U.S. Markets closed
  • S&P Futures

    3,902.00
    +4.25 (+0.11%)
     
  • Dow Futures

    31,241.00
    +39.00 (+0.12%)
     
  • Nasdaq Futures

    11,838.00
    -40.25 (-0.34%)
     
  • Russell 2000 Futures

    1,771.50
    -3.40 (-0.19%)
     
  • Crude Oil

    110.35
    +0.46 (+0.42%)
     
  • Gold

    1,845.10
    +3.90 (+0.21%)
     
  • Silver

    21.87
    -0.03 (-0.13%)
     
  • EUR/USD

    1.0562
    -0.0026 (-0.2429%)
     
  • 10-Yr Bond

    2.7870
    -0.0680 (-2.38%)
     
  • Vix

    29.43
    +0.08 (+0.27%)
     
  • GBP/USD

    1.2495
    +0.0020 (+0.1587%)
     
  • USD/JPY

    127.8500
    +0.0560 (+0.0438%)
     
  • BTC-USD

    29,738.95
    -270.09 (-0.90%)
     
  • CMC Crypto 200

    650.34
    -23.03 (-3.42%)
     
  • FTSE 100

    7,389.98
    +87.24 (+1.19%)
     
  • Nikkei 225

    26,739.03
    +336.19 (+1.27%)
     

Evolent Health Announces Third Quarter 2021 Results

  • Oops!
    Something went wrong.
    Please try again later.
·20 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

WASHINGTON, Nov. 3, 2021 /PRNewswire/ -- Evolent Health, Inc. (NYSE: EVH), a health care company that delivers proven clinical and administrative solutions to payers and providers, today announced financial results for the quarter ended September 30, 2021.

Highlights from the third quarter of 2021 announcement include:

Quarter ended September 30, 2021:

  • GAAP revenue of $222.5 million, a decrease of $17.1 million, or 7.1%, from the three months ended September 30, 2020.

  • Net loss attributable to common shareholders of Evolent Health, Inc. of $(13.0) million.

  • Achieved Adjusted EBITDA of $13.8 million.

  • Total Lives Managed of 14.7 million as of September 30, 2021, composed of 1.6 million Evolent Health Services Lives on Platform and 13.1 million Clinical Solutions Lives on Platform.

Additional announcements:

  • Evolent enters into two new agreements with Sunflower Medical Group in Kansas and Northern Medical Group in New York, expanding its total cost of care management services through Evolent Care Partners

  • Evolent adds new partnership with Health New England to provide comprehensive advance care planning services through New Century Health

Seth Blackley, Chief Executive Officer and Co-Founder of Evolent Health commented, "Overall, we're pleased with our results this quarter and our continued momentum on growth and earnings power. As we head into 2022, we are seeing momentum from our current portfolio as our solutions are delivering differentiated performance for our partners and our pipeline continues to drive strong growth. Today, we are excited to announce Evolent Care Partners has signed two new provider partnerships with Sunflower Medical Group in Kansas and Northern Medical Group in New York. Additionally, we are pleased to announce a new partnership with Health New England, a leading not-for-profit provider-owned health plan in Massachusetts. Health New England will leverage advance care planning services through New Century Health's Vital Decisions platform to help its more than 180,000 members with serious illness plan for future health care decisions. The three new partnerships announced today bring our total partner additions to ten for 2021, exceeding our target of six to eight."

Mr. Blackley added, "We also continue to drive innovation for our partners to make meaningful progress in increasing efficiency, improving clinical outcomes, and reducing the cost of care. For example, in the 2020 Performance Year, Evolent Care Partners drove over $20 million in savings to Medicare across 55,000 lives – putting it in the top 10% of performance of at-scale first year ACOs in the history of the program. With life growth already under contract and expected expansion to savings rates per life, we expect Evolent Care Partners to become an important financial and strategic contributor to Evolent Health."

"We remain committed to the execution of our focused strategy and are encouraged by our strong performance and momentum as we head into 2022."

