UnitedHealth Group's Optum to buy Change Healthcare for $13B

private equity investment
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UnitedHealth Group's Optum unit has agreed to buy Change Healthcare for $7.84 billion in cash plus about $5 billion in debt, the companies said on Wednesday.

The acquisition will strengthen the insurer's portfolio of healthcare technology services and capabilities.

Change Healthcare will join with OptumInsight to provide software and data analytics, technology-enabled services and research, advisory and revenue cycle management offerings, the companies said in a press release.

UnitedHealth will pay $25.75 per share in cash, a 41% premium over Change Healthcare's closing price Tuesday of $18.24 a share. 

Change Healthcare has 317.3 million shares outstanding, according to FactSet, giving the deal a value of about $8 billion. 

The deal includes more than $5 billion in debt owed by Change Healthcare that values the deal at $13 billion, according to Bloomberg.

Change Healthcare shares soared 37% premarket on the news, MarketWatch reported.

The acquisition is expected to close in the second half of 2021, subject to Change Healthcare shareholders’ approval, regulatory approvals and other customary closing conditions. Private equity funds affiliated with The Blackstone Group, which own approximately 20% of the common stock of Change Healthcare, have agreed to vote the shares they control in favor of the combination, according to the press release.

The acquisition is expected to add to UnitedHealth’s adjusted earnings per share by about 50 cents in 2022.

Change Healthcare’s platform manages revenue, payment cycles, and clinical information, while Optum’s data analytics solutions will help simplify clinical, administrative, and payment processes, the companies said.

A key opportunity is to simplify financial interactions with insights drawn from billions of claims transactions using Change Healthcare’s intelligent health care network, combined with Optum’s advanced data analytics. This will support significantly faster, more informed and accurate services and processing, UnitedHealth said.

"Together we will help streamline and inform the vital clinical, administrative and payment processes on which health care providers and payers depend to serve patients,” said Andrew Witty, President of UnitedHealth Group and CEO of Optum in a statement. “We’re thrilled to welcome Change Healthcare’s highly skilled team to create a better future for health care.”

“Change Healthcare has made significant progress executing its strategic objectives, including advancing innovation, accelerating growth and improving the effectiveness of the U.S. health system,” said Howard Lance, Chairman of the Board of Directors of Change Healthcare.