Hi Tutor,

I am working on my final assignment for this course. I need some assistance with this question my professor posed to me. To give context, I am to imagine that I am the CEO of CVS Health making a pitch for the acquisition of Signify Health. I have been reading the SEC Corp call to understand the details of the deal, but I do have enough information to answer the question below:

What are the estimated initial as well as ongoing costs associated with acquiring Signify Health? Also, what is the projected additional revenue that CVS anticipates the organization will generate as a result of this acquisition?

Here is what I found so far from the SEC Corp Call Sept 6, 2022, what does this mean?

Lisa C. Gill Analyst, JPMorgan Securities LLC

Q

Thanks very much. Good morning and congratulations on the first transaction. Shawn, can we just dig a little bit into the numbers? Just two questions here. One, can you quantify the synergies that you talked about? And then secondly, if I look at consensus numbers for Signify, it looks like it should be about 150 basis points accretive for 2024, which gets you very close to that 2% goal. Am I in the ballpark as I think about that?

Shawn M. Guertin Chief Financial Officer& Executive Vice President, CVS Health Corp.			A

Yeah. So, that's a good way to do it. So, let me frame this for you. I think, first of all, again, as it pertains to this deal, I think it is important to reiterate it is accretive, it is synergistic, and it's expected to generate a high-single digit ROIC over time. And obviously, this is a platform for the future beyond simply acquiring what is already a very strong stand-alone business in Signify. I think the right - you're on the right track. I think the consensus is a good proxy for - to think about the starting point for the Signify stand-alone business. And as I mentioned, there are - there's synergy value, I think, in the first full year.

If you went back to our Investor Day, we had talked about getting an additional 2% of adjusted EPS growth as a result of our health services strategy. This asset, combined with the - some modest synergies, will get us a long way towards achieving that goal. So, certainly you are in the neighborhood, I think, with your estimate.

One thing I do want to just point out, as people think - and we can talk more about it, but as people think about multiples is there is a meaningful tax benefit here in terms of how this transaction was structured that is worth - I think it's better to think about that as maybe about $1.50 per share of purchase price as opposed to a synergy. But it is also a meaningful financial element of this transactions for you to think about in your modeling.