8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________

FORM 8-K

_________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

June 24, 2022

Date of Report (Date of earliest event reported)   

Evolent Health, Inc.

(Exact name of registrant as specified in its charter)

_________________________

Delaware		001-37415						32-0454912
(State or other jurisdiction of incorporation or organization)		Commission File Number:						(I.R.S. Employer Identification No.)
800 N. Glebe Road	,	Suite 500	,	Arlington	,	Virginia	,	22203
(Address of principal executive offices)(zip code)

(571) 389-6000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report.)

_________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock of Evolent Health, Inc., par value $0.01 per share	EVH	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 1.01. Entry into a Material Definitive Agreement.

On June 24, 2022, Evolent Health, Inc., a Delaware corporation (“EVH, Inc.”), Evolent Health LLC, a Delaware limited liability company (“EVH LLC” and, together with EVH, Inc., the “Evolent Entities”), and Endzone Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of EVH LLC (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with TPG Growth Iceman Parent, Inc., a Delaware corporation, (the “Company”) and the parent entity of Implantable Provider Group, Inc., and TPG Growth V Iceman, L.P., a Delaware limited partnership, solely in its capacity as representative as set forth therein (the “Representative”), pursuant to which, subject to the satisfaction or waiver of certain conditions, Merger Sub will be merged with and into the Company (the “Merger”) with the Company surviving the Merger as a wholly-owned subsidiary of EVH LLC. The closing of the transactions contemplated by the Merger Agreement (the “Closing”), including the Merger, shall take place on the second business day following the satisfaction or waiver of certain conditions set forth in the Merger Agreement (or on such other date as the parties agree) (the “Closing Date”); provided, however, that the Evolent Entities will not be obligated to consummate the Closing prior to August 1, 2022.

Pursuant to the terms of and as set forth in the Merger Agreement, the Evolent Entities will pay and/or issue to the shareholders and optionholders of the Company (collectively, the “Seller Parties”), subject to certain adjustments and deductions as set forth in the Merger Agreement, cash in an aggregate amount equal to $250,000,000 (the “Cash Consideration”) and an aggregate of number of shares of EVH, Inc.’s Class A common stock (the “Equity Consideration” and together with the Cash Consideration, the “Merger Consideration”) equal to $125,000,000 divided by the volume weighted average closing price of EVH, Inc.’s Class A Common Stock (“Class A Shares”) on the New York Stock Exchange for the ten (10) trading days ending on the last trading day immediately prior to the Closing Date. The Merger Consideration is subject to certain post-Closing adjustments and deductions related to, among other things, the Company’s net working capital, cash and indebtedness, and certain Company transaction expenses as of the Closing Date. In EVH, Inc.’s discretion, the Cash Consideration can be increased with a corresponding decrease to the Equity Consideration.

In addition to the Merger Consideration, the Seller Parties shall be eligible to receive, subject to the satisfaction of certain conditions and metrics set forth in the Merger Agreement, including those related to certain operating results of the Company and its subsidiaries from August 1, 2022 through December 31, 2022 (the “First Earnout Period”) and the first three quarters of 2023 (the “Second Earnout Period”), additional consideration of up to $87,000,000 payable in cash and Class A Shares valued at a price equal to the volume weighted average closing price of such Class A Shares on the New York Stock Exchange for the ten (10) trading days ending immediately prior to the payment (the “Earnout Consideration”). Subject to the conditions applicable thereto, $31,071,000 of the Earnout Consideration will be payable and/or issuable following the First Earnout Period and $87,000,000 less any Earnout Consideration paid and/or issued with respect to the First Earnout Period will be payable and/or issuable following the Second Earnout Period. In EVH, Inc.’s discretion, the Earnout Consideration, if any, may be paid in all cash.

Class A Shares issued as part of the Merger Consideration and Earnout Consideration will be issued only to those Seller Parties who are “accredited investors” as defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”). Seller Parties who are not “accredited investors” as defined in Rule 501 of Regulation D under the Securities Act, or who do not otherwise comply with certain other requirements as set forth in the Merger Agreement, will receive, in lieu of Class A Shares, an amount of cash equivalent thereto.

Each of the boards of directors or managing member or partners, as applicable, of the Evolent Entities and the Company has approved the parties’ entry into the Merger Agreement and the

consummation of the transactions contemplated thereby, including the Merger, as applicable, with the parties making customary representations, warranties and covenants, including, but not limited to, that the Company shall conduct its business in the ordinary course from the date of the execution of the Merger Agreement through the earlier of the Closing Date or the date on which the Merger Agreement is terminated and shall not solicit or engage in negotiations or discussions regarding alternative transactions. The consummation of the transactions contemplated by the Merger Agreement, including the Merger, is also subject to customary closing conditions, including, among others, the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the absence of any legal impediments that would prevent the consummation of such transactions, the accuracy of the representations and warranties the parties made in the Merger Agreement, subject to certain exceptions contained therein, and the parties’ material compliance with their respective obligations under the Merger Agreement. The shareholders of the Company have approved the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger, by the requisite percentage under applicable state law and the Company’s governing documents. The Merger is not subject to any financing condition.

