UnitedHealth Group (UNH) shares moved lower Tuesday after a federal judge denied a request from the Department of Justice to block its proposed merger with healthcare technology group Change Healthcare (CHNG).
The DoJ had raised antitrust concerns over the $8 billion deal, first unveiled in January, and argued that it would give UnitedHealth access to healthcare plans offered by rival such as Humana (HUM) and Anthem, while allowing the combined group to service around 95% of the top health insurance companies in the country.
Judge Carl Nichols of the U.S. District Court for the District of Columbia, however, allowed the deal go ahead, provided UnitedHealth goes ahead with the agreed $2.2 billion sale of Change's claims edit subsidiary, ClaimsXten, to a private equity group.
The decision could be seen as a major setback for President Joe Biden's antitrust agenda, particularly as it relates to his administration's effort to reduce healthcare costs.
“We are pleased with the decision and look forward to combining with Change Healthcare as quickly as possible so that together we can continue our work to make the health system work better for everyone," UnitedHealth said in a media statement.
UnitedHealth Group shares were marked 1.5% lower in early Tuesday trading to change hands at $515.75 each. Change Healthcare shares jumped 7% to $27.26 each.
Revenues from UnitedHealth Group's healthcare solutions division, Optum -- where Change Healthcare will ultimately be integrated -- have paced topline gains for the group and helped deliver stronger-than-expected second quarter earnings.
UnitedHealth said adjusted profits for the three months ended in June came in at $5.34 a share, up 13.6% from the same period last year and 14 cents ahead of the Wall Street consensus forecast.
Group revenues, UnitedHealth said, rose 13% to $80.2 billion, again topping analysts' estimates of a $79.68 billion tally, while Optum revenue rose 17.75% to $45.1 billion.
Looking into the 2022 calendar year, Dow component UnitedHealth forecast adjusted earnings between $21.40 to $21.90 per share, up from a prior forecast of $21.20 to $21.70 per share.
