WASHINGTON, May 7, 2019
/PRNewswire/ -- Evolent Health, Inc. (NYSE: EVH), a
company providing an integrated value-based care platform to the
nation's leading physician and payer organizations, today announced
financial results for the quarter ended March 31, 2019.
Highlights from the first quarter of 2019 announcement include
(all comparisons are to the quarter ended March 31, 2018):
- GAAP revenue of $197.8 million,
an increase of 41.5%; Adjusted Revenue of $198.4 million, an increase of 37.3%
- Net income (loss) attributable to Evolent Health, Inc. of
$(46.7) million, Adjusted EBITDA of
$(14.8) million
- Lives on platform of approximately 3.4 million, an increase of
20.8%
- New partnership agreement with Premera Blue Cross, a
not-for-profit independent licensee of the Blue Cross Blue Shield
Association. Evolent will provide health plan operations
services—including claims adjudication, utilization management and
care management services—and the IdentifiSM value-based
technology platform to help serve approximately 70,000 exchange
lives in Washington and
Alaska.
Frank Williams, chief executive
officer of Evolent Health, Inc., commented, "Overall, we are
pleased with our top-line results for the first quarter and the
steady progress we are making on our strategic and operational
objectives for 2019. We enter the spring with a number of
opportunities emerging in our new business pipeline, including
several late-stage opportunities with existing and prospective
partners."
Mr. Williams added, "We are also excited to announce a new
relationship with Premera Blue Cross, our third new partner for
this year. Premera Blue Cross has 2 million customers across the
U.S. and is viewed as a progressive payer committed to clinical
innovation. Looking broadly across the market, we believe the
combination of our value-based care approach and health plan
services platform has positioned us well to deliver significant
clinical and administrative results for both providers and
traditional payers."
Mr. Williams concluded, "Finally, we are pleased to report that
we are making substantive progress on our key corporate initiatives
to promote strong top-line growth, drive operational efficiency and
continue to evolve our partnership model to create greater
alignment with our network partners. We believe the combination of
these efforts, along with continued policy support from CMS in the
move to value, sets us up well as we look to the second half of
2019."
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.
Reported Results
Evolent Health, Inc. reported the following GAAP results:
- Total revenue of $197.8 million
and $139.7 million for the three
months ended March 31, 2019 and 2018,
respectively, an increase of 41.5%;
-
- Services revenue of $153.7
million and $120.1 million for
the three months ended March 31, 2019
and 2018, respectively, before intersegment eliminations of
$3.1 million and $3.8 million, respectively; and
- True Health premiums revenue of $47.4
million and $23.6 million for
the three months ended March 31, 2019
and 2018, respectively, before intersegment eliminations of
$0.3 million and $0.2 million, respectively.
- Cost of revenue of $117.4 million
and $72.0 million for the three
months ended March 31, 2019 and 2018,
respectively, an increase of 63.2%;
- Claims expenses of $37.8 million
and $16.7 million for the three
months ended March 31, 2019 and 2018,
respectively, an increase of 125.4%;
- Selling, general and administrative expenses of $74.8 million and $55.5
million for the three months ended March 31, 2019 and 2018, respectively, an
increase of 34.8%;
- Net income (loss) attributable to Evolent Health, Inc. of
$(46.7) million and $(13.6) million for the three months ended
March 31, 2019 and 2018,
respectively;
- Earnings (loss) available to common shareholders, basic and
diluted, of $(46.7) million and
$(13.6) million for the three months
ended March 31, 2019 and 2018,
respectively; and
- Earnings (loss) available to common shareholders, per basic and
diluted share, of $(0.59) and
$(0.18) for the three months ended
March 31, 2019 and 2018,
respectively.
Total cash and cash equivalents, as of March 31, 2019, were
$170.8 million.
Adjusted Results
- Adjusted Revenue of $198.4
million and $144.4 million for
the three months ended March 31, 2019
and 2018, respectively, an increase of 37.3%;
-
- Adjusted Services Revenue of $154.3
million and $124.8 million for
the three months ended March 31, 2019
and 2018, respectively, before intersegment eliminations of
$3.1 million and $3.8 million, respectively; and
- True Health premiums revenue of $47.4
million and $23.6 million for
the three months ended March 31, 2019
and 2018, respectively, before intersegment eliminations of
$0.3 million and $0.2 million, respectively.
- Adjusted Cost of Revenue of $115.8
million and $70.3 million for
the three months ended March 31, 2019
and 2018, respectively, an increase of 64.7%;
- Claims expenses of $37.8 million
and $16.7 million for the three
months ended March 31, 2019 and 2018,
respectively, an increase of 125.4%;
- Adjusted Selling, General and Administrative Expenses of
$59.5 million and $49.4 million for the three months ended
March 31, 2019 and 2018,
respectively, an increase of 20.5%;
- Adjusted EBITDA of $(14.8)
million and $7.9 million for
the three months ended March 31, 2019
and 2018, respectively;
-
- Services Adjusted EBITDA of $(15.5)
million and $7.0 million for
three months ended March 31, 2019 and
2018, respectively; and
- True Health Adjusted EBITDA of $0.7
million and $0.9 million for
the three months ended March 31, 2019
and 2018, respectively.
- Adjusted Earnings (Loss) Available for Class A and Class B
Shareholders of $(25.3) million and
$1.2 million for the three months
ended March 31, 2019 and 2018,
respectively; and
- Adjusted Earnings (Loss) per Share Available for Class A and
Class B Shareholders of $(0.31) and
$0.02 for the three months ended
March 31, 2019 and 2018,
respectively.