The Merger Agreement may be terminated by EVH LLC and the Representative on behalf of the Company under the following circumstances: (i) by mutual written consent; (ii) by EVH LLC if there has been an uncured breach by the Company of the representations and warranties or covenants or agreements by the Company set forth in the Merger Agreement that results in the failure of certain conditions to Closing to be satisfied; (iii) by the Representative if there has been a material and willful breach by the Evolent Entities or Merger Sub of the representations and warranties or covenants or agreements by the Evolent Entities or Merger Sub set forth in the Merger Agreement that results in the failure of certain conditions to Closing to be satisfied; (iv) by either EVH LLC or the Representative in the event the Closing has not occurred by December 31, 2022 or in the event there is any law or injunction or other final and non-appealable order restraining, enjoining or otherwise prohibiting the transactions contemplated by the Merger Agreement; or (v) by the Representative if all conditions to the Evolent Entities to Closing have been satisfied, the date on which the Closing is required to occur has passed, the Company has irrevocably confirmed that its conditions to Closing have been satisfied or waived and the Evolent Entities do not consummate the Closing with five business days of such notice. The Merger Agreement provides that, upon termination of the Merger Agreement by the Representative as a result of a material and willful breach of the Merger Agreement by the Evolent Entities or Merger Sub or otherwise pursuant to (v) above, the Company and the Seller Parties will be entitled to a termination fee of $30,000,000. In addition, the parties to the Merger Agreement are, subject to limited exceptions, entitled to an injunction or injunctions to prevent breaches of the Merger Agreement and to enforce specifically the provisions of the Merger Agreement.

To provide for certain losses incurred by the Evolent Entities, Merger Sub, or the Company, the Evolent Entities purchased a buyer-side representations and warranties insurance policy (the “R&W Policy”), which R&W Policy shall be effective as of the Closing. The R&W Policy is subject to a cap and certain customary terms, exclusions and deductibles, which limit the Evolent Entities’ ability to make recoveries under the R&W Policy.

In connection with the Closing, certain Seller Parties and EVH, Inc. will enter into a registration rights agreement granting such Seller Parties certain registration rights with respect to the Equity Consideration to be received by such Seller Parties. In addition, in connection with the Closing, certain Seller Parties and EVH, Inc. will enter into a Purchase Price Adjustment Agreement, which provides for the escrowing of cash by both EVH, Inc. and certain Seller Parties equal to 15% of the value of the Equity Consideration received by such Seller Parties. Such escrowed amounts will be released to EVH, Inc. and/or such Seller Parties, upon the occurrence of certain events related to market fluctuations of the Class A Shares occurring during the 90-day period following the Closing.

The Evolent Entities intend to finance a portion of the Cash Consideration through debt financing. In connection with its entry into the Merger Agreement, EVH LLC entered into a debt financing commitment letter with Ares Capital Management LLC (“Ares”), pursuant to which Ares has committed to provide EVH LLC with secured debt financing in an aggregate principal amount of $225,000,000, structured as (i) a term loan facility of up to $175,000,000, with an initial interest rate of adjusted term SOFR (“Secured Overnight Financing Rate”) plus 5.50%, and (ii) a priority ABL revolving credit facility of up to $50,000,000, with an initial interest rate of adjusted term SOFR plus 3.50%, both of which are expected to be fully funded on the Closing Date. The debt financing commitment letter provides that borrowings under the credit facilities will mature on the earlier of (i) five years from the Closing Date and (ii) 91 days prior to the earliest maturity of outstanding indebtedness of EVH, Inc. or any of its subsidiaries that is secured by a lien that is junior to the lien securing the credit facilities, is unsecured or is subordinated in right of payment to the payment obligations under the credit facilities, subject to certain exceptions. The commitment to provide the credit facilities is subject to customary closing conditions for financings of this type, including consummation of the Merger in all material respects in accordance with the Merger Agreement.

Item 3.02. Unregistered Sales of Equity Securities.

The information set forth in Item 1.01 above with respect to the issuance of Class A Shares as part of the Merger Consideration and Earnout Consideration is incorporated into this Item 3.02 by reference.

Pursuant to the Merger Agreement, Class A Shares will be issued only to those Seller Parties who are “accredited investors” as defined in Rule 501 of Regulation D under the Securities Act. The issuance and sale of Class A Shares to such Seller Parties will be exempt from registration under the Securities Act by Section 4(a)(2) thereof as a transaction not involving any public offering. The Evolent Entities have not engaged in general solicitation or advertising with regard to the issuance and sale of the Class A Shares that will be issued in connection with the Merger.

Item 7.01. Regulation FD Disclosure.

On June 29, 2022, EVH, Inc. issued a press release announcing the execution of the Merger Agreement and posted investor presentation materials discussing the Merger on the investor relations section of the EVH, Inc. website. A copy of the investor presentation and the press release is furnished herewith as Exhibit 99.1 and Exhibit 99.2, respectively, and are incorporated herein by reference.

The information, including Exhibits 99.1 and 99.2 hereto, furnished under this Item 7.01 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject EVH, Inc. or any other person to liability under that Section, and shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act or the Exchange Act, except as otherwise expressly stated in such filing.

Forward-Looking Statements

This Current Report on Form 8-K contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended (the “PSLRA”), including, but not limited to, statements regarding the consummation of the transactions contemplated by the Merger Agreement, including the Merger and the receipt of the debt financing, and the expected Closing thereof. The Evolent Entities claim the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA. Actual events or results may differ materially from those contained in these forward-looking statements. The factors that could cause future events or results to vary from the forward-looking statements contained herein include, without limitation, risks and uncertainties related to

the possibility that the Closing may be delayed or may not occur and the risk that litigation or other matters could affect the Closing. In addition, please refer to the periodic reports that EVH, Inc. has filed with the Securities and Exchange Commission, including its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and the risk factors noted therein. Such periodic filings by EVH, Inc. identify and address other important factors that could cause future events or results to vary from the forward-looking statements set forth in this Current Report on Form 8-K. In addition, the Evolent Entities disclaim any obligation to update any forward-looking statements contained herein to reflect events or circumstances that occur after the date hereof.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Investor Presentation.
99.2	Press Release of Evolent Health, Inc. dated June 29, 2022.
104	The cover page from this Current Report on Form 8-K, formatted as Inline XBRL.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Evolent Health, Inc.
Date: June 29, 2022	/s/ Jonathan D. Weinberg
	Jonathan D. Weinberg
	General Counsel and Secretary
	(Duly Authorized Officer)

