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Change Healthcare Inc Ordinary Shares CHNG

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Change Delivers Solid Q2 Amid Ongoing Antitrust Review for Merger With UnitedHealth

Julie Utterback, CFA Senior Equity Analyst

Analyst Note

| Julie Utterback, CFA |

No-moat Change Healthcare released second-quarter results that were roughly in line with expectations, but the key driver of the company's valuation remains its pending acquisition by narrow-moat UnitedHealth's Optum segment. UnitedHealth still plans to purchase Change with a potential closing in 2022 for $25.75 per share, which is our fair value estimate for Change. If the deal doesn't close because of regulatory concerns, though, we would likely reduce the value of Change to our stand-alone fair value estimate of $16.50.

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Company Profile

Business Description

Change Healthcare is a spin-off of various healthcare processing and consulting services acquired by McKesson over numerous years. Recently, these processing assets were contributed to a joint venture and in June 2019 public shares were issued with McKesson retaining the majority interest. As of the end of the March 2020 quarter, McKesson distributed all its interest in the public processor. Core services consist of insurance (healthcare) claim clearinghouse for healthcare payers in addition to administrative and consulting services to assist healthcare providers improve reimbursement coding, billing, and collections.

424 Church Street, Suite 1400
Nashville, TN, 37219
T +1 615 932-3000
Sector Healthcare
Industry Health Information Services
Most Recent Earnings Sep 30, 2021
Fiscal Year End Mar 31, 2022
Stock Type Speculative Growth
Employees 15,000