PR Newswire
WASHINGTON, Nov. 2, 2022
WASHINGTON, Nov. 2, 2022 /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, 2022.
Highlights from the third quarter of 2022 announcement include:
Quarter ended September 30, 2022:
Also today, Evolent announced the following 3 new operating partnerships:
Additional third quarter business development updates:
Seth Blackley, Chief Executive Officer, and Co-Founder of Evolent Health stated, "Our third quarter results were strong across organic growth, margin expansion and product innovation. We also achieved another successful quarter of sales momentum, signing three new operating partnerships, bringing our total new partnership announcements to 13 for the year versus our target of 6-8.
Mr. Blackley continued, "In addition, we are seeing sales acceleration of our integrated, value-based specialty proposition with many large health plans around the country. Finally, I'm excited to have promoted Dan McCarthy to President of Evolent, overseeing our specialty business, and I am happy to welcome Kali Beyah as our new Chief People and Brand Officer."
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"):
Segment Highlights: Clinical Solutions
Segment Highlights: Evolent Health Services
Total cash and cash equivalents was $156.8 million as of September 30, 2022.
Adjusted Results
Business Outlook
Fourth Quarter 2022 Guidance
For the three months ending December 31, 2022, revenue is expected to be in the range of approximately $361.0 million to $381.0 million. Adjusted EBITDA is expected to be in the range of approximately $24.0 million to $29.0 million.
Full Year 2022 Guidance
Revenue for the year ending December 31, 2022 is expected to be in the range of approximately $1.33 billion to $1.35 billion. Adjusted EBITDA is expected to be in the range of approximately $98.0 million to $103.0 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").
Additional Outlook Information
Cash deployed for software development is expected to be in the range of $30 million - $35 million for the year ended December 31, 2022.
Web and Conference Call Information
As previously announced, Evolent Health, Inc. will hold a conference call to discuss its third quarter performance this evening, November 2, 2022, at 5:00 p.m., Eastern Time. To listen to a live broadcast via the internet and view the accompanying materials, please visit the Company's Investor Relations website at http://ir.evolenthealth.com. To participate by telephone, dial 855.940.9467 or 412.317.6034 for international callers, and ask to join the "Evolent Health call." Participants are advised to dial in at least fifteen minutes prior to the call to register. The call will be archived on the company's website for one week and will be available beginning later this evening. Evolent Health invites all interested parties to attend the conference call.
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:
Seth Frank
Investor Relations
[email protected]
Non-GAAP Financial Measures
In addition to disclosing financial results that are determined in accordance with GAAP, we present and discuss 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, strategy and shareholder advisory services and certain 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.
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, non-recurring 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 net income (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 gain on transfer of membership, loss on extinguishment/repayment of debt, net, gain from equity method investees, changes in fair value of contingent consideration, change in the tax receivable agreement liability, other income (expense), net, repositioning costs, stock-based compensation expense, severance costs, amortization of contract cost assets, strategy and shareholder advisory services, acquisition-related costs and gain (loss) from discontinued operations.
Management uses Adjusted EBITDA as a supplemental performance measure because the removal of acquisition-related costs, one-time or non-cash items (e.g. depreciation, amortization and stock-based compensation expenses) allows us to focus on operational performance. We believe that this measure is also useful to investors because it allows further insight into the period over period operational performance in a manner that is comparable to other organizations in our industry and in the market in general.
Adjusted EBITDA Margin is as defined Adjusted EBITDA divided by Revenue. Management uses Adjusted EBITDA margin as a supplemental performance measure because it allows the investor to understand operational performance compared to revenues over time. We believe that this measure is also useful to investors because it allows further insight into the period over period operational performance in a manner that is comparable to other organizations in our industry and in the market in general.
