WASHINGTON, Nov. 5, 2020 /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, 2020.
Highlights from the third quarter of 2020 include:
- GAAP revenue of $264.6 million,
an increase of 20.2% year-over-year.
- Net loss attributable to common shareholders of Evolent Health,
Inc. of $(37.3) million.
- Achieved adjusted EBITDA of $12.7
million.
- Lives on platform of approximately 3.5 million.
- Announced two new provider customers for total cost of care, in
addition to today's announcement of Florida Blue Medicare as a
specialty care customer.
- Closed the Passport Health Plan asset sale.
Seth Blackley, Chief Executive
Officer and Co-Founder of Evolent Health commented, "Overall, I am
very pleased with our results for the quarter and the progress we
have made executing on our strategic priorities: driving strong
organic growth in our core three solutions, expanding margins and
efficiently allocating capital. During the quarter we signed two
new provider partnerships in our total cost of care solution and
today we are announcing the addition of Florida Blue Medicare on
our specialty care management platform, New Century Health. This
takes our total partner additions to 8 for 2020 and, importantly,
opens up the Blue Cross Blue Shield segment for New Century Health.
In addition, we are growing our relationships with existing
partners, including an expansion of our administrative
simplification solution with SOMOS. These agreements and our robust
pipeline demonstrate the significant value we are adding for
customers."
Mr. Blackley continued, "In addition to driving top line growth,
we continued expanding our Adjusted EBITDA margins in the quarter
through our focus on operating discipline. Looking ahead, our
targeted overhead cost initiative is exceeding our expectations as
we work to drive margin expansion in 2021 and beyond."
"We remain focused on maximizing long-term shareholder value by
driving top- and bottom-line growth in our three core solutions and
also by optimizing our financial model through efficient capital
allocation. We are continuing to explore strategic options
for our health plan assets and have made significant progress,
including completing the sale of assets of Passport and agreeing to
sell our interests in the Lighthouse Health Plan to Anthem. Looking
ahead, we see several macro trends accelerating that will support
our business in the years ahead, including an enhanced focus on
cost and value from purchasers of health care services,
policy-based focus on driving the shift to value, and increased
pressure on managed care plans as a result of the continued impact
of COVID-19. With these tailwinds at our back, we will continue to
execute on our focused strategy and are encouraged by the strong
pipeline momentum of our solutions into 2021."
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 results in
accordance with U.S. generally accepted accounting principles
("GAAP"). All comparisons are to the quarter ended September 30, 2019:
- Revenue of $264.6 million and
$220.1 million for the three months
ended September 30, 2020 and 2019,
respectively, an increase of 20.2%;
-
- Services revenue of $239.7
million and $179.9 million for
the three months ended September 30,
2020 and 2019, respectively, before intersegment
eliminations of $(4.6) million and
$(3.3) million, respectively;
and
- True Health premiums revenue of $29.5
million and $43.8 million for
the three months ended September 30,
2020 and 2019, respectively, before intersegment
eliminations of $0 and $(0.2) million, respectively.
- Cost of revenue of $183.2 million
and $131.8 million for the three
months ended September 30, 2020 and
2019, respectively, an increase of 39.0%.
- Claims expenses of $21.3 million
and $34.8 million for the three
months ended September 30, 2020 and
2019, respectively, a decrease of (38.7)%.
- Selling, general and administrative expenses of $55.8 million and $58.8
million for the three months ended September 30, 2020 and 2019, respectively, a
decrease of (5.2)%.
- Net loss attributable to common shareholders of Evolent Health,
Inc. of $(37.3) million and
$(25.5) million for the three months
ended September 30, 2020 and 2019,
respectively.
- Loss attributable to common shareholders of Evolent Health,
Inc., per basic and diluted share, of $(0.44) and $(0.30)
for the three months ended September 30,
2020 and 2019, respectively.
Total cash and cash equivalents and investments as of
September 30, 2020, was $387.0
million.
Adjusted Results
- Adjusted Cost of Revenue of $180.2
million and $129.0 million for
the three months ended September 30,
2020 and 2019, respectively, an increase of 39.6%.
- Claims expenses of $21.3 million
and $34.8 million for the three
months ended September 30, 2020 and
2019, respectively, a decrease of (38.7)%.
- Adjusted selling, general and administrative expenses of
$50.4 million and $53.1 million for the three months ended
September 30, 2020 and 2019,
respectively, a decrease of (5.1)%.
- Adjusted EBITDA of $12.7 million
and $3.3 million for the three months
ended September 30, 2020 and 2019,
respectively.
- Adjusted Loss Available to Common Shareholders of $(2.7) million and $(7.7)
million for the three months ended September 30, 2020 and 2019, respectively.
- Adjusted Loss per Share Available to Common Shareholders of
$(0.03) and $(0.09) for the three months ended September 30, 2020 and 2019, respectively.
Business Outlook
The Company is not providing forward looking guidance for GAAP
reported financial measures. A reconciliation of forward looking
Adjusted EBITDA financial measures to net loss attributable to
common shareholders of Evolent Health, Inc., the most comparable
GAAP financial measure, is provided in the "Guidance
Reconciliation" table below.
Evolent reiterated that it expects to be within
previously-stated full year 2020 guidance ranges. Adjusted Revenue
for the year ending December 31, 2020
is expected to be in the range of approximately $1.000 billion to $1.014
billion. The components of Adjusted Revenue include Adjusted
Services revenue, which is forecasted to be approximately
$903.3 million to $913.3 million, and True Health premiums revenue,
which is forecasted to be approximately $116.0 million to $120.0
million; intersegment eliminations are forecasted to be
approximately $(19.3) million for the
full year. Adjusted EBITDA is expected to be in the range of
approximately $35.0 million to
$38.0 million.