Business Outlook
We are not providing forward looking guidance for GAAP reported
financial measures. A reconciliation of forward looking non-GAAP
financial measures to the most comparable GAAP financial measure is
provided in the "Guidance Reconciliation" table below. For the full
year 2019, Adjusted Revenue is expected to be at the middle of our
previously announced range of approximately $805.0 million to $880.0
million. The components of Adjusted Revenue include Adjusted
Services Revenue, which is forecasted to be approximately
$650.0 million to $710.0 million, and True Health premiums revenue,
which is forecasted to be approximately $170.0 million to $190.0
million; intersegment eliminations are forecasted to be
approximately $(15.0) million to
$(20.0) million for the full year.
Adjusted EBITDA is expected to be towards the middle to lower end
of the previously provided range of break even to approximately
$15.0 million.
For the three months ended June 30,
2019, Adjusted Revenue is expected to be in the range of
approximately $187.0 million to
$195.0 million. The components of
Adjusted Revenue include Adjusted Services Revenue, which is
forecasted to be approximately $149.0
million to $153.0 million, and
True Health premiums revenue, which is forecasted to be
approximately $42.0 million to
$46.0 million; intersegment
eliminations are forecasted to be approximately $(4.0) million for the quarter. Adjusted EBITDA
is expected to be in the range of approximately $(8.0) million to $(5.0)
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").
Organization Update: Nicky McGrane Promoted to Executive Vice
President; John Johnson named
CFO
The Company also announced that Nicky
McGrane has been promoted to Executive Vice President of
Corporate Performance to enhance his operational impact on the
business. In his new role, Mr. McGrane will focus on driving key
corporate performance initiatives, managing discrete operational
areas and taking responsibility for post-merger integration, as
well as continuing to play an active role in Investor Relations.
Mr. Williams commented, "Nicky has been an invaluable member of our
management team for the past several years and I am looking forward
to working with him in his new leadership role as we work to drive
integration, efficiency and improved performance across the
business."
The Company also named John
Johnson as Chief Financial Officer. Most recently, Mr.
Johnson served as the acting CFO of New Century Health post-merger
and previously served as Evolent's SVP of Corporate Performance.
Mr. Williams added, "I am also delighted John will be succeeding
Nicky as CFO. John has worked closely with Nicky and me over
the past few years as a member of our Finance team and Chief of
Staff in the Office of the CEO. John is a proven performer who has
been instrumental in driving our growth strategy and performance as
a public company and I am certain he will have a tremendous impact
in his new role as CFO." Mr. Johnson, who has a Physics degree from
Cornell University, joined the company
in 2016 and has had a wide range of responsibilities within the
strategy and finance functions, including financial planning,
corporate performance and overall financial strategy. Both of these
organizational changes are effective as of July 1, 2019.
Web and Conference Call Information
As previously announced, Evolent Health, Inc. will hold a
conference call to discuss its first quarter performance this
evening, May 7, 2019, at 5:00 p.m.,
Eastern Time. The conference call will be available via live
webcast on 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.
About Evolent Health
Evolent Health partners with leading provider and payer
organizations to achieve superior clinical and financial results in
value-based care and under full-risk arrangements. With a provider
heritage and over 20 years of health plan administration
experience, Evolent operates in more than 35 U.S. health care
markets, actively managing care across Medicare, Medicaid,
commercial and self-funded adult and pediatric populations. With
the experience to drive change, Evolent confidently stands by a
commitment to achieve results. For more information, visit
www.evolenthealth.com.
Contacts:
Bob East
|
Kim
Conquest
|
443.213.0500
|
540.435.2095
|
Investor
Relations
|
Media
Relations
|
InvestorRelations@evolenthealth.com
|
KConquest@evolenthealth.com
|
Financial Statement Presentation
Evolent Health, Inc. is a holding company and its principal
asset is all of the Class A common units in its operating
subsidiary, Evolent Health LLC, which has owned all of our
operating assets and substantially all of our business since
inception. The financial results of Evolent Health LLC are
consolidated in the financial statements of Evolent Health,
Inc.
Non-GAAP Financial Measures
In addition to disclosing financial results that are determined
in accordance with GAAP, we present and discuss Adjusted Revenue,
Adjusted Services 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, Services Adjusted EBITDA, True
Health Adjusted EBITDA, Adjusted Earnings (Loss) Available to Class
A and Class B Shareholders, Adjusted Earnings (Loss) per Share
Available to Class A and Class B Shareholders and Adjusted
Weighted-Average Class A and Class B Shares, which are all non-GAAP
financial measures, as supplemental measures to help investors
evaluate our fundamental operational performance.
Adjusted Transformation Services Revenue and Adjusted Platform
and Operations Services Revenue are defined as transformation
services revenue and platform and operations services revenue,
respectively, before the effect of intersegment eliminations and
adjusted to exclude the impact of purchase accounting adjustments.
In addition, the company's Adjusted Transformation Services Revenue
and Adjusted Platform and Operations Services Revenue for the three
months ended March 31, 2018, include a $4.5 million adjustment related to revenue that
was contracted for prior to 2018 and that was properly excluded
from revenue in our 2017 results under the revenue recognition
rules then in effect under Accounting Standards Codification
("ASC") 605. On January 1, 2018,
we adopted the new revenue recognition rules under ASC 606 using
the modified retrospective method, which required us to include
this $4.5 million as part of the
cumulative transition adjustment to beginning retained earnings as
of January 1, 2018. This is a
one-time adjustment and it will not reoccur in future periods.
Adjusted Services Revenue is defined as the sum of Adjusted
Transformation Services Revenue and Adjusted Platform and
Operations Services Revenue. Adjusted Revenue is defined as the sum
of Adjusted Services Revenue and True Health premiums revenue, less
relevant intersegment eliminations. Management uses Adjusted
Revenue, Adjusted Services Revenue, Adjusted Transformation
Services Revenue and Adjusted Platform and Operations Services
Revenue as supplemental performance measures because they reflect a
complete view of the operational results. The measures are also
useful to investors because they reflect the full view of our
operational performance in line with how we generate our long term
forecasts.
