By Milana Vinn and Anirban Sen
Exciting news from the financial market as healthcare software provider Evolent Health is currently in talks with private equity firms and healthcare services providers for a potential sale. This process was initiated after Evolent received takeover interest, according to sources familiar with the matter.
Leading private equity firms such as TPG, CD&R, and KKR have shown interest in acquiring Evolent, which boasts a market value of around $3.8 billion. TPG, one of Evolent's early investors, is among the potential bidders.
Health insurer Elevance Health is also in the running and might join forces with a private equity firm to secure the acquisition of Evolent, the sources revealed.
Following this news, Evolent's shares surged by over 18% on Thursday. Despite a 14% decline earlier in the year, the company's shares have been traded in New York since its IPO in 2015.
The sale process, which began a few months ago, is being facilitated by a financial adviser, and initial bids have already been received by Evolent. The deal could potentially be finalized in the coming weeks, although sources caution that it may not come to fruition.
Evolent, known for its software that aids healthcare providers and insurers in transitioning to value-based care models from traditional fee-for-service models, has partnerships with industry giants such as Humana.
Founded in 2011 by UPMC Health Plan and The Advisory Board Company, Evolent reported a 38% increase in revenue in its latest quarter, with reduced losses. However, the results fell short of market expectations due to lower billing rates from healthcare payer customers.
Activist investor Engaged Capital acquired a significant stake in Evolent in 2020, urging the company to explore avenues to enhance shareholder value. This led to the establishment of a strategy committee focused on value creation initiatives.
Interestingly, Evolent has attracted takeover interest in the past, with reports in 2021 suggesting that Walgreens was considering a deal with the company.
Stay tuned for more updates on this potential acquisition that could reshape the healthcare software industry!
Analysis:
This article highlights the ongoing discussions surrounding the potential sale of healthcare software provider Evolent Health to private equity firms and healthcare services providers. The interest from prominent firms like TPG, CD&R, and KKR, coupled with Evolent's innovative software solutions, has sparked excitement in the financial market.
If the acquisition goes through, it could pave the way for significant developments in the healthcare industry, particularly in the realm of value-based care models. Investors and stakeholders should closely monitor the progress of these negotiations as it could impact Evolent's future trajectory and potentially yield lucrative opportunities in the market.