For the three months ending December 31,
2020, Adjusted Revenue is expected to be in the range of
approximately $249.0 million to
$264.0 million. The components of
Adjusted Revenue include Adjusted Services revenue, which is
forecasted to be approximately $225.0
million to $235.0 million, and
True Health premiums revenue, which is forecasted to be
approximately $28.5 million to
$32.5 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 $10.0 million to $13.0
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").
Web and Conference Call Information
As previously announced, Evolent Health, Inc. will hold a
conference call to discuss its third quarter and full year
performance this evening, November 5, 2020, 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 (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 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
Common Shareholders, Adjusted Earnings (Loss) per Share Available
to Common Shareholders and Adjusted Weighted-Average Common Shares,
which are all non-GAAP financial measures, as supplemental measures
to help investors evaluate our fundamental operational
performance.
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, acquisition-related 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 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 adjustments such as goodwill impairment,
equity method investment 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 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, loss on extinguishment of debt, gain
(loss) from equity method investees, gain (loss) on disposal of
assets, goodwill impairment, changes in fair value of contingent
consideration and indemnification asset, other income (expense),
net, net loss attributable to non-controlling interests, purchase
accounting adjustments, stock-based compensation expense, severance
costs, amortization of contract cost assets and acquisition-related
costs. Adjusted EBITDA margin is defined as Adjusted EBITDA
dividend by Adjusted Revenue.
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 Earnings (Loss) Available to Common Shareholders is
defined as earnings (loss) attributable to common shareholders
adjusted to exclude, income (loss) from equity method investees,
other income (expense), net, gain (loss) on disposal of assets,
impairment of equity method investees, goodwill impairment, 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, acquisition-related costs and other one-time
adjustments.
Adjusted Weighted-Average Common 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 Common
Shareholders is defined as Adjusted Earnings (Loss) Available to
Common Shareholders divided by Adjusted Weighted-Average Common
Shares, and reflects the adjustments made in those non-GAAP
measures.
Management uses Adjusted Earnings (Loss) Available to Common
Shareholders, Adjusted Weighted-Average Common Shares and Adjusted
Earnings (Loss) per Share Available to Common 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)
(in thousands, except
per share data)
(unaudited)
|
|
|
For the Three
Months Ended
September 30,
|
|
For the Nine
Months Ended
September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenue
|
|
|
|
|
|
|
|
Transformation
services
|
$
|
4,807
|
|
|
$
|
5,184
|
|
|
$
|
10,800
|
|
|
$
|
10,481
|
|
Platform and
operations services
|
230,299
|
|
|
171,438
|
|
|
652,574
|
|
|
463,252
|
|
Premiums
|
29,487
|
|
|
43,521
|
|
|
87,136
|
|
|
136,125
|
|
Total
revenue
|
264,593
|
|
|
220,143
|
|
|
750,510
|
|
|
609,858
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
Cost of revenue
(exclusive of depreciation and amortization expenses presented
separately below)
|
183,165
|
|
|
131,763
|
|
|
524,630
|
|
|
357,587
|
|
Claims
expenses
|
21,325
|
|
|
34,802
|
|
|
63,136
|
|
|
108,644
|
|
Selling, general and
administrative expenses
|
55,758
|
|
|
58,808
|
|
|
160,967
|
|
|
200,578
|
|
Depreciation and
amortization expenses
|
14,694
|
|
|
15,408
|
|
|
46,610
|
|
|
44,966
|
|
Loss on
extinguishment of debt, net
|
4,789
|
|
|
—
|
|
|
4,789
|
|
|
—
|
|
(Gain) loss on
disposal of assets
|
—
|
|
|
—
|
|
|
6,447
|
|
|
(9,600)
