WASHINGTON, May 5, 2021 /PRNewswire/ -- Evolent Health,
Inc. (NYSE: EVH), a health care company that delivers proven
clinical and administrative solutions to payers and providers,
today announced financial results for the quarter ended
March 31, 2021.
Highlights from the first quarter of 2021 announcement
include:
Quarter ended March 31, 2021:
- GAAP revenue of $215.1
million.
- Net loss attributable to common shareholders of Evolent Health,
Inc. of $(9.8) million.
- Achieved Adjusted EBITDA of $14.9
million.
- Lives on Full Platform of approximately 3.4 million and New
Century Health Technology & Services Suite of 8.2 million,
for a total of 11.6 million lives managed.
Additional announcements:
- Evolent announces new partnership with Oak Street Health, which
will leverage New Century Health's specialty care management
services in oncology and cardiology.
- Evolent adds a new large health plan partner, which will
leverage the Evolent Health Services' full clinical technology
platform and health plan administrative services.
Seth Blackley, Chief Executive
Officer and Co-Founder of Evolent Health commented, "Overall, we're
pleased that we exceeded our key financial objectives for the
quarter, and we are off to a strong start to the year. We are on
track towards our target of mid-teens organic top-line growth and
expanded margins as we utilize our value-based care solutions to
improve the cost and quality of health care."
Mr. Blackley commented, "In terms of new business objectives, we
continue to see strong momentum in our pipeline, and that our
solutions are increasingly in demand in the market, enabling
continued strong organic growth. Payers and risk-bearing providers
continue to select Evolent based on our state-of-the-art
capabilities and ability to improve savings and outcomes with
high-cost, high-risk members and patients. Today, we are excited to
announce two new partnerships. First, New Century Health has
entered into a partnership with a leading network of risk-based
primary care clinics. New Century Health will provide medical
oncology, radiation oncology and cardiology services to two markets
and we anticipate go-lives for both geographies later this year.
Second, Evolent Health Services has entered into a long-term
partnership with a large health plan. We will provide our full
clinical and administrative solutions to this partner across
multiple markets starting in early 2022. Overall, we are excited
about the addition of these partners and about our growth outlook
across the year."
Mr. Blackley concluded, "In summary, we are proud that Evolent's
quality and cost improving solutions were deployed across more than
11.6 million lives during Q1 and we are excited to continue to grow
that reach. We continue to make progress and remain focused on our
strategic plan of strong organic growth, expanding margins and
optimal capital allocation. The overall progress against these
strategic initiatives, in addition to our commitments to our
partners, has increased our impact on the health of the communities
we serve and sets us up well for the year ahead."
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"):
- Revenue of $215.1 million and
$221.2 million for the three months
ended March 31, 2021 and 2020, respectively.
- Cost of revenue of $157.8 million
and $175.6 million for the three
months ended March 31, 2021 and 2020, respectively.
- Selling, general and administrative expenses of $58.6 million and $52.1
million for the three months ended March 31, 2021 and
2020, respectively.
- Net loss attributable to common shareholders of Evolent Health,
Inc. of $(9.8) million and
$(78.8) million for the three months
ended March 31, 2021 and 2020, respectively.
- Loss attributable to common shareholders of Evolent Health,
Inc., per basic and diluted share, of $(0.12) and $(0.93)
for the three months ended March 31, 2021 and 2020,
respectively.
Total cash and cash equivalents was $236.0 million as of March 31, 2021.
Adjusted Results
- Adjusted Cost of Revenue of $157.1
million and $172.5 million for
the three months ended March 31, 2021 and 2020,
respectively.
- Adjusted selling, general and administrative expenses of
$43.0 million and $44.9 million for the three months ended
March 31, 2021 and 2020, respectively.
- Adjusted EBITDA of $14.9 million
and $3.9 million for the three months
ended March 31, 2021 and 2020, respectively.
- Adjusted Loss Available to Common Shareholders of $(1.2) million and $(12.0)
million for the three months ended March 31, 2021 and
2020, respectively.
- Adjusted Loss per Share Available to Common Shareholders of
$(0.01) and $(0.14) for the three months ended March 31,
2021 and 2020, respectively.
