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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): April 4, 2022

 

 

Change Healthcare Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Delaware   001-38961   82-2152098
(State or Other Jurisdiction
of Incorporation)
  (Commission
File Number)
  (IRS Employer
Identification No.)

424 Church Street, Suite 1400

Nashville, Tennessee 37219

(Address of Principal Executive Offices) (Zip Code)

(615) 932-3000

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, par value $0.001 per share   CHNG   The Nasdaq Stock Market LLC
6.00% Tangible Equity Units   CHNGU   The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 


Item 1.01

Entry into a Material Definitive Agreement.

As previously disclosed, on January 5, 2021, Change Healthcare Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with UnitedHealth Group Incorporated (“Parent”) and Cambridge Merger Sub Inc., a wholly owned subsidiary of Parent (“Merger Sub” and, together with the Company and Parent, the “Parties”), pursuant to which Parent will acquire the Company (the “Merger”). Also as previously disclosed, on December 9, 2021, Parent delivered written notice to the Company that it was exercising its unilateral right to extend the Outside Date (as defined in the Merger Agreement) to April 5, 2022.

On April 4, 2022, the Parties entered into a waiver (the “Waiver”) pursuant to which, among other things, the Company and Parent each waived its right to terminate the Merger Agreement due to a failure of the Merger to have been consummated by the Outside Date until the earlier of (i) 5:00 p.m. (New York time) on the tenth business day following a final order (whether or not appealable) issued by the U.S. District Court for the District of Columbia (the “Trial Court”) with respect to the complaint filed by the U.S. Department of Justice and certain other parties regarding the Merger and the other transactions contemplated by the Merger Agreement that permanently prohibits the consummation of the Merger and (ii) 11:59 p.m. (New York time) on December 31, 2022 (the “Waiver Period”); provided, that if (A) the Trial Court issues a final order that permits the consummation of the Merger (whether or not subject to conditions), (B) any plaintiff appeals such order and (C) the Parties’ ability to consummate the Merger is enjoined or otherwise prohibited by a governmental entity pending such appeal, then the Waiver Period may be extended by either Parent or the Company (in each case, acting in its sole discretion) to 5:00 p.m. (New York time) on March 31, 2023, by providing written notice to the other party prior to 11:59 p.m. (New York time) on December 31, 2022.

The Waiver also contains a waiver by Parent that provides that, if the Company or Parent terminates the Merger Agreement pursuant to Section 9.2(a) or Section 9.2(c) of the Merger Agreement at a time when any of the conditions to the closing set forth in Sections 8.1(b), 8.1(c) (in connection with a legal restraint of a governmental antitrust entity) or 8.2(c) of the Merger Agreement has not been satisfied or, to the extent permitted by applicable law, waived, Parent will pay to the Company an amount equal to $650,000,000.


The Waiver also contains a waiver by Parent which will allow the Company to declare and pay a one-time special dividend of up to $2.00 in cash per each issued and outstanding share of common stock of the Company, with a record date and payment date to be determined in the sole discretion of the Board of Directors of the Company (or a committee thereof).

The foregoing description of the Waiver is qualified in its entirety by reference to the Waiver, a copy of which is filed as Exhibit 10.1 hereto and is incorporated by reference herein.

 

Item 8.01

Other Events.

On April 5, 2022, the Company and Parent issued a joint press release announcing their entry into the Waiver. A copy of the press release is filed as Exhibit 99.1 hereto and is incorporated by reference herein.

 

Item 9.01

Financial Statements and Exhibits.

 

Exhibit

  

Description

10.1    Waiver, dated as of April 4, 2022, between UnitedHealth Group Incorporated, Cambridge Merger Sub Inc. and Change Healthcare Inc.
99.1    Joint Press Release dated April 5, 2022.
104    Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

CHANGE HEALTHCARE INC.
By:  

/s/ Loretta A. Cecil

Name:   Loretta A. Cecil
Title:   Executive Vice President, General Counsel

Date: April 5, 2022    

Exhibit 10.1

UnitedHealth Group Incorporated

UnitedHealth Group Center

9900 Bren Road East

Minnetonka, MN 55343

Cambridge Merger Sub Inc.