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, transaction costs related
to acquisitions and business combinations, securities offerings 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
one-time (e.g. transaction 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.
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 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 one-time adjustments, such as goodwill
impairment, severance costs, 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.
Adjusted EBITDA is the sum of Services Adjusted EBITDA and True
Health Adjusted EBITDA and is defined as EBITDA (net income (loss)
attributable to Evolent Health, Inc. before interest income,
interest expense, (provision) benefit for income taxes,
depreciation and amortization expenses), adjusted to exclude,
changes in fair value of contingent consideration and
indemnification assets, income (loss) from equity method investees,
other income (expense), net, net (income) loss attributable to
non-controlling interests, purchase accounting adjustments,
stock-based compensation expenses, severance costs, amortization of
contract cost assets recorded as a result of a one-time ASC 606
transition adjustment, transaction costs related to acquisitions
and business combinations and other one-time adjustments.
Management uses Adjusted EBITDA as a supplemental performance
measure because the removal of transaction 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 Earnings (Loss) Available to Class A and Class B
Shareholders is defined as earnings (loss) available to common
shareholders adjusted to exclude, income (loss) from equity method
investees, (provision) benefit for income taxes, other income
(expenses), net, changes in fair value of contingent consideration
and indemnification assets, net (income) loss attributable to
non-controlling interests, purchase accounting adjustments,
stock-based compensation expenses, severance costs, amortization of
contract cost assets recorded as a result of a one-time ASC 606
transition adjustment, transaction costs related to acquisitions
and business combinations and other one-time adjustments.
Adjusted Weighted-Average Class A and Class B Shares is defined
as weighted average common shares (diluted) adjusted to include, in
periods of net loss, the dilutive or potentially dilutive effect of
the assumed conversion of Class B common shares to Class A common
shares.
Adjusted Earnings (Loss) per Share Available to Class A and
Class B Shareholders is defined as Adjusted Earnings (Loss)
Available to Class A and Class B Shareholders divided by Adjusted
Weighted-Average Class A and Class B Shares, and reflects the
adjustments made in those non-GAAP measures.
Management uses Adjusted Earnings (Loss) Available to Class A
and Class B Shareholders, Adjusted Weighted-Average Class A and
Class B Shares and Adjusted Earnings (Loss) per Share Available to
Class A and Class B Shareholders because these performance measures
represent our core operating performance distributed amongst all of
our investors which is not represented by the GAAP results across
time due to our complex equity structure. We believe that
these measures are also useful to investors for the same
reason.
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.
Evolent Health,
Inc.
Consolidated
Statements of Operations and Comprehensive Income
(Loss)
(unaudited)
|
|
(in thousands, except
per share data)
|
For the
Three
|
|
Months
Ended
|
|
March
31,
|
|
2019
|
|
2018
|
Revenue
|
|
|
|
Transformation
services
|
$
|
3,353
|
|
|
$
|
6,505
|
|
Platform and
operations services
|
147,292
|
|
|
109,818
|
|
Premiums
|
47,111
|
|
|
23,391
|
|
Total
revenue
|
197,756
|
|
|
139,714
|
|
|
|
|
|
Expenses
|
|
|
|
Cost of revenue
(exclusive of depreciation and amortization
|
|
|
|
expenses presented
separately below)
|
117,441
|
|
|
71,975
|
|
Claims
expenses
|
37,757
|
|
|
16,749
|
|
Selling, general and
administrative expenses
|
74,838
|
|
|
55,526
|
|
Depreciation and
amortization expenses
|
14,266
|
|
|
9,496
|
|
Change in fair value
of contingent consideration
|
100
|
|
|
100
|
|
Total operating
expenses
|
244,402
|
|
|
153,846
|
|
Operating income
(loss)
|
(46,646)
|
|
|
(14,132)
|
|
Interest
income
|
1,060
|
|
|
1,072
|
|
Interest
expense
|
(3,562)
|
|
|
(853)
|
|
Income (loss) from
equity method investees
|
(424)
|
|
|
(131)
|
|
Other Income
(expense), net
|
427
|
|
|
(18)
|
|
Income (loss) before
income taxes and
|
|
|
|
non-controlling
interests
|
(49,145)
|
|
|
(14,062)
|
|
Provision (benefit)
for income taxes
|
(496)
|
|
|
3
|
|
Net income
(loss)
|
(48,649)
|
|
|
(14,065)
|
|
Net income (loss)
attributable to non-controlling interests
|
(1,910)
|
|
|
(439)
|
|
Net income (loss)
attributable to Evolent Health, Inc.
|
$
|
(46,739)
|
|
|
$
|
(13,626)
|
|
|
|
|
|
Earnings (Loss)
Available to Common Shareholders
|
|
|
|
Basic and
Diluted
|
$
|
(46,739)
|
|
|
$
|
(13,626)
|
|
|
|
|
|
Earnings (Loss)
per Common Share
|
|
|
|
Basic and
Diluted
|
$
|
(0.59)
|
|
|
$
|
(0.18)
|
|
|
|
|
|
Weighted-Average
Common Shares Outstanding
|
|
|
|
Basic and
Diluted
|
79,335
|
|
|
75,375
|
|
|
|
|
|
Comprehensive
income (loss)
|
|
|
|
Net income
(loss)
|
$
|
(48,649)
|
|
|
$
|
(14,065)
|
|
Other comprehensive
income (loss), net of taxes, related to:
|
|
|
|
Foreign currency
translation adjustment
|
24
|
|
|
—
|
|
Total comprehensive
income (loss)
|
(48,625)
|
|
|
(14,065)
|
|
Total comprehensive
income (loss) attributable to
|
|
|
|
non-controlling
interests
|
(1,910)
|
|
|
(439)
|
|
Total comprehensive
income (loss) attributable to
|
|
|
|
Evolent Health,
Inc.
|
$
|
(46,715)
|
|
|
$
|
(13,626)
|
|
Evolent Health,
Inc.
