Evolent Health(US:EVH)2020-11-08 13:31Financial Data and Key Metrics Changes - Total revenue for Q3 2020 was $264.6 million, representing a 20.2% increase compared to Q3 2019 [7][42] - Adjusted EBITDA for the quarter was $12.7 million, up from $3.3 million in Q3 2019 [42] - Adjusted EBITDA margins improved to 4.8% of revenue, up about 100 basis points from Q2 and over 300 basis points from Q3 2019 [39][42] Business Line Data and Key Metrics Changes - Services segment revenue increased 33.2% to $239.7 million compared to $179.9 million in Q3 2019, driven by new partner additions and cross-sell expansions [43] - The average PMPM (per member per month) fee for the quarter was $23.73, compared to $16.20 in Q3 2019 [44] - Adjusted EBITDA from the services segment was $13.8 million, compared to $3.1 million in the prior year [44] Market Data and Key Metrics Changes - Approximately 3.5 million total lives were on the platform as of September 30, 2020 [7][43] - The company signed eight new partners in 2020, exceeding the previously communicated range of six to eight [9][11] Company Strategy and Development Direction - The company aims for strong organic growth, scaling EBITDA margins, and optimizing its strategic portfolio and balance sheet [5][16] - The focus remains on monetizing health plan assets to deleverage and concentrate on three core solutions [16][18] - The company anticipates mid-teens organic top-line growth in the long term [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving medium-term targets regardless of political outcomes, emphasizing the bipartisan nature of their work [22][24] - The ongoing pressure on healthcare budgets due to COVID-19 is expected to create opportunities for value-based arrangements [24][27] - The company is optimistic about the future, with strong momentum heading into 2021 [36][52] Other Important Information - The company expects total adjusted revenue for 2020 to be in the range of $1 billion to $1.014 billion [49] - Adjusted EBITDA for the full year is forecasted to be between $35 million and $38 million [50] Q&A Session Summary Question: Can you elaborate on the Blues win and its market potential? - Management indicated that having a proof case with Florida Blue Medicare will be beneficial for targeting other Blue plans across the country [55] Question: Which of the three offerings is seeing the most momentum? - Management noted that all three solutions are experiencing pressure from the market, with strong differentiation and opportunities for growth [60][62] Question: What is the opportunity with Florida Blue and the PMPM dynamics? - The initial contract with Florida Blue Medicare is expected to generate an annualized run rate of $75 million, with potential for additional lives in the future [65] Question: How does the Passport sale impact revenue? - Management clarified that while Passport revenue will decline, there will be a gradual wind-down rather than an immediate drop [87] Question: What is the appetite for direct contracting among current customers? - Management stated that direct contracting is still in the early stages, but it could be interesting for future growth as the program matures [80][82]