Adjusted Earnings (Loss) Available to Common Shareholders is defined as net income (loss) attributable to common shareholders of Evolent Health, Inc. adjusted to exclude gain from equity method investees, other income (expense), net, gain on transfer of membership, loss on extinguishment of debt, net, loss on repayment of debt, changes in fair value of contingent consideration, change in tax receivable agreement liability, purchase accounting adjustments, repositioning costs, stock-based compensation expenses, severance costs, amortization of contract cost assets recorded as a result of a one-time ASC 606 transition adjustment, gain (loss) from discontinued operations, strategy and shareholder advisory services and acquisition-related costs.
Adjusted Earnings (Loss) per Share Available to Common Shareholders is defined as Adjusted Earnings (Loss) Available to Common Shareholders divided by Weighted-Average Common Shares, and reflects the adjustments made in those non-GAAP measures.
Management uses Adjusted Earnings (Loss) Available to Common Shareholders and Adjusted Earnings (Loss) per Share Available to Common Shareholders because excluding non-cash items (e.g. depreciation, amortization and stock-based compensation expenses) allows us to focus on operational performance. We believe that these measures are also useful to investors for the same reason.
These adjusted measures do not represent and should not be considered as alternatives to GAAP measurements, and our calculations thereof may not be comparable to similarly entitled measures reported by other companies. A reconciliation of these adjusted measures to their most comparable GAAP financial measures is presented in the tables below. We believe these measures are useful across time in evaluating our fundamental core operating performance.
Lives on Platform and Per Member Per Month ("PMPM") Fee
Total Lives on Platform are calculated by summing our Evolent Health Services Lives on Platform and our Clinical Solutions Lives on Platform. Evolent Health Services Lives on Platform are calculated by summing members on our value-based care and comprehensive health plan administrative platform. Clinical Solutions Lives on Platform are calculated by summing the Clinical Solutions Lives on Platform in our Performance suite and New Century Health Technology and Services suite Lives on Platform. Clinical Solutions Lives on Platform in our Performance suite are calculated by summing members covered for oncology specialty care services and members covered for cardiology specialty care services for contracts not under ASO arrangements. New Century Health Technology and Services suite Lives on Platform are calculated by summing members covered for oncology specialty care services, members covered for cardiology specialty care services and members covered for advance care planning services for contracts under ASO arrangements. Members covered for more than one category are counted in each category. Clinical Solutions Cases are calculated by summing the number of individuals receiving services through our IPG and Vital Decisions programs in a given period.
Evolent Health Services average per member per month ("PMPM") fee is defined as platform and operations revenue pertaining to the Evolent Health Services segment during the period reported divided by the average of the beginning and ending Evolent Health Services segment membership during the period reported divided by the number of months in the period. Clinical Solutions Performance suite Average PMPM fee is defined as platform and operations services revenue pertaining to our Clinical Solutions Performance suite during the period reported divided by the average of the beginning and ending Clinical Solutions Performance suite membership during the period reported divided by the number of months in the period. New Century Health Technology and Services suite Average PMPM fee is defined as platform and operations revenue pertaining to the New Century Health Technology and Services suite during the period reported divided by the average of the beginning and ending New Century Health Technology and Services suite membership during the period reported divided by the number of months in the period. Clinical Solutions Revenue per Case is calculated by the revenue pertaining to IPG and Vital Decisions divided by the number of cases for a given period.
Management uses lives on platform, PMPM fees, cases and revenue per case because we believe that they provide insight into the unit economics of our services. We believe that these measures are also useful to investors because they allow further insight into the period over period operational performance. We believe that these measures are also useful to investors because they allow further insight into the period over period operational performance.