Condensed
Consolidated Balance Sheets
(unaudited)
|
|
(in
thousands)
|
|
As
of
|
|
|
As
of
|
|
|
March
31,
|
December
31,
|
|
|
2019
|
|
|
2018
|
|
Cash and cash
equivalents
|
|
$
|
170,817
|
|
|
|
$
|
228,320
|
|
|
Restricted
cash
|
|
56,637
|
|
|
|
160,005
|
|
|
Restricted
investments
|
|
1,319
|
|
|
|
818
|
|
|
Total current
assets
|
|
321,186
|
|
|
|
487,966
|
|
|
Investments, at
amortized cost
|
|
13,789
|
|
|
|
10,010
|
|
|
Intangible assets,
net
|
|
336,231
|
|
|
|
335,036
|
|
|
Goodwill
|
|
770,334
|
|
|
|
768,124
|
|
|
Total
assets
|
|
1,629,374
|
|
|
|
1,722,281
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
39,007
|
|
|
|
146,760
|
|
|
Long-term debt, net
of discount
|
|
223,320
|
|
|
|
221,041
|
|
|
Total
liabilities
|
|
479,248
|
|
|
|
532,925
|
|
|
Total shareholders'
equity (deficit) attributable to
|
|
|
|
|
|
|
Evolent Health,
Inc.
|
|
1,100,026
|
|
|
|
1,143,824
|
|
|
Non-controlling
interests
|
|
50,100
|
|
|
|
45,532
|
|
|
Total liabilities and
shareholders' equity (deficit)
|
|
1,629,374
|
|
|
|
1,722,281
|
|
|
Evolent Health,
Inc.
Condensed
Consolidated Statements of Cash Flows
(unaudited)
|
|
(in
thousands)
|
For the
Three
|
|
Months
Ended
|
|
March
31,
|
|
2019
|
|
2018
|
Net cash and
restricted cash provided by (used in) operating
activities
|
$
|
(25,709)
|
|
|
$
|
(24,705)
|
|
Net cash and
restricted cash provided by (used in) investing
activities
|
(25,478)
|
|
|
(12,685)
|
|
Net cash and
restricted cash provided by (used in) financing
activities
|
(109,665)
|
|
|
(21,607)
|
|
Effect of exchange
rate on cash and cash equivalents and restricted cash
|
(19)
|
|
|
(4)
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents and restricted
cash
|
(160,871)
|
|
|
(59,001)
|
|
Cash and cash
equivalents and restricted cash as of
beginning-of-period
|
388,325
|
|
|
295,363
|
|
Cash and cash
equivalents and restricted cash as of end-of-period
|
$
|
227,454
|
|
|
$
|
236,362
|
|
Evolent Health,
Inc.
Reconciliation of
Adjusted Results of Operations
(unaudited)
|
|
|
(in
thousands)
|
For the Three
Months Ended March 31, 2019
|
|
|
For the Three
Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Evolent Health,
Inc.
|
|
Evolent Health,
Inc.
|
|
Evolent
|
|
|
|
Evolent
|
|
|
Evolent
|
|
|
|
Evolent
|
|
as
Reported
|
|
as
Adjusted
|
|
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 (1)
|
$
|
3,353
|
|
|
$
|
—
|
|
|
$
|
3,353
|
|
|
|
$
|
6,505
|
|
|
$
|
3,655
|
|
|
$
|
10,160
|
|
|
$
|
(3,152)
|
|
|
(48.5)
|
%
|
|
$
|
(6,807)
|
|
|
(67.0)
|
%
|
Platform and
operations services (1)
|
147,292
|
|
|
596
|
|
|
147,888
|
|
|
|
109,818
|
|
|
1,060
|
|
|
110,878
|
|
|
37,474
|
|
|
34.1
|
%
|
|
37,010
|
|
|
33.4
|
%
|
Premiums
|
47,111
|
|
|
—
|
|
|
47,111
|
|
|
|
23,391
|
|
|
—
|
|
|
23,391
|
|
|
23,720
|
|
|
101.4
|
%
|
|
23,720
|
|
|
101.4
|
%
|
Total
revenue
|
197,756
|
|
|
596
|
|
|
198,352
|
|
|
|
139,714
|
|
|
4,715
|
|
|
144,429
|
|
|
58,042
|
|
|
41.5
|
%
|
|
53,923
|
|
|
37.3
|
%
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
(exclusive of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
depreciation and
amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses
presented
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
separately below)
(2)
|
117,441
|
|
|
(1,609)
|
|
|
115,832
|
|
|
|
71,975
|
|
|
(1,636)
|
|
|
70,339
|
|
|
45,466
|
|
|
63.2
|
%
|
|
45,493
|
|
|
64.7
|
%
|
Claims
expenses
|
37,757
|
|
|
—
|
|
|
37,757
|
|
|
|
16,749
|
|
|
—
|
|
|
16,749
|
|
|
21,008
|
|
|
125.4
|
%
|
|
21,008
|
|
|
125.4
|
%
|
Selling, general
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
administrative
expenses (3)
|
74,838
|
|
|
(15,297)
|
|
|
59,541
|
|
|
|
55,526
|
|
|
(6,098)
|
|
|
49,428
|
|
|
19,312
|
|
|
34.8
|
%
|
|
10,113
|
|
|
20.5
|
%
|
Depreciation and
amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses
(4)
|
14,266
|
|
|
(5,735)
|
|
|
8,531
|
|
|
|
9,496
|
|
|
(2,636)
|
|
|
6,860
|
|
|
4,770
|
|
|
50.2
|
%
|
|
1,671
|
|
|
24.4
|
%
|
Change in fair value
of contingent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
consideration
(5)
|
100
|
|
|
(100)
|
|
|
—
|
|
|
|
100
|
|
|
(100)
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
Total operating
expenses
|
244,402
|
|
|
(22,741)
|
|
|
221,661
|
|
|
|
153,846
|
|
|
(10,470)
|
|
|
143,376
|
|
|
90,556
|
|
|
58.9
|
%
|
|
78,285
|
|
|
54.6
|
%
|
Operating income
(loss)
|
$
|
(46,646)
|
|
|
$
|
23,337
|
|
|
$
|
(23,309)
|
|
|
|
$
|
(14,132)
|
|
|
$
|
15,185
|
|
|
$
|
1,053
|
|
|
$
|
(32,514)
|
|
|
(230.1)
|
%
|
|
$
|
(24,362)
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses as a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
percentage of total
revenue
|
123.6
|
%
|
|
|
|
111.8
|
%
|
|
|
110.1
|
%
|
|
|
|
99.3
|
%
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjustments to
platform and operations services revenue include deferred revenue