Financial Results of Evolent Health, Inc.

In our earnings releases, prepared remarks, conference calls, slide presentations and webcasts, we may use or discuss non-GAAP financial measures. Definitions of the non-GAAP financial measures, as well as reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in this earnings release. See Financial Statement Presentation and Non-GAAP Financial Measures for more information.

Segment Highlights: Evolent Health Services

  • Revenue of $63.3 million, down 36.8%, from $100.2 million for the three months ended September 30, 2020, respectively.

  • Adjusted EBITDA of $(3.4) million and $24.6 million for the three months ended September 30, 2021 and 2020, respectively.

  • Evolent Health Services Lives on Platform was 1.6 million lives with a Evolent Health Services Average PMPM of $13.19 as of September 30, 2021.

Segment Highlights: Clinical Solutions

  • Revenue of $159.6 million, up 14.0%, from $140.1 million for the three months ended September 30, 2020.

  • Adjusted EBITDA of $23.9 million and $(1.0) million for the three months ended September 30, 2021 and 2020, respectively.

  • Clinical Solutions Lives on Platform in our Performance Suite was 1.5 million with a Clinical Solutions Performance Suite Average PMPM of $34.16 and in our New Century Technology and Services Suite Lives on Platform was 11.7 million with a New Century Technology and Services Suite Average PMPM of $0.36 as of September 30, 2021.

Reported Results

Evolent Health, Inc. reported the following results in accordance with U.S. generally accepted accounting principles ("GAAP"):

  • Revenue of $222.5 million and $239.6 million for the three months ended September 30, 2021 and 2020, respectively.

  • Cost of revenue of $163.1 million and $181.8 million for the three months ended September 30, 2021 and 2020, respectively.

  • Selling, general and administrative expenses of $51.3 million and $52.4 million for the three months ended September 30, 2021 and 2020, respectively.

  • Net loss attributable to common shareholders of Evolent Health, Inc. of $(13.0) million and $(37.3) million for the three months ended September 30, 2021 and 2020, respectively.

  • Loss attributable to common shareholders of Evolent Health, Inc., per basic and diluted share, of $(0.15) and $(0.44) for the three months ended September 30, 2021 and 2020, respectively.

Total cash and cash equivalents was $252.5 million as of September 30, 2021.

Adjusted Results

  • Adjusted cost of revenue of $162.9 million and $178.7 million for the three months ended September 30, 2021 and 2020, respectively.

  • Adjusted selling, general and administrative expenses of $45.8 million and $47.0 million for the three months ended September 30, 2021 and 2020, respectively.

  • Adjusted EBITDA of $13.8 million for both the three months ended September 30, 2021 and 2020, respectively.

  • Adjusted Loss Attributable to Common Shareholders of $(2.4) million and $(2.2) million for the three months ended September 30, 2021 and 2020, respectively.

  • Adjusted Loss per Share Attributable to Common Shareholders of $(0.03) for both the three months ended September 30, 2021 and 2020, respectively.

Business Outlook

Full Year 2021 Guidance

Revenue for the year ending December 31, 2021 is expected to be in the range of approximately $884 million to $900 million, compared to previous guidance of $870 million to $900 million.

Adjusted EBITDA is expected to be in the range of approximately $56 million to $60 million, compared to previous guidance of $50 million to $58 million.

Fourth Quarter 2021 Guidance

For the three months ending December 31, 2021, revenue is expected to be in the range of approximately $225 million to $240 million. Adjusted EBITDA is expected to be in the range of approximately $14 million to $18 million.

This "Business Outlook" section contains forward-looking statements, and actual results may differ materially. Factors that may cause actual results to differ materially from our current expectations are set forth below in "Forward Looking Statements - Cautionary Language" and Evolent Health, Inc.'s filings with the Securities and Exchange Commission ("SEC").

