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Change Healthcare Inc. (CHNG) - Wall Street’s Best Digest Daily Alert - 4/9/21

This healthcare IT company beat analysts’ estimates by $0.04 last quarter.

This healthcare IT company beat analysts’ estimates by $0.04 last quarter.

Change Healthcare Inc. (CHNG)
From The Prudent Speculator

Change Healthcare is the leading independent provider of health care IT services, offering software and analytics solutions in support of provider network management, payments and other administrative healthcare functions that aim to enhance clinical decision-making and improve quality of care.

The company announced in January that it had agreed to combine with Optum, a technology-focused division of UnitedHealth Group, in a transaction whereby CHNG holders would receive $25.75 per share in cash. The deal, which is scheduled to close in the second half of this year, is being highly scrutinized by regulators (the Department of Justice extended its review period last week), while we note that the American Hospital Association (AHA) has formally expressed its opposition.

Of course, we think the antitrust risks are well discounted, given the current 16% spread between the market and merger prices. Moreover, we are attracted to Change’s competitive position should the union not be consummated, and note the AHA’s comment, “The types of services offered by OptumInsight and Change are a must have for health care providers to navigate byzantine insurance reimbursement and ensure accurate and timely payment.”

CHNG trades at 15 and 13 times the respective fiscal 2022 and 2023 consensus EPS estimates.

John Buckingham, The Prudent Speculator,, 877-817-4394, April 2, 2021