Connecticut insurer winding down amid reported Amazon, CVS interest in parent firm

Aug. 23—Nearly three years after taking over a Norwalk insurance carrier called Remedy Partners with a new way to cover health costs, Signify Health is winding down that business as it weighs acquisition offers for the overall company.

The Wall Street Journal reported Sunday that Amazon is considering an offer for Signify, as the giant considers expanding a push into the health services sector. Signify could fetch as much as $8 billion in any sale, according to sources not identified by name in the report. CVS Health and UnitedHealth have been floated as well in media reports as interested in a deal for Signify Health.

Under Steve Wiggins who created UnitedHealth subsidiary Oxford Health Plans, Norwalk-based Remedy Partners created a new form of health insurance covering "episodes of care" to heal specific ailments, with the federal Affordable Care Act subsequently setting aside funding for such plans. In 2019, Remedy merged with Signify which offers health services in the home, both through visiting nurses as well as via virtual sessions.

Texas-based Signify Health served notice earlier this summer of its plans to discontinue its legacy Remedy business, without stating at the time whether it would maintain its Norwalk office going forward. The company notified the Connecticut Department of Labor late last month of plans to lay off nearly 150 employees across five offices including Norwalk, Dallas and New York City, along with another 340 not assigned to any specific office.

"Wherever possible, we are finding positions within Signify Health for qualified and eligible employees to support other parts of the business," said Lynn Shepherd, a Signify Health spokesperson. "We will be evaluating our office space as we work through the administrative details."

Signify Health took a $520 million charge against earnings in the second quarter to account for the decision, to include at least $25 million to cover severance and other costs of employees leaving the company.

Over the first six months of this year, the legacy Remedy business generated $44 million in revenue, down 28 percent from the front half of 2021. Signify saw a 20 percent increase in its home-health services over that span, to $395 million.

In prior statements to investors, Signify Health says the COVID-19 pandemic had a "prolonged negative impact" on the former Remedy Partners business. That was in part due to the interruption of non-essential health care in the first year of the pandemic as patients looked to exposure to the virus, then subsequent reductions by the Centers for Medicare and Medicaid Services to its reimbursement formulas under its Bundled Payments for Care Improvement Advanced program, or BPCI-A.

Signify Health has challenged those reimbursement reductions along with other insurance carriers offering similar plans, but is discontinuing the legacy Remedy business regardless of the outcome of that appeal.

The company has signaled success in getting some of its BCPI-A plan customers to shift into a Medicare Shared Savings Program it is ramping up.

"We are already having success in converting BPCI-A clients to total cost-of-care programs," said Signify Health CEO Kyle Armbrester, speaking in early August to investment analysts. "Normally, closing shared-savings contracts with health systems take several months, but we were able to transition many of the BPCI-A clients to the MSSP program in a matter of weeks, due to their conviction and our ability to drive savings."

Alex.Soule@scni.com; 203-842-2545; @casoulman

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