Optum and Change Healthcare extend merger deadline ahead of trial

Photo: Courtesy UnitedHealthcare

Optum and Change Healthcare are extending their merger agreement to the end of the year, ahead of their scheduled trial starting August 1.

The new merger deadline is December 31.

As part of the extension, Optum will pay a $650 million fee to Change Healthcare in the event the merger is unable to be completed because of the court's decision. Change Healthcare will pay a special cash dividend of $2 per share to its shareholders at or about the time of the closing.

WHY THIS MATTERS

The Department of Justice has sued to block the merger, citing anticompetitive concerns about data. Optum is owned by UnitedHealth Group, which also owns the nation's largest health insurer.

Change is a healthcare technology company that provides data and analytics-driven solutions. The transaction would give UnitedHealthcare access to a vast amount of its rival health insurers' competitively sensitive information, according to the DOJ. 

Optum and Change contend that their combination would connect and simplify the core clinical, administrative and payment processes of providers and payers, thus increasing efficiency and reducing friction in order to lower costs.

The U.S. Department of Justice's attempt to block the combination is without merit and serves only to delay improving the experience and outcomes for all participants in the health system, Optum and Change said.

THE LARGER TREND

The deadline extension was made since the civil trial against the $13 billion merger is set to begin on August 1 in federal court. Twelve days have been scheduled for the case in the U.S. District Court in the District of Columbia, and each side is limited to 25 witnesses, according to a March 28 order from District Judge Carl J. Nichols.

In February, the Department of Justice filed a civil lawsuit to stop the merger due to competition concerns. The complaint was filed by the DOJ and Attorneys General of Minnesota and New York in the U.S. District Court for the District of Columbia.

ON THE RECORD

In a joint statement, Optum and Change said: "The extended agreement reflects our firm belief in the potential of our combination to improve healthcare, and in our commitment to contesting the meritless legal challenge to this merger."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com