Evolent Health(EVH) - 2025 Q1 - Quarterly Results

Evolent First Quarter 2025 Results Announcement Evolent announced strong Q1 2025 results at the high end of expectations, reiterating full-year outlook and securing five new revenue agreements First Quarter 2025 Highlights Evolent reported Q1 2025 results at the high end of expectations, with strong revenue and Adjusted EBITDA, reiterating its full-year outlook - CEO Seth Blackley stated that Q1 results were at the high end of expectations, the full-year outlook is reiterated, and the company sees a strong selling environment, with key operational focuses including scaling the oncology solution, favorable margin trends, AI-based automation, and disciplined capital allocation towards debt paydown[3] Q1 2025 Financial & Operational Highlights (in thousands, except PMPM/per case) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Financial Results | | | | Revenue | $483,649 | $639,653 | | Net loss attributable to common shareholders | $(72,250) | $(25,225) | | Adjusted EBITDA | $36,860 | $54,097 | | Adjusted EBITDA Margin | 7.6% | 8.5% | | Average Lives on Platform/Cases | | | | Performance Suite | 6,486 | 7,050 | | Specialty Technology and Services Suite | 77,079 | 72,302 | | Average Unique Members | 40,628 | 39,888 | | Average PMPM Fees/Revenue per Case | | | | Performance Suite | $15.57 | $21.19 | | Specialty Technology and Services Suite | $0.36 | $0.41 | New Revenue Agreements Evolent secured five new revenue agreements, expanding surgical management, medical oncology, advanced imaging, and musculoskeletal services - The company secured five new revenue agreements, including two new health plans implementing surgical management solutions, expanded medical oncology Technology & Services with a national payer adding 800,000 Medicare Advantage lives, and additions of advanced imaging and musculoskeletal services for existing partners covering over 100,000 Medicaid lives and 100,000 Medicare Advantage lives respectively[7] Financial Results Evolent's Q1 2025 financial results show a decrease in GAAP revenue and a widened net loss, alongside adjusted non-GAAP figures Reported Results (GAAP) Q1 2025 GAAP revenue decreased to $483.6 million, with net loss widening to $72.3 million, and cash at $246.5 million Q1 2025 GAAP Financial Results (in thousands, except per share data) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Revenue | $483,649 | $639,653 | | Cost of revenue | $381,178 | $535,547 | | Net loss attributable to common shareholders | $(72,250) | $(25,225) | | Basic and diluted loss per share | $(0.63) | $(0.22) | - Total cash and cash equivalents was $246.5 million as of March 31, 2025[5] Adjusted Results (Non-GAAP) Q1 2025 Adjusted EBITDA was $36.9 million (7.6% margin), and Adjusted Income was $7.4 million, both down year-over-year Q1 2025 Adjusted Financial Results (in thousands, except per share data) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Adjusted EBITDA | $36,860 | $54,097 | | Adjusted EBITDA margin | 7.6% | 8.5% | | Adjusted income attributable to common shareholders | $7,445 | $24,144 | | Adjusted basic income per common share | $0.06 | $0.21 | Business Outlook Evolent provides Q2 and full-year 2025 guidance, reiterating revenue and Adjusted EBITDA expectations Second Quarter 2025 Guidance Evolent projects Q2 2025 revenue between $440.0 million and $470.0 million, with Adjusted EBITDA from $33.0 million to $40.0 million Q2 2025 Guidance (in millions) | Metric | Guidance Range (in millions) | | :--- | :--- | | Revenue | $440.0 - $470.0 | | Adjusted EBITDA | $33.0 - $40.0 | Full Year 2025 Guidance Full-year 2025 outlook reiterated: revenue $2.06 billion-$2.11 billion, Adjusted EBITDA $135.0 million-$165.0 million, and $35 million for capitalized software Full Year 2025 Guidance (Reiterated) | Metric | Guidance Range | | :--- | :--- | | Revenue | $2.06 billion - $2.11 billion | | Adjusted EBITDA | $135.0 million - $165.0 million | - The Company reiterated its expectation to deploy approximately $35 million in cash for capitalized software development during 2025[11] Key Operating Metrics Definitions This section defines key operating metrics like Revenue Agreements, Lives on Platform, PMPM Fee, Cases, and Average Unique Members - A "new revenue agreement" is defined as incremental revenue from new partner entities or additional sales to existing partners, including service, geographic, or line of business expansions[16] - "Lives on Platform" are calculated by summing monthly members for each service suite (Performance, Specialty Technology and Services, Administrative) and dividing by the number of months in the period[17] - "Average PMPM fee" is calculated by dividing the revenue from a specific suite by the corresponding "Lives on Platform" for the period, then by the number of months[18] - "Average Unique Members" are calculated by summing members across all solutions, but only counting members from the solution with the maximum number of members in cases where partners use multiple solutions, to avoid duplication[19] Consolidated Financial Statements This section presents Evolent's unaudited consolidated statements for operations, balance sheets, and cash flows for Q1 2025 Consolidated Statements of Operations and