Evolent Health (EVH) Misses Q4 EPS by 3c, Revenues Beat; Offers Q1 & FY20 Revenue Mid-Point Guidance Above Consensus

Evolent Health (NYSE: EVH) reported Q4 EPS of ($0.07), $0.03 worse than the analyst estimate of ($0.04). Revenue for the quarter came in at $237.5 million versus the consensus estimate of $232.86 million.

Quarter ended December 31, 2019:

• GAAP revenue of $236.5 million, an increase of 22.5%; Adjusted Revenue of $237.5 million, an increase of 22.9%
• Net loss attributable to common shareholders of Evolent Health, Inc. of $(198.1) million, inclusive of a non-cash goodwill impairment of $199.8 million and Adjusted EBITDA of $8.2 million
• Lives on platform of approximately 3.7 million

Frank Williams, chief executive officer of Evolent Health, Inc., commented, "Overall, we are pleased with our results for the quarter and the calendar year, having met our key strategic objectives for the year and delivering strong clinical and operational performance for our partner organizations. The combination of seven new partners and significant growth across the Evolent network helped us to achieve strong top-line growth and margin expansion over the course of the year."

Mr. Williams commented, "We're excited to add a new partner to our network: a national payer organization that will leverage a subset of New Century Health's oncology management services to support Medicaid and Exchange members across five states. In addition to this new partnership, we are delighted to announce that New Century Health has expanded its existing partnership with Humana. New Century Health has provided Humana with comprehensive oncology management services in Medicare for some time and will now also provide clinical pathway review and provider engagement services in Medicaid. These new opportunities are driven by NCH's more than 15 years of experience driving cost savings and improving quality of specialty care through the deployment of evidence-based clinical pathways and peer-to-peer education and collaboration."

Mr. Williams continued, "We are also delighted to have formally launched four of our ACO partners in CMS' newly launched Pathways to Success program. We look forward to working with our partners to initially manage total cost of care for more than 60,000 Medicare beneficiaries with an opportunity to expand into other programs and populations across time."

Mr. Williams concluded, "Overall, we come into 2020 with substantial strategic momentum and high visibility into 20 percent-plus organic growth in our service business with continued margin expansion anticipated across the year. This momentum is reflected in our recent partner announcements, strong partner renewal environment and the breadth and depth of our current pipeline. In addition, we anticipate becoming cash flow positive beginning this fall, supported by a strong exit run rate heading into 2021."

GUIDANCE:

Evolent Health sees Q1 2020 revenue of $233.5-245.5 million, versus the consensus of $234.76 million.

Evolent Health sees FY2020 revenue of $935-985 million, versus the consensus of $935.79 million.

For the three months ended March 31, 2020, revenue is expected to be in the range of approximately $233.5 million to $245.5 million. The components of revenue include services revenue, which is forecasted to be approximately $205.0 million to $215.0 million, and True Health premiums revenue, which is forecasted to be approximately $31.0 million to $33.0 million; intersegment eliminations are forecasted to be approximately $(2.5) million for the quarter. Adjusted EBITDA is expected to be in the range of approximately $2.0 million to $5.0 million.

For the full year 2020, revenue is expected to be in the range of approximately $935.0 million to $985.0 million. The components of revenue include services revenue, which is forecasted to be approximately $820.0 million to $860.0 million, and True Health premiums revenue, which is forecasted to be approximately $125.0 million to $135.0 million; intersegment eliminations are forecasted to be approximately $(10.0) million for the full year. Adjusted EBITDA for the full year is expected to be $24.0 million to $32.0 million.

For earnings history and earnings-related data on Evolent Health (EVH) click here.

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