UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): February 10, 2020

Change Healthcare Inc.

(Exact Name of Registrant as Specified in its Charter)

3055 Lebanon Pike, Suite 1000

Nashville, Tennessee 37214

(Address of Principal Executive Offices) (Zip Code)

(615) 932-3000

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Explanatory Note

As previously announced, on March 1, 2017, McKesson 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 and substantially all of Change Healthcare Performance, Inc.’s (formerly Change Healthcare, Inc.) legacy business were contributed to Change Healthcare LLC, a Delaware limited liability company (“Change Healthcare”), resulting in the establishment of a joint venture (the “Joint Venture Transactions”).

On February 10, 2020, McKesson issued a press release announcing the commencement of its exchange offer (the “Exchange Offer”) related to the separation of McKesson’s interest in Change Healthcare. The separation is being effected in connection with the merger of PF2 SpinCo, Inc. (“SpinCo”), a Delaware corporation and a wholly owned subsidiary of McKesson, and the Company (the “Merger”). As previously announced, in connection with the consummation of the Joint Venture Transactions, the Company, SpinCo and McKesson entered into a number of agreements, including the Merger Agreement dated as of December 20, 2016 (the “Merger Agreement”), pursuant to which, among other things, immediately following the consummation of the Exchange Offer (and any required clean-up spin-off distribution as described below), SpinCo will merge with and into the Company, with the Company as the surviving company. The separation transactions described in this Current Report on Form 8-K are collectively referred to herein as the “Transactions”.

In the Exchange Offer, McKesson is offering the holders of its common stock, par value $0.01 per share (the “McKesson Common Stock”), the option to exchange their shares of McKesson Common Stock for shares of SpinCo’s common stock, par value $0.001 per share (the “SpinCo Common Stock”). SpinCo will hold all of McKesson’s interest in Change Healthcare prior to the consummation of the Exchange Offer. If the Exchange Offer is not fully subscribed because less than all shares of SpinCo Common Stock owned by McKesson are exchanged, or if the Exchange Offer is consummated but not all of the shares of SpinCo Common Stock owned by McKesson are exchanged, the remaining shares of SpinCo Common Stock owned by McKesson will be distributed in a clean-up spin-off (the “Spin-off” and, together with the exchange offer, the “Distribution”) on a pro rata basis to holders of McKesson Common Stock whose shares of McKesson Common Stock remain outstanding after consummation of the Exchange Offer.

Immediately following the Distribution, all shares of SpinCo Common Stock will be converted into an equal number of shares of common stock of the Company, par value $0.001 (the “Change Common Stock”), in the Merger. After the completion of the Merger, Change Healthcare will be a wholly-owned subsidiary of the Company, and the holders of McKesson Common Stock who participate in the Exchange Offer or who receive SpinCo Common Stock in the Spin-off, if applicable, will own approximately 51% of the Change Common Stock on a fully-diluted basis.

The Distribution is intended to be executed via a tax-free distribution of SpinCo Common Stock to holders of McKesson Common Stock for U.S. federal income tax purposes. The Merger is intended to qualify as a “reorganization” for U.S. federal income tax purposes.

The Separation Agreement

On February 10, 2020, in connection with the commencement of the Exchange Offer, McKesson, SpinCo, the Company, Change Healthcare (and certain of its affiliates), entered into a Separation and Distribution Agreement (the “Separation Agreement”), which provides the material terms for the Distribution.

Subject to the terms and conditions of the Separation Agreement, prior to consummating the Distribution and completing the Merger, to the extent not already completed, McKesson will transfer to SpinCo all of its direct or indirect interest in Change Healthcare. In addition, McKesson will commence the Exchange Offer and, to the extent that any shares of SpinCo Common Stock are not exchanged in the Exchange Offer, after giving effect to the Exchange Offer, McKesson will distribute the remaining shares of SpinCo Common Stock on a pro rata basis to the holders of outstanding shares of McKesson Common Stock in the Spin-off. McKesson, in its sole discretion, will determine the terms of the Exchange Offer, including the number of shares of SpinCo’s Common Stock that will be offered for each share of McKesson Common Stock.

