When CEO Neil de Crescenzo oversaw the merger of Change Healthcare with the greater part of McKesson Technology Services in 2017, he was keen to see what his company could do. With thousands of new employees and a full breadth of solutions, there seemed very little that Change couldn't accomplish. "The two companies together can do something neither one of us can do by ourselves,” he said in an interview. “The main thing… [customers] will see is their trusted partner can now bring them a broader portfolio of solutions and more innovation than was historically the case.”
Three years later and the Change CEO’s interests appear to be more strategic in nature. It’s been a tumultuous time for the health-tech as they worked to combine operations between the two companies, rolled with McKesson’s exit as a majority shareholder in March 2020, and then IPO’d the same month to offset debts incurred in relation to the transaction. Amidst all these developments, Covid-19 landed on American shores and began to wreak havoc with healthcare.
Following McKesson’s departure, the firm quickly snapped up its former pharmacy unit, eRx Network, for $212.9 million from former shareholders. eRx serves over 59,000 pharmacies and generated an estimated $67 million in revenue between February 2019 and February 2020. With pharmaceuticals considered a reliable revenue generator for many healthcare companies, eRx gives the firm a way to enter new markets and provide more exhaustive offerings to its healthcare clients.
On the other hand, the health-tech firm sold off its Connected Analytics business to consulting firm Kaufman Hall in a separate deal. The analytics unit counts over 300 hospitals and health systems as its customers. It appears de Crescenzo’s company is trading in its “broad portfolio of services” of yesteryear for a more targeted approach today. According to a news release, de Crescenzo states the sale of the analytics unit aligns with the firm’s strategic intent to focus on the areas of business where the firm can deliver the most significant impact for their customers, through the Change Healthcare platform.
Kaufman Hall is happy to embrace Change's analytics unit with open arms. The company is a provider of performance management software, data, and management consulting solutions, and the leadership team believes that Connected Analytics will complement its suite of services. Together, the combined solutions will create healthcare's most comprehensive enterprise offerings available on the market. Healthcare organizations can use the firm’s financial and clinical software to enhance services, while Kaufman’s higher education and financial institution customers can benefit from the augmented options.
“This acquisition comes at a pivotal time for our clients, as the nation experiences rapid change and uncertainty,” said Wes Champion, managing director and CEO of Kaufman Hall. “Now more than ever, clients need reliable and actionable data and insights to help execute what’s needed today and model for the future.”