By Sam Boughedda
This week, Evolent Health (NYSE:EVH) announced the expansion of its Humana (NYSE:HUM) relationship to include two states — Arizona and Florida — on Performance Suite for Oncology.
The news has resulted in Evolent's share price jumping more than 8% Thursday.
Truist analysts said that the company revealed during a presentation on Wednesday at a healthcare investor conference that the contract is expected to add $250 million of annual revenue in 2024.
The analysts, who have a Hold rating and a $34 price target on Evolent, told investors in a note that the arrangement is expected to go-live in the second half of 2023 and "represents ~500K incremental lives, which implies a ~$42 PMPM (higher than corporate average due to Oncology and Medicare focus)."
"The company flagged that in Florida, it works with Florida Blue (private), AvMed (private), and another national payer on Oncology in Performance Suite. EVH believes it is easier for oncologists to standardize on one model and thus Evolent is providing much of the cancer care in the state of Florida through its model," wrote the analysts.
They added that Evolent currently works with Humana in 36 states through its Technology & Services Suite for cancer care. However, the analysts stated, "the company has done very little historically on the Performance Suite side for Humana."
"EVH expects to exit FY24 at a ~$300 mln adjusted EBITDA run-rate which includes $150-200 mln of core business performance (including expanded HUM contract), IPG EBITDA contribution of $35-40 mln, and synergized NIA EBITDA of $85 mln)."