purchase accounting adjustments of approximately $0.6 million and
$0.2 million for the three months ended March 31, 2019 and
2018, respectively, resulting
from our acquisitions and business combinations. Adjustments to
transformation services revenue and platform and operations
services revenue for the three months
ended March 31, 2018, also include
approximately $3.7 million and $0.8 million,
respectively, resulting from our transition adjustments related to
the implementation of ASC 606.
|
(2)
|
Adjustments to cost
of revenue include approximately $0.8 million and $0.3 million in
stock-based compensation expense for the three months ended
March 31, 2019 and 2018, respectively. The adjustments also
include approximately $0.8 million
and $0.5 million related to the amortization of contract cost
assets recorded as a result of the one-time ASC 606 transition
adjustment for the three months ended March 31, 2019 and 2018,
respectively. Adjustments also include one-time
severance costs of approximately $0.8 million for the three months
ended March 31, 2018.
|
(3)
|
Adjustments to
selling, general and administrative expenses include $3.7 million
and $3.5 million in stock-based compensation expense for the three
months ended March 31, 2019 and 2018, respectively.
Adjustments also include transaction costs
of $0.9 million and $1.8 million for the three months ended
March 31, 2019 and 2018, respectively, resulting from
acquisitions and business combinations. Adjustments also include
one-time severance costs of approximately $10.6 million and
$0.8
million for the three months ended March 31, 2019 and 2018,
respectively.
|
(4)
|
Adjustments to
depreciation and amortization expenses of approximately $5.7
million and $2.6 million for the three months ended March 31,
2019 and 2018, respectively, relate to amortization of intangible
assets acquired via asset acquisition and
business combinations.
|
(5)
|
The adjustment
reverses the impact of changes in fair value of our contingent
consideration that was assumed as part of a business combination
during 2016.
|
Evolent Health,
Inc.
Segment
Results
(unaudited)
|
|
|
|
|
|
|
|
|
Intersegment
|
|
|
|
|
|
Services
|
|
True
Health
|
Eliminations
|
Consolidated
|
Adjusted
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
Services:
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Transformation Services
|
|
$
|
3,353
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
3,353
|
|
|
Adjusted Platform and
Operations Services
|
|
150,947
|
|
|
|
—
|
|
|
|
(3,059)
|
|
|
|
147,888
|
|
|
Adjusted Services
Revenue
|
|
154,300
|
|
|
|
—
|
|
|
|
(3,059)
|
|
|
|
151,241
|
|
|
True
Health:
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
|
|
—
|
|
|
|
47,376
|
|
|
|
(265)
|
|
|
|
47,111
|
|
|
Adjusted
Revenue
|
|
154,300
|
|
|
|
47,376
|
|
|
|
(3,324)
|
|
|
|
198,352
|
|
|
Purchase accounting
adjustments (1)
|
|
(596)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(596)
|
|
|
Total
revenue
|
|
$
|
153,704
|
|
|
|
$
|
47,376
|
|
|
|
$
|
(3,324)
|
|
|
|
$
|
197,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Services:
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Transformation Services
|
|
$
|
10,160
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
10,160
|
|
|
Adjusted Platform and
Operations Services
|
|
114,675
|
|
|
|
—
|
|
|
|
(3,797)
|
|
|
|
110,878
|
|
|
Adjusted Services
Revenue
|
|
124,835
|
|
|
|
—
|
|
|
|
(3,797)
|
|
|
|
121,038
|
|
|
True
Health:
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
|
|
—
|
|
|
|
23,585
|
|
|
|
(194)
|
|
|
|
23,391
|
|
|
Adjusted
Revenue
|
|
124,835
|
|
|
|
23,585
|
|
|
|
(3,991)
|
|
|
|
144,429
|
|
|
ASC 606 transition
adjustment (2)
|
|
(4,498)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(4,498)
|
|
|
Purchase accounting
adjustments (1)
|
|
(217)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(217)
|
|
|
Total
revenue
|
|
$
|
120,120
|
|
|
|
$
|
23,585
|
|
|
|
$
|
(3,991)
|
|
|
|
$
|
139,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segments
|
|
|
|
|
|
|
Services
|
|
True
Health
|
Total
|
|
Three Months Ended
March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
(15,499)
|
|
|
|
$
|
721
|
|
|
|
$
|
(14,778)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
6,966
|
|
|
|
$
|
947
|
|
|
|
$
|
7,913
|
|
|
|
|
|
|
(1)
Purchase accounting adjustments pertain to Adjusted Platform and
Operations Services Revenue. There were no purchase accounting
adjustments in relation
to
Adjusted Transformation Services Revenue or True Health premiums
revenue.
|
(2)
Adjustment to Adjusted Transformation Services Revenue was
approximately $3.7 million and the adjustment to Adjusted Platform
and Operations Services
Revenue was
approximately $0.8 million. See "Non-GAAP Financial Measures" above
for more information on adjustments pertaining to the
implementation of ASC 606.
|
Evolent Health,
Inc.
