Evolent Health Engages in Sale Talks With KKR, TPG & Others

Private equity firms including TPG, Clayton, Dubilier & Rice (CD&R), and KKR are among those expressing interest in acquiring the healthcare software provider, which currently holds a market value of approximately $3.8 billion.

Evolent Health has entered into negotiations with private equity firms and healthcare service providers for a potential sale, initiated after the company received takeover interest.

Private equity firms including TPG, Clayton, Dubilier & Rice (CD&R), and KKR are among those expressing interest in acquiring the healthcare software provider, which currently holds a market value of approximately $3.8 billion.

TPG, an early investor in Evolent, is notably among the potential bidders.

Elevance Health, a major health insurer, initially showed interest in bidding for Evolent but has since withdrawn from the process, as reported by Mint.

Reportedly, Evolent has been working with a financial adviser on this sale process, which began several months ago.

Further, the company has received initial bids, with a potential deal expected to be finalized in the coming weeks, although sources caution that an agreement is not guaranteed.

Evolent, which has partnerships with healthcare providers and health insurers including Humana, is a maker of software that enables them to migrate from fee-for-service reimbursement models towards value-based care models.

In a value-based model, doctors and healthcare providers are reimbursed based on the quality of care they provide.

Founded in 2011 by UPMC Health Plan, which operates one of the largest US provider-owned health plans, and The Advisory Board Company, it provides technology tools to hospitals and healthcare providers.

In its most recent quarter, Evolent reported a 38% increase in revenue and a reduction in losses, though its results fell short of market expectations due to lower billing rates from healthcare payer clients.

Moreover, the company has been the target of previous acquisition interest, including a reported bid consideration by Walgreens in 2021.

Activist investor Engaged Capital, which acquired a significant stake in Evolent in 2020, has pushed for initiatives to enhance shareholder value, leading to the establishment of a strategy committee focused on value creation.

Despite the ongoing discussions, there remains a possibility that no deal will materialize.