EX-99.1

1 Accelerating Evolent’s Market Leadership in Value-Based Care June 29, 2022

2 Safe Harbor Statement Certain statements made in this presentation and in other written or oral statements made by us or on our behalf are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). A forward-looking statement is a statement that is not a historical fact and, without limitation, includes any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like: “believe,” “anticipate,” “expect,” “estimate,” “aim,” “predict,” “potential,” “continue,” “plan,” “project,” “will,” “should,” “shall,” “may,” “might” and other words or phrases with similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to the closing of the IPG transaction (including the financing thereof), the ability of the transaction to accelerate our strategic objectives, expand our specialty focus and be better positioned to meet client needs, our expectations that the IPG transaction will be immediately accretive to Adjusted EBITDA margins and cash flow, provide meaningful revenue cross-sell synergy opportunity and improve customer and revenue diversification, our guidance and business outlook and future performance or financial results, including of IPG. We claim the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA. These statements are only predictions based on our current expectations and projections about future events. Forward-looking statements involve risks and uncertainties that may cause actual results, level of activity, performance or achievements to differ materially from the results contained in the forward-looking statements. Risks and uncertainties that may cause actual results to vary materially, some of which are described within the forward-looking statements, include, among others: risks and uncertainties related to the possibility that the closing of the IPG transaction may be delayed or may not occur, and the risk that litigation or other matters could affect the closing, the significant portion of revenue we derive from our largest partners, and the potential loss, non- renewal, termination or renegotiation of our relationship or contract with any significant partner, or multiple partners in the aggregate; evolution in the market for value-based care; uncertainty in the health care regulatory framework, including the potential impact of policy changes; our ability to offer new and innovative products and services; risks related to completed and future acquisitions, investments, alliances and joint ventures, divert management resources, or result in unanticipated costs or dilute our stockholders; the financial benefits we expect to receive as a result of the sale of certain assets of Passport may not be realized; the growth and success of our partners, which is difficult to predict and is subject to factors outside of our control, including governmental funding reductions and other policy changes, enrollment numbers for our partners’ plans, premium pricing reductions, selection bias in at-risk membership and the ability to control and, if necessary, reduce health care costs; risks relating to our ability to maintain profitability for our total cost of care and New Century Health’s performance-based contracts and products, including capitation and risk-bearing contracts; our ability to effectively manage our growth and maintain an efficient cost structure, and to successfully implement cost cutting measures; changes in general economic conditions nationally and regionally in our markets, including inflation and economic and business conditions and the impact thereof on the economy resulting from the COVID-19 pandemic and other public health emergencies our ability to recover the significant upfront costs in our partner relationships; our ability to attract new partners and successfully capture new growth opportunities; the increasing number of risk-sharing arrangements we enter into with our partners; our ability to estimate the size of our target markets; our ability to maintain and enhance our reputation and brand recognition; consolidation in the health care industry; competition which could limit our ability to maintain or expand market share within our industry; risks related to governmental payer audits and actions, including whistleblower claims; our ability to partner with providers due to exclusivity provisions in our contracts; risks related to our offshore operations; our ability to contain health care costs, implement increases in premium rates on a timely basis, maintain adequate reserves for policy benefits or maintain cost effective provider agreements; our dependency on our key personnel, and our ability to attract, hire, integrate and retain key personnel; the impact of additional goodwill and intangible asset impairments on our results of operations; our indebtedness, our ability to service our indebtedness, and our ability to obtain additional financing; our ability to achieve profitability in the future; the impact of litigation, including the ongoing class action lawsuit; material weaknesses in the future may impact our ability to conclude that our internal control over financial reporting is not effective and we may be unable to produce timely and accurate financial statements; restrictions and penalties as a result of privacy and data protection laws; data loss or corruption due to failures or errors in our systems and service disruptions at our data centers; restrictions and penalties as a result of privacy and data protection laws; adequate protection of our intellectual property, including trademarks; any alleged infringement, misappropriation or violation of third-party proprietary rights; our use of “open source” software; our ability to protect the confidentiality of our trade secrets, know-how and other proprietary information; our reliance on third parties and licensed technologies; our ability to use, disclose, de-identify or license data and to integrate third-party technologies; our reliance on Internet infrastructure, bandwidth providers, data center providers, other third parties and our own systems for providing services to our partners; our reliance on third-party vendors to host and maintain our technology platform; our obligations to make payments to certain of our pre-IPO investors for certain tax benefits we may claim in the future; our ability to utilize benefits under the tax receivables agreement described herein; our obligations to make payments under the tax receivables agreement that may be accelerated or may exceed the tax benefits we realize; the terms of agreements between us and certain of our pre-IPO investors; the conditional conversion features of the 2024 and 2025 convertible notes, which, if triggered, could require us to settle the 2024 or 2025 convertible notes in cash; the potential volatility of our Class A common stock price; the potential decline of our Class A common stock price if a substantial number of shares are sold or become available for sale; provisions in our second amended and restated certificate of incorporation and third amended and restated by-laws and provisions of Delaware law that discourage or prevent strategic transactions, including a takeover of us; the ability of certain of our investors to compete with us without restrictions; provisions in our second amended and restated certificate of incorporation which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees; and our intention not to pay cash dividends on our Class A common stock. The risks included here are not exhaustive. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Our Annual Report on Form 10-K for the year ended December 31, 2021 (the "2021 Form 10-K") and other documents filed with the SEC include additional factors that could affect our businesses and financial performance. Moreover, we operate in a rapidly changing and competitive environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors. Further, it is not possible to assess the effect of all risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. In addition, we disclaim any obligation to update any forward-looking statements to reflect events or circumstances that occur after the date of this presentation. This presentation is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any securities of any nature whatsoever, and it may not be relied upon in connection with the purchase of securities. The contents of this presentation do not constitute legal, tax or business advice. Anyone reading this presentation should seek advice based on their particular circumstances from independent legal, tax and business advisors.