Web and Conference Call Information

As previously announced, Evolent Health, Inc. will hold a conference call to discuss its third quarter performance this evening, November 3, 2021, at 5:30 p.m., Eastern Time. To listen to a live broadcast via the internet and view the accompanying materials, please visit the Company's Investor Relations website at http://ir.evolenthealth.com. To participate by telephone, dial 855.940.9467 or 412.317.6034 for international callers, and ask to join the "Evolent Health call." Participants are advised to dial in at least fifteen minutes prior to the call to register. The call will be archived on the company's website for one week and will be available beginning later this evening. Evolent Health invites all interested parties to attend the conference call.

Evolent Health Logo (PRNewsfoto/Evolent Health)
Evolent Health Logo (PRNewsfoto/Evolent Health)

About Evolent Health

Evolent Health (NYSE: EVH) delivers proven clinical and administrative solutions that improve whole-person health while making health care simpler and more affordable. Our solutions encompass total cost of care management, specialty care management, and administrative simplification. Evolent serves a national base of leading payers and providers, is the first company to receive the National Committee for Quality Assurance's Population Health Program Accreditation, and is consistently recognized as a top place to work in health care nationally. Learn more about how Evolent is changing the way health care is delivered by visiting evolenthealth.com.

Contacts:

Chelsea Griffin
Investor Relations
919.817.8045
cgriffin@evolenthealth.com

Dan Paladino
Media Relations
571.306.3470
dpaladino@evolenthealth.com

Non-GAAP Financial Measures

In addition to disclosing financial results that are determined in accordance with GAAP, we present and discuss Adjusted Revenue, Adjusted Transformation Services Revenue, Adjusted Platform and Operations Services Revenue, Adjusted Cost of Revenue, Adjusted Selling, General and Administrative Expenses, Adjusted Depreciation and Amortization Expenses, Adjusted Total Operating Expenses, Adjusted Operating Income (Loss), Adjusted EBITDA, Adjusted Earnings (Loss) Available to Common Shareholders and Adjusted Earnings (Loss) per Share Available to Common Shareholders, which are all non-GAAP financial measures, as supplemental measures to help investors evaluate our fundamental operational performance.

Adjusted Cost of Revenue and Adjusted Selling, General and Administrative Expenses are defined as cost of revenue and selling, general and administrative expenses, respectively, adjusted to exclude the impact of stock-based compensation expenses, severance costs, amortization of contract cost assets recorded as a result of a one-time ASC 606 transition adjustment, acquisition-related costs related to acquisitions and business combinations, securities offerings, discontinued operations and other one-time adjustments. Management uses Adjusted Cost of Revenue and Adjusted Selling, General and Administrative Expenses as supplemental performance measures, which are also useful to investors, because they facilitate an understanding of our long term operational costs while removing the effect of costs that are not expected to reoccur frequently (e.g. acquisition-related costs) and non-cash (e.g. stock-based compensation expenses) in nature. Additionally, these supplemental performance measures facilitate understanding a breakdown of our Adjusted Total Operating Expenses. Adjustments for acquisition-related costs incurred generally represent professional service fees and direct expenses related to acquisitions. Because we do not acquire businesses on a predictable cycle, we do not consider the amount of acquisition-related costs to be a representative component of the day-to-day operating performance of our business.

Adjusted Depreciation and Amortization Expenses is defined as depreciation and amortization expenses adjusted to exclude the impact of amortization expenses related to intangible assets acquired through asset acquisitions and business combinations. Management uses Adjusted Depreciation and Amortization Expenses as a supplemental performance measure because it reflects a complete view of the operational results. The measure is also useful to investors because it facilitates understanding a breakdown of our Adjusted Total Operating Expenses.

Adjusted Total Operating Expenses is defined as the sum of Adjusted Cost of Revenue, Adjusted Selling, General and Administrative Expenses and Adjusted Depreciation and Amortization Expenses, and reflects the adjustments made in those non-GAAP measures. Adjusted Total Operating Expenses is further adjusted to exclude the impact of (gain) loss on disposal of assets and items arising from acquisitions and business combinations, such as changes in fair value of contingent consideration and indemnification assets.