Evolent Health, Inc. | |||||||
Consolidated Statements of Operations and Comprehensive Income (Loss) | |||||||
(unaudited, in thousands, except per share data) | |||||||
For the Three Months Ended | For the Nine Months Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Revenue | $ 352,585 | $ 222,471 | $ 969,581 | $ 659,599 | |||
Expenses | |||||||
Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) | 266,617 | 163,126 | 736,061 | 493,071 | |||
Selling, general and administrative expenses | 68,521 | 51,292 | 186,408 | 152,582 | |||
Depreciation and amortization expenses | 17,196 | 14,859 | 47,414 | 44,962 | |||
Change in fair value of contingent consideration | (12,700) | (225) | (5,822) | (819) | |||
Total operating expenses | 339,634 | 229,052 | 964,061 | 689,796 | |||
Operating income (loss) | 12,951 | (6,581) | 5,520 | (30,197) | |||
Interest income | 425 | 120 | 765 | 311 | |||
Interest expense | (4,754) | (6,367) | (9,143) | (18,978) | |||
Gain from equity method investees | 1,392 | 63 | 3,940 | 12,725 | |||
Gain on transfer of membership | — | — | — | 22,969 | |||
Loss on extinguishment/repayment of debt, net | (10,192) | — | (10,192) | (19,158) | |||
Change in tax receivable agreement liability | (42,870) | — | (42,870) | — | |||
Other income (expense), net | (345) | (41) | 130 | (73) | |||
Loss from continuing operations before income taxes | (43,393) | (12,806) | (51,850) | (32,401) | |||
Provision for (benefit from) income taxes | (45,516) | 234 | (44,498) | 936 | |||
Income (loss) from continuing operations | 2,123 | (13,040) | (7,352) | (33,337) | |||
Income (loss) from discontinued operations, net of tax (1) | — | — | (463) | 1,383 | |||
Net income (loss) attributable to common shareholders of Evolent Health, Inc. | $ 2,123 | $ (13,040) | $ (7,815) | $ (31,954) | |||
Income (loss) per common share | |||||||
Basic: | |||||||
Continuing operations | $ 0.02 | $ (0.15) | $ (0.08) | $ (0.39) | |||
Discontinued operations | — | — | (0.01) | 0.02 | |||
Basic income (loss) per share attributable to common shareholders of Evolent Health, Inc. | $ 0.02 | $ (0.15) | $ (0.09) | $ (0.37) | |||
Diluted: | |||||||
Continuing operations | $ 0.02 | $ (0.15) | $ (0.08) | $ (0.39) | |||
Discontinued operations | — | — | (0.01) | 0.02 | |||
Diluted income (loss) per share attributable to common shareholders of Evolent Health, Inc. | $ 0.02 | $ (0.15) | $ (0.09) | $ (0.37) | |||
Weighted-average common shares outstanding | |||||||
Basic | 95,286 | 85,800 | 91,643 | 85,306 | |||
Diluted | 99,308 | 85,800 | 91,643 | 85,306 | |||
Comprehensive income (loss) | |||||||
Net income (loss) | $ 2,123 | $ (13,040) | $ (7,815) | $ (31,954) | |||
Other comprehensive income (loss), net of taxes, related to: | |||||||
Foreign currency translation adjustment | (262) | 4 | (682) | (85) | |||
Total comprehensive income (loss) attributable to common shareholders of Evolent Health, Inc. | $ 1,861 | $ (13,036) | $ (8,497) | $ (32,039) |
———————— | |
(1) | Includes $(0.5) million loss on disposal for the nine months ended September 30, 2022 and $1.9 million gain on disposal of discontinued operations for the nine months ended September 30, 2021, respectively. |
Evolent Health, Inc. | |||
Condensed Consolidated Balance Sheets | |||
(in thousands, unaudited) | |||
September 30, 2022 | December 31, 2021 | ||
Cash and cash equivalents | $ 156,756 | $ 266,280 | |
Restricted cash and restricted investments | 38,062 | 88,662 | |
Total current assets | 393,774 | 523,960 | |
Intangible assets, net | 451,398 | 279,784 | |
Goodwill | 722,790 | 426,297 | |
Total assets | 1,759,182 | 1,419,458 | |
