Under a new amendment to an existing agreement with regulators, UnitedHealth's proposed $13 billion acquisition of health IT vendor Change Healthcare could close February at the earliest.
The deal could close even sooner if the Department of Justice unexpectedly drops its investigation — or later, if the agency elects to challenge.
Some antitrust experts expect the latter, given rising pressure on regulators to check rampant consolidation in the healthcare industry, and intense opposition to the deal among hospital and pharmacy groups.
"We're in a period of time where the antitrust enforcers have become much, much, much more aggressive," David Balto, an antitrust attorney and former policy director at the Federal Trade Commission, said. "There's a strong likelihood they're going to challenge the deal."
UnitedHealth and Change Healthcare have agreed to an amendment to a timing agreement with the DOJ to not consummate their transaction before Feb. 22. That sets a new deadline for the agency to complete their in-depth investigation, first launched late March.
The diversified healthcare behemoth and the health IT company entered into the original agreement in August. In it, they agreed to not close the merger for at least 120 days following the date on which both Change and UnitedHealth certified "substantial compliance" with the DOJ's second request for data on the tie-up, according to an 8-K filing.
The companies did so on Monday, teeing up a consummation late February, Change disclosed in its second quarter results released Wednesday.
However, the deal could close earlier if the DOJ closes its investigation, the companies said.
Despite the numerous regulatory hurdles UnitedHealth and Change have had to jump through for the deal, the companies have remained bullish that the acquisition for $8 billion in cash and $5 billion in debt will be successful.
UnitedHealth COO Dirk McMahon said on a call last month the deal was close to becoming final, and should close in the "first part" of 2022 after cooperating with the DOJ.
UnitedHealth had previously expected the acquisition — meant to beef up UnitedHealth's data analytics arm OptumInsight — to close in the second half of 2021, but the timeline was pushed back amid regulatory scrutiny.
The deal quickly faced intense opposition after it was announced in January, with competing payers, antitrust groups, the American Hospital Association and the National Community Pharmacists Association all raising anticompetitive concerns.
AHA in March called on the DOJ to go over the deal with a fine-toothed comb, arguing UnitedHealth, which owns the biggest private payer in the U.S., might have an incentive to block access of competing insurers to Change, while resulting in less competition for health IT and revenue cycle management services.
The marriage would also consolidate a massive amount of health data under UnitedHealth, which could distort decisions about patient care, claims processing and denials, AHA said.
Antitrust watchdogs have also raised the alarm. In May, the American Antitrust Institute came out against the transaction, sending a letter to the DOJ outlining its concerns.
In August, the Information reported the DOJ was contacting private attorneys about the possibility of litigation to stop the vertical transaction, as it evaluated whether UnitedHealth might have an incentive to block or restrict access of competing insurers to Change.
According to the report, several state attorneys general also have concerns about the combination.
"This merger faces very strong headwinds," Balto said. "I think this deal is going to face some really tough questions by the Department of Justice."
The Biden administration has been more active on the antitrust front than previous ones. The FTC said that, due to a merger backlog, it may unwind combinations even after the companies consummate the deal, and that it is prioritizing healthcare as part of its enforcement strategy over the next decade.
Regulators have already taken legal action this year to stop one proposed deal in the industry. In June, the DOJ sued to block Aon's proposed $30 billion acquisition of Willis Towers Watson. After the two insurance brokers failed to reach a deal with the regulator, it was terminated in late July.
UnitedHealth and Change, which have stressed that payer UnitedHealthcare and Change's operations will be kept separate, still expect the deal to close. But there could be some conditions.
In the merger agreement, UnitedHealth noted it would be open to divesting assets if required for approval. However, such divestitures couldn't account for more than $650 million in annual revenue, which would be a "burdensome condition," the Minnetonka, Minnesota-based company said.
By comparison, UnitedHealth brought in $257 billion in revenue in 2020.
In a statement, an Optum spokesperson told Healthcare Dive the company is "excited about the opportunity for the combination of Change Healthcare and Optum to improve health outcomes and experiences for everyone, at lower cost."
Optum had no comment on whether it expects a challenge, while Change did not respond to a request for comment.