Adjusted Operating Income (Loss) is defined as Adjusted Revenue less Adjusted Total Operating Expenses, and reflects the adjustments made in those non-GAAP measures. Management uses Adjusted Total Operating Expenses and Adjusted Operating Income (Loss) because the removal of acquisition costs, one-time or non-cash items (e.g. depreciation, amortization and stock-based compensation expenses) allows us to focus on operational performance, and believes these measures are useful to investors because they give investors insight into our core operating performance.

Adjusted EBITDA is defined as EBITDA (net loss attributable to common shareholders of Evolent Health, Inc. before interest income, interest expense, (provision) benefit for income taxes, depreciation and amortization expenses), adjusted to exclude equity method investment impairment, gain on the transfer of membership, loss on repayment of debt, loss on extinguishment of debt, goodwill impairment, gain (loss) from equity method investees, loss on disposal of assets and consolidation, changes in fair value of contingent consideration and indemnification asset, net loss attributable to non-controlling interests, other income (expense), net, repositioning costs, stock-based compensation expense, severance costs, amortization of contract cost assets, strategy and shareholder advisory expenses, acquisition-related costs and gain (loss) from discontinued operations.

Management uses Adjusted EBITDA as a supplemental performance measure because the removal of acquisition-related costs, one-time or non-cash items (e.g. depreciation, amortization and stock-based compensation expenses) allows us to focus on operational performance. We believe that this measure is also useful to investors because it allows further insight into the period over period operational performance in a manner that is comparable to other organizations in our industry and in the market in general.

Adjusted EBITDA Margin is as defined Adjusted EBITDA divided by Revenue. Management uses Adjusted EBITDA margin as a supplemental performance measure because it allows the investor to understand operational performance compared to revenues over time. We believe that this measure is also useful to investors because it allows further insight into the period over period operational performance in a manner that is comparable to other organizations in our industry and in the market in general.

Adjusted Earnings (Loss) Available to Common Shareholders is defined as earnings (loss) attributable to common shareholders adjusted to exclude gain from equity method investees, other income (expense), net, gain on transfer of membership, loss on repayment of debt, goodwill impairment, loss on disposal of assets, impairment of equity method investees, changes in fair value of contingent consideration and indemnification assets, net loss attributable to non-controlling interests, loss on extinguishment of debt, purchase accounting adjustments, repositioning costs, stock-based compensation expenses, severance costs, amortization of contract cost assets recorded as a result of a one-time ASC 606 transition adjustment, gain (loss) from discontinued operations, strategy and shareholder advisory services and acquisition-related costs.

Adjusted Earnings (Loss) per Share Available to Common Shareholders is defined as Adjusted Earnings (Loss) Available to Common Shareholders divided by Weighted-Average Common Shares, and reflects the adjustments made in those non-GAAP measures.

Management uses Adjusted Earnings (Loss) Available to Common Shareholders and Adjusted Earnings (Loss) per Share Available to Common Shareholders because excluding non-cash items (e.g. depreciation, amortization and stock-based compensation expenses) allows us to focus on operational performance. We believe that these measures are also useful to investors for the same reason.

Revenue Excluding Divested Assets is defined as the sum of revenue, less revenue from our divested health plan assets of Passport, Lighthouse and Miami Children's. Management uses Total Revenue Excluding Divested Assets as a supplemental performance measure because it reflects our on-going operational results. The measures are useful to investors because it reflects the full view of our operational performance in line with how we generate our long-term forecasts.

These adjusted measures do not represent and should not be considered as alternatives to GAAP measurements, and our calculations thereof may not be comparable to similarly entitled measures reported by other companies. A reconciliation of these adjusted measures to their most comparable GAAP financial measures is presented in the tables below. We believe these measures are useful across time in evaluating our fundamental core operating performance.

