Core Insights - The U.S. value-based care (VBC) service market is rapidly evolving, attracting investors due to its potential for long-term stability and returns, focusing on integrated care rather than fee-for-service models [1] - CVS Health and Evolent Health are key players in the VBC space, aiming to provide higher-quality care at lower costs [1] CVS Health - CVS Health's Oak Street Health operates over 230 centers nationwide, providing primary care to Medicare-eligible patients and expanding VBC across its businesses, including Aetna and MinuteClinic [2] - The latest quarterly performance showed an 8.4% year-over-year revenue increase, although adjusted EPS decreased by 2 cents to $1.81 [3] - CVS is taking steps to stabilize Aetna and Oak Street, including investing in technology and enhancing leadership [3][4] - Caremark, CVS's pharmacy benefit manager, is performing well with high retention rates and partnerships to expand access to medications [5][6] - CVS raised its full-year revenue outlook to at least $391.5 billion, with adjusted EPS expected between $6.30 and $6.40 [6] Evolent Health - Evolent Health experienced a 31.3% year-over-year revenue decline in Q2 2025, with a loss of 10 cents per share compared to 18 cents EPS in the previous year [7] - Despite the revenue decline, Evolent is focused on organic growth, margin expansion, and capital allocation [7] - The company secured four new revenue agreements in Q2, bringing the year-to-date total to 11 [8] - Evolent has a partnership with Aetna to provide oncology services to 250,000 Medicare Advantage members, expected to generate over $250 million in new revenues by Q1 2026 [10] - Evolent's second-quarter adjusted EBITDA was $37.5 million, with a projected annualized run rate EBITDA improvement of $20 million by year-end [12] Price Performance and Valuation - Year-to-date, CVS shares have increased by 63.7%, while Evolent shares have declined by 23.3% [15] - CVS trades at a forward price-to-sales (P/S) ratio of 0.23X, lower than Evolent's 0.45X [16] - The Zacks Consensus Estimate for CVS's 2025 EPS indicates a 17% year-over-year growth to $6.34, with estimates trending upward [18] - Evolent's EPS estimate has remained stable at 42 cents for the past 90 days, representing a 2.4% increase over 2024 [20] Conclusion - Both CVS and Evolent are positioned as major players in the VBC market, with CVS showing stronger strategic execution and an optimistic full-year outlook, making it appear better positioned than Evolent [21]

Core Insights - Evolent Health, Inc. (NYSE: EVH) has experienced a significant double-digit decline in stock price since January, indicating a poor performance year-to-date [1] Company Performance - The stock price of Evolent Health has shown a very slow and poor performance throughout the year, with a notable double-digit drop [1] Analyst Background - Gamu Dave Innocent Pasi, a financial professional with extensive experience in investment research and analysis, has contributed insights into the financial landscape, focusing on actionable trading ideas and investment recommendations [1]

Core Viewpoint - Evolent Health, Inc. has announced the pricing of $145.0 million in 4.50% convertible senior notes due 2031, aimed at improving financial flexibility and reducing interest expenses while minimizing shareholder dilution [1][2][5]. Group 1: Transaction Details - The offering size was increased from $140.0 million to $145.0 million, with an additional option for initial purchasers to buy up to $21.75 million more [1]. - Evolent expects net proceeds of approximately $140.2 million, or $161.2 million if the additional notes option is fully exercised, which will be used primarily to repurchase existing convertible senior notes [5][7]. - The notes will mature on August 15, 2031, and interest will be paid semiannually at a rate of 4.50% [6]. Group 2: Conversion and Repurchase Terms - The notes are convertible at the option of the holders prior to maturity, with an initial conversion price of approximately $13.53 per share, representing a 50% premium over the closing price on August 18, 2025 [6]. - Evolent may terminate conversion rights under certain conditions related to the stock price performance [3]. - Holders can require Evolent to repurchase their notes upon a "fundamental change" at 100% of the principal amount plus accrued interest [4]. Group 3: Share Repurchase Impact - Evolent plans to repurchase approximately 4.43 million shares of its Class A common stock at a price of $9.02 per share, which may influence the market price of both the stock and the notes [8][9]. - The repurchase of shares sold short by initial investors could lead to increased market activity affecting the stock price [9]. Group 4: Company Overview - Evolent Health specializes in improving health outcomes for individuals with complex conditions and serves a national base of leading payers and providers [13].

