Change Healthcare sale of business unlikely to appease DOJ’s concerns on UnitedHealth

Change Healthcare (NASDAQ:CHNG)’s planned sale of its ClaimsXten business is unlikely to “completely allay” the DOJ’s antitrust concerns on UnitedHealth’s (NYSE:UNH) planned acquisition, according to a Piper Sandler analyst.

UnitedHealth (UNH) on Monday announced that it agreed to sell Change Healthcare’s (CHNG) claims editing business to TPG Capital for $2.2 billion in cash.

The sale of the ClaimsXten business come after the DOJ in late February sued to block Change Healthcare’s (CHNG) sale to UNH due to antitrust concerns. The DOJ trial to block the deal is scheduled to start Aug. 1

“The divestiture of ClaimsXten mitigates obvious antitrust risk; but is unlikely to restore competition or placate the DOJ,” Piper Sandler analyst Jessica Tassan, who has an overweight rating and $26 price target on CHNG, wrote in a note.

DOJ still has antitrust concerns around CHNG’s EDI network and data rights, according to Tassan.

In late March one independent attorney told Dealreporter that divesting the ClaimsXten business could make the DOJ’s case much harder to prove.

“The divestiture does, however, improve the optics of the merger and makes us incrementally confident that CHNG + UNH will prevail at trial in August,” Tassan wrote.

Earlier this month, Change Healthcare (CHNG) and UnitedHealth’s (UNH) Optum extend merger agreement to Dec. 31. Under the extension, Optum will pay a $650M fee to Change Healthcare in the event the merger is unable to be completed because of the court’s decision.