|
|
Goodwill
impairment
|
—
|
|
|
—
|
|
|
215,100
|
|
|
—
|
|
Change in fair value
of contingent consideration and indemnification asset
|
2,570
|
|
|
(500)
|
|
|
(492)
|
|
|
(300)
|
|
Total operating
expenses
|
282,301
|
|
|
240,281
|
|
|
1,021,187
|
|
|
701,875
|
|
Operating
loss
|
(17,708)
|
|
|
(20,138)
|
|
|
(270,677)
|
|
|
(92,017)
|
|
Interest
income
|
1,288
|
|
|
1,124
|
|
|
3,049
|
|
|
3,026
|
|
Interest
expense
|
(7,419)
|
|
|
(3,630)
|
|
|
(19,997)
|
|
|
(10,812)
|
|
Impairment of equity
method investments
|
—
|
|
|
—
|
|
|
(47,133)
|
|
|
—
|
|
Gain (loss) from
equity method investees
|
(13,717)
|
|
|
(3,859)
|
|
|
11,014
|
|
|
(6,187)
|
|
Other income
(expense), net
|
(111)
|
|
|
(84)
|
|
|
170
|
|
|
(244)
|
|
Loss before income
taxes and non-controlling interests
|
(37,667)
|
|
|
(26,587)
|
|
|
(323,574)
|
|
|
(106,234)
|
|
Provision (benefit)
for income taxes
|
503
|
|
|
(849)
|
|
|
(3,131)
|
|
|
53
|
|
Net loss
|
(38,170)
|
|
|
(25,738)
|
|
|
(320,443)
|
|
|
(106,287)
|
|
Net loss attributable
to non-controlling interests
|
(822)
|
|
|
(217)
|
|
|
(822)
|
|
|
(2,412)
|
|
Net loss attributable
to common shareholders of Evolent Health, Inc
|
$
|
(37,348)
|
|
|
$
|
(25,521)
|
|
|
$
|
(319,621)
|
|
|
$
|
(103,875)
|
|
|
|
|
|
|
|
|
|
Loss per common
share
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
|
(0.44)
|
|
|
$
|
(0.30)
|
|
|
$
|
(3.87)
|
|
|
$
|
(1.27)
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
|
|
|
|
|
|
|
Basic and
diluted
|
85,172
|
|
|
83,819
|
|
|
82,615
|
|
|
81,831
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss
|
|
|
|
|
|
|
|
Net loss
|
$
|
(38,170)
|
|
|
$
|
(25,738)
|
|
|
$
|
(320,443)
|
|
|
$
|
(106,287)
|
|
Other comprehensive
loss, net of taxes, related to:
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
71
|
|
|
(68)
|
|
|
(86)
|
|
|
(33)
|
|
Total comprehensive
loss
|
(38,099)
|
|
|
(25,806)
|
|
|
(320,529)
|
|
|
(106,320)
|
|
Total comprehensive
loss attributable to non-controlling interests
|
(822)
|
|
|
(217)
|
|
|
(822)
|
|
|
(2,412)
|
|
Total comprehensive
loss attributable to common shareholders of Evolent Health,
Inc
|
$
|
(37,277)
|
|
|
$
|
(25,589)
|
|
|
$
|
(319,707)
|
|
|
$
|
(103,908)
|
|
Evolent Health,
Inc
Condensed
Consolidated Balance Sheets
(in thousands,
unaudited)
|
|
|
September
30, 2020
|
|
December 31,
2019
|
Cash and cash
equivalents
|
$
|
370,514
|
|
|
$
|
101,008
|
|
Restricted
cash
|
30,037
|
|
|
27,523
|
|
Restricted
investments
|
1,410
|
|
|
817
|
|
Total current
assets
|
548,545
|
|
|
228,801
|
|
Investments, at
amortized cost
|
16,519
|
|
|
18,558
|
|
Intangible assets,
net
|
275,492
|
|
|
308,459
|
|
Goodwill
|
354,722
|
|
|
572,064
|
|
Total
assets
|
1,391,789
|
|
|
1,498,015
|
|
|
|
|
|
Accounts
payable
|
32,177
|
|
|
37,488
|
|
Long-term debt, net
of discount
|
285,213
|
|
|
293,667
|
|
Total
liabilities
|
737,044
|
|
|
568,968
|
|
|
|
|
|
Total shareholders'
equity attributable to Evolent Health, Inc
|
629,818
|
|
|
922,358
|
|
Non-controlling
interests
|
24,927
|
|
|
6,689
|
|
Total liabilities and
shareholders' equity (deficit)
|
1,391,789
|
|
|
1,498,015
|
|
Evolent Health,
Inc
Condensed
Consolidated Statements of Cash Flows
(in thousands,
unaudited)
|
|
|
For the Nine
Months
Ended September 30,
|
|
2020
|
|
2019
|
Net cash and
restricted cash used in operating activities
|
$
|
(3,374)
|
|
|
(55,832)
|
|
Net cash and
restricted cash from (used in) investing activities
|
263,297
|
|
|
(102,460)
|
|
Net cash and
restricted cash from (used in) financing activities
|
12,054
|
|
|
(24,299)
|
|
Effect of exchange
rate on cash and cash equivalents and restricted cash
|
43
|
|
|
19
|
|
Net increase
(decrease) in cash and cash equivalents and restricted
cash
|
272,020
|
|
|
(182,572)
|
|
Cash and cash
equivalents and restricted cash as of
beginning-of-period
|
128,531
|
|
|
388,325
|
|
Cash and cash
equivalents and restricted cash as of end-of-period
|
$
|
400,551
|
|
|
205,753
|
|
Evolent Health,
Inc
Reconciliation of
Adjusted Results of Operations
(in thousands,
unaudited)
|
|
|
For the Three
Months Ended September 30, 2020
|
|
|
For the Three
Months Ended September 30, 2019
|
|