Business Outlook
A reconciliation of forward looking Adjusted EBITDA 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.
Revenue for the year ending December 31,
2021 is expected to be in the range of approximately
$845.0 million to $880.0 million. Adjusted EBITDA is expected to be
in the range of approximately $42.0
million to $52.0 million.
For the three months ending June 30,
2021, revenue is expected to be in the range of
approximately $210.0 million to
$225.0 million. Adjusted EBITDA is
expected to be in the range of approximately $10.0 million to $14.0
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 first quarter performance this
evening, May 5, 2021, at 6:00 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 Transformation Services Revenue, Adjusted Platform and
Operations Services Revenue, Adjusted Cost of Revenue, Adjusted
Selling, General and Administrative Expenses, Adjusted Depreciation
and Amortization Expenses, Adjusted Total Operating Expenses,
Adjusted Operating Income (Loss), Adjusted EBITDA, Adjusted
Earnings (Loss) Available to Common Shareholders and Adjusted
Earnings (Loss) per Share Available to Common Shareholders, which
are all non-GAAP financial measures, as supplemental measures to
help investors evaluate our fundamental operational
performance.
Adjusted Cost of Revenue and Adjusted Selling, General and
Administrative Expenses are defined as cost of revenue and selling,
general and administrative expenses, respectively, adjusted to
exclude the impact of stock-based compensation expenses, severance
costs, amortization of contract cost assets recorded as a result of
a one-time ASC 606 transition adjustment, acquisition-related costs
related to acquisitions and business combinations, securities
offerings, discontinued operations and other one-time adjustments.
Management uses Adjusted Cost of Revenue and Adjusted Selling,
General and Administrative Expenses as supplemental performance
measures, which are also useful to investors, because they
facilitate an understanding of our long term operational costs
while removing the effect of costs that are not expected to reoccur
frequently (e.g. acquisition-related costs) and non-cash (e.g.
stock-based compensation expenses) in nature. Additionally, these
supplemental performance measures facilitate understanding a
breakdown of our Adjusted Total Operating Expenses. Adjustments for
acquisition-related costs incurred generally represent professional
service fees and direct expenses related to acquisitions. Because
we do not acquire businesses on a predictable cycle, we do not
consider the amount of acquisition-related costs to be a
representative component of the day-to-day operating performance of
our business.
Adjusted Depreciation and Amortization Expenses is defined as
depreciation and amortization expenses adjusted to exclude the
impact of amortization expenses related to intangible assets
acquired through asset acquisitions and business combinations.
Management uses Adjusted Depreciation and Amortization Expenses as
a supplemental performance measure because it reflects a complete
view of the operational results. The measure is also useful to
investors because it facilitates understanding a breakdown of our
Adjusted Total Operating Expenses.
Adjusted Total Operating Expenses is defined as the sum of
Adjusted Cost of Revenue, Adjusted Selling, General and
Administrative Expenses and Adjusted Depreciation and Amortization
Expenses, and reflects the adjustments made in those non-GAAP
measures. Adjusted Total Operating Expenses is further adjusted to
exclude the impact of (gain) loss on disposal of assets and items
arising from acquisitions and business combinations, such as
changes in fair value of contingent consideration and
indemnification assets.
Adjusted Operating Income (Loss) is defined as Adjusted Revenue
less Adjusted Total Operating Expenses, and reflects the
adjustments made in those non-GAAP measures. Management uses
Adjusted Total Operating Expenses and Adjusted Operating Income
(Loss) because the removal of acquisition costs, one-time or
non-cash items (e.g. depreciation, amortization and stock-based
compensation expenses) allows us to focus on operational
performance, and believes these measures are useful to investors
because they give investors insight into our core operating
performance.
Adjusted EBITDA is defined as EBITDA (net loss attributable to
common shareholders of Evolent Health, Inc. before interest income,
interest expense, (provision) benefit for income taxes,
depreciation and amortization expenses), adjusted to exclude equity
method investment impairment, gain on the transfer of membership,
loss on repayment of debt, gain (loss) from equity method
investees, gain (loss) on disposal of assets and consolidation,
changes in fair value of contingent consideration and
indemnification asset, other income (expense), net, purchase
accounting adjustments, repositioning cost, stock-based
compensation expense, severance costs, amortization of contract
cost assets, shareholder advisory services, acquisition-related
costs and discontinued operations.
