A Busy Week for Healthcare Dealmaking
UnitedHealth Group Buying Change Healthcare in $13 Billion Deal
Earlier this week, Haven, the joint healthcare venture between Amazon (AMZN), JPMorgan Chase (JPM), and Berkshire Hathaway (BRK) announced it would shut down by the end of February. The news came as a sign of just how difficult it can be to disrupt the American healthcare system, but it does not mean that other companies are not pushing forward with dealmaking.
UnitedHealth Group’s (UNH) Optum announced it would acquire Change Healthcare (CHNG) for $5 billion in debt and $7.84 billion in cash. The merger will bring Change Healthcare’s revenue, payment cycle, and clinical information management systems to UnitedHealth Optum’s data analytics solutions. A main goal for the joint company will be to simplify financial transactions.
AmerisourceBergen Buying Walgreens Distribution Unit
In a bid to expand its presence in Europe and compete more effectively in the United States healthcare sector, drug wholesaler AmerisourceBergen (ABC) will buy Walgreens’ (WBA) distribution business for $6.5 billion. For AmerisourceBergen, the main benefit of the deal is access to Alliance Healthcare, one of Europe’s largest healthcare distributors. In 2020 Walgreens’ distribution arm generated $20 billion in sales—roughly 14% of the company’s total revenue.
The deal will free up Walgreens to focus on its core pharmacy and retail business, which has been less resilient throughout the COVID-19 pandemic. Shares fell almost 30% in 2020 as foot traffic at stores as well as routine doctor visits that lead to prescriptions decreased.
Centene Acquiring Magellan Health
Centene (CNC) and Magellan Health (MGLN) have agreed to merge in a $2.2 billion deal approved by the boards of both companies. When the deal is finalized, it will form one of the country’s biggest behavioral health platforms. Together the services will have 41 million unique members.
Centene is one of the country’s largest sellers of government health plans like Medicaid and Medicare. Magellan manages treatments for mental health, substance use disorders, and other behavioral health needs.
Centene CEO Michael Neidorff said in a statement, “There is a critical need for a fundamentally better approach to supporting people with complex, chronic conditions through better integration of physical and mental health care. This has become even more evident in light of the pandemic which has driven a dramatic rise in behavioral health needs.” The merger will help the companies focus on scaling technology to expand their specialty care programs.
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