A federal judge on Monday denied efforts by the U.S. Department of Justice to block UnitedHealth Group's $13 billion deal to acquire data broker Change Healthcare.
Judge Carl Nichols handed down the ruling in U.S. District Court for the District of Columbia, after listening to two weeks of oral arguments from the healthcare companies and the Justice Department.
Nichols also ordered UnitedHealth Group to divest Change Healthcare's ClaimsXten business to TPG Capital. UnitedHealth Group had said it would sell the business for $2.2 billion to the private equity group.
As part of the merger, UnitedHealth Group agreed to acquire $5 billion of Change Healthcare's debt in addition to paying $7.8 billion in cash.
Change Healthcare’s stock jumped 6.9% to $27.25 a share in after-hours trading upon the news. UnitedHealth Group’s stock remained steady at $523.55 a share.
“We are pleased with the decision and look forward to combining with Change as quickly as possible so that together we can continue our work to make the health system work better for everyone,” said a UnitedHealth Group spokesperson.
Change Healthcare likewise said it was pleased with the ruling.
The Justice Department said Tuesday it is "reviewing the opinion closely to evaluate next steps." Nichols' full memorandum opinion regarding the case will be unsealed later this week.
UnitedHealth Group and Change Healthcare aim to consummate the merger by Dec. 31.
UnitedHealth Group announced its plan to buy Change Healthcare in January 2021. The healthcare giant aims to add Change Healthcare’s claims processing, review and administrative services to its Optum healthcare services arm. Nashville, Tenn.-based Change Healthcare will join the smallest division of Optum--OptumInsight--which handles revenue cycle management for providers and other insurers.
The Justice Department sued to block the deal in February, alleging it would give UnitedHealthcare improper insight into how rival insurers structure their networks.
The proposed merger attracted criticism from hospitals, pharmacies and antitrust advocates, which argued the acquisition of Change Healthcare would give UnitedHealth Group an unfair advantage in claims processing, leading to higher healthcare costs for providers, other payers and patients.
The National Community Pharmacists Association expressed disappointment in Nichols' decision.
UnitedHealth Group’s acquisition of Change Healthcare "will give it a massive advantage over its competitors, and it will create an irresistible incentive for the insurance company to use patient data to steer business to its own pharmacy, and away from local, small-business pharmacies," CEO B. Douglas Hoey said in a statement.