Reconciliation of
Adjusted EBITDA to Net Income (Loss)
Attributable to
Evolent Health, Inc.
(unaudited)
|
|
(in
thousands)
|
For the
Three
|
|
Months
Ended
|
|
March
31,
|
|
2019
|
|
2018
|
Net Income (Loss)
Attributable to
|
|
|
|
Evolent Health,
Inc.
|
$
|
(46,739)
|
|
|
$
|
(13,626)
|
|
Less:
|
|
|
|
Interest
income
|
1,060
|
|
|
1,072
|
|
Interest
expense
|
(3,562)
|
|
|
(853)
|
|
(Provision) benefit
for income taxes
|
496
|
|
|
(3)
|
|
Depreciation and
amortization expenses
|
(14,266)
|
|
|
(9,496)
|
|
EBITDA
|
(30,467)
|
|
|
(4,346)
|
|
Less:
|
|
|
|
Income (loss) from
equity method investees
|
(424)
|
|
|
(131)
|
|
Change in fair value
of
|
|
|
|
contingent
consideration
|
(100)
|
|
|
(100)
|
|
Other income
(expense), net
|
427
|
|
|
(18)
|
|
Net (income) loss
attributable to
|
|
|
|
non-controlling
interests
|
1,910
|
|
|
439
|
|
ASC 606 transition
adjustments
|
—
|
|
|
(4,498)
|
|
Purchase accounting
adjustments
|
(596)
|
|
|
(217)
|
|
Stock-based
compensation expense
|
(4,537)
|
|
|
(3,795)
|
|
Severance
costs
|
(10,602)
|
|
|
(1,594)
|
|
Amortization of
contract cost assets
|
(754)
|
|
|
(561)
|
|
Transaction
costs
|
(1,013)
|
|
|
(1,784)
|
|
Adjusted
EBITDA
|
$
|
(14,778)
|
|
|
$
|
7,913
|
|
|
Evolent Health,
Inc.
Reconciliation of
Adjusted Earnings (Loss) Available to Class A and Class
B
Shareholders to
Earnings (Loss) Available to Common Shareholders
(unaudited)
|
|
|
|
(in thousands, except
per share data)
|
For the
Three
|
|
|
Months
Ended
|
|
|
March
31,
|
|
|
2019
|
|
2018
|
|
Earnings (Loss)
Available to
|
|
|
|
|
Common
Shareholders - Basic and Diluted (a)
|
$
|
(46,739)
|
|
|
$
|
(13,626)
|
|
|
Less:
|
|
|
|
|
Income (loss) from
equity method investees
|
(424)
|
|
|
(131)
|
|
|
(Provision) benefit
for income taxes
|
—
|
|
|
7
|
|
|
Other income
(expense), net
|
431
|
|
|
—
|
|
|
Change in fair value
of contingent consideration
|
(100)
|
|
|
(100)
|
|
|
Net (income) loss
attributable to
|
|
|
|
|
non-controlling
interests
|
1,910
|
|
|
439
|
|
|
ASC 606 Transition
Adjustment
|
—
|
|
|
(4,498)
|
|
|
Purchase accounting
adjustments
|
(6,331)
|
|
|
(2,853)
|
|
|
Stock-based
compensation expense
|
(4,537)
|
|
|
(3,795)
|
|
|
Severance
costs
|
(10,602)
|
|
|
(1,594)
|
|
|
Amortization of
contract cost assets
|
(754)
|
|
|
(561)
|
|
|
Transaction
costs
|
(1,013)
|
|
|
(1,784)
|
|
|
Adjusted Earnings
(Loss) Available
|
|
|
|
|
to Class A and
Class B Shareholders (b)
|
$
|
(25,319)
|
|
|
$
|
1,244
|
|
|
|
|
|
|
|
Earnings (Loss)
per Share Available to
|
|
|
|
|
Common
Shareholders - Basic and Diluted (a) (1)
|
$
|
(0.59)
|
|
|
$
|
(0.18)
|
|
|
|
|
|
|
|
Adjusted Earnings
(Loss) per Share Available
|
|
|
|
|
to Class A and
Class B Shareholders (b) (2)
|
$
|
(0.31)
|
|
|
$
|
0.02
|
|
|
|
|
|
|
|
Weighted-average
common shares - basic
|
79,335
|
|
|
75,375
|
|
|
Weighted-average
common shares - diluted
|
79,335
|
|
|
75,375
|
|
|
Adjusted
Weighted-Average Class A
|
|
|
|
|
and Class B Shares
(3)
|
82,525
|
|
|
77,516
|
|
|
|
(1)
|
For periods of net
loss, shares used in both the basic and diluted earnings per share
calculation represent basic shares as using diluted shares would be
anti-dilutive.
|
(2)
|
Represents Adjusted
Earnings (Loss) Available to Class A and Class B Shareholders
divided by Adjusted Weighted-Average Class A and Class B Shares as
described in footnote 3 below.
|
(3)
|
Represents the
weighted-average common shares (diluted) adjusted to include, in
periods of net loss, the dilutive or potentially dilutive effect of
the assumed conversion of Class B common shares to Class A common
shares. See the reconciliation of Adjusted Weighted-Average Class A
and Class B Shares to diluted weighted-average common shares on the
following page.
|
Evolent Health,
Inc.
