Tag Archives: UnitedHealth Group

Judge Rejects Antitrust Challenge to UnitedHealth Acquisition

U.S. District Judge Carl Nichols ruled for the companies in an opinion that he kept under seal for now because he said it “may contain competitively sensitive information.” The judge said he would release a redacted public version of the ruling in the coming days. In a one-page public order, he denied the Justice Department’s request to block the companies from completing the deal.

The court ruling represents an early blow to stepped-up antitrust enforcement by the Biden administration, which sued in February to block the deal. The Justice Department’s top antitrust official,

Jonathan Kanter,

said the department disagreed with the decision and was considering its next steps.

“Protecting competition and access to affordable healthcare is of the utmost importance to the antitrust division and the Department of Justice,” Mr. Kanter said.

The decision is a triumph for UnitedHealth, which owns the largest U.S. health insurer and a healthcare operation that comprises thousands of doctors as well as clinics, surgery centers and other assets, along with a powerful conglomeration of health data.

In a statement, a UnitedHealth spokesman said, “We are pleased with the decision and look forward to combining with Change Healthcare as quickly as possible so that together we can continue our work to make the health system work better for everyone.”

Change provides services related to payment processes for healthcare systems, analytics for financing and billing and tools that help hospitals make decisions about patient care.

UnitedHealth had agreed to divest business assets related to claims-processing to address competition concerns, an offer the Justice Department had dismissed as insufficient.

Judge Nichols in his order required UnitedHealth to make that divestiture.

UnitedHealth’s deal for Change, announced in January 2021, will bring the health-technology company under the company’s Optum health-services arm. UnitedHealth had argued that its combination with Change could help improve care by getting better information to doctors, and reduce waste. It agreed to pay nearly $8 billion for Change and assume about $5 billion in debt.

The Justice Department had argued that the deal would give UnitedHealth a virtual monopoly on an important tool that health insurers use to determine when a claim should be paid. And it said the company shouldn’t be allowed to own Change Healthcare’s data clearinghouse, which rival insurers use to compete with UnitedHealth.

The judge, an appointee of former President

Donald Trump,

signaled his skepticism of the lawsuit in a hearing earlier this month. A trial took place in August.

The lawsuit was part of an early batch of antitrust cases brought by the Justice Department under President Biden, a Democrat, that were designed to take a harder line on corporate deal activity. Among other cases, the department is waiting on a ruling in its challenge to a major publishing industry deal, Penguin Random House’s planned acquisition of Simon & Schuster. And it is preparing to go to trial next week in its lawsuit challenging a partnership between

American Airlines Group Inc.

and

JetBlue Airways Corp.

The current crop of antitrust officials, backed by calls from Democrats for a more aggressive approach, have sought to set new court precedents that would steer the law in a broader direction, after years of rulings in which the judiciary has tended to read the antitrust laws more narrowly than a generation ago. Monday’s decision served as a reminder that the Justice Department’s goals are dependent on proving their cases in front of a judge.

The Federal Trade Commission, which shares antitrust authority with the department, also is facing hurdles. It recently lost a ruling from its own in-house administrative law judge, in a case where it was challenging

Illumina Inc.’s

acquisition of cancer-testing developer Grail Inc.

Monday’s decision comes as UnitedHealth and its rivals have continued to move more deeply into vertical integration of health assets, spanning insurance and healthcare provider businesses, as well as pulling together ever-larger troves of health data.

Even after the Justice Department filed suit to block the Change deal, UnitedHealth moved ahead with other acquisitions, including a $5.4 billion takeover of home-health company

LHC Group Inc.

announced last March.

Earlier this month,

CVS Health Corp.

—the parent of health insurer Aetna, a pharmacy-benefit operation and its eponymous drugstores—announced an $8 billion deal to take over home-healthcare company Signify Health Inc. CVS has said it wants to get deeper into the business of primary care.

Write to Anna Wilde Mathews at anna.mathews@wsj.com and Brent Kendall at brent.kendall@wsj.com

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CVS Is in Advanced Talks to Buy Signify Health for Around $8 Billion

CVS Health Corp.

CVS -0.49%

is in advanced talks to acquire the home-healthcare company

Signify Health Inc.