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
|
$
|
4,807
|
|
|
$
|
—
|
|
|
$
|
4,807
|
|
|
|
$
|
5,184
|
|
|
$
|
—
|
|
|
$
|
5,184
|
|
|
$
|
(377)
|
|
|
(7.3)
|
%
|
|
$
|
(377)
|
|
|
(7.3)
|
%
|
Platform and
operations services (1)
|
230,299
|
|
|
—
|
|
|
230,299
|
|
|
|
171,438
|
|
|
165
|
|
|
171,603
|
|
|
58,861
|
|
|
34.3
|
%
|
|
58,696
|
|
|
34.2
|
%
|
Premiums
|
29,487
|
|
|
—
|
|
|
29,487
|
|
|
|
43,521
|
|
|
—
|
|
|
43,521
|
|
|
(14,034)
|
|
|
(32.2)
|
%
|
|
(14,034)
|
|
|
(32.2)
|
%
|
Total
revenue
|
264,593
|
|
|
—
|
|
|
264,593
|
|
|
|
220,143
|
|
|
165
|
|
|
220,308
|
|
|
44,450
|
|
|
20.2
|
%
|
|
44,285
|
|
|
20.1
|
%
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
(exclusive of depreciation and amortization expenses presented
separately below) (2)
|
183,165
|
|
|
(3,012)
|
|
|
180,153
|
|
|
|
131,763
|
|
|
(2,720)
|
|
|
129,043
|
|
|
51,402
|
|
|
39.0
|
%
|
|
51,110
|
|
|
39.6
|
%
|
Claims
expenses
|
21,325
|
|
|
—
|
|
|
21,325
|
|
|
|
34,802
|
|
|
—
|
|
|
34,802
|
|
|
(13,477)
|
|
|
(38.7)
|
%
|
|
(13,477)
|
|
|
(38.7)
|
%
|
Selling, general and
administrative expenses (3)
|
55,758
|
|
|
(5,328)
|
|
|
50,430
|
|
|
|
58,808
|
|
|
(5,678)
|
|
|
53,130
|
|
|
(3,050)
|
|
|
(5.2)
|
%
|
|
(2,700)
|
|
|
(5.1)
|
%
|
Depreciation and
amortization expenses (4)
|
14,694
|
|
|
(5,983)
|
|
|
8,711
|
|
|
|
15,408
|
|
|
(6,101)
|
|
|
9,307
|
|
|
(714)
|
|
|
(4.6)
|
%
|
|
(596)
|
|
|
(6.4)
|
%
|
Loss on
extinguishment of debt
|
4,789
|
|
|
(4,789)
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,789
|
|
|
100.0
|
%
|
|
—
|
|
|
—
|
%
|
Change in fair value
of contingent consideration and indemnification asset
|
2,570
|
|
|
(2,570)
|
|
|
—
|
|
|
|
(500)
|
|
|
500
|
|
|
—
|
|
|
3,070
|
|
|
(614.0)
|
%
|
|
—
|
|
|
—
|
%
|
Total operating
expenses
|
282,301
|
|
|
(21,682)
|
|
|
260,619
|
|
|
|
240,281
|
|
|
(13,999)
|
|
|
226,282
|
|
|
42,020
|
|
|
17.5
|
%
|
|
34,337
|
|
|
15.2
|
%
|
Operating income
(loss)
|
$
|
(17,708)
|
|
|
$
|
21,682
|
|
|
$
|
3,974
|
|
|
|
$
|
(20,138)
|
|
|
$
|
14,164
|
|
|
$
|
(5,974)
|
|
|
$
|
2,430
|
|
|
12.1
|
%
|
|
$
|
9,948
|
|
|
166.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses as a percentage of total revenue
|
106.7
|
%
|
|
|
|
98.5
|
%
|
|
|
109.1
|
%
|
|
|
|
102.7
|
%
|
|
|
|
|
|
|
|
|
|
————
|
(1)
|
Adjustments to
platform and operations services revenue include deferred revenue
purchase accounting adjustments of approximately $0.2 million for
the three months ended September 30, 2019, resulting from our
acquisitions and business combinations.
|
(2)
|
Adjustments to cost
of revenue include $0.4 million and $1.6 million in stock-based
compensation expense for the three months ended September 30,
2020 and 2019, respectively. The adjustments also include
approximately $2.6 million and $0.4 million related to
the amortization of contract cost assets recorded as a result of
the one-time ASC 606 transition adjustment for both the three
months ended September 30, 2020 and 2019, respectively.
Adjustments also include contract cost assets impairment charge of
$0.6 million for the three months ended September 30, 2019.
Adjustments also include acquisition-related costs of approximately
$0.1 million for the three months ended September 30,
2019 resulting from acquisitions and business
combinations.
|
(3)
|
Adjustments to
selling, general and administrative expenses include $2.7 million
and $4.2 million in stock-based compensation expense for the three
months ended September 30, 2020 and 2019, respectively.
Adjustments also include acquisition-related costs of $0.8 million
and $1.2 million for the three months ended September 30, 2020
and 2019, respectively, resulting from acquisitions and business
combinations. Adjustments for the three months ended
September 30, 2020 and 2019 also include $1.8 million and $0.3
million of severance costs, respectively.
|
(4)
|
Adjustments to
depreciation and amortization expenses of approximately $6.0
million and $6.1 million for the three months ended
September 30, 2020 and 2019, respectively, relate to
amortization of intangible assets acquired via asset acquisitions
and business combinations.
