- UnitedHealth to acquire Change Healthcare for £5.78 billion.
- The acquisition will boost United’s per-share earnings by 36.87 pence.
- The deal is expected to close in the second half of 2021.
UnitedHealth Group Inc. (NYSE: UNH) agreed to an all-cash deal valued at £5.78 billion to acquire Change Healthcare Inc. (NASDAQ: CHNG) on Wednesday. The move, it said, will help expand its footprint in healthcare technology services.
UnitedHealth opened about 2% down in the stock market on Wednesday but gained close to 6% in the next few hours. Including the price action, the American for-profit managed health care company now has a per-share price of a record £262.47 as compared to a sharply lower £143.68 per share in March when the impact of the COVID-19 crisis was at its peak. The price action should come in handy if you are interested in investing in the stock market.
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At the time of writing, the insurance services provider has a market cap of £249 billion and a price to earnings ratio of 20.45.
The acquisition will boost United’s per-share earnings
The agreement between the two companies translates to £18.99 per share, that represents a 41.2% premium on the price at which Change Healthcare closed the regular session on Tuesday. According to UnitedHealth, the acquisition will boost its per-share earnings by 36.87 pence in 2022.
In the quarter that concluded on 30th September, UnitedHealth reported £48 billion of total revenue. Over 50% of it, as per the Minnetonka-based company, was attributed to its healthcare technology services division that it calls Optum. In the same period, Change Healthcare posted £557.43 million of revenue.
CEO Andrew Witty of Optum commented on the news on Wednesday and said:
“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.”
The deal is likely to close in the second half of 2021
The transaction is likely to complete in the second half of this year. In related news from the healthcare sector, Centene Corp said that it will buy Magellan Health Inc. for £1.62 billion.
Change Healthcare debuted on the Nasdaq Stock Exchange in June 2019 at a per-share price of £10.77. The stock started the year 2020 at £11.75 per share and closed at a slightly higher £13.75 per share.
In March, when the impact of the ongoing Coronavirus pandemic was at its peak, Change Healthcare had plummeted to as low as £5.77 per share in the stock market. At the time of writing, the Nashville-based company is valued at £5.40 billion.