UnitedHealth and Change Healthcare
UnitedHealth has agreed to buy Change Healthcare in a deal that values the company at $8 billion. However, when also considering Change Healthcare’s outstanding debt, which totals to around $5 billion, the value of the deal is much closer to $13 billion.
The company plans to pay around $25.75 per share, a price that would represent a significant 41% premium over Change Healthcare’s closing price on Tuesday, January 5, which was only $18.24 per share. The news of the deal boosted Change Healthcare’s stock over 30% alone on January 6, making that premium feel far less overpriced.
As for UnitedHealth, shares of the company were up around 6% all day. UnitedHealth’s purchase seems to mainly consist of bolstering and combining the company’s current work in their OptumInsight unit with Change Healthcare to provide better software, data analytics, and technology, among other services. This should help create a more efficient and simplified system for things such as providing vital information on patient services and securing payments to a number of important subjects, including insurers, health care providers, and the patients themselves.
The deal is set to close sometime in the second half of 2021 with expectations that this will boost UnitedHealth’s earnings by $0.50 per share in 2022 - a fairly significant boost.
In a statement released with the news of the agreed-upon deal, President of UnitedHealth Group and CEO of Optum, Andrew Witty 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.”
This was followed by remarks from President and CEO of Change Healthcare, Neil de Crescenzo, who said, “This opportunity is about advancing connectivity and accelerating innovations and efficiencies essential to a simpler, more intelligent and adaptive health system.”
The business deal agreed upon between UnitedHealth and Change Healthcare looks to be mutually beneficial. This is considering UnitedHealth’s overpay of sorts on the deal and the potential increase in revenue that Change Healthcare can bring to the company. Additionally, the merger can provide further improvements in data systems and technology. If all goes according to plan, this deal will serve UnitedHealth extremely well in 2022, or as soon as its effects take place.
About the Author
Tom Price is a writer focusing on Entertainment and Sports Features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.