Management uses Adjusted EBITDA as a supplemental performance
measure because the removal of acquisition-related costs, one-time
or non-cash items (e.g. depreciation, amortization and stock-based
compensation expenses) allows us to focus on operational
performance. We believe that this measure is also useful to
investors because it allows further insight into the period over
period operational performance in a manner that is comparable to
other organizations in our industry and in the market in
general.
Adjusted 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 on transfer of membership, loss
on repayment of debt, loss on disposal of assets, impairment of
equity method investees, changes in fair value of contingent
consideration and indemnification assets, purchase accounting
adjustments, repositioning costs, stock-based compensation
expenses, severance costs, amortization of contract cost assets
recorded as a result of a one-time ASC 606 transition adjustment,
gain (loss) from discontinued operations, shareholder advisory
services and acquisition-related costs.
Adjusted Earnings (Loss) per Share Available to Common
Shareholders is defined as Adjusted Earnings (Loss) Available to
Common Shareholders divided by Weighted-Average Common Shares, and
reflects the adjustments made in those non-GAAP measures.
Management uses Adjusted Earnings (Loss) Available to Common
Shareholders and Adjusted Earnings (Loss) per Share Available to
Common Shareholders because excluding non-cash items (e.g.
depreciation, amortization and stock-based compensation expenses)
allows us to focus on operational performance. We believe that
these measures are also useful to investors for the same
reason.
These adjusted measures do not represent and should not be
considered as alternatives to GAAP measurements, and our
calculations thereof may not be comparable to similarly entitled
measures reported by other companies. A reconciliation of these
adjusted measures to their most comparable GAAP financial measures
is presented in the tables below. We believe these measures are
useful across time in evaluating our fundamental core operating
performance.
Lives on Platform
Lives on Full Platform are calculated by summing members on our
value-based care and comprehensive health plan administrative
platform, as well as members covered for oncology specialty care
services and members covered for cardiology specialty care
services. Lives on New Century Technology & Services Suite are
calculated by summing members covered for oncology specialty care
services and members covered for cardiology specialty care services
for contracts under ASO arrangements. Members covered for more than
one category are counted in each category. Management uses lives on
Full Platform and lives on New Century Technology & Services
Suite as supplemental performance measures because we believe that
they provide insight into the unit economics of our services. We
believe that these measures are also useful to investors because
they allow further insight into the period over period operational
performance.
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,
|
|
2021
|
|
2020
|
Revenue
|
|
|
|
Transformation
services
|
$
|
345
|
|
|
$
|
5,238
|
|
Platform and
operations services
|
214,726
|
|
|
215,994
|
|
Total
revenue
|
215,071
|
|
|
221,232
|
|
|
|
|
|
Expenses
|
|
|
|
Cost of revenue
(exclusive of depreciation and amortization expenses presented
separately below)
|
157,832
|
|
|
175,629
|
|
Selling, general and
administrative expenses
|
58,591
|
|
|
52,087
|
|
Depreciation and
amortization expenses
|
15,187
|
|
|
15,978
|
|
Loss on disposal of
assets
|
—
|
|
|
6,447
|
|
Change in fair value
of contingent consideration and indemnification asset
|
(594)
|
|
|
(3,818)
|
|
Total operating
expenses
|
231,016
|
|
|
246,323
|
|
Operating
loss
|
(15,945)
|
|
|
(25,091)
|
|
Interest
income
|
123
|
|
|
770
|
|
Interest
expense
|
(6,337)
|
|
|
(6,281)
|
|
Impairment of equity
method investments
|
—
|
|
|
(47,133)
|
|
Gain (loss) from
equity method investees
|
7,783
|
|
|
(412)