Accounts payable | 61,863 | 96,084 | |
Accrued liabilities | 132,238 | 107,241 | |
Long-term debt, net of discount | 412,444 | 215,676 | |
Total liabilities | 903,044 | 725,825 | |
Total shareholders' equity | 856,138 | 693,633 | |
Total liabilities and shareholders' equity | 1,759,182 | 1,419,458 |
Evolent Health, Inc. | |||
Condensed Consolidated Statements of Cash Flows | |||
(in thousands, unaudited) | |||
For the Nine Months | |||
2022 | 2021 | ||
Net cash and restricted cash used in continuing operations | |||
Net cash and restricted cash used in operating activities | $ (47,248) | $ (27,909) | |
Net cash and restricted cash provided by (used in) investing activities | (254,659) | 38,582 | |
Net cash and restricted cash provided by (used in) financing activities | 142,395 | (90,446) | |
Effect of exchange rate on cash and cash equivalents and restricted cash | (612) | (53) | |
Net decrease in cash and cash equivalents and restricted cash | (160,124) | (79,826) | |
Cash and cash equivalents and restricted cash as of beginning-of-period (1) | 354,942 | 361,581 | |
Cash and cash equivalents and restricted cash as of end-of-period (1) | $ 194,818 | $ 281,755 | |
Net cash and restricted cash provided by (used in) discontinued operations | |||
Cash flows provided by operating activities | $ — | $ 5,002 | |
Cash flows used in investing activities | — | (2,494) |
———————— | |
(1) | As a result of the closing of the sale of True Health during the first quarter of 2021, the consolidated statement of operations and related financial information reflect the Company's operations and assets and liabilities of True Health as discontinued operations. 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 the nine months ended September 30, 2021. |
Evolent Health, Inc. | ||||||||||||||||||||
Reconciliation of Adjusted Results of Operations | ||||||||||||||||||||
(in thousands, unaudited) | ||||||||||||||||||||
For the Three Months Ended September 30, 2022 | For the Three Months Ended September 30, 2021 | 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 | $ 352,585 | $ — | $ 352,585 | $ 222,471 | $ — | $ 222,471 | $ 130,114 | 58.5 % | $ 130,114 | 58.5 % | ||||||||||
Expenses | ||||||||||||||||||||
Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) (1) | 266,617 | (1,124) | 265,493 | 163,126 | (222) | 162,904 | 103,491 | 63.4 % | 102,589 | 63.0 % | ||||||||||
Selling, general and administrative expenses (2) | 68,521 | (9,485) | 59,036 | 51,292 | (5,464) | 45,828 | 17,229 | 33.6 % | 13,208 | 28.8 % | ||||||||||
Depreciation and amortization expenses (3) | 17,196 | (6,840) | 10,356 | 14,859 | (5,147) | 9,712 | 2,337 | 15.7 % | 644 | 6.6 % | ||||||||||
Change in fair value of contingent consideration | (12,700) | 12,700 | — | (225) | 225 | — | (12,475) | (5,544.4) % | — | — % | ||||||||||
Total operating expenses | 339,634 | (4,749) | 334,885 | 229,052 | (10,608) | 218,444 | 110,582 | 48.3 % | 116,441 | 53.3 % | ||||||||||
Operating income (loss) | $ 12,951 | $ 4,749 | $ 17,700 | $ (6,581) | $ 10,608 | $ 4,027 | $ 19,532 | 296.8 % | $ 13,673 | 339.5 % | ||||||||||
Total operating expenses as a percentage of total revenue | 96.3 % | 95.0 % | 103.0 % | 98.2 % |
———— | |
(1) | Adjustments to cost of revenue include $1.0 million and $0.1 million in stock-based compensation expense for the three months ended September 30, 2022 and 2021, respectively, and $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 three months ended September 30, 2021. |