|
|
For the Nine
Months Ended September 30, 2020
|
|
|
For the Nine
Months ended September 30, 2019
|
|
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
|
$
|
10,800
|
|
|
$
|
—
|
|
|
$
|
10,800
|
|
|
|
$
|
10,481
|
|
|
$
|
—
|
|
|
$
|
10,481
|
|
|
$
|
319
|
|
|
3.0
|
%
|
|
$
|
319
|
|
|
3.0
|
%
|
Platform and
operations services (1)
|
652,574
|
|
|
—
|
|
|
652,574
|
|
|
|
463,252
|
|
|
926
|
|
|
464,178
|
|
|
189,322
|
|
|
40.9
|
%
|
|
188,396
|
|
|
40.6
|
%
|
Premiums
|
87,136
|
|
|
—
|
|
|
87,136
|
|
|
|
136,125
|
|
|
—
|
|
|
136,125
|
|
|
(48,989)
|
|
|
(36.0)
|
%
|
|
(48,989)
|
|
|
(36.0)
|
%
|
Total
revenue
|
750,510
|
|
|
—
|
|
|
750,510
|
|
|
|
609,858
|
|
|
926
|
|
|
610,784
|
|
|
140,652
|
|
|
23.1
|
%
|
|
139,726
|
|
|
22.9
|
%
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
(exclusive of depreciation and amortization expenses presented
separately below) (2)
|
524,630
|
|
|
(7,220)
|
|
|
517,410
|
|
|
|
357,587
|
|
|
(6,067)
|
|
|
351,520
|
|
|
167,043
|
|
|
46.7
|
%
|
|
165,890
|
|
|
47.2
|
%
|
Claims
expenses
|
63,136
|
|
|
—
|
|
|
63,136
|
|
|
|
108,644
|
|
|
—
|
|
|
108,644
|
|
|
(45,508)
|
|
|
(41.9)
|
%
|
|
(45,508)
|
|
|
(41.9)
|
%
|
Selling, general and
administrative expenses (3)
|
160,967
|
|
|
(16,354)
|
|
|
144,613
|
|
|
|
200,578
|
|
|
(30,839)
|
|
|
169,739
|
|
|
(39,611)
|
|
|
(19.7)
|
%
|
|
(25,126)
|
|
|
(14.8)
|
%
|
Goodwill
impairment
|
215,100
|
|
|
(215,100)
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
215,100
|
|
|
100.0
|
%
|
|
—
|
|
|
—
|
%
|
Depreciation and
amortization expenses (4)
|
46,610
|
|
|
(17,993)
|
|
|
28,617
|
|
|
|
44,966
|
|
|
(18,195)
|
|
|
26,771
|
|
|
1,644
|
|
|
3.7
|
%
|
|
1,846
|
|
|
6.9
|
%
|
(Gain) loss on
disposal of assets
|
6,447
|
|
|
(6,447)
|
|
|
—
|
|
|
|
(9,600)
|
|
|
9,600
|
|
|
—
|
|
|
16,047
|
|
|
(167.2)
|
%
|
|
—
|
|
|
—
|
%
|
Loss on
extinguishment of debt
|
4,789
|
|
|
(4,789)
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,789
|
|
|
100.0
|
%
|
|
—
|
|
|
—
|
%
|
Change in fair value
of contingent consideration and indemnification asset
|
(492)
|
|
|
492
|
|
|
—
|
|
|
|
(300)
|
|
|
300
|
|
|
—
|
|
|
(192)
|
|
|
64.0
|
%
|
|
—
|
|
|
—
|
%
|
Total operating
expenses
|
1,021,187
|
|
|
(267,411)
|
|
|
753,776
|
|
|
|
701,875
|
|
|
(45,201)
|
|
|
656,674
|
|
|
319,312
|
|
|
45.5
|
%
|
|
97,102
|
|
|
14.8
|
%
|
Operating income
(loss)
|
$
|
(270,677)
|
|
|
$
|
267,411
|
|
|
$
|
(3,266)
|
|
|
|
$
|
(92,017)
|
|
|
$
|
46,127
|
|
|
$
|
(45,890)
|
|
|
$
|
(178,660)
|
|
|
(194.2)
|
%
|
|
$
|
42,624
|
|
|
92.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses as a percentage of total revenue
|
136.1
|
%
|
|
|
|
100.4
|
%
|
|
|
115.1
|
%
|
|
|
|
107.5
|
%
|
|
|
|
|
|
|
|
|
|
————
|
(1)
|
Adjustments to
platform and operations services revenue include deferred revenue
purchase accounting adjustments of approximately $0.9 million for
the nine months ended September 30, 2019, resulting from our
acquisitions and business combinations.
|
(2)
|
Adjustments to cost
of revenue include $1.4 million and $3.3 million in stock-based
compensation expense for the nine months ended September 30,
2020 and 2019, respectively. Adjustments also include
acquisition-related costs of approximately $0.3 million for
the nine months ended September 30, 2019, resulting from
acquisitions and business combinations. The adjustments also
include approximately $3.7 million and $1.9 million
related to the amortization of contract cost assets recorded as a
result of the one-time ASC 606 transition adjustment for the nine
months ended September 30, 2020 and 2019, respectively.
Adjustments also include contract cost assets impairment charge of
$0.6 million for the nine months ended September 30,
2019. Adjustments for the nine months ended September 30, 2020
include $2.2 million of severance costs.
|
(3)
|
Adjustments to
selling, general and administrative expenses include $9.0 million
and $11.8 million in stock-based compensation expense for the six
months ended September 30, 2020 and 2019, respectively.
Adjustments also include acquisition-related costs of
$1.6 million and $4.1 million for the nine months ended
September 30, 2020 and 2019, respectively, resulting from
acquisitions and business combinations. Adjustments for the nine
months ended September 30, 2020 and 2019 also include $5.7
million and $14.8 million of severance costs, respectively. The
adjustments also include approximately $0.1 million related to
the amortization of contract cost assets recorded as a result of
the one-time ASC 606 transition adjustment for the nine months
ended September 30, 2019.
|
(4)
|
Adjustments to
depreciation and amortization expenses of approximately $18.0
million and $18.2 million for the nine months ended
September 30, 2020 and 2019, respectively, relate to
amortization of intangible assets acquired via asset acquisitions
and business combinations.
