Change Healthcare, UnitedHealth Extend Healthcare Merger Deadline

Change Healthcare and UnitedHealth Group’s diversified health services company, Optum, have announced that they will extend their healthcare merger agreement to December 31, 2022.

UnitedHealth Group first announced plans for Optum to acquire Change Healthcare in January 2021.

In a proposed transaction valued at $8 billion, the merger aimed to combine Change Healthcare’s revenue cycle management technologies with Optum’s services to ease clinician workflow, improve provider access to clinical data, and streamline payment processes.

The companies had expected to finalize the deal in the second half of 2021, but the transaction hit a series of roadblocks.

Most recently, the Antitrust Division of the Department of Justice (DOJ) filed a civil lawsuit to block the merger deal. The complaint stated that the transaction would hurt competition in the commercial health insurance and healthcare technology markets.

DOJ claimed that UnitedHealth Group would gain access to rival payer information, giving the health plan an unfair market advantage. Additionally, the merger would eliminate UnitedHealth Group’s only significant rival for first-pass claims editing technology, allowing the payer to develop a monopoly share in the market.

Change Healthcare and Optum said that DOJ’s attempt to block the merger is “without merit and serves only to delay improving the experience and outcomes for all participants in the health system.”

Since the initial merger announcement, the companies had pushed the deadline to April 2022, but have now extended it to December 2022.

“The extended agreement reflects our firm belief in the potential of our combination to improve healthcare and in our commitment to contesting the meritless legal challenge to this merger,” the companies said in a joint statement.

Change Healthcare and Optum plan to detail the benefits of the merger deal at a two-week trial scheduled to begin on August 1.

Should the court block the merger from advancing, Optum will pay a $650 million fee to Change Healthcare, the press release noted. If the merger is allowed to continue, Change Healthcare plans to pay a cash dividend of $2 per share to its shareholders at or around the closing.

The merger deal has faced scrutiny since its announcement.

First, DOJ filed a review of the deal in March 2021 to gather additional information on the proposed acquisition, following concerns from the American Hospital Association (AHA) that the merger would hurt competition.

AHA again expressed its worries about the deal in an August 2021 letter to DOJ. The trade organization insisted that the healthcare merger would lead to higher prices and negatively impact patient care, claims processing, and denials.

However, Change Healthcare and Optum stated in the announcement that the combination would lead to lower costs and better experiences for its stakeholders

In January 2022, anonymous Bloomberg sources claimed that Change Healthcare was considering selling assets, including its payment integrity business, to prepare for the merger with UnitedHealth Group.

AHA and other hospital groups applauded DOJ for its recent challenge of the proposed healthcare merger.