Evolent Health Settles With Activist Investor Engaged

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Activist investor Engaged Capital has reached a settlement with Evolent Health Inc. that will see a new director join the board and the health-care company form a committee charged with improving investor returns.

Under the terms of the agreement, Craig Barbarosh will be appointed to the board and its newly created strategy review committee, the company said in a statement Tuesday, confirming an earlier report by Bloomberg News

The committee will be tasked with finding ways to boost returns for investors in Evolent, including through cost cuts, improvements to its operations and changes to its overall business strategy and direction, the company said.

“We are pleased to have come to an agreement with Engaged Capital and look forward to furthering our constructive relationship,” Frank Williams, Evolent chairman and co-founder, said in the statement.

Evolent’s shares rose 1.2% in trading Tuesday to $15.71 at 10:00 a.m. in New York, giving the company a market value of roughly $1.3 billion.

Engaged disclosed a stake in Evolent of just under 10% in August, making it the company’s largest holder. At the time, the investor said it wanted the health-care firm to explore ways to improve value, including through the sale of all or part of the company, according to company filings.

Evolent also plans to propose a change to its bylaws at the company’s annual meeting that would see all of its directors stand for a shareholder vote every year if approved, instead of only some of them as is the case now. Engaged has agreed to a customary standstill agreement, the company said.

“Craig’s appointment to the board, the formation of a strategy committee of the board and the commitment to seek to declassify the board at the upcoming annual meeting are important steps in Evolent’s evolution as a public company,” Glenn Welling, founder and chief investment officer at Engaged, said in the statement.

Barbarosh has served on Landec Corp. since 2019 and has been a director of Nextgen Healthcare Inc. since 2009.

©2020 Bloomberg L.P.

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