The combined capabilities create a powerhouse of a healthcare analytics and technology company.
Optum and Change Healthcare have agreed to combine, uniting two of the nation’s largest technology and service companies. The agreement is expected to close in the second half of 2021, with Optum buying Change’s common stock. The Blackstone Group, which owns approximately 20% of the common stock of Change Healthcare, has agreed to vote the shares they control in favor of the combination. Change will join with OptumInsight to provide software and data analytics, technology-enabled services and research, advisory and revenue cycle management offerings, according to Optum parent company UnitedHealth Group.
Upon closing, Neil de Crescenzo, president and CEO of Change Healthcare, will serve as OptumInsight’s chief executive officer, leading the combined organization.
The two companies will more effectively connect and simplify core clinical, administrative and payment processes, UHG said. Change Healthcare brings key technologies, connections and advanced clinical decision and administrative and financial support capabilities to enable better workflow and transactional connectivity. Optum brings modern analytics, comprehensive clinical expertise, innovative technologies and extensive experience in improving operational and clinical performance. Optum has an estimated 5,000 hospitals in its portfolio and about 300 health plans. Asked a few years ago how many insurers used its services, an Optum executive said, “all of them.”
The combined capabilities create a powerhouse of a healthcare analytics and technology company. The acquisition is expected to be accretive to UnitedHealth Group’s net and adjusted earnings per share in 2022, advancing strongly in subsequent years, Optum said. This is inclusive of investments to accelerate technology, system and product integration and development activities to more quickly deliver the value of this combination to all healthcare system stakeholders.
UnitedHealth Group’s insurance arm, UnitedHealthcare, is considered the largest insurer in the nation. Its information and technology-enabled health services business Optum delivers integrated solutions to improve population health. Change Healthcare focuses on accelerating the transformation of the healthcare system through data and analytics-driven solutions to improve clinical, financial, administrative and patient engagement outcomes. “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. “This opportunity is about advancing connectivity and accelerating innovations and efficiencies essential to a simpler, more intelligent and adaptive health system,” said Neil de Crescenzo, president and CEO of Change Healthcare. “We share with Optum a common mission and values and importantly, a sense of urgency to provide our customers and those they serve with the more robust capacities this union makes possible.”
The healthcare and life sciences M&A markets were active in 2020 and transaction activity is robust and growing in 2021, even amid the COVID-19 pandemic. There is unprecedented capital in market, the lowest interest rates in US history and strong acquirer motivations for high quality healthcare companies. Across the continuum of care, buyers and investors are looking for well established, profitable businesses and offering strong valuations and options for management.
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