|
Evolent Health,
Inc
Segment
Results
(in thousands,
unaudited)
|
|
|
Services
|
|
True
Health
|
|
Intersegment Eliminations
|
|
Consolidated
|
Revenue
|
|
|
|
|
|
|
|
For the Three
Months Ended September 30, 2020
|
|
|
|
|
|
|
|
Services:
|
|
|
|
|
|
|
|
Transformation
services
|
$
|
4,807
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,807
|
|
Platform and
operations services
|
234,914
|
|
|
—
|
|
|
(4,615)
|
|
|
230,299
|
|
Services
revenue
|
239,721
|
|
|
—
|
|
|
(4,615)
|
|
|
235,106
|
|
True
Health:
|
|
|
|
|
|
|
|
Premiums
|
—
|
|
|
29,487
|
|
|
—
|
|
|
29,487
|
|
Total
revenue
|
$
|
239,721
|
|
|
$
|
29,487
|
|
|
$
|
(4,615)
|
|
|
$
|
264,593
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended September 30, 2019
|
|
|
|
|
|
|
|
Services:
|
|
|
|
|
|
|
|
Transformation
services
|
$
|
5,184
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,184
|
|
Platform and
operations services
|
174,688
|
|
|
—
|
|
|
(3,250)
|
|
|
171,438
|
|
Services
revenue
|
179,872
|
|
|
—
|
|
|
(3,250)
|
|
|
176,622
|
|
True
Health:
|
|
|
|
|
|
|
|
Premiums
|
—
|
|
|
43,765
|
|
|
(244)
|
|
|
43,521
|
|
Total
revenue
|
$
|
179,872
|
|
|
$
|
43,765
|
|
|
$
|
(3,494)
|
|
|
$
|
220,143
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
True
Health
|
|
Segments
Total
|
|
|
For the Three
Months Ended September 30, 2020
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
13,783
|
|
|
$
|
(1,100)
|
|
|
$
|
12,683
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended September 30, 2019
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
3,139
|
|
|
$
|
194
|
|
|
$
|
3,333
|
|
|
|
|
|
|
Services
|
|
True
Health
|
|
Intersegment Eliminations
|
|
Consolidated
|
Revenue
|
|
|
|
|
|
|
|
For the Nine
Months Ended September 30, 2020
|
|
|
|
|
|
|
|
Services:
|
|
|
|
|
|
|
|
Transformation
services
|
$
|
10,800
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,800
|
|
Platform and
operations services
|
667,653
|
|
|
—
|
|
|
(15,079)
|
|
|
652,574
|
|
Services
revenue
|
678,453
|
|
|
—
|
|
|
(15,079)
|
|
|
663,374
|
|
True
Health:
|
|
|
|
|
|
|
|
Premiums
|
—
|
|
|
87,415
|
|
|
(279)
|
|
|
87,136
|
|
Total
revenue
|
$
|
678,453
|
|
|
$
|
87,415
|
|
|
$
|
(15,358)
|
|
|
$
|
750,510
|
|
|
|
|
|
|
|
|
|
For the Nine
Months Ended September 30, 2019
|
|
|
|
|
|
|
|
Services:
|
|
|
|
|
|
|
|
Transformation
services
|
$
|
10,481
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,481
|
|
Platform and
operations services
|
472,638
|
|
|
—
|
|
|
(9,386)
|
|
|
463,252
|
|
Services
revenue
|
483,119
|
|
|
—
|
|
|
(9,386)
|
|
|
473,733
|
|
True
Health:
|
|
|
|
|
|
|
|
Premiums
|
—
|
|
|
136,905
|
|
|
(780)
|
|
|
136,125
|
|
Total
revenue
|
$
|
483,119
|
|
|
$
|
136,905
|
|
|
$
|
(10,166)
|
|
|
$
|
609,858
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
True
Health
|
|
Segments
Total
|
|
|
For the Nine
Months Ended September 30, 2020
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
28,178
|
|
|
$
|
(2,829)
|
|
|
$
|
25,349
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine
Months Ended September 30, 2019
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
(21,157)
|
|
|
$
|
2,038
|
|
|
$
|
(19,119)
|
|
|
|
Evolent Health,
Inc
Reconciliation of
Adjusted EBITDA to Net Loss
Attributable to
Common Shareholders of Evolent Health, Inc
(in thousands, except
per share data)
(unaudited)
|
|
|
For the Three
Months
Ended September 30,
|
|
For the Nine
Months
Ended September 30,
|
|
For the Three
Months Ended June 30, 2020
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Net loss
attributable to common shareholders of Evolent Health,
Inc.
