UnitedHealth Group and Change Healthcare will extend the closing date of their proposed $13 billion merger by nine months, the companies announced Tuesday.
Under the latest terms of the deal, UnitedHealth Group will pay Change Healthcare a $650 million fee if the deal doesn’t close due to a court order. Last month, the US Department of Justice filed a lawsuit to block the deal, alleging the merger would give UnitedHealth Group’s $12 billion insurance arm access to proprietary information about what its competing insurers pay providers, how they build their networks and create a claims monopoly. clearinghouse technology, violating federal antitrust restrictions.
The DOJ lawsuit also alleged that at the time the companies entered into the agreement, UnitedHealthcare agreed to immediately increase its use of Change Healthcare’s services, guaranteeing that if the deal fails, UnitedHealth will still pay Change approximately $60 million. more dollars per year than before the agreement was signed.
The two-week trial is scheduled to begin August 1.
UnitedHealth Group has pledged to fight the DOJ lawsuit, saying the addition of Change Healthcare’s IT services to the healthcare giant’s $12 billion Optum healthcare services arm will streamline clinical, administrative and of payment for provider and payer customers, which would lead to lower healthcare costs for patients. .
The companies have already extended the timeline of the deal. The merger plan was first announced in January 2021. UnitedHealth Group and Change Healthcare now aim to merge before December 31.
“The extended agreement reflects our strong belief in the potential of our combination to improve healthcare, and our commitment to challenging the baseless legal challenge to this merger,” the companies said in a joint statement.
If the deal is completed, Change Healthcare has agreed to pay a special cash dividend of $2 per share to its shareholders upon closing.
The computer company is apparently in talks to sell its ClaimsXTen payments integrity service for more than $2 billion to private equity group New Mountain Capital to assuage antitrust concerns.
Change Healthcare declined to comment on the potential sale.
UnitedHealth Group also said it would be open to divestitures to get the regulatory green light, though offloading anything over $650 million in annual revenue would be unduly burdensome.
Uncertainty around the Change Healthcare deal has not slowed down Optum’s negotiation.
Last week, UnitedHealth Group paid $5.4 billion to buy home care and hospice provider LHC Group.
UnitedHealth Group also paid an undisclosed sum to buy Refresh Mental Health from private equity firm Kelso & Co last month. Refresh, based in Jacksonville Beach, operates a nationwide network of more than 300 outpatient mental health, addiction and eating disorder centers. Kelso bought the company for nearly $700 million in December 2020.
“Together, we will be able to deepen the integration between medical and behavioral care and advance personalized patient care through value-based care,” a UnitedHealth Group spokesperson wrote in an email. -mail.
A few weeks ago, UnitedHealth Group also would have paid an undisclosed sum to buy the Houston-based Kelsey-Seybold Clinic, an integrated multi-specialty care organization. The medical group was valued at $1.3 billion when private equity group TPG Capital made a minority investment in Kelsey-Seybold in January 2020.
Kelsey-Seybold and UnitedHealth Group declined to comment on the deal.