(2) | Adjustments to selling, general and administrative expenses include $6.0 million and $4.3 million in stock-based compensation expense and $2.6 million and $1.2 million of acquisition-related costs resulting from acquisitions and business combinations for the three months ended September 30, 2022 and 2021, respectively. Adjustments for the three months ended September 30, 2022 include $0.9 million of severance costs. |
(3) | Adjustments to depreciation and amortization expenses of approximately $6.8 million and $5.1 million for the three months ended September 30, 2022 and 2021, respectively, relate to amortization of intangible assets acquired via asset acquisitions and business combinations. |
For the Nine Months Ended September 30, 2022 | For the Nine Months Ended September 30, 2021 | 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 | $ 969,581 | $ — | $ 969,581 | $ 659,599 | $ — | $ 659,599 | $ 309,982 | 47.0 % | $ 309,982 | 47.0 % | ||||||||||
Expenses | ||||||||||||||||||||
Cost of revenue (exclusive | 736,061 | (3,503) | 732,558 | 493,071 | (1,884) | 491,187 | 242,990 | 49.3 % | 241,371 | 49.1 % | ||||||||||
Selling, general and | 186,408 | (23,433) | 162,975 | 152,582 | (26,160) | 126,422 | 33,826 | 22.2 % | 36,553 | 28.9 % | ||||||||||
Depreciation and | 47,414 | (15,971) | 31,443 | 44,962 | (16,990) | 27,972 | 2,452 | 5.5 % | 3,471 | 12.4 % | ||||||||||
Change in fair value of | (5,822) | 5,822 | — | (819) | 819 | — | (5,003) | (610.9) % | — | — % | ||||||||||
Total operating expenses | 964,061 | (37,085) | 926,976 | 689,796 | (44,215) | 645,581 | 274,265 | 39.8 % | 281,395 | 43.6 % | ||||||||||
Operating income (loss) | $ 5,520 | $ 37,085 | $ 42,605 | $ (30,197) | $ 44,215 | $ 14,018 | $ 35,717 | 118.3 % | $ 28,587 | 203.9 % | ||||||||||
Total operating expenses as | 99.4 % | 95.6 % | 104.6 % | 97.9 % |
———— | |
(1) | Adjustments to cost of revenue include $3.0 million and $1.6 million in stock-based compensation expense, $0.5 million and $0.3 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, 2022 and 2021, respectively. |
(2) | Adjustments to selling, general and administrative expenses include $16.4 million and $10.1 million in stock-based compensation expense and $7.1 million and $3.3 million of acquisition-related costs resulting from acquisitions and business combinations for the nine months ended September 30, 2022 and 2021, respectively. Adjustments for the nine months ended September 30, 2021 include $6.0 million of repositioning costs and $6.5 million of strategy and shareholder advisory expenses. |
(3) | Adjustments to depreciation and amortization expenses of approximately $16.0 million and $17.0 million for the nine months ended September 30, 2022 and 2021, respectively, relate to amortization of intangible assets acquired via asset acquisitions and business combinations. |
Evolent Health, Inc. | |||||||||||
Segment Results | |||||||||||
(in thousands, unaudited) | |||||||||||
Evolent | Clinical | Intersegment Eliminations | Subtotal | Corporate (1) | Consolidated | ||||||
Revenue | |||||||||||
For the Three Months Ended September 30, 2022 | |||||||||||
Total revenue | $ 107,033 | $ 245,257 | $ 295 | $ 352,585 | $ — | $ 352,585 | |||||
For the Three Months Ended September 30, 2021 | |||||||||||
Total revenue | $ 63,315 | $ 159,614 | $ (458) | $ 222,471 | $ — | $ 222,471 | |||||
Evolent | Clinical | Subtotal | Corporate (1) | Consolidated | |||||||
For the Three Months Ended September 30, 2022 | |||||||||||
Adjusted EBITDA | $ 18,507 | $ 16,303 | $ 34,810 | $ (6,755) | $ 28,055 | ||||||
For the Three Months Ended September 30, 2021 | |||||||||||
Adjusted EBITDA | $ (3,353) | $ 23,883 | $ 20,530 | $ (6,765) | $ 13,765 | ||||||
