Evolent Health considers a sale to PE, stock price leaps

Evolent Health, a company that offers software solutions to help providers and insurers transition to value-based care, is reportedly in talks for an acquisition after receiving takeover inquiries, Reuters reported on Thursday.

The company assumes downside risk for providers and health plans and guarantees savings for the health plan. Evolent’s doctors, nurses and licensed clinical social workers help create clinical pathways and protocols for providers to improve care and optimize spend. 

Evolent has a market value of about $3.8 billion, the sources said, Reuters reported.

Evolent shares jumped more than 18% Thursday after Reuters reported news of the sale interest by private equity firms TPG, KKR and Clayton, Dubilier & Rice (CD&R) and health insurer Elevance. Seeking Alpha predicts that the stock could sell for $35 per share if the sale goes through.

Evolent declined to comment on the buyers’ interest or its willingness to sell the company.

In 2021, Bloomberg reported that Walgreens Boots Alliance was considering a deal to acquire Evolent.

In a note, analysts from Truist Securities highlighted that while Evolent Health has been familiar with M&A conversations, a leveraged buyout (LBO) might be more suitable than a strategic acquisition by a health insurer due to potential conflicts of interest, investing.com reported.

Evolent’s Q2 2024 financial results show nearly 40% growth in revenue year over year, but the company lost $6.4 million in Q2, attributable to common shareholders, its earnings report says.

The company decreased its full-year revenue outlook for 2024 in its Q2 earnings report.

Evolent curates emerging medical literature to provide recommendations to partnering provider organizations about the optimal treatment pathway for conditions like cancer. Evolent also has an accountable care organization for independent primary care providers. Evolent takes on the financial and clinical responsibility for patients’ care, according to the company.

If providers follow pre-approved care plans, based on the medical evidence collated by Evolent researchers, providers can get automatic authorization and not have to wait for a prior authorization request. If providers want to deviate from pre-approved plans, they can discuss the evidence with a physician at Evolent.