It’s only Jan 6 and already we have a couple of multi-billion deals to kick off the year.
UnitedHealth Group’s subsidiary Optum is purchasing health technology company Change Healthcare in a $13.5 billion all-cash transaction.
Change Healthcare will join the OptumInsight unit, which provides data, analytics, consulting, technology and managed services solutions to the healthcare industry. Change Healthcare will bring its software, data analytics capabilities, research and revenue cycle management offerings to the Optum roster. Together, they aim to simplify healthcare services and processes.
“We are pleased to be combining with Optum to further our shared goal of transforming the health system to positively impact those we serve,” a Change Healthcare spokesperson, who declined to be named, said via email. “Our combined capabilities will enhance our unique value proposition for customers, create significant value for shareholders and further accelerate growth.”
The billion-dollar transaction includes $25.75 for each share of Change Healthcare common stock, representing a premium of approximately 41% over $18.24, Change Healthcare’s closing stock price Jan. 5. Further, it includes debt Change Healthcare owes amounting to more than $5 billion, Bloomberg reported.
In particular, Change Healthcare and Optum aim to support clinical decision making and reduce administrative waste in healthcare, the companies said in a news release. For example, they plan to combine billions of claims transactions that Change Healthcare has access to with Optum’s advanced data analytics to derive insights on payment trends and opportunities for improvement.
“Together we will help streamline and inform the vital clinical, administrative and payment processes on which healthcare providers and payers depend to serve patients,” said Andrew Witty, president of UnitedHealth Group and CEO of Optum, in a news release. “We’re thrilled to welcome Change Healthcare’s highly skilled team to create a better future for healthcare.”
According to UnitedHealth’s most recent filings, Optum’s revenues totaled about $35 billion for the three months ended Sept. 30. The OptumInsight unit reported revenues of approximately $2.8 billion for the same period.
Though the OptumInsight unit is small, it has the highest operating margins of the company’s reported segments, Bloomberg reported.
Change Healthcare reported total revenue of $755.9 million and net loss amounting to $42.6 million for the three months ended Sept. 30.
The deal is expected to close in the second half of the year, subject to Change Healthcare shareholders’ approval, regulatory approvals and other customary closing conditions.
Upon closing, Change Healthcare President and CEO Neil de Crescenzo will become OptumInsight’s CEO and lead the combined organization.
Photo credit: Natee Meepian, Getty Images
