McKesson's McKesson Technology Solutions includes software, business services, and healthcare health automation, and will form a new company with analytics and network software company Change Healthcare.
Chicago-based McKesson will own 70% of the startup and receive $1.25 billion in cash, while Change Healthcare and its shareholders in Nashville, Tenn., will own a 30% stake in the startup. At the end of the year, it received $1.75 billion in cash proceeds.
According to McKesson and Change Healthcare, startups will serve payers, suppliers and consumers to solve complex tasks such as medical bills and claims through financial and management techniques. Both companies mentioned that they will promote the process of capitalization of health care and establish a value-based purchase and payment system.
The still-named company will be managed by McKesson and Change Healthcare, with Change Healthcare's major shareholder being Blackstone, a private equity firm. The new entity will merge almost all of Change Healthcare's commercial divisions and McKesson Technology Solutions entities into a company with a total annual turnover of $3.4 billion.
In the transaction plan, McKesson will incorporate most of McKesson Technology Solutions into the new company, while the RelayHealth Pharmacy and Enterprise Information Solutions (EIS) divisions will be retained by McKesson. Change Healthcare, formerly Emdeon, contributed to almost all business sectors, with the exception of pharmaceuticals and prescription commerce, which will be owned by shareholders.
The deal will be completed in the first half of 2017 and the IPO is in preparation. John H. Hammergren, Chairman and CEO of McKesson, will serve as Chairman of the new company. Neil de Crescenzo, as Chairman and CEO of Change Healthcare, will be the CEO of the new company. They are all supported by executives from the new company.
“This is a courageous, innovative action. We have created a company that has the power to help consumers deal with their complex and growing financial and clinical challenges,†Hammergren said in a speech. Say. “The new company will build more effective ways in peer-to-peer payments, medical solutions, clinical capabilities, etc. We will solve business problems in a more tax efficient way.â€
Hammergren also said that the new company will help customers reduce job complexity, reduce costs and provide better medical services.
“The merger of the two companies took place at the time of the US health care revolution,†adds de Crescenzo. “We will work together to create tremendous value and deliver innovative solutions to consumers through complementary capabilities. Members create opportunities in a leading healthcare technology company that drives advancement in addressing three key aspects of issues, costs, quality and results in the healthcare sector."
Neil Simpkins, Blackstone's senior managing director, said the two companies' innovative initiatives and forward-looking strategies have had a positive impact on the healthcare ecosystem.
Change Healthcare's financial and management network handled $8.8 billion in healthcare-related transactions – a market that reached $1.7 trillion in 2015. The Nashville Business Journal estimates that Change Healthcare had revenues of approximately $1.4 billion and 7,000 employees in 2015. Blackstone paid $3 billion in 2011 to gain control.
McKesson employs 76,000 people and has a market value of $39.8 billion. Its separate IT division accounts for only 2% of total business revenue in FY2015. In the New York Stock Exchange on Tuesday, McKesson shares rose 2.3% to 17.658 billion yuan.
The deal marks the end of the McKesson Medical Health IT Division in Arafat, Georgia, which was founded in 1974.
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