UnitedHealth Group Center

9900 Bren Road East

Minnetonka, MN 55343

Change Healthcare Inc.

100 Airpark Center Drive East

Nashville, TN 37217

Re: Merger Agreement Waivers

This waiver letter (this “Waiver”), dated as of April 4, 2022, is executed by Change Healthcare Inc., a Delaware corporation (the “Company”), UnitedHealth Group Incorporated, a Delaware corporation (“Parent”), and Cambridge Merger Sub Inc., a Delaware corporation and Wholly Owned Subsidiary of Parent (“Merger Sub” and, together with the Company and Parent, the “Waiving Entities”) with respect to that certain Agreement and Plan of Merger, dated as of January 5, 2021, among the Waiving Entities (the “Merger Agreement”). Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement.

 

  1.

Waiver of Outside Date.

 

  (a)

Each of Parent and the Company hereby unconditionally and irrevocably waives any right to terminate the Merger Agreement pursuant to Section 9.2(a) of the Merger Agreement prior to the earlier of (i) 5:00 p.m. (New York time) on the tenth Business Day following a final Order (whether or not appealable) issued by the U.S. District Court for the District of Columbia (the “Trial Court”) with respect to the complaint filed by the United States Department of Justice and certain other parties regarding the Merger and the other transactions contemplated by the Merger Agreement (the “Merger Litigation”) that permanently prohibits the consummation of the Merger and (ii) 11:59 p.m. (New York time) on December 31, 2022 (the “Waiver Period”); provided, that if (A) the Trial Court issues a final Order that permits the consummation of the Merger (whether or not subject to conditions), (B) any plaintiff appeals such Order and (C) the Waiving Entities’ ability to consummate the Merger is enjoined or otherwise prohibited by a Governmental Entity pending such appeal, then the Waiver Period may be extended by either Parent or the Company (in each case, acting in its sole discretion) to 5:00 p.m. (New York time) on March 31, 2023, by providing written notice to the other party prior to 11:59 p.m. (New York time) on December 31, 2022. Following the execution of this Waiver, each of Parent and the Company hereby further waives any right or claim to interpret the terms of the Merger Agreement (including references to the Outside Date) in any manner inconsistent with the Waiver Period (as may be extended pursuant to the immediately preceding proviso).


  (b)

Parent hereby waives its rights set forth in Section 9.5(b) of the Merger Agreement to the extent required in order that, in the event that the Company or Parent terminates the Merger Agreement pursuant to Section 9.2(a) of the Merger Agreement or Section 9.2(c) of the Merger Agreement at a time when any of the conditions to the Closing set forth in Sections 8.1(b), 8.1(c) (in connection with a Legal Restraint of a Governmental Antitrust Entity) or 8.2(c) of the Merger Agreement has not been satisfied or, to the extent permitted by applicable Law, waived, Parent shall pay, or cause to be paid, to the Company by wire transfer of immediately available funds within three Business Days of such termination an amount equal to $650,000,000.00 (the “Regulatory Termination Fee”). Notwithstanding the foregoing or anything to the contrary in this Waiver, in no event shall the Regulatory Termination Fee be due or payable if, prior to the termination of the Merger Agreement, (i) the Trial Court has issued a final Order in favor of the defendants in the Merger Litigation that permits the consummation of the Merger without the imposition of a Burdensome Condition and (ii) such Order becomes non-appealable.

 

  (c)

Notwithstanding anything to the contrary in the Merger Agreement or otherwise, in the event that the Regulatory Termination Fee becomes payable by Parent, and is paid or caused to be paid by Parent, the Regulatory Termination Fee shall be the Company’s and its Affiliates’ sole and exclusive remedy pursuant to the Merger Agreement or otherwise and, upon payment of the Regulatory Termination Fee (plus any amounts due pursuant to Section 1(d) below), the Company, for itself and its Affiliates, waives, releases and discharges any claim or cause of action of every kind and nature, whether known or unknown, suspected or unsuspected, concealed or hidden, against Parent and its Affiliates, based upon facts or circumstances existing or occurring on or prior to the date of such termination, relating in any way to the Merger Agreement, the transactions contemplated by the Merger Agreement and the termination of the Merger Agreement, including (i) any such claims under applicable Law and (ii) any claims alleging a breach of any representation, warranty, covenant or agreement set forth in or relating in any way to the Merger Agreement, and shall not bring or threaten to bring or otherwise join in any claim or Proceeding against Parent or its Affiliates relating to, arising out of or in connection with the foregoing whether in law, equity or otherwise; provided, that the foregoing shall not limit or otherwise apply to any commercial agreement between the Waiving Entities or any of their respective Affiliates, including that certain Business Expansion Agreement, dated as of January 5, 2021.