3 FINANCIAL OVERVIEW (as of 12/31/21)WHO WE ARE • Technology-Driven Solutions For Health Plans and Providers That Improve Health Outcomes and Lower Costs • Fast Growing, Seasoned Leader in Value-Based Care Solutions with Positive Annual Cash Flow (as of 12/31/21) • Focus on Driving Healthcare Value For Populations Across All Lines of Business: Medicare, Medicaid, and Commercial • Total Revenue $908.0M • Two Segments o Clinical Solutions • New Century Health: Specialty Care • Evolent Care Partners: Primary Care o Evolent Health Services • Addressable Domestic Market Approximating $130B+1 • 3,500 FTEs Globally Evolent Health (NYSE: EVH) A Leader in Value-Based Care Solutions Adjusted EBITDA2 $66.3M 7.3% margin Clinical $82.9M 13.9% margin Corporate $(33.7)M EHS $17.1M 5.5% margin Total Revenue $908.0M Clinical $598.1M 66%EHS $309.8M 34% Eliminations $(1.8)M 1) Evolent Health estimates based on Medicare Advantage (“MA”) Part A, Part B and Medicaid for specialty oncology and cardiology care and primary care for patients enrolled in MA, HMO and Medicare Shared Savings Program. 2) Non-GAAP measure, see “Non-GAAP Financial Measures” for definition and Appendix A for reconciliation to GAAP. 2021 GAAP net loss to common shareholders was $(37.6)M for Evolent Health Inc., $60.7M for the Clinical Solutions segment, $(9.4)M for the EHS segment and $(88.8)M for the Corporate segment. 2021 GAAP net loss to common shareholders margin was (4.2)% for Evolent Health Inc.,10.1% for the Clinical Solutions segment and (3.0)% for the EHS segment. Amounts reflect our investment in True Health as a discontinued operation.

4 Evolent Health to Acquire IPG • A leader in providing surgical management solutions for musculoskeletal conditions • Founded in 2004 and headquartered in Atlanta, GA; majority owned by TPG Growth • Currently serves 8 health plan payers across 27 markets • Expected 2022 Financial Metrics • Revenue: $140 million • Adjusted EBITDA1: $25 million (Approx.18% margin) • Capital Expenditures: $2 million • Expected annual revenue growth of 20%+. 1) Non-GAAP measure, see “Non-GAAP Financial Measures” for definition. Structure and Consideration • $375 million upfront consideration; up to $87 million of contingent consideration • At closing, $250 million funded in cash; balance delivered in EVH shares • Implied upfront transaction multiple of approximately 15-times IPG 2022 expected Adjusted EBITDA1 • Full achievement of performance milestones would translate to an Adjusted EBITDA multiple of approximately 11-times expected Adjusted EBITDA on the incremental consideration • Anticipated closing in the third quarter of 2022; subject to customary closing conditions Strategic Rationale • Accelerates strategy to become a leading provider of value-based specialty care solutions o Adds surgical cost & quality management, primarily focused currently on musculoskeletal (MSK) solutions o Opens significant new cross-sell opportunities • Post-closing, the Company anticipates the transaction will: o Diversify revenue stream with a larger customer portfolio; enhance mix of health plan lines of business (LOBs) as well as mix of performance-based, versus fee-based businesses o Be immediately accretive to Adjusted EBITDA margins and cash flow

5 $291 $253 $170 MSKCardiology Oncology 189%2,000 2014 2030 0 1,000 3,000 500 1,500 2,500 Knee Hip US Health Expenditures1 Total Joint Replacements2 $ Billions Annual Procedures (Thousands) 171% MSK represents the 2nd largest specialty by spend in the US… … with strong growth projected, particularly in outpatient surgery… … and several challenges that make it difficult for payers to manage Wide cost variation within surgical procedures Steep innovation curve for medical devices Lack of data transparency Insufficient specialist engagement The Case for Tackling MSK 1) Bureau of Economic Analysis. Blended account, 2000–2019. Updated January 2022. bea.gov/data/special-topics/ health-care. 2) Projected Volume of Primary Total Joint Arthroplasty in the U.S., 2014 to 2030. Sloan M, Premkumar A, Sheth. N. Bone Joint Surg Am. 2018 Sep 5;100(17):1455-1460.