Lives on Platform and Per Member Per Month ("PMPM") Fee

Total Lives Managed are calculated by summing our Evolent Health Services Lives on Platform, our Clinical Solutions Lives on Platform. Evolent Health Services Lives on Platform are calculated by summing members on our value-based care and comprehensive health plan administrative platform. Clinical Solutions Lives on Platform are calculated by summing the Clinical Solutions Lives on Platform in our Performance suite and New Century Technology and Services suite Lives on Platform. Clinical Solutions Lives on Platform in our Performance suite are calculated by summing members covered for oncology specialty care services and members covered for cardiology specialty care services for contracts not under ASO arrangements. New Century Technology and Services suite Lives on Platform are calculated by summing members covered for oncology specialty care services and members covered for cardiology specialty care services for contracts under ASO arrangements. Members covered for more than one category are counted in each category.

Evolent Health Services Average per member per month ("PMPM") fee is defined as platform and operations revenue pertaining to the Evolent Health Services segment in the quarter divided by the average of the beginning and ending Evolent Health Services segment membership during quarter divided by the number of months in the period. Clinical Solutions Performance suite Average PMPM fee is defined as platform and operations services revenue pertaining to our Clinical Solutions performance suite in the quarter divided by the average of the beginning and ending Clinical Solutions performance suite membership during quarter divided by the number of months in the period. New Century Technology and Services suite Average PMPM fee is defined as platform and operations revenue pertaining to the New Century Technology and Services suite in the quarter divided by the average of the beginning and ending New Century Technology and Services Suite membership during quarter divided by the number of months in the period.

Management uses lives on platform and PMPM fees because we believe that they provide insight into the unit economics of our services. We believe that these measures are also useful to investors because they allow further insight into the period over period operational performance. We believe that these measures are also useful to investors because they allow further insight into the period over period operational performance.

Evolent Health, Inc.

Consolidated Statements of Operations and Comprehensive Income (Loss)

(unaudited, in thousands, except per share data)



For the Three Months
Ended September 30,


For the Nine Months
Ended September 30,


2021


2020


2021


2020

Revenue








Transformation services

$

2,075



$

4,807



$

4,984



$

10,800


Platform and operations services

220,396



234,765



654,615



667,303


Total revenue

222,471



239,572



659,599



678,103










Expenses








Cost of revenue (exclusive of depreciation and amortization expenses presented separately below)

163,126



181,761



493,071



521,748


Selling, general and administrative expenses

51,292



52,366



152,582



151,749


Depreciation and amortization expenses

14,859



14,534



44,962



46,130


Loss on disposal of assets







6,447


Loss on extinguishment of debt, net



4,789





4,789


Goodwill impairment







215,100


Change in fair value of contingent consideration and indemnification asset

(225)



2,570



(819)



(492)


Total operating expenses

229,052



256,020



689,796



945,471


Operating loss

(6,581)



(16,448)



(30,197)



(267,368)


Interest income

120



1,159



311



2,634


Interest expense

(6,367)



(7,416)



(18,978)



(19,987)


Impairment of equity method investments







(47,133)


Gain from equity method investees

63



(13,717)



12,725



11,014


Gain from transfer of membership





22,969




Loss on repayment of debt





(19,158)




Other expense, net

(41)



(110)



(73)



174


Loss from continuing operations before income taxes

(12,806)



(36,532)



(32,401)



(320,666)


Provision (benefit) for income taxes

234



503



936



(3,131)


Loss from continuing operations

(13,040)



(37,035)



(33,337)



(317,535)


Income (loss) from discontinued operations, net of tax (1)



(1,135)



1,383



(2,908)


Net loss

(13,040)



(38,170)



(31,954)



(320,443)


Net loss attributable to non-controlling interests



(822)





(822)


Net loss attributable to common shareholders of Evolent Health, Inc

$

(13,040)



$

(37,348)



$

(31,954)



$

(319,621)










Loss per common share








Basic and diluted








Continuing operations

$

(0.15)



$

(0.43)



$

(0.39)



$

(3.84)


