What happened
Shares of Signify Health (SGFY) jumped 33.9% this week, according to data from S&P Global Market Intelligence. The company, which specializes in healthcare analytics and technology to assist health plans, physician groups, and health systems in home-based care risk assessment, closed at $21.20 on Friday. The stock opened at $29.74 on Monday before rising to a 52-week high of $29.88 later that day. The stock is up more than 96% this year and has a 52-week low of $10.70.
So what
Investors jumped in at the first opportunity after The Wall Street Journal and Bloomberg News reported on Sunday that CVS Health, UnitedHealth Group, Option Care Health and Amazon were all fighting to acquire the company. The auction could valuate the company at more than $8 billion. It has a market cap of $8.146 billion.
Signify's data is designed to allow patients to spend more time recuperating at home to bring down costs for healthcare groups and patients. The big attraction for the companies bidding for Signify is the company's large database related to advanced healthcare analytics.
In the second quarter, Signify reported revenue of $246.2 million, up 16% year over year, along with a net loss of $490 million -- but that includes a $519.9 million impairment loss related to the company's decision, announced in July, to exit its Episodes of Care Services segment. The company also issued full-year guidance of $800 million to $810 million in revenue from its Home and Community Services segment, and $45 million to $48 million from Caravan Health, which it purchased for $250 million in March.
Now what
Home-based care is considered the next battlefield in healthcare, and companies are rushing to position themselves for that eventuality. That puts Signify in a strong position, whether the company is taken over or not. One concern, however, is that investors don't know how the auction will play out and what the ultimate per-share offer will be if it happens. If the deal falls through, Signify is still in a good growth position, but the stock could come tumbling down in the short term.