Evolent | Clinical | Intersegment Eliminations | Subtotal | Corporate (1) | Consolidated | ||||||
Revenue | |||||||||||
For the Nine Months Ended September 30, 2022 | |||||||||||
Total revenue | $ 307,147 | $ 663,060 | $ (626) | $ 969,581 | $ — | $ 969,581 | |||||
For the Nine Months Ended September 30, 2021 | |||||||||||
Total revenue | $ 223,924 | $ 437,031 | $ (1,356) | $ 659,599 | $ — | $ 659,599 | |||||
Evolent | Clinical | Subtotal | Corporate (1) | Consolidated | |||||||
For the Nine Months Ended September 30, 2022 | |||||||||||
Adjusted EBITDA | $ 41,854 | $ 51,988 | $ 93,842 | $ (19,793) | $ 74,049 | ||||||
For the Nine Months Ended September 30, 2021 | |||||||||||
Adjusted EBITDA | $ 9,120 | $ 53,456 | $ 62,576 | $ (20,558) | $ 42,018 |
———————— | |
(1) | Corporate includes various finance, human resources, legal, executive and other corporate infrastructure expenses. |
Evolent Health, Inc. | |||||||
Reconciliation of Adjusted EBITDA to Net Income (Loss) | |||||||
Attributable to Common Shareholders of Evolent Health, Inc. | |||||||
(in thousands, except per share data) | |||||||
(unaudited) | |||||||
For the Three Months | For the Nine Months | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Net income (loss) attributable to common shareholders of Evolent Health, Inc. | $ 2,123 | $ (13,040) | $ (7,815) | $ (31,954) | |||
Less: | |||||||
Interest income | 425 | 120 | 765 | 311 | |||
Interest expense | (4,754) | (6,367) | (9,143) | (18,978) | |||
Benefit from (provision for) income taxes | 45,516 | (234) | 44,498 | (936) | |||
Change in tax receivable agreement liability | (42,870) | — | (42,870) | . | — | ||
Depreciation and amortization expenses | (17,196) | (14,859) | (47,414) | (44,962) | |||
Gain on transfer of membership | — | — | — | 22,969 | |||
Loss on extinguishment/repayment of debt, net | (10,192) | — | (10,192) | (19,158) | |||
Gain from equity method investees | 1,392 | 63 | 3,940 | 12,725 | |||
Change in fair value of contingent consideration | 12,700 | 225 | 5,822 | 819 | |||
Other income (expense), net | (345) | (41) | 130 | (73) | |||
Repositioning costs | — | — | — | (6,043) | |||
Stock-based compensation expense | (6,992) | (4,395) | (19,350) | (11,754) | |||
Severance costs | (996) | — | (1,035) | (52) | |||
Amortization of contract cost assets | (25) | (110) | (79) | (433) | |||
Strategy and shareholder advisory expenses | — | — | — | (6,513) | |||
Acquisition costs | (2,595) | (1,207) | (6,473) | (3,277) | |||
Gain (loss) from discontinued operations (1) | — | — | (463) | 1,383 | |||
Adjusted EBITDA | $ 28,055 | $ 13,765 | $ 74,049 | $ 42,018 |
———————— | |
(1) | Includes $(0.5) million loss on disposal of discontinued operations for the nine months ended September 30, 2022 and $1.9 million gain on disposal of discontinued operations for the nine months ended September 30, 2021, respectively. |
Evolent Health, Inc. | |||||||||||
Reconciliation of Adjusted EBITDA to Net Income (Loss) | |||||||||||
Attributable to Common Shareholders of Evolent Health, Inc. | |||||||||||
(in thousands, except per share data) | |||||||||||
(unaudited) | |||||||||||
Evolent Health Services | Clinical | Corporate | |||||||||
For the Three Months | For the Three Months | For the Three Months | |||||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||
Net income (loss) attributable to common shareholders of Evolent Health, Inc. | $ 5,107 | $ (14,225) | $ 6,701 | $ 18,914 | $ (9,685) | $ (17,729) | |||||
Net income (loss) margin | 4.8 % | (22.5) % | 2.7 % | 11.8 % | |||||||
Less: | |||||||||||
Interest income | — | — | — | — | 425 | 120 | |||||
Interest expense | — | — | — | — | (4,754) | (6,367) | |||||
