Signify Health suitors invite trustbuster pain

The corporate logo of the UnitedHealth Group appears on the side of one of their office buildings in Santa Ana, California, U.S., April 13, 2020. REUTERS/Mike Blake

NEW YORK, Aug 22 (Reuters Breakingviews) – Some opportunities are just too tantalizing to pass up, no matter how risky. Signify Health (SGFY.N) appears to be one. The $6.6 billion company sits at the crossroads of patient data harvesting and moving care into homes, making it a hot commodity for a range of suitors in technology and healthcare. It is also the sort of consolidation that will tempt U.S. trustbusters.

Signify could sell just 18 months after private equity backer New Mountain Capital took it public. Amazon.com (AMZN.O), UnitedHealth (UNH.N) and CVS Health (CVS.N), which owns insurer Aetna, are among those circling and ready to pay some $8 billion, according to the Wall Street Journal. It’s a testament to Signify’s unique position: It reckons it is the largest provider of home health-risk assessments, with few truly national or independent competitors.

Chief Executive Kyle Armbrester has explained that access to patients in their homes gives the company a “unique set of data”, one that could be used to craft care decisions and make sense of payments to providers rewarding quality rather than the number of services rendered. Such connections make the trove of information potentially sensitive. UnitedHealth, for one, should know: Antitrust enforcers at the U.S. Department of Justice have sued to stop its similarly sized acquisition of Change Healthcare (CHNG.O), arguing the data would provide it an unfair competitive advantage.

The lawsuit, filed in February, was a watershed moment, formalizing a regulatory pivot toward more aggressive enforcement based on novel theories of how mergers can harm consumers. The DOJ used the occasion to announce that it is especially scrutinizing deals “at the intersection of health care and data.”

While UnitedHealth seems like the most problematic bidder for Signify – its HouseCalls service will likely be a close second-place to Signify in number of home assessments this year, according to Cowen analysts – others also have caused concern in the past. CVS’s (CVS.N) $69 billion deal for Aetna required major divestitures and raised the eyebrows of a judge reviewing its approval. Federal Trade Commission Chair Lina Khan made her bones writing about competition concerns raised by Amazon, and the online retail titan’s recent deal to buy One Medical speaks to its broader ambitions in healthcare. Nearly any Signify acquirer should brace for regulatory pain.

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CONTEXT NEWS

Signify Health, a home healthcare services and data analysis company, is exploring a sale that could fetch $8 billion, the Wall Street Journal reported on Aug. 21. Suitors include Amazon.com, UnitedHealth and CVS Health, according to the report.

Editing by Jeffrey Goldfarb and Sharon Lam

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