EXPLANATORY NOTE
As previously announced, on March 1, 2017, McKesson Corporation, a Delaware corporation (“McKesson”), and Change Healthcare Inc. (formerly HCIT Holdings, Inc.), a Delaware corporation (the “Company”), completed certain transactions whereby the majority of McKesson’s Technology Solutions segment (“Core MTS”) and substantially all of Change Healthcare Performance, Inc.’s (formerly Change Healthcare, Inc.) legacy business (“Legacy CHC”) were contributed to Change Healthcare LLC, a Delaware limited liability company (the “Joint Venture”), resulting in the establishment of a joint venture.
On March 10, 2020 (the “Effective Date”), pursuant to that certain Agreement and Plan of Merger, dated as of December 20, 2016 (the “Merger Agreement”), by and among the Company, McKesson and PF2 SpinCo, Inc. (formerly PF2 SpinCo LLC), a Delaware corporation and wholly owned subsidiary of McKesson (“SpinCo”), the Company combined with SpinCoin a two-step all-stock “Reverse Morris Trust” transaction that involved (i) a separation of SpinCo from McKesson pursuant to that certain Separation and Distribution Agreement, dated as of February 10, 2020 (the “Separation Agreement” and, the transactions contemplated by the Separation Agreement, the “Separation”), followed by (ii) the merger of SpinCo with and into the Company, with the Company as the surviving company (such merger, together with the other transactions contemplated by the Merger Agreement, the “Merger”).
| Item 1.01 | Entry into a Material Definitive Agreement. |
In connection with the Separation and the Merger, McKesson, SpinCo, the Company, the Joint Venture and Change Healthcare Holdings, LLC, a Delaware limited liability company (“Change Healthcare Holdings”), entered into a Tax Matters Agreement on March 9, 2020. A summary of the material terms of the Tax Matters Agreement is contained in the Company’s registration statement onForm S-4, as amended(Registration No. 333-236234), which was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on February 28, 2020 (the “Change Registration Statement”), and is incorporated by reference into this Item 1.01. A copy of the Tax Matters Agreement is attached hereto as Exhibit 2.3 and is incorporated by reference into this Item 1.01.
| Item 2.01. | Completion of Acquisition or Disposition of Assets. |
On the Effective Date, the Merger was consummated pursuant to the Merger Agreement and the Separation Agreement. On the Effective Date, SpinCo merged with and into the Company, with the Company as the surviving company. As a result, the Joint Venture became a wholly owned subsidiary of the Company. Pursuant to the Merger Agreement, McKesson accepted 15,426,537 shares of its own common stock, par value $0.01 (the “McKesson Common Stock”) in exchange for all 175,995,192 issued and outstanding shares of SpinCo common stock, par value $0.001 per share (the “SpinCo Common Stock”). All shares of SpinCo Common Stock were then converted into an equal number of shares of common stock of the Company, par value $0.001 (the “Change Common Stock”), which the Company issued to the former holders SpinCo Common Stock, together with cash in lieu of any fractional shares.
Immediately after consummation of the Merger, approximately 58% of the outstanding Change Common Stock was heldby pre-Merger holders of McKesson Common Stock and approximately 42% of the outstanding Change Common Stock was heldby pre-Merger holders of Change Common Stock. In connection with the Separation and the Merger, McKesson, SpinCo, the Company, the Joint Venture and Change Healthcare Holdings entered into the Tax Matters Agreement on March 9, 2020. The information set forth in Item 1.01 of this Current Report onForm 8-K is incorporated by reference into this Item 2.01.
The Change Registration Statement sets forth certain additional information regarding SpinCo, the Separation and the Merger. The information contained in Items 1.01 and 5.02 of this Current Report onForm 8-K is incorporated by reference into this Item 2.01. In addition, the foregoing description of the Separation and the Merger is qualified in its entirety by reference to the Separation Agreement and the Merger Agreement, copies of which are attached as exhibits hereto and are incorporated by reference into this Item 2.01.