6 IPG’s Model Focused on Major Drivers of Surgical Spend Within MSK IPG drives significant savings on surgical spend, focused on MSK procedures, through partnering with plans and providers to optimize where a procedure takes place and what device is selected Industry-leading IP based on 18+ years of managing surgical spend Aligned financial incentives with health plan and with provider Decision support tool used by surgical facilities to optimize care Network engagement model rooted in proprietary analytics CORE CAPABILITIES

7 Illustrative Depiction of the IPG Operating Model Health Plan Device Manufacturer Physician IPG contracts with device manufacturer and pays for device that surgeon chooses IPG engages with physician to ensure optimal site-of-care and device selection IPG contracts with plan to provide value-based surgical program on a per-procedure basis

8 Value Proposition Payer Member ASC Surgeon Device Manufacturer • Significant cost savings in high-trending category • No provider or member abrasion • Lower out-of-pocket costs for surgery • More convenient with fewer delays or surgeries being rescheduled • More volume, particularly from higher-acuity cases • No cash outlay risk for high-cost devices • Financial alignment if investor in ASC • More convenient and no abrasion • Potential for volume increases based on IPG tiering schedule • Sophisticated device analytics IPG Creates Value Across Key Stakeholders in Surgical Care Optimized device sourcing Optimized device selection Optimized site-of-care strategy 1 2 3 …benefitting key stakeholders…

9 IPG Brings Strong Partner Relationships with Significant Growth Runway 100% CUSTOMER RETENTION RATE 8 Years AVERAGE CUSTOMER TENURE 98% FACILITY PARTNER SATISFACTION ~20% ORGANIC GROWTH RATE 6% CURRENT ASC FACILITY PENETRATION1 1) IPG ASCs today as a percentage of total ASCs within IPG’s specialty focus across existing payer clients.

10 Value Vision to Maximize the Value of IPG within Evolent Time Execute on organic growth runway within IPG accounts Cross-sell within the Evolent partner portfolio Focus integrated sales team on priority new logos Build out Performance Suite offering for MSK based on IPG model Extend into new LOBs (i.e., Medicare) and into additional specialties (i.e., cardiology) Enhance MSK solution by adding additional capabilities SALES PRODUCT

11 Oncology Cardiology End-of-Life Musculoskeletal Performance Suite Tech & Services COMBINEDNCH IPG Clinical Area Creating a Leading Value-Based Specialty Care Solutions Platform Medicare Medicaid Commercial LOB Mix Product Mix COMMENTARY • Top 3 specialties1 by spend in U.S. healthcare as well as end-of-life across all disease states • Broad coverage across populations and payer types • Balanced product mix 1) Bureau of Economic Analysis. Blended account, 2000–2019. Updated January 2022. bea.gov/data/special-topics/ health-care

12 Evolent: Accelerating Our Market Leadership In Value-Based Care Revenue Growth ✓ $140 million of incremental clinical revenue anticipated in 2022 ✓ IPG is a growth business with annual revenue increases expected of 20%+ ✓ Cross-sell and other revenue synergies Accelerate Margin Expansion ✓ 18% Adjusted EBITDA margin1 anticipated to expand further ✓ Increases Evolent’s mix of Technology and Services solutions Disciplined Capital Allocation ✓ Upfront consideration approximately 15x expected 2022 Adjusted EBITDA1 & full achievement of performance milestones yields a potential 11x multiple on earnout ✓ Modest incremental senior debt enhances overall financial profile ✓ Strong cash flow and capex light A Leader in Value-Based Specialty Solutions Emerging Primary Care Performance Suite Platform Administrative Services to Support Value-Based Care 1) Non-GAAP measure, see “Non-GAAP Financial Measures” for definition.

13 Summary Financing Terms and Outlook • Evolent expects to utilize $25 million of cash on hand and proceeds from a newly committed, $225 million Five-Year Senior Credit Facility to be entered at closing to finance $250 million of the $375 million of upfront consideration to complete the IPG acquisition o Facility terms are SOFR + 506 BPS blended with OID of 98 o No amortization o May repay up to one-third of the facility with no penalty • Remaining consideration in the form of newly issued Evolent common shares FINANCING SOURCES • Targeting Net Leverage ratio1 pro forma at close of approximately 2.9-times, excluding in- the-money convertible notes o Targeting net leverage of under 2.5-times within twelve months of the close of the transaction, driven by operating cash flow BALANCE SHEET and CASH FLOW GO-FORWARD CONSIDERATIONS • Evolent reaffirms second quarter 2022 and full year 2022 guidance (as provided May 4, 2022) before the impact of the pending IPG acquisition • The company will provide an updated financial outlook, along with its second quarter 2022 financial results, in early August, assuming the acquisition has closed by such time 1) Non-GAAP measure, see “Non-GAAP Financial Measures” for definition.

14 Why Evolent Health? Investment Considerations Execution Drives Shareholder Value Efficient Capital Allocation Strong and Expanding Margins Compelling Long-Term Organic Growth Commitment to Shareholder Value

