Zhanna Hapanovich/iStock via Getty Images Evolent Health ( EVH ) could see $35 a share in a takeover from a private equity firm, according to a Truist analyst, after a report that the company is in talks for a sale after takeover interest. Evolent ( EVH ) shares surged 14% on Thursday after Reuters reported that PE firms TPG ( TPG ), KKR ( KKR ) and CD&R are among parties that have expressed interest in a possible deal. Health insurer Elevance Health ( ELV ) is also among the bidders who may team up with a PE firm for a deal.
"We have always believed that an LBO transaction likely made more sense for EVH than a strategic transaction involving a health insurer, given the risk around EVH's health insurance partnerships resulting in conflict of interest," Truist analyst Jailendra Singh wrote in a note on Friday. A PE firm can pay ~$35 a share and generate a "reasonable" IRR and MOIC, Singh, who has a buy rating and $33 price target on Evolent ( EVH ) added. At that price, a PE shop could generate an IRR of around 20% and MOIC of ~2.
5x. "However, a joint partnership involving a strategic buyer such as ELV and a PE firm might have flexibility to push the purchase price higher," Singh wrote. More on Evolent Health Evolent Health, Inc.
(EVH) Q2 2024 Earnings Call Transcript Evolent Health soars on report of sale talks after inbound interest Truist raises Evolent Health to buy, cites rate increases Seeking Alpha’s Quant Rating on Evolent Health Historical earnings data for Evolent Health.
