Piper Sandler Reiterates Overweight Rating on Evolent Health (EVH)

Piper Sandler analyst Jessica Tassan reiterated an Overweight rating and $51.00 price target on Evolent Health (NYSE: EVH).

The analyst commented, "We identify unnamed customers, find evidence of new bookings, confirm 1H24 launch timelines and observe a few delays. EVH announced two wins at a conference on 1/9/24. We believe the legacy NCH client in the northeast expected to deploy NIA Tech & Services Suite in CY24 is Neighborhood Health Plan of Rhode Island with 220K+ unique lives across Medicaid, Commercial and Medicare. We estimate that the NIA Tech & Services Suite expansion will drive $0.60 of incremental PMPM and contribute $1.6M of annual revenue at run-rate. Our checks suggest this expansion was initially slated to launch on 4/1/24, but was delayed until 6/1/24. The second win was a new logo, 100K member Commercial and MA plan in the Southwest. EVH sold a comprehensive Tech & Services deal covering oncology and advanced care planning. We have not identified this customer, but believe the deal could drive $1.80 of PMPM and contribute $2.2M of annual revenue at run-rate. EVH announced another two wins during the 4Q23 earnings call on 2/22/24. We believe EVH's inaugural Advanced Imaging Performance Suite customer is the multi-state plan CareSource covering over 2.3M lives across Medicaid, Commercial and Medicare. We estimate that the Advanced Imaging Performance Suite rollout will drive $3.00 of incremental PMPM and contribute $82.80M of annual revenue at runrate. We believe EVH's national Tech & Services expansion for radiation and surgical oncology is with CNC across 1.1M MA lives at a rate of $0.65 incremental PMPM. We believe this expansion will contribute $8.8M of annual revenue at run-rate. • Be careful what you sleuth for. We believe EVH's MOH FL Performance Suite contracts launched on 4/1/24 vs. during 1Q24. We also believe Medicaid redeterminations are a ($2M) q/q adjusted EBITDA headwind. As a result, we feel comfortable with estimates at the low end of the 1Q24 guidance ranges. • Bridge provides a path to $260.4M of adusted EBITDA in CY24 vs. guide calling for $250.0M at the midpoint. Consensus is at $252.7M. We build our bridge deal by deal. We conservatively account for MOH FL, projecting a 4/1/24 launch vs. the originally anticipated 1Q24 launch. We do not add any contribution from deals discovered during 1Q24 but not yet disclosed by the company, which we believe could provide a source of upside to our estimates. We expect the Medicaid redetermination related adjusted EBITDA headwind to grow from ($4.0M) y/y in 4Q23 to ($6.0M) y/y in 1Q24; hold flat at ($6.0M) y/y in 2Q24; increase to ($7.0M) y/y in 3Q24 and narrow to ($4.0M) y/y in 4Q24. In total, we expect a ($23.0M) y/y adjusted EBITDA headwind from Medicaid redeterminations in CY24 and find support for $260.4M of adjusted EBITDA."

For an analyst ratings summary and ratings history on Evolent Health click here. For more ratings news on Evolent Health click here.

Shares of Evolent Health closed at $30.16 yesterday.

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