|
|
Gain from transfer of
membership
|
22,969
|
|
|
—
|
|
Loss on repayment of
debt
|
(19,158)
|
|
|
—
|
|
Other expense,
net
|
(14)
|
|
|
(70)
|
|
Loss from continuing
operations before income taxes
|
(10,579)
|
|
|
(78,217)
|
|
Provision for income
taxes
|
611
|
|
|
270
|
|
Loss from continuing
operations
|
(11,190)
|
|
|
(78,487)
|
|
Gain (loss) from
discontinued operations, net of tax (1)
|
1,383
|
|
|
(265)
|
|
Net loss
|
(9,807)
|
|
|
(78,752)
|
|
Net loss attributable
to non-controlling interests
|
—
|
|
|
—
|
|
Net loss attributable
to common shareholders of Evolent Health, Inc
|
$
|
(9,807)
|
|
|
$
|
(78,752)
|
|
|
|
|
|
Loss per common
share
|
|
|
|
Basic and
diluted
|
|
|
|
Continuing
operations
|
$
|
(0.13)
|
|
|
$
|
(0.93)
|
|
Discontinued
operations
|
0.01
|
|
|
—
|
|
Basic and diluted
loss per share attributable to common shareholders of Evolent
Health, Inc
|
$
|
(0.12)
|
|
|
$
|
(0.93)
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
|
|
|
Basic and
diluted
|
84,670
|
|
|
84,793
|
|
|
|
|
|
Comprehensive
loss
|
|
|
|
Net loss
|
$
|
(9,807)
|
|
|
$
|
(78,752)
|
|
Other comprehensive
loss, net of taxes, related to:
|
|
|
|
Foreign currency
translation adjustment
|
(31)
|
|
|
(153)
|
|
Total comprehensive
loss
|
(9,838)
|
|
|
(78,905)
|
|
Total comprehensive
loss attributable to non-controlling interests
|
—
|
|
|
—
|
|
Total comprehensive
loss attributable to common shareholders of Evolent Health,
Inc
|
$
|
(9,838)
|
|
|
$
|
(78,905)
|
|
————————
|
(1)
|
Includes
$1.9 million gain on disposal of discontinued operations for
the three months ended March 31, 2021.
|
Evolent Health,
Inc.
Condensed
Consolidated Balance Sheets
(in thousands,
unaudited)
|
|
|
March 31,
2021
|
|
December 31,
2020
|
Cash and cash
equivalents
|
$
|
236,032
|
|
|
$
|
319,002
|
|
Restricted
cash
|
67,737
|
|
|
21,028
|
|
Total current
assets
|
508,310
|
|
|
547,649
|
|
Intangible assets,
net
|
259,420
|
|
|
264,992
|
|
Goodwill
|
349,022
|
|
|
349,029
|
|
Total
assets
|
1,305,584
|
|
|
1,371,700
|
|
|
|
|
|
Accounts
payable
|
78,574
|
|
|
31,975
|
|
Long-term debt, net
of discount
|
202,132
|
|
|
263,343
|
|
Total
liabilities
|
688,286
|
|
|
752,100
|
|
|
|
|
|
Total shareholders'
equity attributable to Evolent Health, Inc
|
617,298
|
|
|
619,600
|
|
Total liabilities and
shareholders' equity (deficit)
|
1,305,584
|
|
|
1,371,700
|
|
Evolent Health,
Inc.
Condensed
Consolidated Statements of Cash Flows
(in thousands,
unaudited)
|
|
|
For the Three
Months
Ended March 31,
|
|
2021
|
|
2020
|
Net cash and
restricted cash provided by (used in) continuing
operations
|
|
|
|
Net cash and
restricted cash provided by (used in) operating
activities
|
$
|
(48,163)
|
|
|
(20,541)
|
|
Net cash and
restricted cash used in investing activities
|
45,951
|
|
|
(10,807)
|
|
Net cash and
restricted cash provided by (used in) financing
activities
|
(55,584)
|
|
|
32,574
|
|
Effect of exchange
rate on cash and cash equivalents and restricted cash
|
1
|
|
|
41
|
|
Net increase
(decrease) in cash and cash equivalents and restricted
cash
|
(57,795)
|
|
|
1,267
|
|
Cash and cash
equivalents and restricted cash as of beginning-of-period
(1)
|
361,564
|
|
|
128,531
|
|
Cash and cash
equivalents and restricted cash as of end-of-period
(1)
|
$
|
303,769
|
|
|
129,798
|
|
|
|
|
|
Net cash and
restricted cash provided by (used in) discontinued
operations
|
|
|
|
Cash flows provided
by (used in) operating activities
|
$
|
5,002
|
|
|
$
|
2,745
|
|
Cash flows provided
by (used in) investing activities
|
(2,494)
|
|
|
(721)
|
|
|
|
|
|
|
|
|
|
————————
|
(1)
|
As a result of the
closing of the sale of True Health SPA, the consolidated statements
of operations, consolidated balance sheets, and related financial
information reflect the Company's operations and assets and
liabilities of True Health as discontinued operations for all
periods presented. Cash flows and comprehensive income have not
been adjusted and are included in the consolidated statements of
cash flows and consolidated statements of comprehensive income
(loss) for all periods presented.