15 Non-GAAP Financial Measures In addition to disclosing financial results that are determined in accordance with GAAP, we present and discuss certain non-GAAP financial measures, as supplemental measures to help investors evaluate our fundamental operational performance. Net Debt is defined as the carrying value outstanding under the Company’s, 2024 Notes and 2025 Notes and senior secured debt adjusted to exclude the impact of net discounts and deferred financing costs less Available Cash. Management uses Net Debt as a supplemental performance measure because the netting of cash and cash equivalents from the principal amount of debt outstanding allows us to determine our debt repayment requirements in excess of available cash. We believe that this measure is also useful to investors because it allows further insight into the capital requirements of the Company that is comparable to other organizations in our industry and in the market in general. Net Leverage Ratio (or Net Leverage) is defined as Net Debt divided by LTM Adjusted EBITDA. Management uses Net Debt to LTM Adjusted EBITDA as a supplemental performance measure because it allows the investor to understand capital requirements compared to operating performance over time. We believe that this measure is also useful to investors because it allows further insight into the period over period operational performance in a manner that is comparable to other organizations in our industry and in the market in general. Available cash is defined as cash and cash equivalents and investments determined in accordance with GAAP adjusted to exclude cash, cash equivalents and investments held at Passport Health Plan. Management uses Available Cash a supplemental performance measure as it excludes cash held by Passport that is not readily accessible for expenditures outside of the Passport corporate entity without regulatory approval from the Kentucky Department of Insurance. Adjusted EBITDA is defined as EBITDA (net loss attributable to common shareholders of Evolent Health, Inc. before interest income, interest expense, (provision) benefit for income taxes, depreciation and amortization expenses, adjusted to exclude gain on transfer of membership, loss on repayment/extinguishment of debt, gain (loss) from equity method investees, changes in fair value of contingent consideration and indemnification asset, other income (expense), net, repositioning costs, stock-based compensation expense, severance costs, amortization of contract cost assets, strategy and shareholder advisory services, acquisition-related costs and gain (loss) from discontinued operations. Management uses Adjusted EBITDA as a supplemental performance measure because the removal of acquisition-related costs, one-time or non-cash items (e.g. depreciation, amortization and stock-based compensation expenses) allows us to focus on operational performance. We believe that this measure is also useful to investors because it allows further insight into the period over period operational performance in a manner that is comparable to other organizations in our industry and in the market in general. Adjusted EBITDA Margin is as defined Adjusted EBITDA divided by Revenue. Management uses Adjusted EBITDA margin as a supplemental performance measure because it allows the investor to understand operational performance compared to revenues over time. We believe that this measure is also useful to investors because it allows further insight into the period over period operational performance in a manner that is comparable to other organizations in our industry and in the market in general. The Company cannot reconcile future net leverage without unreasonable effort because certain items that impact this calculation such as net income or loss, Adjusted EBITDA, cash and debt balances are unpredictable with regard to those specific amounts and the timing of events associated with the closing of the acquisition of IPG, therefore they cannot be reasonably predicted at this time These adjusted measures do not represent and should not be considered as alternatives to GAAP measurements, and our calculations thereof may not be comparable to similarly entitled measures reported by other companies. A reconciliation of these adjusted measures to their most comparable GAAP financial measures is presented in the tables below. We believe these measures are useful across time in evaluating our fundamental core operating performance.

16 Appendix A – Evolent Health, Inc. Adjusted EBITDA Reconciliation Consolidated 2021 ($ in millions) 2021 Clinical Solutions Evolent Health Services Corporate Net loss attributable to common shareholders of Evolent Health, Inc. $(37.6) $60.7 $(9.4) $(88.8) GAAP Margin (4.1)% 10.1% (3.0)% Less: Interest income 0.4 - - 0.4 Interest expense (25.4) - - (25.4) (Provision) benefit for income taxes (0.5) - - (0.5) Depreciation and amortization expenses (60.0) (17.7) (42.3) - Gain on transfer of membership 45.9 - 23.0 23.0 Gain (loss) from equity method investees 13.2 - - 13.2 Loss on repayment/ extinguishment of debt (21.3) - - (21.3) Gain (loss) on disposal of assets and consolidation - - - - Change in fair value of contingent consideration and indemnification asset (13.3) - - (13.3) Other income (expense), net (0.1) - - (0.1) Repositioning costs (7.3) - (6.1) (1.3) Stock-based compensation expense (16.7) (3.8) (2.0) (10.9) Severance costs (0.2) - - (0.2) Amortization of contract cost assets (0.5) - (0.5) - Strategy and shareholder advisory expenses (6.5) - - (6.5) Acquisition-related costs (4.2) (0.8) - (3.4) Gain (loss) from discontinued operations (7.3) - 1.4 (8.7) Adjusted EBITDA $66.3 $82.9 $17.1 $(33.7) Adjusted EBITDA Margin 7.3% 13.9% 5.5%

EX-99.2

Exhibit 99.2

EVOLENT HEALTH TO ACQUIRE IPG

-     Expected to Accelerate Evolent Health’s Position as a Leading Provider of Value-Based Specialty Care Solutions

-     Expands Evolent’s Value-Based Specialty Care Solutions Portfolio to Musculoskeletal Conditions

-     Expected to be Immediately Accretive to Adjusted EBITDA Margins and Cash Flow

-     Diversifies Customer Mix and Accelerates Entry into Commercial Line of Business

WASHINGTON, DC (June 29, 2022) – Evolent Health, Inc. (“Evolent” or “the Company”) (NYSE: EVH) today announced that it has entered into a definitive agreement to acquire IPG, a leading technology and services company providing surgical management solutions for musculoskeletal conditions, from TPG Growth, the middle market and growth equity platform of alternative asset firm TPG, for $375 million plus additional contingent consideration of up to $87 million. Upon close the IPG team and platform will be integrated into New Century Health.

Seth Blackley, Chief Executive Officer and Co-Founder of Evolent Health stated, “Today’s announcement represents an important step in Evolent’s journey to become a national leader in value-based specialty care solutions. The acquisition of IPG will expand Evolent’s specialty portfolio, add new customers, and increase our commercial insurance revenue mix. 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.”

John Johnson, Chief Financial Officer of Evolent Health stated, “At closing, the IPG acquisition is expected to immediately enhance our Adjusted EBITDA margin and cash flow profile and is consistent with our objective of efficiently allocating capital to drive long-term value creation. 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.”

Vince Coppola, Chief Executive Officer of IPG said, “On behalf of IPG, we are excited to become part of a leading value-based specialty care solutions company. 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.”

STRATEGIC RATIONALE

Expanding Specialty Focus:

•Accelerates Evolent’s core strategy to be a leading provider of value-based specialty care solutions.

•Expands Evolent’s specialty focus to include surgical cost management focusing on musculoskeletal conditions, adding to our specialty portfolio today of oncology, cardiology, and end-of-life care planning.

