Evolent Health Hits New 52 Week High, Valence Buy The Key

Shares of Evolent Health Inc. (NYSE:EVH) scaled a new 52-week high of $23.64 on Jul 14, eventually closing a tad bit lower at $23.46. This translates into an impressive year-to-date return of roughly 93.7%, significantly higher than the S&P 500 return of 2.27%.

This rally was primarily driven by Evolent’s growing customer base and expanding footprint. The company’s recently announced acquisition of Chicago-based Valence Health is expected to drive growth in the long haul.

This Zacks Rank #3 (Hold) stock has a market cap of around $951.44 million while average volume of shares traded over the last three months is roughly 198.9K.

Key Growth Factors

As of Mar 31, 2016, Evolent had more than $1.2 million lives on its platform. In the first quarter alone, the company added over 50,000 lives in two markets through the expansion into the Medicare Shared Savings Program and an additional 417,000 lives in Medicaid.

The acquisition of Valence will further expand its clientele. Valence serves the likes of The University of Chicago, Cincinnati Children’s, NorthShore and many others. The deal will provide considerable scale to Evolent’s business, as the combined entity will serve 23 long-term operating partners and more than 1.8 million lives in 30 plus states.

Apart from financial benefits, the acquisition strengthens Evolent’s inherent capabilities and expands its growth prospect. Management noted that Valence’s expertise in Medicaid and pediatric value-based care administration will fill-up important gaps in Evolent’s business model.

Evolent also noted that almost 90 contracts are in strategic or initial phases that can be long term opportunities for the company. Per management, the deal will help Evolent to address the needs of the fast growing value-based care market, which is projected to grow more than $45 billion by 2020.

Zacks Rank & Key Picks

Evolent Health has a Zacks Rank #3 (Hold).

Better-ranked stocks include Foundation Medicine (NASDAQ:FMI) , Omnicell (NASDAQ:OMCL) and Streamline Health (NASDAQ:STRM) . While Foundation Medicine and Omnicell sport a Zacks Rank #1 (Strong Buy), Streamline carries a Zacks Rank #2 (Buy).