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Change Healthcare Divests Capacity Unit To Focus On Growth; Street Says Buy
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Change Healthcare Divests Capacity Unit To Focus On Growth; Street Says Buy

Change Healthcare has agreed to sell its Capacity Management business unit to HealthStream, which is a leader in providing workforce solutions to the healthcare industry. The healthcare technology company expects to close the deal in the coming weeks. Financial terms of the deal weren’t disclosed.

The divestment gives Change Healthcare (CHNG) an opportunity to focus more on the core aspects of its business and drive growth. Its CEO Neil de Crescenzo said “The sale of the Capacity Management business aligns with our strategy to concentrate on the primary areas of our business to achieve the best outcomes for our customers through the power of the Change Healthcare platform.”

HealthStream (HSTM) will gain products like ANSOS, Enterprise Visibility, and Capacity Planner from the acquisition of Capacity Management business, which focuses on nurse staffing and improvement in patient flow.

On Nov. 23, Cantor Fitzgerald analyst Steven Halper raised the stock’s price target to $19 (10.9% upside potential) from $18 and maintained a Buy rating. Halper said that the company’s Network Solutions segment “is generally underappreciated by investors” and that “some of CHNG’s solutions within this segment are gaining traction among consumers given challenges caused by COVID-19.”

Halper added that the company is confident of returning to 4-6% core growth in early FY22 and expects potentially stronger growth thereafter. Meanwhile, the analyst noted that “FY22 growth will likely be higher than this target given the easier comparison to COVID-impacted F21. We continue to believe the company is well-positioned to accelerate growth.” (See CHNG stock analysis on TipRanks).

The rest of the Street has a bullish outlook on the stock with a firm Strong Buy analyst consensus backed by 12 unanimous Buy ratings. The average price target stands at $20.05 and implies upside potential of about 17.1% to current levels. Shares have increased by 4.5% year-to-date.

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