|
Evolent Health,
Inc.
Reconciliation of
Adjusted Results of Operations
(in thousands,
unaudited)
|
|
|
For the Three
Months Ended March 31, 2021
|
|
|
For the Three
Months Ended March 31, 2020
|
|
Evolent Health,
Inc
as
Reported
|
|
Evolent Health,
Inc
as
Adjusted
|
|
Evolent
|
|
|
|
Evolent
|
|
|
Evolent
|
|
|
|
Evolent
|
|
|
|
Health,
Inc
|
|
|
|
Health,
Inc
|
|
|
Health,
Inc
|
|
|
|
Health,
Inc
|
|
Change Over Prior
Period
|
|
Change Over Prior
Period
|
|
as
Reported
|
|
Adjustments
|
|
as
Adjusted
|
|
|
as
Reported
|
|
Adjustments
|
|
as
Adjusted
|
|
$
|
|
%
|
|
$
|
|
%
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transformation
services
|
$
|
345
|
|
|
$
|
—
|
|
|
$
|
345
|
|
|
|
$
|
5,238
|
|
|
$
|
—
|
|
|
$
|
5,238
|
|
|
$
|
(4,893)
|
|
|
(93.4)
|
%
|
|
$
|
(4,893)
|
|
|
(93.4)
|
%
|
Platform and
operations services (1)
|
214,726
|
|
|
—
|
|
|
214,726
|
|
|
|
215,994
|
|
|
—
|
|
|
215,994
|
|
|
(1,268)
|
|
|
(0.6)
|
%
|
|
(1,268)
|
|
|
(0.6)
|
%
|
Total
revenue
|
215,071
|
|
|
—
|
|
|
215,071
|
|
|
|
221,232
|
|
|
—
|
|
|
221,232
|
|
|
(6,161)
|
|
|
(2.8)
|
%
|
|
(6,161)
|
|
|
(2.8)
|
%
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
(exclusive of depreciation and amortization expenses presented
separately below) (1)
|
157,832
|
|
|
(689)
|
|
|
157,143
|
|
|
|
175,629
|
|
|
(3,153)
|
|
|
172,476
|
|
|
(17,797)
|
|
|
(10.1)
|
%
|
|
(15,333)
|
|
|
(8.9)
|
%
|
Selling, general and
administrative expenses (2)
|
58,591
|
|
|
(15,570)
|
|
|
43,021
|
|
|
|
52,087
|
|
|
(7,207)
|
|
|
44,880
|
|
|
6,504
|
|
|
12.5
|
%
|
|
(1,859)
|
|
|
(4.1)
|
%
|
Depreciation and
amortization expenses (3)
|
15,187
|
|
|
(5,906)
|
|
|
9,281
|
|
|
|
15,978
|
|
|
(5,867)
|
|
|
10,111
|
|
|
(791)
|
|
|
(5.0)
|
%
|
|
(830)
|
|
|
(8.2)
|
%
|
(Gain) loss on
disposal of assets
|
—
|
|
|
—
|
|
|
—
|
|
|
|
6,447
|
|
|
(6,447)
|
|
|
—
|
|
|
(6,447)
|
|
|
(100.0)
|
%
|
|
—
|
|
|
—
|
%
|
Change in fair value
of contingent consideration and indemnification asset
|
(594)
|
|
|
594
|
|
|
—
|
|
|
|
(3,818)
|
|
|
3,818
|
|
|
—
|
|
|
3,224
|
|
|
(84.4)
|
%
|
|
—
|
|
|
—
|
%
|
Total operating
expenses
|
231,016
|
|
|
(21,571)
|
|
|
209,445
|
|
|
|
246,323
|
|
|
(18,856)
|
|
|
227,467
|
|
|
(15,307)
|
|
|
(6.2)
|
%
|
|
(18,022)
|
|
|
(7.9)
|
%
|
Operating income
(loss)
|
$
|
(15,945)
|
|
|
$
|
21,571
|
|
|
$
|
5,626
|
|
|
|
$
|
(25,091)
|
|
|
$
|
18,856
|
|
|
$
|
(6,235)
|
|
|
$
|
9,146
|
|
|
36.5
|
%
|
|
$
|
11,861
|
|
|
190.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses as a percentage of total revenue
|
107.4
|
%
|
|
|
|
97.4
|
%
|
|
|
111.3
|
%
|
|
|
|
102.8
|
%
|
|
|
|
|
|
|
|
|
————————
|
(1)
|
Adjustments to cost
of revenue include $0.6 million and $0.4 million in stock-based
compensation expense for the three months ended March 31, 2021
and 2020, respectively. The adjustments also include approximately