•Enables Evolent to more fully meet the value-based specialty needs of health plan and risk-bearing provider clients through an integrated and “turnkey” partner service approach

Anticipate an Enhanced Financial Profile for Evolent Health:

•Expect the transaction to be immediately accretive to Adjusted EBITDA margins and cash flow.

•Expect meaningful revenue cross-sell synergy opportunity with health plan and risk-bearing provider customers.

•Improves customer and revenue diversification, adds additional specialty end-markets and enhanced balance across both the Company’s book of risk and non-risk contracts and health plan revenue by line of business (i.e., Medicare, Medicaid and Commercial).

TRANSACTION DETAILS AND OUTLOOK

Acquisition of IPG

•Evolent will acquire IPG from TPG Growth for $375 million in cash, due at close. In addition, contingent consideration of up to $87 million may be paid based on future performance milestones for IPG.

•For Calendar Year 2022, IPG standalone financials are expected to be:

◦Revenue of $140 million.

◦Adjusted EBITDA of $25 million (approximately 18% margin).

◦Capital expenditures of $2 million.

•Annual sales growth for IPG is expected to be 20%+.

•The upfront valuation multiple for IPG equates to approximately 15-times IPG’s expected 2022 Adjusted EBITDA. Full achievement of the performance milestones would translate to an expected Adjusted EBITDA multiple of approximately 11-times the incremental consideration.

•This transaction is expected to close during the third quarter of 2022 and is subject to customary closing conditions.

•The Company expects to fund $250 million of the purchase price in cash, through a combination of $25 million cash on hand and proceeds from a new $225 million Five Year Senior Credit Facility provided by funds managed by the credit group of Ares Management.

•The balance of the upfront consideration will be in the form of newly issued Evolent common shares.

2022 Financial Outlook

•The Company reaffirmed its outlook for the second quarter of 2022 and full year 2022 before the acquisition of IPG, as originally issued on May 4, 2022.

•At closing, pro forma for the transaction, the Company is targeting trailing twelve-month net debt (excluding in-the-money convertible notes) to Adjusted EBITDA ratio of approximately 2.9-times and the Company anticipates targeting net leverage of under 2.5-times within twelve months following the close of the transaction.

•The Company expects to provide updated full year guidance incorporating the acquisition on its second quarter, 2022 earnings report and conference call in early August, assuming the acquisition has closed by such time.

Teleconference and Webcast

Management will host a conference call to discuss the acquisition on Wednesday, June 29, 2022 at 8:00 am Eastern Time.

A live link to the webcast of the call as well a presentation to accompany the call are available at the following location: http://ir.evolenthealth.com/event-calendar/default.aspx.

Shareholders and interested participants may also listen to a live broadcast of a conference call hosted by management. To participate, please dial 855-940-9467 or 412-317-6034 for international callers and referencing the "Evolent Health call" 15 minutes prior to the call. An audio playback of the conference call will be available on Evolent's investor relations website, ir.evolenthealth.com, for 90 days after the call.

About Evolent Health

Evolent Health (NYSE: EVH) delivers proven clinical and administrative solutions that improve whole-person health while making health care simpler and more affordable. Our solutions encompass total cost of care management, specialty care management, and administrative simplification. Evolent serves a national base of leading payers and providers, is the first company to receive the National Committee for Quality Assurance's Population Health Program Accreditation and is consistently recognized as a top place to work in health care nationally. Learn more about how Evolent is changing the way health care is delivered by visiting evolenthealth.com

About IPG

IPG is a leading provider of surgical cost management solutions, working with health plans, providers, surgical facilities, device manufacturers and patients across the country to improve quality and reduce costs for surgical procedures through optimization of the most effective site of care and device selection, resulting in more affordable high-quality care to consumers. For more information about IPG, call 866.753.0046, or visit www.ipg.com.

About TPG Growth

TPG Growth is the middle market and growth equity investment platform of TPG, the global alternative asset firm. With approximately $14.7 billion of assets under management, TPG Growth targets investments in a broad range of industries and geographies. TPG Growth has the deep sector knowledge, operational resources, and global experience to drive value creation, and help companies reach their full potential. The platform is backed by the resources of TPG, which has approximately $120 billion of assets under management. For more information, please visit www.tpg.com or on Twitter @TPG.

FORWARD-LOOKING STATEMENTS

Certain statements made in this press release and in other written or oral statements made by us or on our behalf are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). A forward-looking statement is a statement that is not a historical fact and, without limitation, includes any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like: “believe,” “anticipate,” “expect,” “estimate,” “aim,” “predict,” “potential,” “continue,” “plan,” “project,” “will,” “should,” “shall,” “may,” “might” and other words or phrases with similar meaning in connection

with a discussion of future operating or financial performance. In particular, these include statements relating to the closing of the IPG transaction (including the financing thereof), the ability of the transaction to accelerate our strategic objectives, expand our specialty focus and be better positioned to meet client needs, our expectations that the IPG transaction will be immediately accretive to Adjusted EBITDA margins and cash flow, provide meaningful revenue cross-sell synergy opportunity and improve customer and revenue diversification, our guidance and business outlook and future performance or financial results, including of IPG. We claim the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA.

