Privia Health Acquires Evolent Care Partners for $100M, Expanding Value-Based Care Footprint

Privia Health, a leading physician enablement company, has announced the acquisition of Evolent Health's accountable care organization (ACO) business, Evolent Care Partners, for $100 million in cash. The deal, which is expected to close in the fourth quarter, marks a significant expansion of Privia's value-based care network and reinforces its position in the rapidly evolving healthcare landscape.

Strategic Expansion and Financial Impact

The acquisition brings more than 120,000 lives under Privia's management across various programs, including the Medicare Shared Savings Program (MSSP), commercial programs, and Medicare Advantage. This addition increases Privia's total attributed lives in value-based care arrangements to 1.5 million across both new and existing states.

Privia stands to benefit financially from the deal, with the potential for an additional $13 million payout contingent on the ACO's performance in the MSSP program in 2025. The transaction is expected to positively contribute to Privia's adjusted earnings next year, reflecting the company's confidence in the synergies and growth opportunities presented by the acquisition.

Enhancing Value-Based Care Performance

A key aspect of the acquisition is the opportunity for Privia to improve the performance of Evolent Care Partners within the MSSP. In 2024, Evolent Care Partners achieved a shared savings rate of 5.9%, which, while respectable, falls short of Privia's impressive 9.3% savings rate across its ACOs. This discrepancy suggests significant potential for Privia to leverage its expertise and technology to enhance the efficiency and effectiveness of the newly acquired ACO.

Ryan Langston, an analyst at TD Cowen, commented on the deal's potential, stating, "We see potential for [Evolent Care Partners] to generate additional earnings through [Privia] improving MSSP performance over time."

Implications for Evolent Health

For Evolent Health, the divestiture of its ACO business aligns with its strategic focus on core specialty care management services. The company plans to use the proceeds from the sale to reduce its debt, potentially strengthening its financial position. This move allows Evolent to streamline its operations and concentrate resources on its primary business segments.

The assets being sold to Privia represent approximately $10 million in adjusted earnings before taxes and other accounting adjustments for Evolent, highlighting the significance of the transaction for both companies involved.