Comprehensive Income (Loss) Q1 2025 operations show $483.6 million revenue, $1.6 million operating loss, and a $72.3 million net loss due to option exercise Consolidated Statements of Operations (unaudited, in thousands) | | For the Three Months Ended March 31, (in thousands) | | :--- | :--- | :--- | | | 2025 | 2024 | | Revenue | $483,649 | $639,653 | | Total operating expenses | $485,271 | $653,062 | | Operating income (loss) | $(1,622) | $(13,409) | | Loss on option exercise | $(52,348) | — | | Loss before income taxes | $(63,148) | $(16,715) | | Net loss attributable to common shareholders | $(72,250) | $(25,225) | | Loss per common share (Basic and diluted) | $(0.63) | $(0.22) | Consolidated Balance Sheets As of March 31, 2025, total assets reached $2.65 billion, cash $246.5 million, liabilities $1.52 billion, and equity $935.5 million Consolidated Balance Sheet Highlights (in thousands) | | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $246,547 | $104,203 | | Total current assets | $727,934 | $607,117 | | Goodwill | $1,137,320 | $1,137,320 | | Total assets | $2,653,451 | $2,544,411 | | Liabilities & Equity | | | | Total current liabilities | $739,097 | $715,501 | | Long-term debt, net | $647,532 | $490,520 | | Total liabilities | $1,524,702 | $1,352,979 | | Total shareholders' equity | $935,521 | $1,001,259 | Consolidated Statements of Cash Flows Q1 2025 cash flows show $4.6 million from operations, $13.1 million used in investing, and $107.9 million from financing, boosting cash position Consolidated Statements of Cash Flows Highlights (unaudited, in thousands) | | For the Three Months Ended March 31, (in thousands) | | :--- | :--- | :--- | | | 2025 | 2024 | | Net cash provided by operating activities | $4,565 | $4,909 | | Net cash used in investing activities | $(13,093) | $(9,732) | | Net cash provided by financing activities | $107,854 | $14,882 | | Net increase in cash and cash equivalents | $99,349 | $10,021 | | Cash and cash equivalents at end-of-period | $277,845 | $233,478 | Non-GAAP Financial Measures This section defines and reconciles Evolent's non-GAAP financial measures to GAAP, providing a clearer view of operational performance Definitions of Non-GAAP Measures Evolent uses non-GAAP measures like Adjusted EBITDA and Adjusted Income, excluding non-operational costs for clearer performance evaluation - The company presents non-GAAP measures like Adjusted Cost of Revenue, Adjusted SG&A, Adjusted EBITDA, and Adjusted Income to help investors evaluate fundamental operational performance[28] - Adjustments to GAAP figures include removing costs not representative of day-to-day operations, such as stock-based compensation, severance, transaction costs, repositioning costs, and amortization of acquired intangible assets[29][30][31] Reconciliation of Adjusted Results This section details the reconciliation of non-GAAP measures, including Adjusted Cost of Revenue, SG&A, EBITDA, and Income, to GAAP counterparts Reconciliation of Adjusted Cost of Revenue (in thousands) | | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Cost of revenue (GAAP) | $381,178 | $535,547 | | Less: Stock-based compensation | 657 | 1,005 | | Adjusted cost of revenue (Non-GAAP) | $380,521 | $534,542 | Reconciliation of Adjusted Selling, General and Administrative Expenses (in thousands) | | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | SG&A (GAAP) | $78,409 | $79,104 | | Less: Stock-based compensation | 10,424 | 17,781 | | Less: Severance costs | 1,014 | 380 | | Less: Transaction-related costs | 703 | — | | Less: Repositioning costs | — | 9,929 | | Adjusted SG&A (Non-GAAP) | $66,268 | $51,014 | Reconciliation of Adjusted EBITDA to Net Loss (in thousands) | | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net loss attributable to common shareholders (GAAP) | $(72,250) | $(25,225) | | Adjustments (Interest, Taxes, D&A, etc.) | 109,110 | 79,322 | | Adjusted EBITDA (Non-GAAP) | $36,860 | $54,097 | Reconciliation of Adjusted Income to Net Loss (in thousands) | | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net loss attributable to common shareholders (GAAP) | $(72,250) | $(25,225) | | Adjustments (Loss on option exercise, Purchase accounting, etc.) | 79,695 | 49,369 | | Adjusted income attributable to common shareholders (Non-GAAP) | $7,445 | $24,144 | Forward-Looking Statements - Cautionary Language This section provides a safe harbor statement, outlining numerous risks and uncertainties that could impact Evolent's forward-looking statements - The report contains forward-looking statements concerning future results, performance, new partner additions, and business outlook, which are not historical facts and are subject to significant risks[48] - Key risks include dependence on a few large partners, the challenges of risk-sharing arrangements, ability to attract new partners, competition, and changes in healthcare regulation[49] - Additional risks highlighted include data security and privacy, protection of intellectual property, risks associated with AI use, reliance on third parties, debt service obligations, and potential stock price volatility[50] - The company states that the list of risks is not exhaustive and undertakes no obligation to publicly update any forward-looking statements[51][52]