|
$
|
(37,348)
|
|
|
$
|
(25,521)
|
|
|
$
|
(319,621)
|
|
|
$
|
(103,875)
|
|
|
$
|
(203,521)
|
|
GAAP
margin
|
(14.1)
|
%
|
|
(11.6)
|
%
|
|
(42.6)
|
%
|
|
(17.0)
|
%
|
|
(85.3)
|
%
|
Less:
|
|
|
|
|
|
|
|
|
|
Interest
income
|
1,288
|
|
|
1,124
|
|
|
3,049
|
|
|
3,026
|
|
|
842
|
|
Interest
expense
|
(7,419)
|
|
|
(3,630)
|
|
|
(19,997)
|
|
|
(10,812)
|
|
|
(6,293)
|
|
(Provision) benefit
for income taxes
|
(503)
|
|
|
849
|
|
|
3,131
|
|
|
(53)
|
|
|
3,904
|
|
Depreciation and
amortization expenses
|
(14,694)
|
|
|
(15,408)
|
|
|
(46,610)
|
|
|
(44,966)
|
|
|
(15,778)
|
|
EBITDA
|
(16,020)
|
|
|
(8,456)
|
|
|
(259,194)
|
|
|
(51,070)
|
|
|
(186,196)
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Impairment of equity
method investees
|
—
|
|
|
—
|
|
|
(47,133)
|
|
|
—
|
|
|
—
|
|
Loss on extinguishment
of debt
|
(4,789)
|
|
|
—
|
|
|
(4,789)
|
|
|
—
|
|
|
—
|
|
Gain (loss) from
equity method investees
|
(13,717)
|
|
|
(3,859)
|
|
|
11,014
|
|
|
(6,187)
|
|
|
25,143
|
|
Gain (loss) on
disposal of assets
|
—
|
|
|
—
|
|
|
(6,447)
|
|
|
9,600
|
|
|
—
|
|
Goodwill
impairment
|
—
|
|
|
—
|
|
|
(215,100)
|
|
|
—
|
|
|
(215,000)
|
|
Change in fair value
of contingent consideration and indemnification asset
|
(2,570)
|
|
|
500
|
|
|
492
|
|
|
300
|
|
|
(756)
|
|
Other income
(expense), net
|
(111)
|
|
|
(84)
|
|
|
170
|
|
|
(244)
|
|
|
352
|
|
Net loss attributable
to non-controlling interests
|
822
|
|
|
217
|
|
|
822
|
|
|
2,412
|
|
|
—
|
|
Purchase accounting
adjustments
|
—
|
|
|
(165)
|
|
|
—
|
|
|
(926)
|
|
|
—
|
|
Stock-based
compensation expense
|
(3,164)
|
|
|
(5,758)
|
|
|
(10,375)
|
|
|
(15,045)
|
|
|
(3,703)
|
|
Severance
costs
|
(1,757)
|
|
|
(307)
|
|
|
(7,890)
|
|
|
(14,790)
|
|
|
(30)
|
|
Amortization of
contract cost assets
|
(2,610)
|
|
|
(1,061)
|
|
|
(3,817)
|
|
|
(2,613)
|
|
|
(767)
|
|
Acquisition-related
costs
|
(807)
|
|
|
(1,272)
|
|
|
(1,490)
|
|
|
(4,458)
|
|
|
(374)
|
|
Adjusted
EBITDA
|
$
|
12,683
|
|
|
$
|
3,333
|
|
|
$
|
25,349
|
|
|
$
|
(19,119)
|
|
|
$
|
9,039
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
4.8
|
%
|
|
1.5
|
%
|
|
3.4
|
%
|
|
(3.1)
|
%
|
|
3.8
|
%
|
Evolent Health,
Inc
Reconciliation of
Adjusted Earnings (Loss) Available to Common
Shareholders to
Net Loss Attributable to Common Shareholders
(in thousands, except
per share data)
(unaudited)
|
|
|
For the Three
Months
Ended September 30,
|
|
For the Nine
Months
Ended September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net Loss
Attributable to Common Shareholders - Basic and Diluted
(a)
|
$
|
(37,348)
|
|
|
$
|
(25,521)
|
|
|
$
|
(319,621)
|
|
|
$
|
(103,875)
|
|
Less:
|
|
|
|
|
|
|
|
Gain (loss) from
equity method investees
|
(13,717)
|
|
|
(3,859)
|
|
|
11,014
|
|
|
(6,187)
|
|
Other income
(expense), net
|
(111)
|
|
|
—
|
|
|
170
|
|
|
431
|
|
Gain (loss) on
disposal of assets
|
—
|
|
|
—
|
|
|
(6,447)
|
|
|
9,600
|
|
Impairment of equity
method investees
|
—
|
|
|
—
|
|
|
(47,133)
|
|
|
—
|
|
Goodwill
impairment
|
—
|
|
|
—
|
|
|
(215,100)
|
|
|
—
|
|
Loss on extinguishment
of debt
|
(4,789)
|
|
|
—
|
|
|
(4,789)
|
|
|
—
|
|
Change in fair value
of contingent consideration and indemnification asset
|
(2,570)
|
|
|
500
|
|
|
492
|
|
|
300
|
|
Net loss attributable
to non-controlling interests
|
822
|
|
|
217
|
|
|
822
|
|
|
2,412
|
|
Purchase accounting
adjustments
|
(5,983)
|
|
|
(6,266)
|
|
|
(17,993)
|
|
|
(19,121)
|
|
Stock-based
compensation expense
|
(3,164)
|
|
|
(5,758)
|
|
|
(10,375)
|
|
|
(15,045)
|
|
Severance
costs
|
(1,757)
|
|
|
(307)
|
|
|
(7,890)
|
|
|
(14,790)
|
|
Amortization of
contract cost assets
|
(2,610)
|
|
|
(1,061)
|
|
|
(3,817)
|
|
|
(2,613)
|
|
Acquisition-related
costs
|
(807)
|
|
|
(1,272)
|
|
|
(1,490)
|
|
|
(4,458)
|
|
Adjusted Loss
Attributable to Common Shareholders (b)
|
$
|
(2,662)
|
|
|
$
|
(7,715)
|
|
|
$
|
(17,085)
|
|
|
$
|
(54,404)
|
|
|
|
|
|
|
|
|
|
Loss per Share
Attributable to Common Shareholders - Basic and Diluted (a)
(1)
|
$
|
(0.44)
|
|
|
$
|
(0.30)
|
|
|
$
|
(3.87)
|
|
|
$
|
(1.27)
|
|
|
|
|
|
|
|
|
|
Adjusted Loss per
Share Available to Common Shareholders (b)
(2)
|
$
|
(0.03)
|
|
|
$
|
(0.09)
|
|
|
$
|
(0.18)
|
|
|
$
|
(0.65)
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares - basic and diluted (1)
|
85,172
|
|
|
83,819
|
|
|
82,615
|
|
|
81,831
|
|
Adjusted
Weighted-Average Common Shares (3)
|
85,172
|
|
|
84,525
|
|
|
82,615
|
|
|
83,481
|
|
|
————
|
(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 Common Shareholders divided by
Adjusted Weighted-Average Common 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 Common
to Diluted Weighted-Average Common Shares on the following
page.
