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Why Change Healthcare Is Rising Today

By Brian Feroldi - Updated Mar 10, 2020 at 1:55PM

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Shares pop after the company announces that it has officially cut ties with one of its major shareholders.

What happened

Shares of Change Healthcare (CHNG -0.21%), a healthcare stock that provides data and analytical tools that are designed to improve healthcare systems, rose as much as 11% in early morning trading on Monday. As of 12:50 p.m. EST, shares were up 5%.

So what

The pop is most likely linked to Change's announcement that healthcare supply giant McKesson (MCK -0.26%) is no longer one of its major shareholders. As previously announced, McKesson and Change Healthcare have decided to part ways. That split officially took place today, and McKesson no longer owns any voting or economic interest in the business.

Stock chart with price heading down and then up

Image source: Getty Images.

Change Healthcare's CEO stated:

We started our journey three years ago, combining Change Healthcare with the majority of the McKesson Technology Solutions businesses to create a leading healthcare information technology company. Today, we are an independent market leader, innovating on our platform to improve clinical, financial and patient engagement outcomes across the U.S. healthcare system. With our established and scaled platform, a strong new business pipeline, a world-class innovation engine and deep customer and partner relationships, we are well positioned to accelerate growth and performance over the coming years.

Traders appear to agree that Change Healthcare is better off on its own and is bidding up the stock in response.

Now what

Change Healthcare is in the middle of a business model transition right now, but the company still expects the year ahead to be decent for the business. Management has guided for Solutions revenue -- which is its largest business segment -- to grow at least 4% in fiscal 2021. As for profitability, the company expects adjusted EBITDA to grow 6% to 8%, which is a slightly faster rate than revenue.

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Stocks Mentioned

Change Healthcare Inc. Stock Quote
Change Healthcare Inc.
$23.48 (-0.21%) $0.05
McKesson Corporation Stock Quote
McKesson Corporation
$321.54 (-0.26%) $0.84

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