The Separation Agreement also sets forth other agreements between McKesson, SpinCo and the Company related to the transactions, including provisions concerning the termination and settlement of intercompany accounts and financial instruments and the resignation of McKesson personnel from SpinCo prior to the Distribution. The Separation Agreement also sets forth agreements that govern certain aspects of the relationship between McKesson and the Company after the Distribution, including provisions with respect to litigation, access to information, confidentiality and dispute resolution.

The Separation Agreement requires McKesson to indemnify the Company against losses arising from, among other things, (i) any liabilities of McKesson (other than liabilities of Change Healthcare or arising out of ownership of Change Healthcare) (ii) any of McKesson’s financial instruments, (iii) breaches by McKesson of the Separation Agreement, (iv) any liabilities of SpinCo and its subsidiaries arising before (or based on facts occurring before) the Distribution, (v) any indemnification claims of officers or directors of McKesson and its subsidiaries (including SpinCo, prior to the Distribution) and (vi) the failure of the consummation of the Merger to occur immediately following the Distribution as a result of a breach of the Merger Agreement by McKesson or SpinCo. The Separation Agreement requires the Company to indemnify McKesson against losses arising from, among other things, (i) any liabilities of Change Healthcare or arising out of ownership of Change Healthcare, (ii) breaches by SpinCo of the Separation Agreement following the Merger and (iii) the failure of the consummation of the Merger to occur immediately following the Distribution as a result of a breach of the Merger Agreement by the Company. McKesson is also required to indemnify the Company for losses arising from any material misstatements or omissions in SEC filings required in connection with the Transactions to the extent such misstatements or omissions were not based on information furnished by the Company.

Tax Matters Agreement

Pursuant to the Separation Agreement, McKesson, SpinCo and the Company will enter into a Tax Matters Agreement as of the effective date of the Distribution. The Tax Matters Agreement will govern the rights, responsibilities and obligations of McKesson and SpinCo after the Transactions with respect to tax liabilities and benefits, tax attributes, tax contests and other tax sharing regarding U.S. federal, state and local, and non-U.S., taxes, other tax matters and related tax returns. In addition, the Tax Matters Agreement could restrict the Company’s ability to enter into certain change of control or other transactions involving the Company’s equity if such transactions could implicate the tax-free status of the Distribution. To the extent the Distribution does not qualify as a tax-free transaction as a result of the Company’s failure to comply with the Tax Matters Agreement, the Company will be required to indemnify McKesson, and in certain circumstances the Tax Matters Agreement may require that the Company enter into a new tax receivable agreement pursuant to which it will be required to pay to McKesson 85% of the cash tax savings, if any, arising from the utilization of certain tax basis increases resulting from the Distribution.

The Distribution is subject to the satisfaction or waiver of certain conditions, including that the registration statement on Form S-4 and S-1 (File No. 333-236236) filed by SpinCo (the “SpinCo Registration Statement”) with the Securities and Exchange Commission (the “SEC”) in connection with the Distribution and the registration statement on Form S-4 (File No. 333-236234) filed by the Company (together with the SpinCo Registration Statement, the “Registration Statements”) with the SEC in connection with the Merger will each be declared effective by the SEC, that the Merger Agreement be in full force and effect at the time of the Distribution, that all the conditions to the Merger have been satisfied or waived, and the other conditions described more fully in the Registration Statements. The Merger is also subject to the satisfaction or waiver of certain conditions, including that the Distribution has been consummated, the receipt by McKesson, on the one hand, and the Company, on the other hand, of opinions from their respective counsel relating to the treatment of the distribution and the merger for U.S. federal income tax purposes, and the other conditions described more fully in the Registration Statements.

The foregoing description of the Separation Agreement (including the Tax Matters Agreement) does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Separation Agreement (including the form of Tax Matters Agreement included therein), which is filed as Exhibit 2.1 to this Current Report on Form 8-K, and which is incorporated herein by reference.