Core Viewpoint - Evolent Health, Inc. plans to offer $140 million in convertible senior notes due 2031, with an option for initial purchasers to buy an additional $20 million, aimed at improving financial flexibility and supporting share repurchases [1][2]. Group 1: Offering Details - The offering consists of $140 million aggregate principal amount of convertible senior notes due 2031, subject to market conditions [1]. - Evolent expects to use up to $100 million of the net proceeds to repurchase a portion of its existing 1.50% convertible senior notes due 2025 and approximately $40 million for repurchasing shares of its Class A common stock [2]. - The notes will be convertible into cash, shares of Evolent's Class A common stock, or a combination thereof, with interest payable semiannually starting February 15, 2026 [4]. Group 2: Repurchase Strategy - Evolent plans to repurchase shares of its Class A common stock sold short by initial investors at a price equal to the last reported sale price on the pricing date, which may influence the market price of the stock [3]. - The company anticipates that holders of the 2025 Notes who agree to have their notes repurchased may unwind their hedges by buying Evolent's Class A common stock, potentially affecting the stock price [6]. Group 3: Conversion Rights - The conversion rights of the notes may be terminated by Evolent on or after August 20, 2026, under specific conditions related to the stock price performance [5]. - The conversion price and other terms of the notes will be determined at the time of the offering's pricing [4]. Group 4: Regulatory Information - The notes and any Class A common stock issued upon conversion will not be registered under the Securities Act, and may only be offered to qualified institutional buyers [7]. - The press release does not constitute an offer to sell or a solicitation to buy the securities described [8]. Group 5: Company Overview - Evolent Health specializes in improving health outcomes for individuals with complex conditions, serving a national base of leading payers and providers [9].

Evolent Health (EVH) FY Conference Summary Company Overview - **Company**: Evolent Health (EVH) - **Date of Conference**: August 13, 2025 - **Key Speakers**: CFO John Johnson, Richard Close from Canaccord Key Points and Arguments Financial Performance - **EBITDA Outperformance**: Evolent Health reported a strong performance in EBITDA, achieving a second consecutive beat for the year, leading to an increase in the lower end of their EBITDA guidance [5][12] - **Revenue Decline**: Despite the positive EBITDA performance, revenue guidance was lowered due to timing issues with performance suites and risk-based contracts [12][14] - **Claims Development**: Favorable claims development was noted, with trends below the 12% forecast for oncology costs, which were projected at a 10.5% trend for the year [5][6][26] Revenue Guidance Changes - **Partnership with Aetna**: A significant new partnership with Aetna for their Medicare Advantage population in Florida was announced, with a delay in the go-live date to Q1 of the following year due to data exchange preparations [14][16] - **Regulatory Delays**: A performance suite contract was delayed due to regulatory issues but is now set to go live on September 1 [16][17] - **Guidance Philosophy Shift**: The company adjusted its guidance philosophy, moving the fully contracted revenue point to the midpoint of the range to allow for potential faster deterioration in exchange membership [17][18] Cost Trends and Oncology - **Oncology Cost Trends**: The company is forecasting a 12% trend in oncology costs but is currently experiencing a trend of about 10.5%. The stability in authorization data is noted as a positive sign compared to the previous year's volatility [23][25][26][27] - **Pandemic Impact**: The spikes in cancer cases last year were attributed to pandemic-related factors, with expectations of a return to normal trends moving forward [27] Market Dynamics and Partnerships - **Vendor Consolidation Trend**: Evolent Health aims to be the enterprise partner of choice for managed care organizations, capitalizing on a trend of vendor consolidation in the industry [29][30] - **Regulatory Pressures**: Increasing regulatory requirements are driving managed care organizations to seek external partners like Evolent to meet commitments on turnaround times and data integration [36][38] Future Outlook - **Revenue Projections**: Evolent Health anticipates generating approximately $2.5 billion in revenue for the next year, supported by a robust pipeline of over $1 billion [41][33] - **EBITDA Growth**: The company aims for a 20% year-over-year growth in adjusted EBITDA, driven by both organic