Discontinued operations



(0.01)



0.02



(0.03)


Basic and diluted loss per share attributable to common shareholders of Evolent Health, Inc

$

(0.15)



$

(0.44)



$

(0.37)



$

(3.87)










Weighted-average common shares outstanding








Basic and diluted

85,800



85,172



85,306



82,615










Comprehensive loss








Net loss

$

(13,040)



$

(38,170)



$

(31,954)



$

(320,443)


Other comprehensive loss, net of taxes, related to:








Foreign currency translation adjustment

4



71



(85)



(86)


Total comprehensive loss

(13,036)



(38,099)



(32,039)



(320,529)


Total comprehensive loss attributable to non-controlling interests



(822)





(822)


Total comprehensive loss attributable to common shareholders of Evolent Health, Inc

$

(13,036)



$

(37,277)



$

(32,039)



$

(319,707)


————————

(1)

Includes $1.9 million gain on disposal of discontinued operations for the nine months ended September 30, 2021.

Evolent Health, Inc.

Condensed Consolidated Balance Sheets

(in thousands, unaudited)



September 30,
2021


December 31,
2020

Cash and cash equivalents

$

252,496



$

319,002


Restricted cash and restricted investments

29,259



21,028


Total current assets

478,196



547,649


Intangible assets, net

245,069



264,992


Goodwill

349,010



349,029


Total assets

1,253,525



1,371,700






Accounts payable

37,785



31,975


Debt, net of discount

237,767



289,900


Total liabilities

646,041



752,100






Total shareholders' equity

607,484



619,600


Total liabilities and shareholders' equity

1,253,525



1,371,700


Evolent Health, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)



For the Nine Months
Ended September 30,


2021


2020

Net cash and restricted cash provided by (used in) continuing operations




Net cash and restricted cash used in operating activities

$

(27,909)



(3,374)


Net cash and restricted cash provided by investing activities

38,582



263,297


Net cash and restricted cash provided by (used in) financing activities

(90,446)



12,054


Effect of exchange rate on cash and cash equivalents and restricted cash

(53)



43


Net increase (decrease) in cash and cash equivalents and restricted cash

(79,826)



272,020


Cash and cash equivalents and restricted cash as of beginning-of-period (1)

361,581



128,531


Cash and cash equivalents and restricted cash as of end-of-period (1)

$

281,755



400,551






Net cash and restricted cash provided by (used in) discontinued operations




Cash flows provided by operating activities

$

5,002



$

7,920


Cash flows provided by (used in) investing activities

(2,494)



936










————————

(1)

As a result of the closing of the sale of True Health SPA, the consolidated statements of operations, consolidated balance sheets, and related financial information reflect the Company's operations and assets and liabilities of True Health as discontinued operations for all periods presented. Cash flows and comprehensive income have not been adjusted and are included in the consolidated statements of cash flows and consolidated statements of comprehensive income (loss) for all periods presented.

Evolent Health, Inc.

Reconciliation of Adjusted Results of Operations

(in thousands, unaudited)



For the Three Months Ended September 30, 2021



For the Three Months Ended September 30, 2020


Evolent Health, Inc

as Reported


Evolent Health, Inc

as Adjusted


Evolent




Evolent



Evolent




Evolent




Health, Inc




Health, Inc



Health, Inc




Health, Inc


Change Over Prior Period


Change Over Prior Period


as Reported


Adjustments


as Adjusted



as Reported


Adjustments


as Adjusted


$


%


$


%

Revenue





















Transformation services

$

2,075



$



$

2,075




$

4,807



$



$

4,807



$

(2,732)



(56.8)

%


$

(2,732)



(56.8)

%

Platform and operations services (1)

220,396





220,396




234,765





234,765



(14,369)



(6.1)

%


(14,369)



(6.1)

%

Total revenue

222,471





222,471




239,572





239,572



(17,101)



(7.1)

%


(17,101)



(7.1)

%

Expenses





















Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) (1)

163,126



...