 

  (d)

Clause (ii) of Section 9.5(d) of the Merger Agreement is incorporated by reference herein, mutatis mutandis (including with references to the “Termination Fee” interpreted as references to the Regulatory Termination Fee for purposes of this Waiver).

 

 

2


  2.

Waiver of Certain Regulatory Matters.

 

  (a)

Antitrust Work Plan. Each Waiving Entity hereby waives any and all covenants, agreements, rights or obligations of the Waiving Entities set forth in Section 7.6(b)(iii) of the Merger Agreement (including with respect to the antitrust work plan set forth in Section 7.6(b)(iii) of the Company Disclosure Letter).

 

  (b)

Regulatory Efforts. The Company hereby waives the covenants, agreements, and obligations of Parent set forth in Section 7.6 of the Merger Agreement (including Sections 7.6(b)(vi) and 7.6(b)(vii) of the Merger Agreement) to the extent they would obligate Parent to proffer or effect any sale, divestiture, lease, license, disposal or holding separate or other similar arrangement with respect to, or other disposition of or restriction on, of any assets, operations, rights, product lines, licenses, businesses or interests therein of the Company, Parent or any of their respective Subsidiaries, other than the proposed divestiture of the Company’s claims editing business.

 

  3.

Waiver of Certain Dividend Restrictions. Each of Parent and Merger Sub hereby waives the restrictions set forth in Section 7.1(a)(vii) of the Merger Agreement, and any other contrary provision of the Merger Agreement, with respect to the declaration, setting aside, making or payment of any dividend or other distribution with respect to the Company’s capital stock, but solely to the extent that the Company may declare, set aside, make or pay a one-time special cash dividend of not more than $2.00 in cash per issued and outstanding Share with a record date and payment date to be determined in the sole discretion of the Company Board (or a committee thereof) (such dividend, the “Dividend”). If so requested by the Company, Parent and the Company shall cooperate with each other and work together in good faith to facilitate the payment of the Dividend as determined by the Company Board (or a committee thereof); provided that in no event shall the Closing Date be extended as a result of or in connection with the Dividend. For the avoidance of doubt, the waiver under this Section 3 and the declaration, setting aside, making or payment of any Dividend in accordance with this Section 3 is not dependent or conditioned on the occurrence of the Closing or the consummation of the Merger or the outcome of the Merger Litigation.

 

  4.

Waiver of Certain Other Interim Operation Restrictions. Each of Parent and Merger Sub hereby waives the restrictions set forth in Section 7.1(a) of the Merger Agreement, and the Company hereby waives certain related provisions of the Merger Agreement, in each case as set forth on Exhibit A to this Waiver.

 

  5.

General Waivers.

 

  (a)

The Company hereby (i) acknowledges that, as of the date of this Waiver, there has been no breach of the Merger Agreement on the part of Parent or Merger Sub and (ii) waives, releases and discharges any claim or cause of action of every kind and nature, whether known or unknown, suspected or unsuspected, concealed or hidden, against Parent and its Affiliates, based upon facts or circumstances existing or occurring on or prior to the date of this Waiver for all purposes under the Merger Agreement, including under Sections 8.3(a), 8.3(b), 9.2(c) (with respect to the proviso therein) and 9.3(a) (as applicable) of the Merger Agreement.

 

3


  (b)

Each of Parent and Merger Sub hereby (i) acknowledges that, as of the date of this Waiver, there has been no breach of the Merger Agreement on the part of the Company and (ii) waives, releases and discharges any claim or cause of action of every kind and nature, whether known or unknown, suspected or unsuspected, concealed or hidden, against the Company and its Affiliates, based upon facts or circumstances existing or occurring on or prior to the date of this Waiver for all purposes under the Merger Agreement, including under Sections 8.2(a), 8.2(b), 8.2(d), 9.2(c) (with respect to the proviso therein) and 9.4(a) (as applicable) of the Merger Agreement.