These statements are only predictions based on our current expectations and projections about future events. Forward-looking statements involve risks and uncertainties that may cause actual results, level of activity, performance or achievements to differ materially from the results contained in the forward-looking statements. Risks and uncertainties that may cause actual results to vary materially, some of which are described within the forward-looking statements, include, among others: risks and uncertainties related to the possibility that the closing of the IPG transaction may be delayed or may not occur, and the risk that litigation or other matters could affect the closing, the significant portion of revenue we derive from our largest partners, and the potential loss, non-renewal, termination or renegotiation of our relationship or contract with any significant partner, or multiple partners in the aggregate; evolution in the market for value-based care; uncertainty in the health care regulatory framework, including the potential impact of policy changes; our ability to offer new and innovative products and services; risks related to completed and future acquisitions, investments, alliances and joint ventures, divert management resources, or result in unanticipated costs or dilute our stockholders; the financial benefits we expect to receive as a result of the sale of certain assets of Passport may not be realized; the growth and success of our partners, which is difficult to predict and is subject to factors outside of our control, including governmental funding reductions and other policy changes, enrollment numbers for our partners’ plans, premium pricing reductions, selection bias in at-risk membership and the ability to control and, if necessary, reduce health care costs; risks relating to our ability to maintain profitability for our total cost of care and New Century Health’s performance-based contracts and products, including capitation and risk-bearing contracts; our ability to effectively manage our growth and maintain an efficient cost structure, and to successfully implement cost cutting measures; changes in general economic conditions nationally and regionally in our markets, including inflation and economic and business conditions and the impact thereof on the economy resulting from the COVID-19 pandemic and other public health emergencies our ability to recover the significant upfront costs in our partner relationships; our ability to attract new partners and successfully capture new growth opportunities; the increasing number of risk-sharing arrangements we enter into with our partners; our ability to estimate the size of our target markets; our ability to maintain and enhance our reputation and brand recognition; consolidation in the health care industry; competition which could limit our ability to maintain or expand market share within our industry; risks related to governmental payer audits and actions, including whistleblower claims; our ability to partner with providers due to exclusivity provisions in our contracts; risks related to our offshore operations; our ability to contain health care costs, implement increases in premium rates on a timely basis, maintain adequate reserves for policy benefits or maintain cost effective provider agreements; our dependency on our key personnel, and our ability to attract, hire, integrate and retain key personnel; the impact of additional goodwill and intangible asset impairments on our results of operations; our indebtedness, our ability to service our indebtedness, and our ability to obtain additional financing; our ability to achieve profitability in the future; the impact of litigation, including the ongoing class action lawsuit; material weaknesses in the future may impact our ability to conclude that our internal control over financial reporting is not effective and we may be unable to produce timely and accurate financial statements; restrictions and penalties as a result of privacy and data protection laws; data loss or corruption due to failures or errors in our systems and service disruptions at our

data centers; restrictions and penalties as a result of privacy and data protection laws; adequate protection of our intellectual property, including trademarks; any alleged infringement, misappropriation or violation of third-party proprietary rights; our use of “open source” software; our ability to protect the confidentiality of our trade secrets, know-how and other proprietary information; our reliance on third parties and licensed technologies; our ability to use, disclose, de-identify or license data and to integrate third-party technologies; our reliance on Internet infrastructure, bandwidth providers, data center providers, other third parties and our own systems for providing services to our partners; our reliance on third-party vendors to host and maintain our technology platform; our obligations to make payments to certain of our pre-IPO investors for certain tax benefits we may claim in the future; our ability to utilize benefits under the tax receivables agreement described herein; our obligations to make payments under the tax receivables agreement that may be accelerated or may exceed the tax benefits we realize; the terms of agreements between us and certain of our pre-IPO investors; the conditional conversion features of the 2024 and 2025 convertible notes, which, if triggered, could require us to settle the 2024 or 2025 convertible notes in cash; the potential volatility of our Class A common stock price; the potential decline of our Class A common stock price if a substantial number of shares are sold or become available for sale; provisions in our second amended and restated certificate of incorporation and third amended and restated by-laws and provisions of Delaware law that discourage or prevent strategic transactions, including a takeover of us; the ability of certain of our investors to compete with us without restrictions; provisions in our second amended and restated certificate of incorporation which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees; and our intention not to pay cash dividends on our Class A common stock.

The risks included here are not exhaustive. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Our Annual Report on Form 10-K for the year ended December 31, 2021 (the "2021 Form 10-K") and other documents filed with the SEC include additional factors that could affect our businesses and financial performance. Moreover, we operate in a rapidly changing and competitive environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors. Further, it is not possible to assess the effect of all risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. In addition, we disclaim any obligation to update any forward-looking statements to reflect events or circumstances that occur after the date of this press release.

This press release is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any securities of any nature whatsoever, and it may not be relied upon in connection with the purchase of securities. The contents of this press release do not constitute legal, tax or business advice. Anyone reading this press release should seek advice based on their particular circumstances from independent legal, tax and business advisors.

Additional Information and Where to Find It:

Financial Details and Webcast

http://ir.evolenthealth.com/overview/

Information About Evolent Health

https://www.evolenthealth.com/

Contacts:

Evolent Health, Media Contact:

Media Relations

media@evolenthealth.com

Evolent Health, Investor Relations Contact:

Seth R. Frank

sfrank@evolenthealth.com

571-895-3919

IPG Media Contact:

kperry@ipg.com

404-849-1380

# # #

XML

Cover	Jun. 24, 2022
Cover [Abstract]
Document Type	8-K
Document Period End Date	Jun. 24, 2022
Entity Registrant Name	Evolent Health, Inc.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-37415
Entity Tax Identification Number	32-0454912
Entity Address, Address Line One	800 N. Glebe Road
Entity Address, Address Line Two	Suite 500
Entity Address, City or Town	Arlington
Entity Address, State or Province	VA
City Area Code	571
Local Phone Number	389-6000
Entity Address, Postal Zip Code	22203
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Class A Common Stock of Evolent Health, Inc., par value $0.01 per share
Trading Symbol	EVH
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Amendment Flag	false
Entity Central Index Key	0001628908