Evolent Health, an Arlington, Va.-based healthcare technology provider, is exploring a potential combination with The Advisory Board, a Washington, D.C.-based healthcare consulting firm, according to a report from Reuters published on Friday.
Citing people “familiar with the matter,” Reuters reporter Carl O’Donnell wrote, “Healthcare technology provider Evolent Health Inc. is exploring a potential combination with Advisory Board Co, the business consulting company targeted by activist fund Elliott Management, people familiar with the matter said.”
The Advisory Board announced in February that its board and management team had begun an evaluation process to explore potential strategic alternatives to maximize shareholder value, including a sale of part or all of the company.
The two companies already have a relationship as The Advisory Board helped to launch Evolent five years ago. 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. The company started with $25 million in funding from The Advisory Board Company and the UPMC Health Plan. Frank Williams, CEO and co-founder of Evolent Health, had served as executive chairman of The Advisory Board Company.
In 2015, Evolent became a publicly traded company. The company was a 2014 Healthcare Informatics Up and Comer and on the 2016 Healthcare Informatics 100 list, Evolent ranked 59th. The Advisory Board ranked 17thon the Healthcare Informatics 100 list this past year, with $780 million in revenue.
According to the Reuters article, written by Carl O’Donnell, Evolent Health shares jumped as much as 14 percent on the news and ended trading up 4.8 percent at $20.85, giving the company a market capitalization of $1.4 billion. Advisory Board shares ended flat at $44.70, giving the company a market capitalization of $1.8 billion.
“Evolent has held talks with private equity firms about getting financial backing for an offer, and there is no certainty that it will clinch a deal, the people said on Friday,” O’Donnell wrote in the article. Further, the article quoted “people familiar with the matter” as reporting that “Advisory Board has also attracted the interest of other companies, including healthcare data company Press Ganey Associates Inc. “Advisory Board received preliminary offers this week, and will continue discussions with bidders in the coming weeks,” O’Donnell wrote, citing the same people.
A deal could involve the sale of the entire company or just a divestment of its healthcare division, the people said, according to O’Donnell.