growth and margin expansion initiatives [43][41] - **AI Integration**: Evolent is on track to achieve a $20 million net improvement in unit costs through AI initiatives, with a long-term goal of $50 million in net EBITDA benefits [45][46] Cash Flow and Capital Allocation - **Cash Flow Expectations**: The company expects to generate about $65 million in cash from operations for the remainder of the year, following a one-time cash usage of $85 million in the first half [49][50] - **Deleveraging Strategy**: Evolent plans to deleverage by approximately one turn per year, focusing on capital allocation priorities [50] Additional Important Insights - **Data Connectivity Investments**: Evolent is investing in data connectivity and interoperability, which is expected to become an industry standard by 2027, enhancing their competitive position [39][40] - **Engagement with Regulatory Bodies**: The company is actively involved in discussions with AHIP and HHS to influence value-based care directions [40]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited interim consolidated financial statements for Evolent Health, Inc. as of June 30, 2025, and for the three and six-month periods then ended Consolidated Balance Sheet Highlights (Unaudited) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $150,995 | $104,203 | | Total current assets | $562,257 | $607,117 | | Goodwill | $1,137,321 | $1,137,320 | | Total assets | $2,461,532 | $2,544,411 | | **Liabilities & Equity** | | | | Total current liabilities | $557,519 | $715,501 | | Long-term debt, net | $648,455 | $490,520 | | Total liabilities | $1,336,727 | $1,352,979 | | Total shareholders' equity | $896,005 | $1,001,259 | Consolidated Statement of Operations Highlights (Unaudited) | (in thousands, except per share data) | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | $927,977 | $1,286,798 | | Total operating expenses | $930,770 | $1,292,419 | | Operating income (loss) | $(2,793) | $(5,621) | | Net loss attributable to common shareholders | $(123,340) | $(31,608) | | Loss per common share - Basic and diluted | $(1.07) | $(0.28) | Consolidated Statement of Cash Flows Highlights (Unaudited) | (in thousands) | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(25,769) | $26,326 | | Net cash used in investing activities | $(73,624) | $(23,273) | | Net cash provided by (used in) financing activities | $98,927 | $(88,499) | | Net decrease in cash and cash equivalents | $(526) | $(85,508) | [Note 4. Transactions](index=20&type=section&id=Note%204.%20Transactions) On August 1, 2024, the company acquired certain assets of Machinify, Inc. for $28.5 million, enhancing its AI capabilities Machinify Acquisition Purchase Price Allocation (August 1, 2024) | (in thousands) | Amount | | :--- | :--- | | **Purchase Consideration** | | | Cash | $19,500 | | Fair value of contingent consideration | $9,000 | | **Total consideration** | **$28,500** | | **Allocation** | | | Technology (Intangible Asset) | $7,700 | | Goodwill | $20,809 | | Liabilities assumed | $9 | | **Net assets acquired** | **$28,500** | [Note 5. Revenue Recognition](index=20&type=section&id=Note%205.%20Revenue%20Recognition) Revenue is primarily from multi-year contracts for care management services, recognized over time, with a significant year-over-year decrease in Medicare and Performance Suite revenue Disaggregation of Revenue by Line of Business (in thousands) | Line of Business | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Medicaid | $193,018 | $217,068 | $381,142 | $432,192 | | Medicare | $109,042 | $268,673 | $224,360 | $555,633 | | Commercial and other | $142,268 | $161,404 | $322,475 | $298,973 | | **Total** | **$444,328** | **$647,145** | **$927,977** | **$1,286,798** | Disaggregation of Revenue by Product Type (in thousands) | Product Type | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Performance Suite | $267,917 | $461,602 | $570,938 | $909,820 | | Specialty Technology and Services Suite | $81,401 | $81,515 | $164,222 | $170,518 | | Administrative Services | $55,880 | $60,770 | $113,071 | $119,339 | | Cases | $39,130 | $43,258 | $79,746 | $87,121 | | **Total** | **$444,328** | **$647,145** | **$927,977** | **$1,286,798** | [Note 8. Goodwill and Intangible Assets, Net](index=25&type=section&id=Note%208.%20Goodwill%20and%20Intangible%20Assets%2C%20Net) As of June 30, 2025, the company held $1.14 billion in goodwill and $651.2 million in net intangible assets, with no impairment identified - The annual goodwill impairment test as of October 31, 2024, concluded that goodwill was not impaired, as the reporting unit's fair value exceeded its carrying value by approximately **$336.0 million**, or **13.6%**[96](index=96&type=chunk) - Amortization expense for intangible assets decreased to **$33.6 million** for the six months ended June 30, 2025, from **$44.0 million** in the prior year period, primarily because several corporate trade names were fully amortized by December 2024[99](index=99&type=chunk) [Note 9. Debt](index=29&type=section&id=Note%209.