Evolent Health(EVH) - 2025 Q3 - Quarterly Results

Financial Performance - Evolent reported Q3 2025 revenue of $479.5 million, a decrease of 22.8% from $621.4 million in Q3 2024[3]. - Adjusted EBITDA for Q3 2025 was $39.0 million, representing an increase of 22.5% from $31.8 million in Q3 2024, with an adjusted EBITDA margin of 8.1%[3][11]. - Evolent's net loss attributable to common shareholders improved to $26.9 million in Q3 2025 from $31.2 million in Q3 2024, with a net loss margin of 5.6%[3][9]. - Revenue for the three months ended September 30, 2025, was $479.5 million, a decrease of 22.8% compared to $621.4 million for the same period in 2024[27]. - Operating income for the three months ended September 30, 2025, was $886 thousand, compared to a loss of $16.3 million in the same period of 2024[27]. - Net loss attributable to common shareholders for the nine months ended September 30, 2025, was $150.3 million, compared to a loss of $62.8 million for the same period in 2024[27]. - The company reported a net loss of $(150,270,000) for the nine months ended September 30, 2025, compared to $(62,839,000) for the same period in 2024[53]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $113,362,000, compared to $137,848,000 for the same period in 2024[51]. Revenue Guidance and Expectations - The company expects Q4 2025 revenue to be in the range of $462 million to $472 million and adjusted EBITDA between $30 million and $40 million[13]. - Full year 2025 revenue guidance is now approximately $1.87 billion to $1.88 billion, with adjusted EBITDA expected to be between $144 million and $154 million[14]. - The company added two new customer agreements in Q3 2025, bringing the total for the year to thirteen, and expects to generate over $750 million in new annualized revenue in 2026[4][5]. Cash and Assets - Evolent's total cash and cash equivalents as of September 30, 2025, were $116.7 million[9]. - Cash and cash equivalents as of September 30, 2025, were $116.7 million, an increase from $104.2 million as of December 31, 2024[29]. - Total assets as of September 30, 2025, were $2.45 billion, a decrease from $2.54 billion as of December 31, 2024[29]. - Total liabilities as of September 30, 2025, were $1.61 billion, compared to $1.35 billion as of December 31, 2024[29]. - The company plans to deploy approximately $35 million in cash for capitalized software development during 2025[15]. Expenses and Costs - The company reported a significant increase in selling, general and administrative expenses to $231.2 million for the nine months ended September 30, 2025, compared to $215.3 million in 2024[27]. - Total cost of revenue for the nine months ended September 30, 2025, was $1,104,880,000, with adjusted cost of revenue at $1,101,932,000 after excluding stock-based compensation[48]. - Selling, general and administrative expenses for the nine months ended September 30, 2025, were $231,210,000, with adjusted expenses of $157,123,000 after adjustments[49]. - Transaction-related costs for the three months ended September 30, 2025, amounted to $551,000, which are adjusted out to reflect normal operating costs[39]. - Repositioning costs incurred for the nine months ended September 30, 2024, totaled $10,599,000, which are not part of normal business operations[38]. Strategic Developments - Evolent appointed Mario Ramos as CFO effective January 1, 2026, to support its growth strategy[6][7]. - The company’s repositioning plan concluded in the second quarter of 2024, indicating a strategic shift in operations[38]. Risks and Challenges - The company derives a significant portion of its revenue from its largest partners, with potential risks related to the loss or renegotiation of contracts[56]. - The company is entering an increasing number of risk-sharing arrangements with partners, which may impact revenue predictability[56]. - Future performance is subject to uncertainties, including governmental funding reductions and policy changes affecting partner success[56]. - There are risks associated with completed and future acquisitions that could divert management resources and incur unanticipated costs[56]. - The company faces competition that may limit its ability to maintain or expand market share within the industry[56]. - The company is dependent on key personnel and must effectively attract and retain talent to support growth[56]. - The company acknowledges the potential impact of inflationary pressures and rising consumer costs on its business operations[59]. - The company is exposed to risks related to data security and privacy, which could affect its reputation and operational integrity[59]. Dividend Policy - The company does not intend to pay cash dividends on its Class A common stock, focusing instead on reinvestment[59].