Evolent Health(EVH) - 2023 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements Presents Evolent Health's unaudited interim consolidated financial statements, covering balance sheets, operations, equity, cash flows, and detailed notes Consolidated Balance Sheets Summarizes the company's financial position, detailing assets, liabilities, and equity as of September 30, 2023, and December 31, 2022 Consolidated Balance Sheets (in thousands) | Metric | September 30, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------- | :------- | | ASSETS | | | | | | Total current assets | $638,798 | $478,054 | $160,744 | 33.6% | | Intangible assets, net | $777,668 | $442,784 | $334,884 | 75.6% | | Goodwill | $1,117,543 | $722,774 | $394,769 | 54.6% | | Total assets | $2,669,615 | $1,817,293 | $852,322 | 46.9% | | LIABILITIES & EQUITY | | | | | | Total current liabilities | $615,294 | $433,442 | $181,852 | 41.9% | | Long-term debt, net | $599,947 | $412,986 | $186,961 | 45.3% | | Tax receivables agreement liability | $112,134 | $45,950 | $66,184 | 144.0% | | Total liabilities | $1,397,916 | $957,876 | $440,040 | 45.9% | | Mezzanine Equity (Preferred Stock) | $175,606 | $0 | $175,606 | - | | Total shareholders' equity | $1,096,093 | $859,417 | $236,676 | 27.5% | Consolidated Statements of Operations and Comprehensive Income (Loss) Details the company's revenues, expenses, and net income or loss for the three and nine months ended September 30, 2023 and 2022 Consolidated Statements of Operations and Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended Sep 30, 2023 (in thousands) | Three Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Revenue | $511,015 | $352,585 | $158,430 | 44.9% | | Total operating expenses | $528,953 | $339,634 | $189,319 | 55.7% | | Operating income (loss) | $(17,938) | $12,951 | $(30,889) | (238.5)% | | Net income (loss) attributable to common shareholders | $(33,196) | $2,123 | $(35,319) | (1663.6)% | | Basic income (loss) per share | $(0.30) | $0.02 | $(0.32) | (1600.0)% | | Diluted income (loss) per share | $(0.30) | $0.02 | $(0.32) | (1600.0)% | | Metric | Nine Months Ended Sep 30, 2023 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | :------- | | Revenue | $1,407,841 | $969,581 | $438,260 | 45.2% | | Total operating expenses | $1,457,702 | $964,061 | $493,641 | 51.2% | | Operating income (loss) | $(49,861) | $5,520 | $(55,381) | (1003.3)% | | Net income (loss) attributable to common shareholders | $(100,865) | $(7,815) | $(93,050) | (1190.7)% | | Basic income (loss) per share | $(0.91) | $(0.09) | $(0.82) | (911.1)% | | Diluted income (loss) per share | $(0.91) | $(0.09) | $(0.82) | (911.1)% | Consolidated Statements of Changes in Mezzanine Equity and Shareholders' Equity Outlines the changes in mezzanine equity and total shareholders' equity for the nine months ended September 30, 2023 and 2022 - Total shareholders' equity increased from $859.4 million as of December 31, 2022, to $1,096.1 million as of September 30, 2023, driven by Series A Preferred Stock issuance, shares for acquisition, and stock-based compensation, partially offset by net loss and preferred stock dividends[29][27] Consolidated Statements of Cash Flows Presents the cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2023 and 2022 Cash Flow Activities (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | | Net cash and restricted cash provided by (used in) operating activities | $53,201 | $(47,248) | $100,449 | | Net cash and restricted cash used in investing activities | $(409,492) | $(254,659) | $(154,833) | | Net cash and restricted cash provided by financing activities | $365,692 | $142,395 | $223,297 | | Net increase (decrease) in cash and cash equivalents and restricted cash | $9,340 | $(160,124) | $169,464 | - Operating cash flows significantly improved, moving from a net outflow of $(47.2) million in 2022 to a net inflow of $53.2 million in 2023, primarily due to non-cash adjustments despite a higher net loss[299][301] - Investing activities saw a substantial increase in cash used, from $(254.7) million in 2022 to $(409.5) million in 2023, mainly driven by the NIA acquisition and continued investments in internal-use software and property and equipment[302][303] - Financing activities provided $365.7 million in 2023, a significant increase from $142.4 million in 2022, primarily due to proceeds from the Credit Agreement and issuance of preferred equity to fund acquisitions[304][305] Notes to Consolidated Financial Statements Provides detailed explanations and disclosures supporting the interim consolidated financial statements Note 1. Organization Describes the company's structure, operational focus, and liquidity position - Evolent Health, Inc. operates as a holding company through its subsidiary, Evolent Health LLC, focusing on improving healthcare quality and affordability for complex conditions[36][40] - The Company re-evaluated its reportable segments, consolidating previous Evolent Health Services and Clinical Solutions into one segment, effective March 31, 2023[37] - As of September 30, 2023, the Company had $184.5 million in unrestricted cash and cash equivalents, believing it has sufficient liquidity for at least the next twelve months[38] Note 2. Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles Outlines the basis for preparing interim financial statements, key accounting estimates, and changes in accounting principles - The interim consolidated financial statements are unaudited and include all necessary recurring adjustments, with certain GAAP footnote disclosures omitted as per SEC instructions