$0.1 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 the three months ended March 31,
2021 and 2020, respectively. Adjustments for the three months ended
March 31, 2020 also include $2.4 million of severance
costs.
|
(2)
|
Adjustments to
selling, general and administrative expenses include $3.1 million
in stock-based compensation expense for the three months ended
March 31, 2021 and 2020, respectively. Adjustments also
include acquisition-related costs of $2.2 million and $0.4
million for the three months ended March 31, 2021 and 2020,
respectively, resulting from acquisitions and business
combinations. Adjustments for the three months ended March 31,
2021 include $5.3 million of repositioning costs and
$5.0 million of strategy and shareholder advisory expenses.
Adjustments for the three months ended March 31,
2020 includes $3.7 million of severance costs.
|
(3)
|
Adjustments to
depreciation and amortization expenses of approximately $5.9
million for both the three months ended March 31, 2021 and
2020 relate to amortization of intangible assets acquired via asset
acquisitions and business combinations.
|
Evolent Health,
Inc
Segment
Results
(in thousands,
unaudited)
|
|
|
Evolent
Health
Services
|
|
Clinical
Solutions
|
|
Intersegment
Eliminations
|
|
Subtotal
|
|
Corporate(1)
|
|
Consolidated
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended March 31, 2021
|
|
|
|
|
|
|
|
|
Transformation
services
|
$
|
345
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
345
|
|
|
$
|
—
|
|
|
$
|
345
|
|
Platform and
operations services
|
84,941
|
|
|
130,223
|
|
|
(438)
|
|
|
214,726
|
|
|
|
|
214,726
|
|
Total
revenue
|
$
|
85,286
|
|
|
$
|
130,223
|
|
|
$
|
(438)
|
|
|
$
|
215,071
|
|
|
$
|
—
|
|
|
$
|
215,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended March 31, 2020
|
|
|
|
|
|
|
|
|
Transformation
services
|
$
|
5,238
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,238
|
|
|
$
|
—
|
|
|
$
|
5,238
|
|
Platform and
operations services
|
91,790
|
|
|
124,872
|
|
|
(668)
|
|
|
215,994
|
|
|
|
|
215,994
|
|
Total
revenue
|
$
|
97,028
|
|
|
$
|
124,872
|
|
|
$
|
(668)
|
|
|
$
|
221,232
|
|
|
$
|
—
|
|
|
$
|
221,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Evolent
Health
Services
|
|
Clinical
Solutions
|
|
Subtotal
|
|
Corporate
(1)
|
|
Segments
Total
|
|
|
For the Three
Months Ended March 31, 2021
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
5,942
|
|
|
$
|
15,976
|
|
|
$
|
21,918
|
|
|
$
|
(7,011)
|
|
|
$
|
14,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended March 31, 2020
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
4,768
|
|
|
$
|
7,043
|
|
|
$
|
11,811
|
|
|
$
|
(7,935)
|
|
|
$
|
3,876
|
|
|
|
————————
|
(1)
|
Corporate includes
various finance, human resources, legal, executive, and other
corporate infrastructure expenses.