%20Debt) The company's debt includes $575 million in Convertible Senior Notes and a First Lien Credit Agreement, with a new $150.0 million facility secured to retire 2025 Notes Summary of Convertible Senior Notes (as of June 30, 2025) | Term | 2025 Notes | 2029 Notes | | :--- | :--- | :--- | | Aggregate principal amount | $172,500,000 | $402,500,000 | | Interest rate | 1.5% | 3.5% | | Maturity date | Oct 15, 2025 | Dec 1, 2029 | | Conversion price | $33.43 | $38.00 | | Carrying value | $172,119,000 | $393,880,000 | - During the six months ended June 30, 2025, the Company borrowed **$200.0 million** under its Term Loan Facility. As of June 30, 2025, **$262.5 million** was outstanding under the Term Loan and Revolving Facilities[128](index=128&type=chunk) - On June 19, 2025, the company secured a commitment letter from Ares for up to **$150.0 million** in additional debt capital to retire its 2025 Notes and for working capital[118](index=118&type=chunk) [Note 10. Commitments and Contingencies](index=33&type=section&id=Note%2010.%20Commitments%20and%20Contingencies) The company faces significant revenue concentration risk with key partners and has a Tax Receivables Agreement liability of $108.1 million Revenue Concentration by Partner (YTD) | Partner | % of Revenue YTD 2025 | % of Revenue YTD 2024 | | :--- | :--- | :--- | | Molina Healthcare, Inc. | 24.1% | 12.1% | | Cook County Health and Hospitals System | 16.5% | 11.2% | | Florida Blue Medicare, Inc. | 14.5% | 12.6% | | Centene Corporation | 11.2% | * | | Humana Insurance Company | * | 21.7% | | *Represents less than 10.0%* | | | - As of June 30, 2025, the company had a Tax Receivables Agreement (TRA) liability of **$108.1 million**, representing its obligation to pay certain pre-IPO investors 85% of specific tax benefits it realizes[136](index=136&type=chunk)[137](index=137&type=chunk) [Note 16. Investments and Equity Method Investees](index=39&type=section&id=Note%2016.%20Investments%20and%20Equity%20Method%20Investees) In Q2 2025, the company purchased the remaining interest in an equity method investment for $51.5 million, recognizing a $52.5 million loss - In Q2 2025, the company purchased the remaining portion of an equity method investment for **$51.5 million**, recognizing a loss of **$52.5 million**, which represents the difference between the fixed purchase price and the estimated fair value of the interests acquired[172](index=172&type=chunk) [Note 21. Reserve for Claims and Performance-Based Arrangements](index=46&type=section&id=Note%2021.%20Reserve%20for%20Claims%20and%20Performance-Based%20Arrangements) The company's reserve for claims and performance-based arrangements decreased to $187.3 million as of June 30, 2025, due to claims payments exceeding newly incurred costs Activity in Reserves for Claims and Performance-Based Arrangements (in thousands) | | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Balance, beginning of period | $318,705 | $404,048 | | Total claims incurred | $420,239 | $731,158 | | Total claims paid | $(551,693) | $(817,643) | | **Balance, end of period** | **$187,251** | **$317,563** | [Note 23. Subsequent Events](index=48&type=section&id=Note%2023.%20Subsequent%20Events) Subsequent to quarter-end, the "One Big Beautiful Bill Act" was enacted, and the company exchanged its Series A Preferred Shares for a new second lien term loan facility - On August 7, 2025, the company completed the exchange of its Series A Preferred Shares for a new second lien term loan facility with similar economic terms but without a common stock conversion feature[209](index=209&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a significant revenue decrease in H1 2025 due to contractual updates, while medical claims cost growth slowed [Recent Events and Industry Climate](index=48&type=section&id=Recent%20Events%20and%20Industry%20Climate) Medical claims costs continued to rise in H1 2025, albeit at a slower pace, and the company completed a significant financing transaction by exchanging Series A Preferred Shares - Medical claims costs in the Performance Suite continued to grow faster than historical averages in the first half of 2025, though at a slower pace than in previous quarters, impacting financial results[216](index=216&type=chunk) - On August 7, 2025, the company exchanged its Series A Preferred Shares for a new second lien term loan, which has substantively similar economic terms but lacks a