Evolent Health inks deal to acquire IPG for $375M

Evolent Health this week announced an agreement to buy IPG, which develops technology and surgical management services for musculoskeletal conditions.

WHY IT MATTERS

The deal calls for Evolent to pay TPG Growth, the growth equity platform of alternative asset firm TPG, $375 million for the company – plus a potential additional consideration of up to $87 million, depending on certain benchmarks.

The acquisition is meant to expand Evolent's value-based care portfolio – boosting its specialty offerings, adding new customers and diversifying its commercial insurance revenue mix.

It broadens Evolent's focus to include surgical cost management focusing on MSDs. By adding to its specialty portfolio tof oncology, cardiology and end-of-life care planning, the company – which expects the deal to be immediately accretive to adjusted EBITDA margins and cash flow – says it will enable better service of the value-based needs of Evolent's payer and risk-bearing provider clients.

"IPG is a leader in surgical cost management solutions with a focus on musculoskeletal cost and quality and adds unique clinical value and an enhanced financial profile to support our mission for our patients, providers, payers and shareholders," said Evolent Health CEO Seth Blackley in a statement.

THE LARGER TREND

The deal comes at a pivotal moment for value-based care – which seems to be gaining some traction after some years of, arguably, a disappointing lack of progress.

Some recent reports have seen the imperatives of risk-based reimbursement ushering a new era of interoperability as payers are brought more into the mix thanks to new data exchange requirements from the Centers for Medicare and Medicaid Services. Others are urging providers to invest more in the IT and staffing needed to meet the obligations of accountable care.

Meanwhile, CMS announced this week that it is designating a new provider type – Rural Emergency Hospitals – with providers who meet conditions of participation eligible to receive payment for services provided on or after January 1, 2023. (Listen to a recent HIMSSCast episode on the future of rural care.)

ON THE RECORD

"IPG will add valuable relationships with national and regional commercial health plans across the country, as well as hundreds of partnerships with ambulatory surgery centers nationally," said John Johnson, Evolent's chief financial officer, in a statement.

"We are excited to become part of a leading value-based specialty care solutions company," added Vince Coppola, CEO of IPG. "We look forward to working closely with the Evolent team to further accelerate our growth and innovation. This partnership creates significant opportunities for our business, our clients and our team."