Change Healthcare's IPO one year in: 10 key events and what to expect in the future

From filing its IPO to innovating during the pandemic, Change Healthcare has had a big year.

The Nashville-Tenn.-based data analytics firm filed its IPO in March 2019 for $100 million and increased that to $200 million a few months later. In June 2019, the company upped its IPO to $1 billion.
The company filed its IPO in March 2019 for $100 million, and increased that to $200 million a few months later. In June 2019, the company upped its IPO to $1 billion.

In the past year, the company has focused on supporting customers, team members and shareholders.

"This year, after having become a public company, which is a different environment from where we were before, we have focused on continuing to expand and grow in sales and revenue as well as new acquisitions of innovative solutions that have taken us into new markets and segments," said Neil de Crescenzo, president and CEO of Change Healthcare. "Our continued expansion was good to see in the past year and we've continued to be innovative, in part because of the pandemic, and we expanded our customer base during the pandemic."

The company exceeded financial commitments and ended the 2020 fiscal year strong with fourth quarter EBITDA above target at 5.5 percent and free cash flow of around $300 million. Change Healthcare has processed around 15 billion healthcare transactions, totaling more than $1.5 trillion in the U.S. Through the IPO and now during the pandemic, the company's core focus has been:

• Protecting team members and their families during the shift to virtual work where possible while also supporting those who need to work onsite so data centers can remain open.
• Enhancing and maintaining business continuity for customers.
• Providing free interoperability and industry standard APIs associated with COVID-19, as well as putting together telehealth bundles, virtual front desk and patient engagement tools. The company also bundled COVID-19 data sets and made them available in the Amazon Web Services data exchange.
• Continuing to innovate, especially by making processes contactless.

"There is still $350 billion in payments to hospitals made in paper checks," said Mr. de Crescenzo. "We announced an all-payer network where we can take any payments providers get by check and provide it electronically, sending them the necessary information to reconcile it. That way, we take out the paper and need for their staff to go into the office to handle reimbursement and cash flow. We had been developing that, but interest in it went way up during the pandemic."

The company also made two key acquisitions in 2020: PDX and eRx Network to build its presence in the pharmacy space. PDX is a pharmacy software provider and eRx Network is a data-driven solutions provider for pharmacies. "If we can understand how to take the pharmacy workflow and complement it with network services for a new level of efficiency and provide data that will make customers more efficient, then we will be effective," said Mr. de Crescenzo. "We have a business model that is a flywheel whereby we have data that makes customers more efficient and we turn that into automated processes, which generates more real-time data and granular insights to allow us to provide more solutions."

Going forward, Change Healthcare expects to focus on ways to become more efficient in data collaboration and accelerate digital transformation.
"During the pandemic, we have worked with a large state that put in a network for COVID-19 testing and we worked with commercial lab vendors to turn that out in 24 hours," said Mr. de Crescenzo. "That is fast-paced innovation that happened out of necessity that would typically happen over longer time frames. How do we keep that pace of innovation going and maintain collaboration going forward?"

Here is a brief timeline of the organization's biggest partnerships and announcements over the past year:

1. In December, the company announced it would add four health system partners, including Bronson Healthcare, Community Health Systems Professional Services Corp., Montefiore Nyack Hospital, University of Wisconsin School of Medicine and Public Health and UW Health Madison. The organizations all worked with Change Healthcare to implement its cloud-native enterprise imaging network, which is on the Google Cloud platform.

2. In January 2020, Change Healthcare launched its API & Services Connection marketplace for open, standards-based application program interface products. The service is managed through the AWS marketplace and allows payers, providers, vendors and consultants as well as independent developers access to its tools for revenue cycle management, payment and medical eligibility workflows.

3. The company also updated its claim attachments solution in January to create a nationwide solution for providers to submit documents and data, including claims attachments, to payers electronically. The claims attachment solution set the stage for use of artificial intelligence technology, which Change already uses to automate medical documentation review for risk adjustment and payment integrity.

4. On Feb. 4, Change Healthcare filed a Form S-4 registration statement with the Securities and Exchange Commission to spin off McKesson's ownership interest. The company completed its split from McKesson in March.

5. Later, on Feb. 24, the company introduced its Market Insights, an analytic dataset that provides healthcare stakeholders with visibility into population health, utilization and financial trends. The dataset aggregates 12 consecutive months of billable healthcare data.

6. In response to the COVID-19 pandemic, Change launched a COVID-19 information hub on April 1 to help providers and payers navigate administrative, data and financial challenges. The hub offers information to help customers maintain medical, claims and prescription data flow and provides a continually updated repository of information. It also published a CARES Act Advisory Resource for providers.

7. In May, Change Healthcare sold its Connected Analytics business to Kaufman Hall, a provider of enterprise performance management software and management consulting services.

8. Change Healthcare purchased eRx Network on May 4 for about $212.9 million, boosting the company's focus on building its pharmacy business.

9. On June 2, Change unveiled its Connected Consumer Health suite, a financial engagement platform it developed with Microsoft and Adobe. The platform was designed for healthcare providers to boost the patient experience.

10. On June 3, Change released its 2020 fiscal year financial report. Total revenue hit $3,074 billion.

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