|
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 March 31,
|
|
2021
|
|
2020
|
Net loss
attributable to common shareholders of Evolent Health,
Inc.
|
$
|
(9,807)
|
|
|
$
|
(78,752)
|
|
Less:
|
|
|
|
Interest
income
|
123
|
|
|
770
|
|
Interest
expense
|
(6,337)
|
|
|
(6,281)
|
|
Benefit for income
taxes
|
(611)
|
|
|
(270)
|
|
Depreciation and
amortization expenses
|
(15,187)
|
|
|
(15,978)
|
|
EBITDA
|
12,205
|
|
|
(56,993)
|
|
Less:
|
|
|
|
Impairment of equity
method investees
|
—
|
|
|
(47,133)
|
|
Gain on transfer of
membership
|
22,969
|
|
|
—
|
|
Loss on repayment of
debt
|
(19,158)
|
|
|
—
|
|
Gain (loss) from
equity method investees
|
7,783
|
|
|
(412)
|
|
Gain (loss) on
disposal of assets and consolidation
|
—
|
|
|
(6,447)
|
|
Change in fair value
of contingent consideration and indemnification asset
|
594
|
|
|
3,818
|
|
Other expense,
net
|
(14)
|
|
|
(70)
|
|
Repositioning
costs
|
(5,380)
|
|
|
—
|
|
Stock-based
compensation expense
|
(3,706)
|
|
|
(3,508)
|
|
Severance
costs
|
(52)
|
|
|
(6,103)
|
|
Amortization of
contract cost assets
|
(127)
|
|
|
(440)
|
|
Strategy and
shareholder advisory expenses
|
(5,000)
|
|
|
—
|
|
Acquisition-related
costs
|
(1,994)
|
|
|
(309)
|
|
Gain (loss) from
discontinued operations (1)
|
1,383
|
|
|
(265)
|
|
Adjusted
EBITDA
|
$
|
14,907
|
|
|
$
|
3,876
|
|
————————
|
(1)
|
Includes
$1.9 million gain on disposal of discontinued operations for
the three months ended March 31, 2021.
|
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 March 31,
|
|
2021
|
|
2020
|
Net Loss
Attributable to Common Shareholders - Basic and Diluted
(a)
|
$
|
(9,807)
|
|
|
$
|
(78,752)
|
|
Less:
|
|
|
|
Gain (loss) from
equity method investees
|
7,783
|
|
|
(412)
|
|
Other expense,
net
|
(14)
|
|
|
(70)
|
|
Gain on transfer of
membership
|
22,969
|
|
|
—
|
|
Loss on repayment of
debt
|
(19,158)
|
|
|
—
|
|
Loss on disposal of
assets
|
—
|
|
|
(6,447)
|
|
Impairment of equity
method Investees
|
—
|
|
|
(47,133)
|
|
Change in fair value
of contingent consideration and indemnification asset
|
594
|
|
|
3,818
|
|
Purchase accounting
adjustments
|
(5,906)
|
|
|
(5,867)
|
|
Repositioning
costs
|
(5,380)
|
|
|
—
|
|
Stock-based
compensation expense
|
(3,706)
|
|
|
(3,508)
|
|
Severance
costs
|
(52)
|
|
|
(6,103)
|
|
Amortization of
contract cost assets
|
(127)
|
|
|
(440)
|
|
(Gain) loss from
discontinued operations (1)
|
1,383
|
|
|
(265)
|
|
Strategy and
shareholder advisory expenses
|
(5,000)
|
|
|
—
|
|
Acquisition-related
costs
|
(1,994)
|
|
|
(309)
|
|
Adjusted Loss
Attributable to Common Shareholders (b)
|
$
|
(1,199)
|
|
|
$
|
(12,016)
|
|
|
|
|
|
Loss per Share
Attributable to Common Shareholders - Basic and Diluted (a)
(2)
|
$
|
(0.12)
|
|
|
$
|
(0.93)
|
|
|
|
|
|
Adjusted Loss per
Share Available to Common Shareholders (b)
|
$
|
(0.01)
|
|
|
$
|
(0.14)
|
|
|
|
|
|
Weighted-average
common shares - basic and diluted (2)
|
84,670
|
|
|
84,793
|
|
————————
|
(1)
|
Includes
$1.9 million gain on disposal of discontinued operations for
the three months ended March 31, 2021.
|
(2)
|
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.
|
Evolent Health,
Inc.
