- Thursday after close, Evolent Health Inc EVH agreed to acquire Magellan Specialty Health, the specialty benefit management organization owned by Centene Corporation CNC, for $650 million at the close plus additional contingent consideration of up to $150 million based on 2023 performance.
- William Blair is positive on the acquisition and believes this is consistent with management's prior commentary that Evolent would consider strategic assets that fit under the specialty care management segment and provide a leg into new specialties beyond oncology, MSK, and cardiology.
- The firm reiterates the Outperform rating.
- EVH shares now trade at roughly 1.5 times the analyst's 2023 sales forecast, which is an attractive risk/reward level for the stock, given the company's unique market position, large and growing addressable market, and still-robust longer-term growth outlook.
- Moreover, William Blair says that the pandemic could accelerate the push to value-based care as providers move away from volume-based, fee-for-service reimbursement.
- Price Action: EVH shares are up 15.47% at $27.55 on the last check Friday.
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