Change Healthcare Weighs Asset Sale to Aid UnitedHealth Merger

Change Healthcare Weighs Asset Sale to Aid UnitedHealth Merger

Change Healthcare Inc. is considering selling some assets to clear the way for its $8 billion acquisition by UnitedHealth Group Inc., according to people with knowledge of the matter. 

The company is working with advisers on a possible divestiture of its payment integrity business, ClaimsXten, said the people, who asked not to be identified because the information is private. ClaimsXten could fetch a value of more than $1 billion, the people said. The business generates $130 million to $150 million in annual earnings before interest, taxes, depreciation and amortization, they said.

There’s no certainty a deal for ClaimsXten will be reached or that it will be enough to satisfy regulators, the people said.

A representative for Change Healthcare didn’t immediately respond to requests for comment. A spokesperson for UnitedHealth declined to comment.

UnitedHealth and Change Healthcare have been caught in a regulatory limbo over their proposed merger since the U.S. Justice Department opened an investigation into the deal in March, two months after it was announced.

Deadline Extended

The transaction was originally expected to close in 2021. In December, UnitedHealth, working to satisfy requests from regulators, extended the deadline to complete its takeover to April 5 from Jan. 5, according to regulatory filings.

The Justice Department in March sought more time to review the merger through a so-called second request that gives regulators more than the standard 30-day period. The companies later agreed not to consummate the deal before Feb. 22 unless the investigation closes before then, according to a Nov. 3 regulatory filing from Change Healthcare that outlines the amended agreement with the government.

Under the agreement, the companies can sell assets if required for approval, according to a filing.

If completed, the deal would bring Change Healthcare, a supplier of health-technology and payment services, into UnitedHealth’s Optum services division. 

The American Hospital Association requested a federal investigation of the tie-up, saying it would reduce competition and lead to higher prices. UnitedHealth has disputed that, saying the companies have “distinct and complementary capabilities” and that the purchase would simplify processes for clients.

©2022 Bloomberg L.P.

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