UnitedHealth to sell Change Healthcare’s claims business for US$2.2 billion

USA – UnitedHealth Group has agreed to sell Change Healthcare’s claims editing business for US$2.2 billion, a move that some analysts believe could clear regulatory hurdles in the way of the healthcare companies’ US$8 billion merger, Reuters reports.

The U.S. Department of Justice (DoJ) sued earlier this year to stop the acquisition for giving UnitedHealth access to competitors’ data, forcing the companies to push the deal’s closing date back by nine months to Dec. 31.

The sale of the claims business to private equity firm TPG Capital will take place only after UnitedHealth’s acquisition of Change is completed, according to a regulatory filing by Change.

According to the DOJ, the acquisition would eliminate UnitedHealth’s only major competitor for first-pass claims editing technology, a “critical product” that saves insurers “billions of dollars” each year.

The DOJ argued in its February complaint that UnitedHealth and Change provide competing software products for processing healthcare claims and serve 38 of the top 40 health insurers in the country.

Ownership of Change’s claims business, ClaimsXten, would provide UnitedHealth with access to rival health plans at Humana Inc, Anthem Inc, CVS Health Corp’s Aetna, and Cigna Corp, according to the agency.

According to Citi analyst Daniel Grosslight, the sale of the claims business will likely remove the DoJ’s objection to the merger, potentially increasing the likelihood of the deal going through.

We do not think this will reduce the value of Change to UnitedHealth as there is significant overlap between ClaimsXten and Optum’s PI solution,” Grosslight wrote in a note.

According to a disclosure made by Change to the US Securities and Exchange Commission on Monday, the claims business sale will take place only after the proposed merger is completed.

UnitedHealth announced in January 2021 that it would spend approximately US$8 billion in cash to acquire Change in order to improve its ability to provide data analytics and revenue cycle management support, among other services.

The transaction, which is estimated to be worth around US$13 billion when debt is factored in, was initially scheduled to close in the second half of 2021.

Beyond the regulatory filing, UnitedHealth, which has stated that it will fight the lawsuit, had no further comments on the deal.

Change Healthcare shares were up 1.03% at US$23.8, while UnitedHealth fell about 1% to US$515.70.

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