Evolent Health and Valence Health have entered an agreement to acquire the majority of Valence Health’s value-based administration, population health and advisory services business for $145M. The addition of Valence Health is expected to enhance Evolent’s market-leading value-based care platform for providers.
Here are 10 things to know about the acquisition:
1. Under terms of the agreement, Valence Health acquisition excludes its contracts serving state insurance cooperatives; the state insurance cooperative contracts will be transferred to a separate entity that will maintain operations as they currently exist today, which will be owned by Valence shareholders.
2. The purchase price consists of 5.84 million shares of Evolent Class A common stock and $35 million in cash. The transaction also includes an earn-out of up to $50 million, payable in Evolent Class A common stock, tied to future new business activity.
3. Evolent expects the acquired business, on a standalone basis, to generate revenues of approximately $80-85 million in 2016.Valence Health has developed particular expertise in the Medicaid and pediatric markets, and currently supports approximately 600,000 lives across 10 long-term operating partners.
4. By adding Valence Health’s services to Evolent, the organizations will be able to offer comprehensive services and technology across a variety of populations and will serve more than 1.8 million lives across 23 long-term operating partners, comprised of provider-sponsored health plans, accountable care organizations and full-risk entities.
5. According to Evolent CEO Frank Williams, the company expects to accelerate their target timeline to adjusted EBITDA break-even in 2017 by one to two quarters
6. The companies expect the transaction to close within the next 120 days, subject to regulatory approvals and certain closing conditions.
