Optum bids to buy Change Healthcare in $13B deal

By Erik L. Ridley, AuntMinnie.com staff writer

January 6, 2021 -- UnitedHealth Group's Optum health services company has signed an agreement to acquire healthcare information systems and enterprise imaging vendor Change Healthcare in a deal valued at over $13 billion.

Change will be integrated with Optum's OptumInsight business if the acquisition closes as expected later this year. The combined organization will offer healthcare software and data analytics, technology services, and research, advisory, and revenue cycle management products, according to the vendors. Current Change president Neil de Crescenzo will become CEO of OptumInsight.

In announcing the deal, the companies said the combination of Change and OptumInsight will enable them to more effectively connect and simplify clinical, administrative, and payment processes for its healthcare customers. In particular, they pointed to opportunities to bring Change's technology for integrating evidence-based clinical criteria into clinician workflows together with Optum's clinical analytics capability and individual health record offering. They will also focus on enabling improvements in healthcare payment systems.

The acquisition marks the end of a transformative journey for Change Healthcare over the last few years. Change was initially formed in 2017 by McKesson Health Solutions and then partner Change Healthcare Holdings after McKesson decided in 2016 to spin off much of its IT operations. At the time, the new company merged the majority of McKesson's Technology Solutions division and all of Change Healthcare Holdings' business -- the revenue cycle management firm formerly known as Emdeon. In early 2020, Change finalized its split from McKesson, which had previously owned 70% of the company.

In radiology, Change has focused in recent years on developing a complete cloud-based enterprise imaging platform. In August, Change acquired the Nucleus.io software platform from NucleusHealth, filling out its medical image management offering with a zero-footprint diagnostic viewer.

In December, Change debuted a suite of cloud-based tools for radiologists, including a variety of artificial intelligence (AI)-based applications such as image sharing capabilities with other physicians, a browser-based and cloud-native software-as-a-service, analytics tools, and secure access to information on any device.

In addition, Change also offers CareSelect Imaging clinical decision-support software, a product that was acquired via its purchase of CDS software firm National Decision Support Company in 2018.

Under the terms of the agreement announced on January 6, Change's common stock will be purchased for $25.75 per share in cash, representing a 41.2% premium over its closing share price of $18.24 on Tuesday. UnitedHealth Group will also assume more than $5 billion in debt held by Change, according to multiple published reports.

The acquisition is expected to close in the second half of the year, subject to Change shareholder approval, regulatory approval, and other customary closing conditions. UnitedHealth expects that the purchase will be accretive to its net and adjusted earnings per share in 2022 by approximately 20¢ to 50¢ per share.

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