|
Evolent Health,
Inc
Reconciliation of
Adjusted Weighted-Average Common
Shares to
Diluted Weighted-Average Common Shares
(in thousands,
unaudited)
|
|
|
For the Three
Months
Ended September 30,
|
|
For the Nine
Months
Ended September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Weighted-average
common shares - diluted
|
85,172
|
|
|
83,819
|
|
|
82,615
|
|
|
81,831
|
|
Assumed conversion of
Class B common shares to Class A common shares
(1)
|
—
|
|
|
706
|
|
|
—
|
|
|
1,650
|
|
Adjusted
Weighted-Average Common Shares
|
85,172
|
|
|
84,525
|
|
|
82,615
|
|
|
83,481
|
|
|
————
|
(1)
|
All Class B common
shares were converted to Class A common shares as of December 31,
2019.
|
Evolent Health,
Inc
Guidance
Reconciliation
(in thousands,
unaudited)
|
|
|
For the Three
Months Ended
December 31, 2020
|
|
For the Year
Ended December
31, 2020
|
Net loss
attributable to common shareholders of Evolent Health,
Inc.
|
$
|
(19,198)
|
|
|
$
|
(338,819)
|
|
Less:
|
|
|
|
Interest
income
|
1,250
|
|
|
4,299
|
|
Interest
expense
|
(9,239)
|
|
|
(29,236)
|
|
Income tax
expense
|
—
|
|
|
3,131
|
|
Depreciation and
amortization expenses
|
(16,500)
|
|
|
(63,110)
|
|
EBITDA
|
5,291
|
|
|
(253,903)
|
|
Less:
|
|
|
|
Impairment of equity
method investments
|
—
|
|
|
(47,133)
|
|
Goodwill
impairment
|
—
|
|
|
(215,100)
|
|
Loss from equity
method investees
|
(500)
|
|
|
10,514
|
|
Net loss attributable
to non-controlling interests
|
—
|
|
|
822
|
|
Loss on extinguishment
of debt
|
—
|
|
|
(4,790)
|
|
Loss on disposal of
assets
|
—
|
|
|
(6,447)
|
|
Change in fair value
of contingent consideration and indemnification asset
|
—
|
|
|
492
|
|
Other income
(expense), net
|
—
|
|
|
170
|
|
Stock-based
compensation expense
|
(3,750)
|
|
|
(14,125)
|
|
Severance
costs
|
(500)
|
|
|
(8,390)
|
|
Amortization of
contract cost assets
|
(459)
|
|
|
(4,276)
|
|
Acquisition-related
costs
|
(1,000)
|
|
|
(2,492)
|
|
Adjusted
EBITDA
|
$
|
11,500
|
|
|
$
|
36,852
|
|
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 report 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 potential negative impact of the COVID-19 pandemic;
- the economic benefits we expect to receive as a result of the
sale of certain assets of Passport may not be realized;
- the significant portion of revenue we derive from our largest
partners, and the potential loss, termination or renegotiation of
our relationship or contract with any significant partner, or
multiple partners in the aggregate;
- 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 CMS 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 and maintain an
efficient cost structure, and to successfully implement cost
cutting measures;
- our ability to offer new and innovative products and
services;
- risks related to completed and future acquisitions,
investments, alliances and joint ventures, including the
acquisition of assets from New Mexico Health Connections, and the
acquisitions of Valence Health Inc., excluding Cicerone Health
Solutions, Inc., Aldera Holdings, Inc., NCIS Holdings, Inc. ("New
Century Health"), and Passport, 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;
- risks relating to our ability to maintain profitability for our
total cost of care and New Century Health's performance-based
contracts and products, including capitation and risk-bearing
contracts;
- the growth and success of our partners, which is difficult to
predict and is subject to factors outside of our control, including
governmental funding reductions and other policy changes,
enrollment numbers for our partners' plans (including in
Florida), premium pricing
reductions, selection bias in at-risk membership and the ability to
control and, if necessary, reduce health care costs;
- our ability to attract new partners and successfully capture
new growth opportunities;
- 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;
- True Health New Mexico's ability to enter the individual
market;
- 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 impact of additional goodwill and intangible asset
impairments on our results of operations;
- our indebtedness, our ability to service our indebtedness, the
impact of covenants in our credit agreement on our business, our
ability to access the delayed draw loan under our credit facility
and our ability to obtain additional financing;
- our ability to achieve profitability in the future;
- the impact of litigation, including the ongoing class action
lawsuit;
- 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 described herein;
- our obligations to make payments under the tax receivables
agreement that may be accelerated or may exceed the tax benefits we
realize;
- the terms of agreements between us and certain of our pre-IPO
investors;
- the conditional conversion features of the 2024 and 2025
convertible notes, which, if triggered, could require us to settle
the 2024 or 2025 convertible 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;
- 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; and
- our ability to remediate our material weaknesses and to
maintain effective internal control over certain instances of one
of our claims processing systems.
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, 2019, subsequent Quarterly Reports
on Form 10-Q 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