SGFY 1.34%

for around $8 billion, according to people familiar with the matter.

CVS appears to have beat out other heavy hitters including

Amazon.com Inc.

and

UnitedHealth Group Inc.,

which had been circling Signify for a deal that could be announced soon. UnitedHealth never submitted an official bid, one of the people said.

There is still no guarantee that CVS will reach a deal for Signify, which has been exploring strategic alternatives since earlier this summer.

Bids for the company were due Sept. 6, but people familiar with the matter have said that an eager buyer could make a move before then.

Signify’s valuation has ballooned since The Wall Street Journal reported in August that it was for sale. Shares of the company closed at $28.77 on Friday, giving it a market capitalization of roughly $6.7 billion.

Signify works with a large group of doctors to facilitate house calls. It uses analytics and technology to help physician groups, health plans, employers and health systems with in-home care. It offers health evaluations for Medicare Advantage and other plans.

At the close of its deal this year to buy Caravan Health, Signify said that it supported roughly $10 billion in total medical spending.

The company went public in February 2021, raising more than $500 million as a result of the offering. On the day of its initial public offering, shares of the company priced above its expected range, at $24.

New York-based New Mountain Capital has backed Signify since 2017. The firm—which had more than $37 billion in assets under management as of early August—has steadily expanded Signify through a series of mergers and acquisitions since its initial investment.

New Mountain is well-versed in the healthcare sector. It previously sold the healthcare payments firm Equian LLC to UnitedHealth for roughly $3.2 billion in 2019.

For CVS, the deal builds on an effort years in the making to transform itself into a major provider of healthcare services through acquisitions and expanded medical services. The company had been struggling to counter slowing revenue from prescription drugs, which drive the bulk of its sales, and to ward off competition from

Amazon

AMZN -0.24%

for retail dollars.

CVS, the nation’s largest drugstore chain by stores and revenue, acquired Aetna in 2018, arguing that melding the insurance company’s patient data with its network of nearly 10,000 bricks-and-mortar sites would squeeze out costs while improving care and convenience.

The strategy has paid off, buoyed by a surge in demand for Covid-19 vaccines and tests at the height of the pandemic. CVS’s market capitalization has grown to more than $130 billion from around $75 billion since the Aetna deal.

The line between Amazon and Walmart is becoming increasingly blurred, as the two companies seek to maintain their slice of the estimated $5 trillion retail market while chipping away at each other’s share, often by borrowing ideas. Photos: Amazon/Walmart

The company is outperforming

Walgreens Boots Alliance Inc.,

which opted against major acquisitions, in the years since. Walgreens, also racing to expand into healthcare, focused largely on partnerships rather than deals. But last year it bought a controlling stake in the primary-care network Village MD, giving it doctors’ offices that CVS had said it could do without.

CVS Chief Executive

Karen Lynch

has since said that the company must have a foothold in primary care if it is to become a full-service medical provider.

CVS had previously been interested in a deal for the parent of One Medical, people familiar with the matter have said.

Amazon

AMZN -0.24%

agreed to purchase the primary-care clinic operator for about $3.9 billion in July.

The Federal Trade Commission is currently investigating the deal. The parent company of One Medical,

1Life Healthcare Inc.,

disclosed the investigation in a securities filing. The disclosure said One Medical and Amazon each received a request for additional information about the deal from the FTC.

While Wall Street has largely focused on CVS’s efforts to acquire primary-care practices, executives have also discussed ambitions to expand its in-home health presence.

A deal for Signify would represent a bright spot in an otherwise lackluster run for deals lately. Deal volumes globally are down roughly 30% this year after a flurry of activity last year, because of a drop in companies’ valuations, market volatility and other factors including Russia’s war in Ukraine.

Healthcare deal making in particular has slowed more than many other sectors. Over $200 billion of healthcare deals announced so far this year has compared with over $400 billion at this time last year, according to Dealogic. The largest healthcare deal to date this year in the U.S. is

Pfizer Inc.’s

$11.6 billion agreement in May to purchase the rest of

Biohaven Pharmaceutical Holding Co.

Write to Laura Cooper at laura.cooper@wsj.com, Sharon Terlep at sharon.terlep@wsj.com and Cara Lombardo at cara.lombardo@wsj.com

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