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Evolent Health to acquire majority of Valence Health's biz for $145M

Evolent HealthInc. has agreed to acquire the majority of Valence Health'sbusiness for approximately $145 million to enhance its platform for health careproviders.

Chicago-based Valence Health provides administration,population health and advisory services. R. Andrew Eckert is the company's CEO.

The transaction does not include Valence Health's contractsserving state insurance cooperatives. These contracts will be transferred to aseparate entity, which will be owned by Valence shareholders.

The purchase price is based on Evolent's July 12 closingclass A common stock price, and consists of 5.84 million class A common sharesand $35 million in cash. The transaction also includes an earn-out of up to $50million, payable in Evolent class A common shares, subject to future newbusiness activity. Shares to be issued in relation to the earn-out are limitedto 3.9 million shares with full payment to be made by Dec. 31.

On a standalone basis, the acquired business is expected togenerate about $80 million to $85 million in revenues for the year ending Dec.31.

The deal is expected to close within the next 120 days,subject to regulatory approvals and closing conditions.

Evolent Health CEO Frank Williams will remain CEO of thecombined company, and its board composition will remain unchanged.

J.P. Morgan Securities LLC is acting as exclusive financialadviser to Valence Health and Latham & Watkins LLP is acting as its legal counsel.Bass Berry & Sims PLC is acting as Evolent's legal counsel.

In addition, Evolent said it expects to meet or exceed itspreviously issued guidancefor the second quarter and full year 2016.