Privia Health Expands Value-Based Care Footprint with $100M Acquisition of Evolent Health's ACO Business

Privia Health Group, a physician enablement company, has announced plans to acquire Evolent Health's accountable care organization (ACO) business for $100 million in cash, with potential for an additional $13 million based on 2025 Medicare Shared Savings Program (MSSP) performance. The deal, expected to close by the end of this year, significantly expands Privia's value-based care (VBC) presence and is anticipated to contribute positively to adjusted EBITDA in 2026.

Acquisition Details and Strategic Implications

The acquisition of Evolent Care Partners will add more than 120,000 attributed lives to Privia Health's portfolio, bringing its total to approximately 1.5 million lives in VBC arrangements across commercial, Medicare, Medicare Advantage (MA), and Medicaid programs. This expansion includes over 1,000 physicians and extends Privia's footprint to 11 additional states, bringing its total presence to 26 states plus the District of Columbia.

Sam Starbuck, Senior Vice President and President of Privia Care Partners at Privia Health, stated, "The addition of Evolent Health's ACO business to our existing national network of ACOs reaffirms Privia Health's ability to replicate our highly differentiated and flexible operating model with new provider partners across the U.S."

Financial Impact and Industry Analysis

The deal is expected to add roughly $10 million in adjusted run-rate EBITDA and will be financed with cash on hand. Industry analysts view the acquisition favorably for both companies. William Blair analyst Ryan Daniels estimates that of the 120,000 attributed lives Privia will gain, approximately 80,000 are MSSP lives, an area where "Privia has proved to be an industry leader in cost and quality performance."

For Evolent Health, the divestiture allows the company to focus on its core specialty business while improving its financial position. Seth Blackley, Evolent's co-founder and CEO, explained, "This strategic divestiture will allow us to focus on our core specialty business while accelerating our path to reducing leverage and improving cash flow. We plan to use all net proceeds to repay borrowings on our senior credit facility."

Market Positioning and Future Outlook

The acquisition strengthens Privia Health's position in the competitive value-based care landscape, where it competes with companies like Agilon, P3, and Astrana. David Larsen, Managing Director and Digital Health Analyst at BTIG, noted, "This deal makes sense in our view, mainly because Privia is in the business of primary care and managing risk for those members regardless of the services they receive, and Evolent is in the business of managing specialty care."

Evolent Health has reiterated its financial outlook for the third quarter, expecting revenue between $460 million and $480 million and adjusted EBITDA between $34 million and $42 million. For the full year, the company projects revenue of $1.85 billion to $1.88 billion and adjusted EBITDA between $140 million and $165 million.

As the healthcare industry continues to shift towards value-based care models, this acquisition represents a significant move in the ongoing consolidation and specialization of healthcare management companies, with potential implications for patient care, cost management, and industry dynamics in the years to come.