(d) Exhibits.

Forward-Looking Statements

This communication contains certain statements about McKesson, SpinCo and the Company that are “forward-looking statements” within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. These matters involve risks and uncertainties as discussed in McKesson’s and the Company’s respective periodic reports on Form 10-K and Form 10-Q and current reports on Form 8-K, filed from time to time with the SEC. The forward-looking statements contained in this communication may include statements about the expected effects on McKesson, SpinCo and the Company of the separation of SpinCo from McKesson and the merger of SpinCo with and into the Company (collectively, the “Transactions”); the anticipated benefits of the Transactions and McKesson’s, SpinCo’s and the Company’s anticipated financial results; and also include all other statements in this communication that are not historical facts. Without limitation, any statements preceded or followed by or that include the words “targets,” “plans,” “believes,” “expects,” “intends,” “will,” “likely,” “may,” “anticipates,” “estimates,” “projects,” “should,” “would,” “could,” “positioned,” “strategy,” “future,” or words, phrases, or terms of similar substance or the negative thereof, are forward-looking statements. These statements are based on the current expectations of the management of McKesson, SpinCo and the Company (as the case may be) and are subject to uncertainty and to changes in circumstances and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. In addition, these statements are based on a number of assumptions that are subject to change. Such risks, uncertainties and assumptions include, but are not limited to: changes in the healthcare industry and regulatory environment; fluctuations in foreign currency exchange rates; material adverse resolution of pending legal proceedings, including those related to the distribution of controlled substances; cyberattack, natural disaster, or malfunction of sophisticated internal computer systems to perform as designed; the potential inadequacy of insurance to cover property loss or liability claims; the satisfaction of the conditions to the Transactions and other risks related to the completion of the Transactions and actions related thereto; McKesson’s and the Company’s ability to complete the Transactions on the anticipated terms and schedule, including the ability to obtain regulatory approvals; the anticipated tax treatment of the Transactions and related transactions; the expansion and growth of the Company’s operations; ongoing risks related to the price or trading volume of the Company’s common stock; failure to pay dividends to holders of the Company’s common stock; impairment charges for goodwill; and the risk that disruptions from the Transactions will harm McKesson’s, SpinCo’s or the Company’s businesses. However, it is not possible to predict or identify all such factors. Consequently, while the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Forward-looking statements included herein are made as of the date hereof, and none of McKesson, SpinCo or the Company undertakes any obligation to update publicly such statements to reflect subsequent events or circumstances.

Important Notices and Additional Information

In connection with the Transactions, McKesson has filed with the SEC a Schedule TO with respect to the exchange offer, SpinCo has filed with the SEC a registration statement on Form S-4 and Form S-1 containing a prospectus of SpinCo relating to the exchange offer, and the Company has filed with the SEC a registration statement on Form S-4 relating to the Transactions. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THESE DOCUMENTS AND ANY AMENDMENTS TO THESE DOCUMENTS WHEN THEY BECOME AVAILABLE, AS WELL AS ANY OTHER RELEVANT DOCUMENTS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT MCKESSON, SPINCO AND THE COMPANY AND THE TRANSACTIONS. Investors and security holders may obtain these materials and other documents filed with the SEC free of charge at the SEC’s website, www.sec.gov. In addition, copies of these materials may be obtained free of charge by accessing McKesson’s website at www.mckesson.com, or from the Company by accessing the Company’s website at www.changehealthcare.com.

To obtain copies of the exchange offer prospectus and related documents, or for questions about the exchange offer or how to participate, please visit the website that McKesson will maintain for the exchange offer at www.dfking.com/McKesson or contact the information agent, D.F. King & Co., at 1-866-304-5477 (toll-free in the United States) and 1-212-269-5550 (outside of the United States).

None of McKesson, SpinCo, the Company or their respective directors or officers makes any recommendation as to whether any McKesson stockholder should participate in the exchange offer. This communication is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 10, 2020