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

Evolent Health, Inc. 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.

“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.”

Chief Executive Officer and Co-Founder of Evolent Health

“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.”

John Johnson, Chief Financial Officer of Evolent Health

“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.”

Vince Coppola, Chief Executive Officer of IPG

STRATEGIC RATIONALE

Expanding Specialty Focus:

• Accelerates Evolent’s core strategy to be a leading provider of value-based specialty care solutions.
• adds surgical cost management with a focus on musculoskeletal disorders to Evolent’s current specialist portfolio of oncology, cardiology, and end-of-life care planning.
• through an integrated and “turnkey” partner service model, enables Evolent to more completely address the value-based specialty needs of health plan and risk-bearing provider clients.

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:

1. Revenue of $140 million.
2. Adjusted EBITDA of $25 million (approximately 18% margin).
3. 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.