Benefit from (provision for) income taxes | — | — | — | — | 45,516 | (234) | |||||
Change in fair value of contingent consideration | — | — | — | — | 12,700 | 225 | |||||
Depreciation and amortization expenses | (11,160) | (10,605) | (6,036) | (4,254) | — | — | |||||
Gain from equity method investees | — | — | — | — | 1,392 | 63 | |||||
Loss on extinguishment of debt | — | — | — | — | (10,192) | — | |||||
Change in tax receivable agreement liability | — | — | — | — | (42,870) | — | |||||
Other income (expense), net | — | — | — | — | (345) | (41) | |||||
Stock-based compensation expense | (1,280) | (157) | (2,623) | (715) | (3,089) | (3,523) | |||||
Severance costs | (946) | — | — | — | (50) | — | |||||
Amortization of contract cost assets | (14) | (110) | — | — | (11) | — | |||||
Acquisition-related costs | — | — | (943) | — | (1,652) | (1,207) | |||||
Loss from discontinued operations | — | — | — | — | — | — | |||||
Adjusted EBITDA | $ 18,507 | $ (3,353) | $ 16,303 | $ 23,883 | $ (6,755) | $ (6,765) | |||||
Adjusted EBITDA margin | 17.2 % | (5.3) % | 6.6 % | 15.0 % |
Evolent Health, Inc. | |||||||||||
Reconciliation of Adjusted EBITDA to Net Income (Loss) | |||||||||||
Attributable to Common Shareholders of Evolent Health, Inc. | |||||||||||
(in thousands, except per share data) | |||||||||||
(unaudited) | |||||||||||
Evolent Health Services | Clinical | Corporate | |||||||||
For the Nine Months | For the Nine Months | For the Nine Months | |||||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||
Net income (loss) attributable to common shareholders of Evolent Health, Inc. | $ 9,107 | $ (12,895) | $ 21,034 | $ 21,586 | $ (37,955) | $ (27,605) | |||||
Net income (loss) margin | 3.0 % | (8.1) % | 3.2 % | 7.8 % | |||||||
Less: | |||||||||||
Interest income | — | — | — | — | 765 | 191 | |||||
Interest expense | — | — | — | — | (9,143) | (12,611) | |||||
Provision for income taxes | — | — | — | — | 44,498 | (702) | |||||
Depreciation and amortization expenses | (28,350) | (23,811) | (19,064) | (6,292) | — | — | |||||
Gain from equity method investees | — | — | — | — | 3,940 | 12,662 | |||||
Gain on transfer of membership | — | — | — | — | — | 22,969 | |||||
Change in fair value of contingent consideration | — | — | — | — | 5,822 | 594 | |||||
Change in tax receivable agreement liability | — | — | — | — | (42,870) | — | |||||
Other income (expense), net | — | — | — | — | 130 | (32) | |||||
Loss on extinguishment/repayment of debt | — | — | — | — | (10,192) | (19,158) | |||||
Repositioning costs | — | — | — | — | — | (6,043) | |||||
Stock-based compensation expense | (3,404) | (1,234) | (7,072) | (1,695) | (8,874) | (4,430) | |||||
Severance costs | (946) | — | — | — | (89) | (52) | |||||
Amortization of contract cost assets | (47) | (323) | — | — | (31) | — | |||||
Strategy and shareholder advisory expenses | — | — | — | — | — | (6,513) | |||||
Acquisition-related costs | — | — | (4,821) | — | (1,652) | (2,070) | |||||
Gain (loss) from discontinued operations | — | — | — | — | (463) | 1,383 | |||||
Adjusted EBITDA | $ 41,854 | $ 12,473 | $ 51,991 | $ 29,573 | $ (19,796) | $ (13,793) | |||||
Adjusted EBITDA margin | 13.7 % | 7.8 % | 7.8 % | 10.7 % |
Evolent Health, Inc. | |||||||
Reconciliation of Adjusted Earnings (Loss) Available to Common | |||||||
Shareholders to Net Income (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, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Net Income (Loss) Attributable to Common Shareholders of Evolent Health, Inc. (a) | $ 2,123 | $ (13,040) | $ (7,815) | $ (31,954) | |||
Less: | |||||||
