Evolent Health(EVH) - 2019 Q3 - Quarterly Report

Revenue Growth - Evolent Health reported a significant revenue increase of 25% year-over-year, reaching $200 million in the latest quarter[7]. - Evolent anticipates continued growth, projecting revenue to exceed $850 million for the upcoming fiscal year, representing a 20% increase[9]. - Total revenue for the three months ended September 30, 2019, was $220,143,000, representing an increase from $149,947,000 in the same period of 2018, a growth of approximately 47%[13]. - For the nine months ended September 30, 2019, total revenue was $609,858,000, compared to $433,959,000 for the same period in 2018, marking an increase of 40.5%[127]. - Revenue from service agreements with joint venture entities was $11.8 million for the three months ended September 30, 2019, compared to $5.1 million for the same period in 2018[103]. User Enrollment and Market Expansion - The company highlighted a 30% growth in user enrollment, bringing the total to 1.5 million members across its health plans[7]. - Evolent is expanding its market presence, with plans to enter three new states by the end of the year, aiming to increase its footprint in the healthcare sector[9]. Profitability and Losses - The company reported a net income of $10 million, compared to a loss of $5 million in the same quarter last year, indicating improved profitability[9]. - The company reported a net loss of $25,521,000 for the three months ended September 30, 2019, compared to a net loss of $12,429,000 for the same period in 2018, indicating a worsening of approximately 105%[13]. - Net loss for the nine months ended September 30, 2019, was a loss of $106,287 thousand, compared to a loss of $36,651 thousand in 2018, indicating a significant increase in losses[16]. Operating Expenses and Financial Health - Evolent is focused on maintaining a strong cost structure, with operating expenses growing at a slower rate than revenue, at 15% year-over-year[9]. - The company’s total operating expenses for the three months ended September 30, 2019, were $240,281,000, up from $160,977,000 in the same period of 2018, an increase of approximately 49%[13]. - Total current assets decreased to $308,012,000 as of September 30, 2019, down from $487,966,000 as of December 31, 2018, a decline of approximately 37%[12]. - The company’s cash and cash equivalents decreased significantly to $96,734,000 as of September 30, 2019, from $228,320,000 as of December 31, 2018, a reduction of approximately 58%[12]. Acquisitions and Investments - The company completed the acquisition of Valence Health, which is expected to contribute an additional $50 million in annual revenue[9]. - The acquisition of New Century Health was completed on October 1, 2018, for a total merger consideration of $205.1 million, which included $118.7 million in cash and 3.1 million shares of Class B common stock valued at $83.2 million[41][42]. - The acquisition of assets from New Mexico Health Connections on January 2, 2018, involved a cash payment of $10.3 million, expected to enhance the company's value-based care model in New Mexico[44][46]. Regulatory Compliance and Risk Management - The company emphasized the importance of regulatory compliance and is actively managing risks associated with healthcare policy changes[9]. - The company has not recorded a liability under the Tax Receivables Agreement (TRA) due to being in a full valuation allowance position[90]. Stock and Equity - The company reported a basic and diluted loss per common share of $0.30 for the three months ended September 30, 2019, compared to a loss of $0.16 for the same period in 2018[13]. - The total equity as of September 30, 2019, was $1,124.3 million, compared to $1,046.3 million as of December 31, 2017, reflecting an increase of approximately 7.5%[21]. Cash Flow and Liquidity - Cash flows from operating activities resulted in a net cash outflow of $55,832 thousand for the nine months ended September 30, 2019, compared to a cash inflow of $4,317 thousand in 2018[16]. - As of September 30, 2019, Evolent Health, Inc. reported cash and cash equivalents of $96.7 million, indicating sufficient liquidity for the next 12 months[23]. Segment Performance - Evolent Health operates through two segments: Services and True Health, with the Services segment focusing on technology-enabled value-based care services[26]. - For the three months ended September 30, 2019, transformation services revenue was $5.2 million, while platform and operations services revenue was $171.0 million[56]. Contingent Considerations and Liabilities - The company recorded a short-term contingent consideration liability fair valued at $5.9 million at the time of the Momentum Health Group transaction[103]. - The contingent consideration related to the GlobalHealth transaction was valued at $6.7 million, with a significant input being stock price volatility at 60%[116].