(Reuters) — Evolent Health‘s initial public offering priced at $17 per share, an underwriter told Reuters late yesterday, valuing the healthcare software maker at about $950 million.
The Arlington, Va.-based company, which is selling all the Class A shares in the offering, raised the offering size to 11.5 million shares from 10 million.
Evolent Health, which ranks 12th on Forbes’ list of America’s Most Promising Companies, makes software for hospitals that are transitioning to new fee systems, in which doctors are paid for keeping patients healthy rather than for treating them once they get sick.
Evolent was founded in 2011 by its top 2 investors, the University of Pittsburgh Medical Center and healthcare research firm Advisory Board Co.
Shares of Evolent, which is 6%-owned by the growth arm of private equity firm TPG, are expected to begin trading on Friday under the symbol “EVH” on the New York Stock Exchange.
JPMorgan, Goldman Sachs and Wells Fargo Securities are among the major underwriters for the IPO.
Founded in 2011, Evolent’s platform is designed to help healthcare providers migrate from fee-for-service reimbursement to “payment models that reward high-quality and cost-effective care,” or value-based models, according to Evolent’s initial registration filing.
“By partnering with providers to accelerate their path to value-based care, we enable our provider partners to expand their market opportunity, diversify their revenue streams, grow market share and improve the quality of the care they provide,” according to the filing.
Evolent said it thinks the addressable market is $10 billion, “based on health insurance expenditures, the total percentage of payments providers receive under value-based contracting, the size of the provider-sponsored health plan market and the fees we believe we can charge.”
“We believe this opportunity will grow to over $46 billion by 2020 driven by health insurance expenditures increasing from approximately $2.1 trillion in 2013 to approximately $3.2 trillion in 2020, the total percentage of payments providers receive under value-based care models growing from 10% to 50%, and the provider-sponsored health plan market representing 15% of total health plan membership,” the company said.
Evolent’s fiscal 2014 losses grew 59.5% to -$52.3 million, on sales growth of 150.4% to $100.9 million, according to the filing.