US judge allows UnitedHealth’s $7.8b acquisition of Change Healthcare to move forward

US healthcare and insurance giant UnitedHealth Group (NYSE: UNH) has welcomed the news that a federal judge has allowed its acquisition of Change Healthcare (NASDAQ: CHNG) to move forward – nearly two years after the all-cash deal was first tabled.

UnitedHealth announced the deal in January 2021 to help streamline administrative and payment processes.

The US Justice Department (DOJ) has since made efforts to block the almost $8 billion acquisition over concerns including antitrust grounds.

District of Columbia judge Carl Nichols issued a sealed opinion this week which ceased the DOJ’s efforts, ending the long-standing disputes between the multi-billion-dollar health care company and the department.

As already planned, judge Carl Nichols did order for Change Healthcare to sell off its ClaimsXten business arm.

In a company statement, UnitedHealth expressed its delight at the verdict.

“We are pleased with the decision and look forward to combining with Change Healthcare as quickly as possible so that together we can continue our work to make the health system work better for everyone,” it said.

The trial lasted weeks and included various testimonies from big names such as UnitedHealth’s chief executive officer Andrew Witty, along with its former chief executive officer David Wichmann.

Biden Administration renewed focus on antitrust enforcement

DOJ had argued that if the deal went forward, it would allow UnitedHealth access to data which would allow the company to misuse it to benefit its insurance arm, UnitedHealthcare.

It said both companies, UnitedHealth and Change Healthcare offer competing software and serve 38 of the top 40 health insurers in the nation.

In its counter-argument, UnitedHealth said it already has access to competitors’ data, and using it in such fashion as the DOJ suggest would deal a huge financial blow to Optum, the group’s fastest-growing segment.

UnitedHealth aims to fold Change Healthcare into Optum, which operates its data analytics segment Optum Insight.

The court action towards UnitedHealth was seen by many as a major headline in US President Joe Biden’s renewed focus on antitrust enforcement.

UnitedHealth’s trial wasn’t the only antitrust case being heard by the court recently in the governments accelerated efforts, as the DOJ’s attempt to block Penguin Random House from acquiring Simon & Schuster for $2.2 billion also faced the court.

M&A spree for UnitedHealth Group in 2022

UnitedHealth and Change Healthcare have since found a buyer for its ClaimXten business, in TPG Capital, in a deal expected to be worth $2 billion.

However, the sale of ClaimXten remains contingent on the merger going through.

The merger of UnitedHealth and Change Healthcare caps off an accelerated acquisition and merging spree in 2022 by the UnitedHealth, with other purchases by the US giant including LHC Group for $5.4 billion, Refresh Mental Health for $1.2 billion, Kelsey-Seybold Clinic and Healthcare Associates of Texas.