Evolent Health(EVH) - 2024 Q3 - Quarterly Results

Revenue Performance - Revenue for Q3 2024 was $621.4 million, an increase of $110.4 million or 21.6% compared to Q3 2023[1] - Revenue for the three months ended September 30, 2024, was $621,401 thousand, a 21.6% increase from $511,015 thousand in the same period of 2023[25] - For Q4 2024, revenue is expected to be between $642.0 million and $667.0 million, with Adjusted EBITDA projected between $22.0 million and $37.0 million[12] - Full year 2024 revenue guidance is approximately $2.55 billion to $2.575 billion, with Adjusted EBITDA expected to be between $160.0 million and $175.0 million[13] Profitability and Loss - Net loss attributable to common shareholders was $(31.2) million, with a net loss margin of (5.0)%, an improvement from (6.5)% in Q3 2023[4] - The net loss attributable to common shareholders for the three months ended September 30, 2024, was $(31,231) thousand, compared to a net loss of $(33,196) thousand for the same period in 2023, reflecting an improvement[47] - The company reported a basic and diluted loss per common share of $(0.27) for the three months ended September 30, 2024, compared to $(0.30) in the same period of 2023[25] - Net loss before preferred dividends decreased to $38,821 thousand in September 2024 from $79,629 thousand in September 2023, representing a 51% improvement[28] - The company experienced a loss before income taxes of $(23,756) thousand for the three months ended September 30, 2024, an improvement from $(30,874) thousand in the same period of 2023[25] Adjusted EBITDA - Adjusted EBITDA for the quarter was $31.8 million, resulting in an Adjusted EBITDA margin of 5.1%, down from 9.5% in the same quarter last year[4] - The adjusted EBITDA for the three months ended September 30, 2024, was $31,801 thousand, with an adjusted EBITDA margin of 5.1%, down from $48,714 thousand and 9.5% in the prior year[47] - The company continues to expect average annual revenue growth in excess of 15% and average Adjusted EBITDA growth of 20% on a long-term basis[14] - Adjusted EBITDA margin is expected to provide further insight into operational performance compared to revenues over time, as management focuses on long-term operational costs[39] Operating Expenses - Total operating expenses for the three months ended September 30, 2024, were $637,669 thousand, compared to $528,953 thousand in the prior year, reflecting a 20.6% increase[25] - Adjusted cost of revenue for the three months ended September 30, 2024, was $539,591 thousand, up from $386,534 thousand in the same period of 2023, reflecting a 39% increase[44] - Total selling, general, and administrative expenses for the nine months ended September 30, 2024, were $215,349 thousand, down from $276,682 thousand in the same period of 2023[45] Cash and Liquidity - Cash and cash equivalents decreased to $96,583 thousand as of September 30, 2024, down from $192,825 thousand at the end of 2023[26] - Total current liabilities decreased to $523,683 thousand as of September 30, 2024, from $674,242 thousand at the end of 2023, indicating improved liquidity[26] - Cash and cash equivalents and restricted cash decreased to $127,851 thousand as of the end of September 2024 from $224,498 thousand at the end of September 2023, a decline of 43%[29] - Net cash provided by operating activities was $44,996 thousand for the nine months ended September 30, 2024, compared to $53,201 thousand for the same period in 2023[28] - The net cash used in investing activities was $43,002 thousand for the nine months ended September 30, 2024, compared to $409,492 thousand in the same period of 2023, showing a significant reduction[28] Contracts and Growth - Evolent announced six new contract agreements in Q3 2024, the highest number in the company's history, including a significant oncology Performance Suite agreement[6] - Evolent Health anticipates continued expansion and new partner additions, indicating a focus on growth despite current market dynamics[52] Risks and Challenges - The company faces risks related to the integration of acquisitions and maintaining profitability under performance-based contracts, which could impact future financial results[53] - The company faces risks related to the ability to contain health care costs and maintain adequate reserves for policy benefits[54] - There is a dependency on key personnel, impacting the ability to attract and retain talent[54] - The company has obligations to make material payments to pre-IPO investors for future tax benefits[54] - The company’s debt following the NIA acquisition raises concerns about meeting obligations[54] - There are potential volatility risks for the Class A common stock price, especially if a substantial number of shares are sold[54] - The company does not intend to pay cash dividends on its Class A common stock[54] - Risks related to legal proceedings and the safeguarding of confidential data may impact operations[54] - The company relies on third-party vendors for technology platform maintenance, which poses operational risks[54] - The conditional conversion features of the 2025 and 2029 Notes may adversely affect financial condition[54] - The company operates in a rapidly changing and competitive environment, with new risk factors emerging[55]