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CHNG Stock Up 35%, UnitedHealth to Acquire Change Healthcare for Over $13B

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by Steve Muchoki · 3 min read
CHNG Stock Up 35%, UnitedHealth to Acquire Change Healthcare for Over $13B
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UnitedHealth and Change Healthcare were in the health industry during the height of the coronavirus pandemic and experienced a double-digit gain in 2020.

In a deal worth approximately $13 billion, UnitedHealth Group Inc (NYSE: UNH) has agreed to purchase health technology company Change Healthcare Inc (NASDAQ: CHNG). According to the transaction details, UnitedHealth will pay $25.75 per share in cash. Apparently, this is 41% up from Tuesday’s CHNG stock close at $18.24. Consequently, CHNG stock had surged over 35% to trade around $24.65 during Wednesday’s pre-market.

On the other hand, UnitedHealth stocks dropped 1.34% yesterday to close the day trading at $344.80. Meanwhile, they were down approximately 1.97% today in the pre-market.

The acquisition agreement valued Change Healthcare at approximately $8 billion. However, UnitedHealth decided to pay off more than $5 billion in debts thus making the deal with more than $13 billion.

“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,” Andrew Witty, President of UnitedHealth Group and CEO of Optum, said in a statement announcing the deal.

This is a strategic acquisition to steer forward the health industry amid the coronavirus pandemic. In any case, it will help streamline the sector as the world eagerly awaits for a viable vaccine to be approved sometimes later this year.

“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.”

As a result of the acquisition, Change Healthcare will merge with UnitedHealth’s OptumInsight unit to offer software, data analytics, technology and other services to the health-care industry.

Performance of Change Healthcare and UnitedHealth

The acquisition of Change Healthcare by UnitedHealth is a representation of the complex nature of the United States’ healthcare system that has been established over many decades.

Both companies. being in the health industry during the height of the coronavirus pandemic, experienced a double-digit gain last year. Whereby UnitedHealth stocks rallied over 18% while Change Healthcare stocks jumped approximately 15%.

According to the market data provided by MarketWatch, UnitedHealth has a reported market valuation of approximately $331.61 billion. Reportedly, the latest acquisition by UnitedHealth is inline with its quest to broaden beyond the health insurance industry. Notably, Change Healthcare CEO, Neil de Crescenzo, has been appointed to lead the combined business unit as the CEO of OptumInsight.

To learn more about the recent deals and other updates of the business landscape, please, follow the link.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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