Guidance
Reconciliation
(in thousands,
unaudited)
|
|
|
For the Three
Months Ended
June 30, 2021
|
|
For the Year
Ended December
31, 2021
|
Net loss
attributable to common shareholders of Evolent Health,
Inc.
|
$
|
(13,987)
|
|
|
$
|
(56,141)
|
|
Less:
|
|
|
|
Interest
income
|
125
|
|
|
500
|
|
Interest
expense
|
(6,200)
|
|
|
(25,000)
|
|
Income Tax Benefit
(Expense)
|
—
|
|
|
(611)
|
|
Depreciation and
amortization expenses
|
(15,000)
|
|
|
(60,000)
|
|
EBITDA
|
7,088
|
|
|
28,970
|
|
Less:
|
|
|
|
Gain from equity
method investees
|
13
|
|
|
7,810
|
|
Gain on transfer of
membership
|
—
|
|
|
22,969
|
|
Loss on repayment of
debt
|
—
|
|
|
(19,158)
|
|
Change in fair value of
contingent consideration and indemnification asset..
|
—
|
|
|
594
|
|
Repositioning
costs
|
(500)
|
|
|
(7,125)
|
|
Other income
(expense), net
|
(50)
|
|
|
(500)
|
|
Stock-based
compensation expense
|
(3,750)
|
|
|
(14,956)
|
|
Severance
costs
|
—
|
|
|
(52)
|
|
Amortization of
contract cost assets
|
(125)
|
|
|
(500)
|
|
Gain from discontinued
operations
|
—
|
|
|
1,383
|
|
Shareholder advisory
services
|
—
|
|
|
(5,000)
|
|
Acquisition-related
costs
|
(500)
|
|
|
(3,495)
|
|
Adjusted
EBITDA
|
$
|
12,000
|
|
|
$
|
47,000
|
|
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 closing of pending transactions 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
our relationship or contract with any significant partner, or
multiple partners in the aggregate;
- evolution in the market for value-based care;
- uncertainty in the health care regulatory framework, including
the potential impact of policy changes;
- our ability to offer new and innovative products and
services;
- risks related to completed and future acquisitions,
investments, alliances and joint ventures, including the
acquisitions of Valence Health Inc., excluding Cicerone Health
Solutions, Inc., Aldera 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;
- the financial benefits we expect to receive as a result of the
sale of certain assets of Passport may not be realized;
- 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, premium pricing
reductions, selection bias in at-risk membership and the ability to
control and, if necessary, reduce health care costs;
- 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;
- our ability to effectively manage our growth and maintain an
efficient cost structure, and to successfully implement cost
cutting measures;
- the potential negative impact of the COVID-19 pandemic and
other public health emergencies;
- our ability to recover the significant upfront costs in our
partner relationships;
- 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 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;
- risks related to our offshore operations;
- 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;
- 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, 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;
- material weaknesses in the future may impact our ability to
conclude that our internal control over financial reporting is not
effective and we may be unable to produce timely and accurate
financial statements;
- restrictions and penalties as a result of privacy and data
protection laws;
- data loss or corruption due to failures or errors in our
systems and service disruptions at our data centers;
- 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;
- our reliance on Internet infrastructure, bandwidth providers,
data center providers, other third parties and our own systems for
providing services to our partners;
- our reliance on third-party vendors to host and maintain our
technology platform;
- 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 impact of our securities class action
litigation;
- 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 third 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; and
- our intention not to pay cash dividends on our Class A common
stock.
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 periodic
reports 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 undertake no
obligation to publicly update any forward-looking statements to
reflect events or circumstances that occur after the date of this
release.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/evolent-health-announces-first-quarter-2021-results-301284828.html
SOURCE Evolent Health