Insight Bite: Optum Merges with Change to Create Healthcare Analytics Powerhouse

Following a resurgence in software dealmaking in the second half of 2020, the new year has been marked by a megadeal in healthcare analytics.

Optum, UnitedHealth Group’s rapidly growing analytics subsidiary, is acquiring tech firm Change Healthcare in a $13 billion deal to create a healthcare analytics powerhouse.

Change Healthcare develops data analytics that assist with reporting and risk adjustment, help healthcare providers boost patient engagement, and improve post-clinical communication. These tools represent an opportunity for Optum to extend its existing analytical infrastructure into every aspect of medical care, reflecting a broader industry shift towards data-driven decision making.

“This opportunity is about advancing connectivity and accelerating innovations and efficiencies essential to a simpler, more intelligent and adaptive health system,” said President and CEO of Change Healthcare Neil de Crescenzo, who will lead the combined organisation as OptumInsight’s chief executive officer. “We share with Optum a common mission and values, and, importantly, a sense of urgency to provide our customers and those they serve with the more robust capacities this union makes possible.”

For Optum, which has often used acquisition to stay ahead of the curve, the purchase represents a push into another key growth area. The healthcare firm has invested heavily in deals aimed at expanding its market presence, acquiring urgent care operator MedExpress in 2015, Surgical Care Affiliates in 2017, and the primary care focused DaVita Medical Group in 2019 – along with numerous other investments and acquisitions targeted at new technologies.

More broadly, the acquisition is the latest kick in a steady beat of software deal making. Increasing numbers of acquisitions, investments, and strategic partnerships are being inked as companies switch focus from bracing for pandemic impact, to capitalising on surging demand, high valuations, and readily available financing.

These conditions are widely expected to accelerate the pace of dealmaking into 2021, leading to more acquisitions like this one across both healthcare analytics and the broader software industry.

Matt Stamp, Software Practice lead at Acuity Advisors commented,

“Optum’s acquisition of Change Healthcare highlights four trends that we expect to proliferate during 2021: consolidation in health technology and software, continuing evolution of data & analytics in key verticals, buyers having the confidence to do larger, transformative deals and deals enjoying robust valuation dynamics (Optum paying 8.3x revenues).”

Matt Stamp, Partner

About Acuity Advisors

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