Back to top

Analyst Blog

Zacks Equity Research

Evolent Health (EVH) Prices $110M Convertible Senior Notes

MDSO HMSY IDXX EVH

Trades from $3

Provider of integrated value-based care platform to health systems and physician organizations, Evolent Health, Inc. (EVH - Free Report) , announced the pricing of $110.0 million worth senior notes. The notes carry a coupon rate of 2.00% and are due in 2021. The notes are being offered only to qualified institutional buyers. Settlement for the offer is expected on Dec 5, 2016. Evolent Health intends to use net proceeds from the offer for working capital and other general corporate purposes.

Shares of Evolent Health have been steadily treading higher on a year-to-date basis. The stock has risen 55.66% compared with the Zacks Computer Software Services industry’s gain of only 4.00%. Evolent Health has a long-term expected growth rate of 30.00%. However, the company has an unfavorable estimate revision trend for the current fiscal with four estimates moving downward compared to no estimate moving in the opposite direction. The current-year estimate accordingly has slipped 10 cents over the past couple of months, pointing at woes ahead.

Interest on the notes is payable semiannually on Jun 1 and Dec 1 of each year, beginning on Jun 1, 2017, at a rate equal to 2.00% per annum.  The notes will mature on Dec 1, 2021 unless earlier repurchased or converted. The notes are convertible into shares of Evolent Health's Class A common stock.

The conversion is based on an initial conversion rate of 41.6082 shares of Class A common stock per $1,000 principal amount of notes. This is equivalent to an initial conversion price of approximately $24.03 per share of Class A common stock.  The initial conversion price represents a premium of approximately 27.50% over the closing price of the Class A common stock on the New York Stock Exchange on Nov 29, 2016.

Zacks Rank & Other Key Picks

Evolent Health currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader medical space include HMS Holdings Corp. (HMSY - Free Report) , Medidata Solutions Inc. (MDSO - Free Report) and IDEXX Laboratories, Inc. (IDXX - Free Report) . Notably, HMS Holdings and Medidata Solutions carry a Zacks Rank #2 (Buy) while IDEXX Laboratories sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

HMS Holdings has a long-term expected growth rate of 14.26%. Notably, the company has a solid one-year return of roughly 42.5%.

Medidata Solutions has a strong one-year return of roughly 19.5%. The stock represents a long-term expected growth rate of 22.33%.

IDEXX Laboratories represents a solid one-year return of almost 68.2%. The company has a long-term expected growth rate of almost 14.96%.

The Best Place to Start Your Stock Search

Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>


In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

MEDIDATA SOLUTN (MDSO) - free report >>

HMS HLDGS CP (HMSY) - free report >>

IDEXX LABS INC (IDXX) - free report >>

EVOLENT HEALTH (EVH) - free report >>