Evolent Health To Buy Valence Health For $145 Mln; Sees To Meet Or Exceed View

(RTTNews) - Evolent Health Inc. (EVH) Wednesday announced that it has entered into a definitive agreement to acquire the majority of Valence Health, Inc.'s business for approximately $145 million.

Regarding its trading, Evolent said it expects to meet or exceed previously provided guidance for the second quarter and full year 2016.

Under the terms, the deal excludes Valence Health's contracts serving state insurance cooperatives. These 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.

The purchase price is based on the closing price of Evolent's Class A common stock on the New York Stock Exchange on July 12, and consists of 5.84 million shares of Evolent Class A common stock and $35 million in cash.

The deal also includes an earn-out of up to $50 million, payable in Evolent Class A common stock, tied to future new business activity.

The companies expect the transaction to close within the next 120 days, subject to regulatory approvals and certain closing conditions set forth in the agreement.

The acquisition has been unanimously approved by the boards of directors of both companies. Frank Williams will remain as Chief Executive Officer of the combined organization. There will be no change in composition of the Evolent Board of Directors.

The addition of the Valence Health business is expected to accelerate target timeline to Adjusted EBITDA break-even in 2017 by one to two quarters.

The combination of Evolent and Valence Health brings together two innovative companies that serve health care providers in the transition to value-based care. Evolent was founded in 2011 to support providers in moving to a population health model of care delivery and to successfully manage performance-based payment arrangements.

Valence Health provides value-based administration, population health and advisory services. The company has developed particular expertise in the Medicaid and pediatric markets, and supports approximately 600,000 lives across 10 long-term operating partners.