Reconciliation of
Adjusted Weighted-Average Class A and Class B
Shares to
Diluted Weighted-Average Common Shares
(unaudited)
|
|
(in
thousands)
|
For the
Three
|
|
Months
Ended
|
|
March
31,
|
|
2019
|
|
2018
|
Weighted-average
common shares - diluted
|
79,335
|
|
75,375
|
Assumed conversion of
Class B common
|
|
|
|
|
|
shares to Class A
common shares
|
3,190
|
|
2,141
|
Adjusted
Weighted-Average Class A and Class B Shares
|
82,525
|
|
77,516
|
Evolent Health,
Inc.
Guidance
Reconciliation
(unaudited)
|
|
(in
thousands)
|
For the
Three
|
For the
Twelve
|
|
Months
Ended
|
Months
Ended
|
|
June
30,
|
December
31,
|
|
|
2019
|
|
|
2019
|
|
Services
revenue
|
|
$
|
150,750
|
|
|
|
$
|
679,000
|
|
|
Purchase accounting
adjustments
|
|
250
|
|
|
|
1,000
|
|
|
Adjusted Services
Revenue
|
|
151,000
|
|
|
|
680,000
|
|
|
Premiums
revenue
|
|
44,000
|
|
|
|
180,000
|
|
|
Intersegment
eliminations
|
|
(4,000)
|
|
|
|
(17,500)
|
|
|
Adjusted
Revenue
|
|
$
|
191,000
|
|
|
|
$
|
842,500
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
Attributable to
|
|
|
|
|
|
|
Evolent Health,
Inc.
|
|
$
|
(33,200)
|
|
|
|
$
|
(103,500)
|
|
|
Less:
|
|
|
|
|
|
|
Interest
income
|
|
500
|
|
|
|
2,000
|
|
|
Interest
expense
|
|
(3,000)
|
|
|
|
(12,000)
|
|
|
Depreciation and
amortization expenses
|
|
(14,600)
|
|
|
|
(58,000)
|
|
|
EBITDA
|
|
(16,100)
|
|
|
|
(35,500)
|
|
|
Less:
|
|
|
|
|
|
|
Income (loss) from
equity method investees
|
|
(2,000)
|
|
|
|
(8,000)
|
|
|
Net (income) loss
attributable to
|
|
|
|
|
|
|
non-controlling
interests
|
|
350
|
|
|
|
2,700
|
|
|
Purchase accounting
adjustments
|
|
(250)
|
|
|
|
(1,000)
|
|
|
Stock-based
compensation expense
|
|
(5,000)
|
|
|
|
(20,000)
|
|
|
Severance
costs
|
|
(1,000)
|
|
|
|
(10,000)
|
|
|
Amortization of
contract cost assets
|
|
(700)
|
|
|
|
(2,700)
|
|
|
Transaction
costs
|
|
(1,000)
|
|
|
|
(4,000)
|
|
|
Adjusted
EBITDA
|
|
$
|
(6,500)
|
|
|
|
$
|
7,500
|
|
|
The guidance reconciliation provided above reconciles the
midpoint of the respective guidance ranges to the most comparable
GAAP measure.
FORWARD-LOOKING STATEMENTS - CAUTIONARY
LANGUAGE
Certain statements made in this release and in other written or
oral statements made by us or on our behalf are "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995 ("PSLRA"). A forward-looking statement is a
statement that is not a historical fact and, without limitation,
includes any statement that may predict, forecast, indicate or
imply future results, performance or achievements, and may contain
words like: "believe," "anticipate," "expect,"
"estimate," "aim," "predict," "potential," "continue," "plan,"
"project," "will," "should," "shall," "may," "might" and other
words or phrases with similar meaning in connection with a
discussion of future operating or financial performance. In
particular, these include statements relating to future actions,
trends in our businesses, prospective services, future performance
or financial results and the outcome of contingencies, such as
legal proceedings. We claim the protection afforded by the
safe harbor for forward-looking statements provided by the
PSLRA.
These statements are only predictions based on our current
expectations and projections about future events.
Forward-looking statements involve risks and uncertainties that may
cause actual results, level of activity, performance or
achievements to differ materially from the results contained in the
forward-looking statements. Risks and uncertainties that may
cause actual results to vary materially, some of which are
described within the forward-looking statements, include, among
others:
- the significant portion of revenue we derive from our largest
partners, and the potential loss, termination or renegotiation of
customer contracts;
- uncertainty relating to expected future revenues from and our
relationship with Passport Health Plan ("Passport"), including as a
result of ongoing litigation pertaining to rate adjustments and
Passport's ability to remain solvent, which among other things
could result in significantly reduced fees or a significant
customer loss in 2019;
- the structural change in the market for health care in
the United States;
- uncertainty in the health care regulatory framework, including
the potential impact of policy changes;
- uncertainty in the public exchange market;
- the uncertain impact of Centers for Medicare and Medicaid
Services waivers to Medicaid rules and changes in membership and
rates;
- the uncertain impact the results of elections may have on
health care laws and regulations;
- our ability to effectively manage our growth, drive a leaner
cost structure and reorient our growth strategy toward new
opportunities;
- our ability to offer new and innovative products and
services;
- risks related to completed and future acquisitions,
investments, alliances and joint ventures, including the pending
partnership with GlobalHealth, the acquisition of assets from New
Mexico Health Connections ("NMHC") and the acquisitions of Valence
Health, Inc., excluding Cicerone Health Solutions, Inc. ("Valence
Health"), Aldera Holdings, Inc. ("Aldera") and NCIS Holdings, Inc.
