NEW YORK, Aug 22 (Reuters) – Evolent Health (EVH.N)opens new tab is currently in talks with private equity firms and health care providers about a potential sale. The process was initiated after interest in an acquisition emerged, people familiar with the matter said Thursday.
Private equity firm TPG (TPG.O)opens new tabCD&R and KKR (KKR.N)opens new tab are among the parties that have expressed interest in a deal with healthcare software provider Evolent, which has a market value of about $3.8 billion, the sources said. TPG was one of Evolent’s early investors.
Health insurer Elevance Health (ELV.N)opens new tab is also among the bidders and could team up with a private equity firm to acquire Evolent, the sources added.
Evolent’s shares rose more than 18 percent on Thursday after the news broke. The shares, which have been traded in New York since the company went public in 2015, had fallen about 14 percent since the start of the year through Wednesday’s close.
Evolent, CD&R and Elevance did not immediately respond to requests for comment. KKR and TPG declined to comment.
Evolent, which is working with a financial adviser on the sale process that began several months ago, has received initial bids, the sources said, adding that an agreement could be reached in the next few weeks.
The sources, who asked not to be identified because the talks are confidential, warned that a deal may not be reached.
Evolent, which has partnerships with healthcare providers and health insurers such as Humana (HUM.N)opens new tabis a manufacturer of software that enables the transition from fee-based reimbursement models to value-based care models. In a value-based model, physicians and healthcare providers are compensated based on the quality of the services they provide.
Evolent was founded in 2011 by UPMC Health Plan, one of the largest provider-owned health plans in the United States, and The Advisory Board Company, a provider of technology tools for hospitals and healthcare providers.
The company reported a 38% jump in revenue while narrowing its losses in the latest quarter, but results fell short of market expectations as it suffered from lower billing rates from its healthcare customers.
Activist investor Engaged Capital acquired a significant stake in Evolent in 2020 and urged the company to explore options to increase shareholder value. Engaged eventually settledopens new tab with the company, which led to the creation of a strategy committee focused on “value creation initiatives”.
Evolent has attracted acquisition interest before. In 2021, Bloomberg reported that Walgreens was considering a deal for Evolent.
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Reporting by Milana Vinn and Anirban Sen in New York; Editing by Paritosh Bansal and Nick Zieminski
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Milana Vinn covers mergers and acquisitions in the technology, media and telecommunications (TMT) space. Her content typically appears in the Markets and Deals sections of the site. Milana previously worked at GLG and PE Hub, where she covered private equity TMT deals for several years. She graduated from the CUNY Graduate School of Journalism with a Masters in Business Journalism.
Anirban Sen is the US M&A editor at Reuters in New York, where he leads coverage of the biggest deals. After joining Reuters in Bangalore in 2009, Anirban left in 2013 to work as a technology deals reporter at several leading business news outlets in India, including The Economic Times and Mint. Anirban returned to Reuters in 2019 as finance editor to lead a team of reporters covering everything from investment banking to venture capital. Anirban holds a degree in history from Jadavpur University and a postgraduate diploma in journalism from the Indian Institute of Journalism & New Media.
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