Evolent Health (EVH) Sells ACO Unit, Strengthens Balance Sheet

Evolent Health, Inc. (NYSE:EVH) is one of the best healthcare AI stocks to buy now. On December 8, Evolent Health, Inc. (NYSE:EVH) revealed that it had completed the divestiture of its Accountable Care Organization (ACO) business to Privia Health Group, Inc. (NASDAQ:PRVA). The transaction, initially announced on September 23, 2025, was closed on Friday December 5.

Evolent received $100 million in cash at closing. The company could also earn an additional package up to $13 million contingent on the ACO’s final Medicare Shared Savings Program (MSSP) performance for 2025. According to management, the divestiture enabled Evolent to sharpen its focus on core specialty condition management areas. It stated that it used the proceeds to reduce debt and improve annual cash flow by approximately $7 million.

Separately, on December 2, Piper Sandler lowered the price target on Evolent from $18 to $6. The firm maintained an Overweight rating on the stock, noting that its deep decline creates an attractive entry point amid temporary policy-driven challenges. According to the analysts, the primary concern is expected enrollment declines in the Individual ACA Marketplace and Medicaid, which together make up about two-thirds of Evolent’s revenue, over the next two years. These drops, stated the firm, stem from the expiration of enhanced Advanced Premium Tax Credits in the Marketplace and the introduction of work requirements in Medicaid, leading to a degraded risk pool. This reduced visibility hits Evolent’s Performance Suite business hardest and lowers high-margin Tech and Services revenue, which is priced on a per-member-per-month basis.

As a result, Piper Sandler now forecasts pro forma CY26E adjusted EBITDA to remain approximately flat year-over-year. The analysts see meaningful earnings growth not resuming until 2027 and substantive debt reduction starting in 2028. On the positive side, the firm believes the risk-reward profile is favorable at current valuation levels of 8-9 times CY27E adjusted EBITDA, especially after the stock’s steep 68.5% drop over the past year.

Evolent Health, Inc. (NYSE:EVH) provides healthcare administrative and clinical solutions, focusing on value-based care delivery and population health management. The company integrates AI into its Identifi platform, which uses predictive analytics and machine learning to identify high-risk patients, optimize care coordination, and reduce costs.

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Disclosure: None. This article is originally published at Insider Monkey.