More on Mergers & Acquisitions

McKesson got $1.25 billion in the just-closed Change Healthcare deal

McKesson will hold a 70 percent stake in the company until Change's upcoming initial public offering.

McKesson Corp. on Thursday closed on its deal to merge its McKesson Technology Solutions division with Change Healthcare, a revenue cycle and analytics company.

Under terms of the deal, McKesson Technology Solutions operations will merge with Change, and operate completely under the Change Healthcare brand. McKesson will hold a 70 percent stake in the company until Change's upcoming initial public offering.

According to the company, Change Healthcare raised about $6.1 billion in debt to fund the merger. McKesson received a $1.25 billion payment and Change shareholders received $1.75 billion. The rest was used to cover transaction costs and to pay down $2.8 billion in existing Change Healthcare debt.

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McKesson Technology Solutions runs a host of healthcare services, many tied to healthcare technology. That includes the RelayHealth division, which includes revenue cycle platforms. RelayHealth's pharmacy business was excluded from the deal.

[Also: McKesson Technology Solutions to rebrand as Change Healthcare after merger closes]

The new Change Healthcare will be managed by a new team made up of Mckesson executives and existing members from the leadership team at Change. Existing Change CEO Neil de Crescenzo will continue to run the new company.

While the companies said they have been working on integration plans since the deal was announced in July, now that the deal has closed Change will accelerate those plans.

Due to the transaction, McKesson revised its fiscal 2017 forecast. It now expects to earn $20.35 to $22.50 per share, up from $9.80 to $10.30 per share.

"Over the last several years, our industry has experienced a continued shift toward value-based care, requiring an increasingly consumer-centered approach to healthcare," de Crescenzo said in a statement. "Change Healthcare will be distinctly positioned to leverage its data, analytics and forward-thinking insights to bring new innovative solutions to payers, providers and consumers as they strive to achieve the best healthcare outcomes as efficiently as possible in this new environment."

Twitter: @HenryPowderly
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