Gain from equity method investees | 1,392 | 63 | 3,940 | 12,725 | |||
Other income (expense), net | (345) | (41) | 130 | (73) | |||
Gain on transfer of membership | — | — | — | 22,969 | |||
Loss on extinguishment/repayment of debt, net | (10,192) | — | (10,192) | (19,158) | |||
Change in fair value of contingent consideration | 12,700 | 225 | 5,822 | 819 | |||
Change in tax receivable agreement liability | (42,870) | — | (42,870) | — | |||
Purchase accounting adjustments | (6,840) | (5,147) | (15,971) | (16,990) | |||
Repositioning costs | — | — | — | (6,043) | |||
Stock-based compensation expense | (6,992) | (4,395) | (19,350) | (11,754) | |||
Severance costs | (996) | — | (1,035) | (52) | |||
Amortization of contract cost assets | (25) | (110) | (79) | (433) | |||
Gain (loss) from discontinued operations (1) | — | — | (463) | 1,383 | |||
Strategy and shareholder advisory expenses | — | — | — | (6,513) | |||
Acquisition-related costs | (2,595) | (1,207) | (6,473) | (3,277) | |||
Adjusted Income (Loss) Attributable to Common Shareholders (b) | $ 58,861 | $ (2,428) | $ 78,726 | $ (5,557) | |||
Income (Loss) per Share Attributable to Common Shareholders (a)(2) | |||||||
Basic | $ 0.02 | $ (0.15) | $ (0.09) | $ (0.37) | |||
Diluted | $ 0.02 | $ (0.15) | $ (0.09) | $ (0.37) | |||
Adjusted Income (Loss) per Share Available to Common Shareholders (b) (2) | |||||||
Basic | $ 0.62 | $ (0.03) | $ 0.86 | $ (0.07) | |||
Diluted | $ 0.59 | $ (0.03) | $ 0.86 | $ (0.07) | |||
Weighted-average common shares(2) | |||||||
Basic | 95,286 | 85,800 | 91,643 | 85,306 | |||
Diluted | 99,308 | 85,800 | 91,643 | 85,306 |
———————— | |
(1) | Includes $(0.5) million loss on disposal of discontinued operations for the nine months ended September 30, 2022 and $1.9 million gain on disposal of discontinued operations for the nine months ended September 30, 2021, respectively. |
(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 | For the Year Ended December 31, 2022 | ||
Net loss attributable to common shareholders of Evolent Health, Inc. | $ (4,523) | $ (13,275) | |
Less: | |||
Interest income | 250 | 1,014 | |
Interest expense | (6,000) | (15,143) | |
Income tax benefit | — | 44,498 | |
Change in tax receivable agreement liability | — | (42,870) | |
Depreciation and amortization expenses | (17,200) | (64,614) | |
Gain from equity method investees | — | 3,940 | |
Loss on extinguishment/repayment of debt, net | — | (10,192) | |
Other income (expense), net | — | 130 | |
Change in contingent consideration | — | 5,822 | |
Stock-based compensation expense | (7,000) | (26,351) | |
Severance costs | — | (1,035) | |
Amortization of contract cost assets | (25) | (104) | |
Acquisition-related costs | (1,000) | (8,407) | |
Discontinued operations | — | (463) | |
Adjusted EBITDA | $ 26,452 | $ 100,500 | |
The guidance reconciliation provided above reconciles the midpoint of the respective guidance ranges to the most comparable GAAP measure.
FORWARD-LOOKING STATEMENTS - CAUTIONARY LANGUAGE
Certain statements made in this 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 our ability to grow our impact significantly throughout this year and beyond, future actions, trends in our businesses, prospective services, new partner additions/expansions, our guidance and business outlook and 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 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, 2021 (the "2021 Form 10-K") 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 report.
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SOURCE Evolent Health
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