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Change Healthcare Shares Surge 30% on $7.8B Merger with UNH's OptumInsight

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Change Healthcare shares rose to a new 52-week high after the company reported it will be combining its operations with UnitedHealth's OptumInsight in an all cash purchase transaction for $25.75 per share.

Healthcare technology platform company Change Healthcare Inc. (CHNG:NASDAQ) and diversified health services firm OptumInsight, owned by UnitedHealth Group Inc. (UNH:NYSE), announced that they have entered into an agreement to combine the two firms operations.

The merger deal is to be structured as an all cash transaction whereby UnitedHealth will acquire 100% of Change Healthcare's common stock for $25.75 per share in cash. Based upon approximately 304.54 million shares outstanding this values the deal at around $7.84 billion.

The agreement provides that Change Healthcare will join with OptumInsight with the objective of providing software and data analytics, technology-enabled services and research, advisory and revenue cycle management offerings to the new entity. The companies stated that this will serve to further the goal of making healthcare work better for everyone.

The rationale for the merger is to combine Change Healthcare's key technologies, connections and advanced clinical decision, administrative and financial support, workflow and transactional connectivity capabilities with Optum's sophisticated analytics, clinical expertise, innovative technologies and vast expertise in operational efficiency and clinical performance.

A specific key opportunity mentioned in the news release is that the combined firm will be able to enhance operational and financial abilities by analyzing data from billions of claims transactions utilizing Change's intelligent healthcare network integrated with Optum's advanced data analytics. The end result of these enhanced capabilities is expected to be significantly quicker, more informed and accurate processing.

Andrew Witty, president of UnitedHealth Group and CEO of OptumInsight, commented, "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...We're thrilled to welcome Change Healthcare's highly skilled team to create a better future for health care."

Change Healthcare's President and CEO Neil de Crescenzo remarked, "This opportunity is about advancing connectivity and accelerating innovations and efficiencies essential to a simpler, more intelligent and adaptive health system. 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 company stated that upon the closing of the transaction Neil de Crescenzo will lead the newly combined organization and will serve in the capacity as CEO of OptumInsight.

Howard Lance, chairman of the board of directors of Change Healthcare, remarked, "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...We are delighted to have in Optum a partner that shares a common vision of creating a better future for health care for the people and communities we serve and see this combination as in the best interests of all of our stakeholders."

The transaction is expected to close in H2/21 subject to the approval of Change Healthcare's shareholders along with other customary closing conditions and regulatory approvals.

Optum is a major business unit of UnitedHealth Group. The firm is an information and technology-enabled health services business which employs greater than 190,000 people globally. The company stated that "it delivers intelligent, integrated solutions that help to modernize the health system and improve overall population health."

Change Healthcare is an independent healthcare technology platform company that partners with healthcare payers and providers employing data and analytics-driven solutions to aid in improving clinical, financial and patient coordination and engagement outcomes.

Change Healthcare began the day with a market capitalization of around $5.6 billion with approximately 304.5 million shares outstanding and a short interest of about 4%. CHNG shares opened nearly 32% higher today at $24.04 (+$5.80, +31.80%) over yesterday's $18.24 closing price and reached a new 52-week high this morning of $24.21. The stock has traded today between $23.51 and $24.21 per share and is currently trading at $23.78 (+$5.54, +30.40%).


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