("New Century Health"), which may be difficult to integrate, divert
management resources, or result in unanticipated costs or dilute
our stockholders;
- our ability to consummate opportunities in our pipeline;
- certain risks and uncertainties associated with the acquisition
of assets from NMHC and the acquisitions of Valence Health, Aldera
and New Century Health, including future revenues may be less than
expected, the timing and extent of new lives expected to come onto
the platform may not occur as expected and the expected results of
Evolent may not be impacted as anticipated;
- risks relating to our ability to maintain profitability for our
and New Century Health's performance-based capitation or
risk-bearing contracts and products;
- the growth and success of our partners, which is difficult to
predict and is subject to factors outside of our control, including
premium pricing reductions, selection bias in at risk membership
and the ability to control and, if necessary, reduce health care
costs, particularly in New
Mexico;
- our ability to attract new partners;
- the increasing number of risk-sharing arrangements we enter
into with our partners;
- our ability to recover the significant upfront costs in our
partner relationships;
- our ability to estimate the size of our target markets;
- our ability to maintain and enhance our reputation and brand
recognition;
- consolidation in the health care industry;
- competition which could limit our ability to maintain or expand
market share within our industry;
- risks related to governmental payer audits and actions,
including whistleblower claims;
- our ability to partner with providers due to exclusivity
provisions in our contracts;
- restrictions and penalties as a result of privacy and data
protection laws;
- adequate protection of our intellectual property, including
trademarks;
- any alleged infringement, misappropriation or violation of
third-party proprietary rights;
- our use of "open source" software;
- our ability to protect the confidentiality of our trade
secrets, know-how and other proprietary information;
- our reliance on third parties and licensed technologies;
- our ability to use, disclose, de-identify or license data and
to integrate third-party technologies;
- data loss or corruption due to failures or errors in our
systems and service disruptions at our data centers;
- online security risks and breaches or failures of our security
measures, including with respect to privacy of health
information;
- our reliance on Internet infrastructure, bandwidth providers,
data center providers, other third parties and our own systems for
providing services to our users;
- our reliance on third-party vendors to host and maintain our
technology platform;
- our ability to contain health care costs, implement increases
in premium rates on a timely basis, maintain adequate reserves for
policy benefits or maintain cost effective provider
agreements;
- the risk of a significant reduction in the enrollment in our
health plan;
- our ability to accurately underwrite performance-based
risk-bearing contracts;
- risks related to our offshore operations;
- our dependency on our key personnel, and our ability to
attract, hire, integrate and retain key personnel;
- the risk of potential future goodwill impairment on our results
of operations;
- our indebtedness and our ability to obtain additional
financing;
- our ability to achieve profitability in the future;
- the requirements of being a public company;
- our adjusted results may not be representative of our future
performance;
- the risk of potential future litigation;
- the impact of changes in accounting principles and guidance on
our reported results;
- our holding company structure and dependence on distributions
from Evolent Health LLC;
- our obligations to make payments to certain of our pre-IPO
investors for certain tax benefits we may claim in the future;
- our ability to utilize benefits under the tax receivables
agreement;
- our ability to realize all or a portion of the tax benefits
that we currently expect to result from past and future exchanges
of Class B common units of Evolent Health LLC for our Class A
common stock, and to utilize certain tax attributes of Evolent
Health Holdings and an affiliate of TPG;
- distributions that Evolent Health LLC will be required to make
to us and to the other members of Evolent Health LLC;
- our obligations to make payments under the tax receivables
agreement that may be accelerated or may exceed the tax benefits we
realize;
- different interests among our pre-IPO investors, or between us
and our pre-IPO investors;
- the terms of agreements between us and certain of our pre-IPO
investors;
- the conditional conversion feature of our convertible notes due
2025 ("2025 Notes"), which, if triggered, could require us to
settle the 2025 Notes in cash;
- the impact of the accounting method for convertible debt
securities that may be settled in cash;
- the potential volatility of our Class A common stock
price;
- the potential decline of our Class A common stock price if a
substantial number of shares are sold or become available for sale
or if a large number of Class B common units are exchanged for
shares of Class A common stock;
- provisions in our second amended and restated certificate of
incorporation and second amended and restated by-laws and
provisions of Delaware law that
discourage or prevent strategic transactions, including a takeover
of us;
- the ability of certain of our investors to compete with us
without restrictions;
- provisions in our second amended and restated certificate of
incorporation which could limit our stockholders' ability to obtain
a favorable judicial forum for disputes with us or our directors,
officers or employees;
- our intention not to pay cash dividends on our Class A common
stock;
- our ability to maintain effective internal control over
financial reporting;
- our expectations regarding the additional management attention
and costs that will be required as we have transitioned from an
"emerging growth company" to a "large accelerated filer"; and
- our lack of public company operating experience.
The risks included here are not exhaustive. Although we believe
the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, level of activity,
performance or achievements. Our Annual Report on Form 10-K
for the year ended December 31, 2018,
and other documents filed with the SEC include additional factors
that could affect our businesses and financial
performance. Moreover, we operate in a rapidly changing and
competitive environment. New risk factors emerge from time to time,
and it is not possible for management to predict all such risk
factors.
Further, it is not possible to assess the effect of all risk
factors on our businesses or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking
statements. Given these risks and uncertainties, investors
should not place undue reliance on forward-looking statements as a
prediction of actual results. In addition, we disclaim any
obligation to update any forward-looking statements to reflect
events or circumstances that occur after the date of this
release.
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SOURCE Evolent Health