Credit Suisse analysts https://www.credit-suisse.com had a post quarterly conference call with Change Healthcare (CHNG) management https://changehealthcare.com to review FY1Q22 results, with both solutions revenue and adjusted EBITDA coming ahead of consensus.
Previously, analysts provided their quick thoughts earlier on the results and the recent volatility in share price. Key highlights from the call included discussion on the pending Optum Deal https://www.optum.com. CHNG confirmed that both UNH https://www.unh.com and CHNG are both still in the process of gathering and submitting the information for the second request.
The company notes that both companies are 100% committed to the deal and are moving forward with the integration planning accordingly. Finally, CHNG notes that the pending deal has not had any impact on their pipeline and the company continues to see strong win rates and booking figures.
CHNG highlighted notable wins. As for Enterprise Imaging, CHNG signed several multi-million dollar contracts, including a contract in excess of $10 million in annual revenue (one of the largest in the company’s history).
Separately, CHNG won several million dollar plus annual contracts with one of the largest payers for a number of their solutions. As for their RCM services business, CHNG continues to expand their pipeline and grow bookings with continued positive trends in both average deal size and win rates, and ongoing success with independent and hospital-based physician practice groups.
CHNG expects COVID vaccine related revenue to taper off throughout the year. As a result, the company believes their overall revenue and EBITDA will decline from 1Q to 2Q and then stabilize for the remainder of the year. With respect to the individual segments, S&A and Networks will see a sequential revenue decline in FYQ2, while TES should see some step-up.
Credit Suisse analysts are updating their model to reflect FY1Q22 results and the company’s FY22 commentary. The analysts FY22/FY23 EBITDA estimates are now $1.071/$1,159 min vs $1,053/$1,155 previously. Their TP of $25.75 reflects the deal price. Risk can include Optum/CHNG deal getting blocked by the Department of Justice.
If you have questions, provide feedback, or news, email Jailendra Singh at jailendra.singh@credit-suisse.com or call 212-325-8121.