Some of the biggest companies in health care in the U.S. are pressing ahead with significant deals at the start of the new year, even as the coronavirus pandemic hangs over the industry’s immediate future.
Insurer UnitedHealth Group Inc. unveiled one of its biggest-ever acquisitions on Wednesday, saying it planned to take over health-technology company Change Healthcare Inc. for $8 billion. Also Wednesday, AmerisourceBergen Corp. said it had agreed to buy Walgreens Boots Alliance Inc.’s Alliance Healthcare pharmaceutical wholesale businesses for about $6.5 billion in cash and stock.
Taken together, the transactions are a sign that large health-care companies are thinking beyond the coronavirus, refining strategies developed before the pandemic while positioning themselves to profit from a world reshaped by it.
More deals could unfold in coming weeks as the industry prepares to gather for the JPMorgan Healthcare Conference—usually a glitzy annual confab in San Francisco that this year will be held virtually as Covid-19 infections continue to soar and vaccines roll out worldwide.
In buying Change Healthcare, UnitedHealth will add additional muscle to its vast Optum health-services business. Meanwhile, U.S.-based AmerisourceBergen will gain one of the largest pharmaceutical wholesalers in Europe, while Walgreens will become even more focused on drugstores at a time when rivals have tried to diversify beyond retail pharmacies.
Investors mostly cheered the deals even as signs that Democrats are poised to take control of the U.S. Senate weighed on the wider market..
Beyond Insurance
UnitedHealth has broadened its reach well beyond the health insurance business it is perhaps best known for. Through its Optum division, the company increasingly delivers medical care directly to patients and sells consulting, technology and data to other health-care entities.
UnitedHealth will pay $25.75 per share in cash, a 41% premium over Change Healthcare’s Tuesday close of $18.24. Including more than $5 billion in debt owed by Change Healthcare, the deal amounts to $13 billion.
The proposed deal will combine Change Healthcare with UnitedHealth’s OptumInsight unit to offer software, data analytics, technology and other services to the health-care industry. Change Healthcare’s chief executive officer, Neil de Crescenzo, will lead the combined business unit, the companies said. Nashville, Tennessee-based Change Healthcare has about 15,000 employees, according to data compiled by Bloomberg.
OptumInsight is the smallest unit in the Optum family by revenue, bringing in about $2.8 billion in the three months ending Sept. 30, according to filings, or about 4% of the company’s total. However, it has the highest operating margins of the company’s reported segments, exceeding 20% in each of the last three full years.