• Adjusted EBITDA: $31.8 million for Q3 2024, impacted by $42 million in higher than expected medical costs.

• Medical Costs Impact: $24 million increase due to higher claims from prior periods and $18 million increase due to acceleration in medical costs in Q3.

• Revenue Guidance: Updated to $2.55 billion to $2.575 billion for 2024.

• Adjusted EBITDA Guidance: Revised to $161 million to $175 million for 2024, with Q4 guidance of $22 million to $37 million.

• Cash from Operations: $18.7 million in Q3 2024; $67.2 million year-to-date.

• New Revenue Agreements: Six new agreements in Q3 2024, the largest number in a single quarter since the company's founding.

• Financing: Obtained $250 million in incremental committed financing, including a new $125 million term loan and a $75 million delayed draw term loan.

• Warning! GuruFocus has detected 3 Warning Signs with EVH.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Evolent Health Inc (NYSE:EVH) announced six new revenue agreements in the third quarter, marking the highest number of new agreements in a single quarter since the company's founding.

• The company is well-capitalized and cash flow positive, with a strong liquidity profile, generating $312 million in cash from operations over the last eight quarters.

• Evolent Health Inc (NYSE:EVH) has secured $250 million in incremental committed financing, providing a buffer for potential slower cash receipts and a proactive path for 2025 convertible note maturity.

• The company reaffirmed its long-term expectations for revenue growth of 15% and adjusted EBITDA growth of at least 20% on average annually.

• Evolent Health Inc (NYSE:EVH) continues to see strong demand for its specialty solutions, with significant new business signings and a robust sales pipeline going into 2025.

Negative Points

• Evolent Health Inc (NYSE:EVH) revised its 2024 adjusted EBITDA outlook downward due to higher than expected medical costs, particularly in its specialty performance suite.

• The company experienced a significant spike in oncology costs, driven by factors such as increased disease prevalence and rapid increases in unit costs.

• Evolent Health Inc (NYSE:EVH) is facing challenges with reimbursement rates, necessitating negotiations for an additional $100 million in annualized rate increases.

• The company's accounts receivable collections have slowed, prompting a draw on its revolving credit facility.

• Evolent Health Inc (NYSE:EVH) is dealing with a small number of partners driving high medical loss ratios, representing 40-50% of performance suite revenue, which may require exiting risk arrangements if terms cannot be aligned.