 

  6.

Waiver Only. Subject to the terms of this Waiver, all terms, conditions and provisions of the Merger Agreement shall remain in full force and effect.

 

  7.

Miscellaneous. Sections 10.2 (Notices), 10.3 (Expenses), 10.5 (Amendment or Other Modification; Waiver), 10.6 (Governing Law and Venue; Submission to Jurisdiction; Selection of Forum; Waiver of Trial by Jury), 10.7 (Specific Performance), 10.8 (Third-Party Beneficiaries), 10.10 (Successors and Assigns), 10.12 (Severability), 10.13 (Counterparts; Effectiveness) and Section 10.14 (Interpretation and Construction) of the Merger Agreement shall apply to this Waiver, mutatis mutandis, as if set forth herein.

[Remainder of page intentionally left blank.]

 

4


This Waiver has been duly executed and delivered by duly authorized officers of the Waiving Entities as of the date first written above.

 

CHANGE HEALTHCARE INC.
By:  

/s/ Neil de Crescenzo

  Name:   Neil de Crescenzo
  Title:   President and Chief Executive Officer
UNITEDHEALTH GROUP INCORPORATED
By:  

/s/ John F. Rex

  Name:   John F. Rex
  Title:   Chief Financial Officer
CAMBRIDGE MERGER SUB INC.
By:  

/s/ John F. Rex

  Name:   John F. Rex
  Title:   Chief Executive Officer and President

[Signature Page to Waiver Letter]

Exhibit 99.1

CHANGE HEALTHCARE AND OPTUM EXTEND MERGER AGREEMENT

Combination will benefit patients, payers and providers by lowering costs and improving experiences

EDEN PRAIRIE, Minn. and NASHVILLE, Tenn. (April 5, 2022)—Optum, a diversified health services company, and Change Healthcare (NASDAQ: CHNG), a health care technology leader, have agreed to extend their merger agreement to December 31, 2022.

In a joint statement, the companies said: “The extended agreement reflects our firm belief in the potential of our combination to improve health care, and in our commitment to contesting the meritless legal challenge to this merger.”

Change Healthcare and Optum share a vision for achieving a simpler, more intelligent and adaptive health system for patients, payers and providers. The combination of Optum and Change Healthcare will connect and simplify the core clinical, administrative and payment processes health care providers and payers depend on to serve patients. Increasing efficiency and reducing friction will benefit the entire health system, resulting in lower costs and a better experience for all stakeholders.

Change Healthcare and Optum will detail the benefits of this combination at a two-week trial scheduled to begin on August 1. The U.S. Department of Justice’s attempt to block the combination is without merit and serves only to delay improving the experience and outcomes for all participants in the health system.

As part of the extension, Optum will pay a $650 million fee to Change Healthcare in the event the merger is unable to be completed because of the court’s decision. Change Healthcare will pay a special cash dividend of $2.00 per share to its shareholders at or about the time of the closing.

About Optum

Optum is a leading information and technology-enabled health services business dedicated to helping make the health system work better for everyone. With more than 190,000 people worldwide, Optum delivers intelligent, integrated solutions that help to modernize the health system and improve overall population health. Optum is part of UnitedHealth Group (NYSE: UNH). For more information, visit www.Optum.com.

About Change Healthcare

Change Healthcare (NASDAQ: CHNG) is a leading healthcare technology company focused on insights, innovation, and accelerating the transformation of the U.S. healthcare system through the power of the Change Healthcare Platform. We provide data and analytics-driven solutions to improve clinical, financial, administrative, and patient-engagement outcomes in the U.S. healthcare system.

###

UnitedHealth Group Investor Relations

Zack Sopcak

(952) 936-7215

zack.sopcak@uhg.com

Optum Media Relations

Gwen Holliday

(202) 549-3429

gwen.m.holliday@optum.com

Change Healthcare Investor Relations

David Elliott

(205) 907-5540

daelliott@changehealthcare.com

Change Healthcare Media Relations

Katherine Wojtecki

(630) 624-9142

katherine.wojtecki@changehealthcare.com