McKesson to Merge IT Unit with Change Healthcare

McKesson Corporation (San Francisco, CA, USA), a health care services and information technology (IT) company, will combine most of the McKesson Technology Solutions (MTS) business with Change Healthcare (Nashville, TN, USA), forming a new company with combined annual revenue of USD 3.4 billion.

Change Healthcare, a provider of software and analytics, network solutions, and technology-enabled services, will contribute all of its businesses to the new company, with the exception of its pharmacy switch and prescription routing business. McKesson and Change Healthcare will own approximately 70% and 30% (respectively) of the new company, and will receive cash proceeds of approximately USD 1.25 billion and USD 1.75 billion, (respectively), following the close of the transaction.

The new company will bring together the complementary strengths of MTS and Change Healthcare to deliver a broad portfolio of solutions that will help lower healthcare costs and improve patient access and outcomes. It will also be able to offer health plans and providers a comprehensive suite of end-to-end financial and payment solutions and technologies. In addition, customers will benefit from solutions that help them manage administrative and clinical complexity as they navigate the transition to value-based care.

“The new company will establish a more efficient suite of end-to-end payment and claims solutions, as well as clinical capabilities, while unlocking the value of our MTS businesses in a tax- efficient manner,” said John Hammergren, chairman and CEO of McKesson Corporation. “We look forward to partnering with Change Healthcare’s management team and employees to create this new enterprise and to help customers reduce complexity, lower costs and ultimately provide better care.”

“The combination of these two entities comes at a transformational time in U.S. healthcare,” said Neil de Crescenzo, president and CEO of Change Healthcare. “Together we will create significant value by bringing together complementary capabilities from both organizations to deliver innovative new solutions for customers, create opportunities for team members at a leading healthcare technology company, and drive advancements that address the three critical areas of cost, quality and outcomes across the healthcare sector.”

The new company has already received commitments for USD 6.1 billion of funded debt, with proceeds to be used to repay approximately USD 2.7 billion of existing Change Healthcare debt, make the cash payments to Change Healthcare’s stockholders, with the remainder to be used for transaction-related expenses.

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