What Happened?
Shares of healthcare solutions company Evolent Health (NYSE: EVH) jumped 10.6% in the morning session after it agreed to sell its value-based primary care business, Evolent Care Partners, to Privia Health Group for up to $113 million.
The transaction included an initial payment of $100 million, with the rest contingent on performance. This strategic sale allowed Evolent to focus on its core specialty condition management business. The company planned to use the proceeds to pay down its senior debt, a move expected to boost its annual cash flow by over $7 million and cut interest expenses by about $10 million. Alongside the announcement, Evolent reaffirmed its revenue and adjusted EBITDA guidance for the third quarter and the full year of 2025, not including the effects of the sale.
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What Is The Market Telling Us
Evolent Health’s shares are extremely volatile and have had 41 moves greater than 5% over the last year. But moves this big are rare even for Evolent Health and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 14 days ago when the stock dropped 6% after markets pulled back, reversing early gains, as investor sentiment remained cautious despite a softer-than-expected inflation reading.
Stocks rose in the morning session after an unexpected drop in the Producer Price Index (PPI) for August signaled easing inflation and raised expectations for a potential Federal Reserve interest rate cut. The U.S. Bureau of Labor Statistics reported that the PPI, which measures wholesale prices, edged down 0.1% the previous month, contrary to analyst expectations for a 0.3% rise. This data gives the Federal Reserve more flexibility to consider lowering interest rates to stimulate the economy.
Evolent Health is down 18.6% since the beginning of the year, and at $9.35 per share, it is trading 68.4% below its 52-week high of $29.56 from September 2024. Investors who bought $1,000 worth of Evolent Health’s shares 5 years ago would now be looking at an investment worth $797.59.
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