intends to integrate the two companies to maximize the value of their combined offerings.

    Signify Health expects Caravan Health to be accretive to 2022 revenue and adjusted EBITDA and intends to provide specific guidance for the combined entity on its fourth quarter 2021 earnings conference call scheduled for March 3, 2022 at 8:30 a.m. ET.

Transaction Summary

Signify Health has agreed to acquire Caravan Health for an initial purchase price of approximately $250 million, consisting of $190 million in cash and $60 million in Signify Health common stock. In addition to the initial purchase price, the transaction includes contingent additional payments of up to $50 million based on the future performance of Caravan Health. The transaction is subject to customary closing conditions and is expected to close in the first quarter of 2022.