common stock conversion feature[221](index=221&type=chunk) [Results of Operations](index=51&type=section&id=Results%20of%20Operations) Revenue for the first six months of 2025 decreased by 27.9% to $928.0 million due to contractual changes, leading to a shift towards higher-margin business Consolidated Results Summary (YTD) | (in thousands) | YTD 2025 | YTD 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $927,977 | $1,286,798 | $(358,821) | (27.9)% | | Cost of revenue | $725,121 | $1,075,849 | $(350,728) | (32.6)% | | Selling, general and administrative | $153,618 | $148,289 | $5,329 | 3.6% | | Operating income (loss) | $(2,793) | $(5,621) | $2,828 | 50.3% | - The decrease in total revenue for the first six months of 2025 was primarily driven by contractual updates, including transitioning a customer from Performance Suite to Specialty Technology and Services Suite (**$257.6 million** impact) and narrowing the scope with other Performance Suite customers (**$96.6 million** impact)[255](index=255&type=chunk) - Cost of revenue as a percentage of total revenue decreased from **83.6%** to **78.1%** for the six months ended June 30, year-over-year, reflecting a shift in business mix towards higher-margin product types[258](index=258&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had $151.0 million in cash, with net cash used in operating activities of $25.8 million, primarily due to prior-year contract payments Summary of Cash Flows (in thousands) | | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(25,769) | $26,326 | | Net cash used in investing activities | $(73,624) | $(23,273) | | Net cash provided by (used in) financing activities | $98,927 | $(88,499) | - Cash used in operating activities for H1 2025 was primarily driven by **$67.5 million** in payments to clients for reconciliations of prior-year Performance Suite contracts that have since been restructured[277](index=277&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations, with a 1% SOFR increase leading to a $2.63 million rise in annual interest expense - The company is exposed to interest rate risk on its variable-rate debt. For every **1%** increase in the SOFR, annual interest expense on outstanding term and revolving loans would increase by **$2.63 million**[294](index=294&type=chunk) [Item 4. Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[299](index=299&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=62&type=section&id=Item%201.%20Legal%20Proceedings) A shareholder derivative action was dismissed in January 2023, and a subsequent demand for litigation was refused by the Board after an investigation - A shareholder derivative action was dismissed in January 2023. The Board later investigated and refused a subsequent shareholder demand to commence litigation related to the same matters[139](index=139&type=chunk)[304](index=304&type=chunk) [Item 1A. Risk Factors](index=62&type=section&id=Item%201A.%20Risk%20Factors) The company updates its risk factors, emphasizing those related to significant indebtedness, potential need for additional financing, and restrictive covenants - The company highlights significant risks associated with its substantial debt, which could make it difficult to satisfy obligations, limit its ability to obtain additional financing, and place it at a competitive disadvantage[306](index=306&type=chunk)[314](index=314&type=chunk) - Restrictive covenants in the company's Credit Agreements impose limitations on incurring additional debt, selling assets, making investments, and paying dividends, which could interfere with business activities[316](index=316&type=chunk)[320](index=320&type=chunk) [Item 5. Other Information](index=65&type=section&id=Item%205.%20Other%20Information) On August 7, 2025, the company exchanged its Series A Preferred Shares for a new $175.0 million second lien term loan facility, removing the common stock conversion feature - On August 7, 2025, the company exchanged its Series A Preferred Shares for a new **$175.0 million** second lien term loan facility, which has similar economic terms but no equity conversion feature[323](index=323&type=chunk)[324](index=324&type=chunk) - The new Second Lien Term Loan Facility matures on December 6, 2029, and carries an interest rate of SOFR + **6.00%** or ABR + **5.00%**, subject to step-downs[325](index=325&type=chunk)[326](index=326&type=chunk)

Core Insights - Evolent Health reported a revenue of $444.33 million for the quarter ended June 2025, marking a year-over-year decline of 31.3% and an EPS of -$0.10 compared to $0.30 a year ago, indicating significant financial challenges [1] - The revenue fell short of the Zacks Consensus Estimate of $457.4 million by 2.86%, and the EPS was below the consensus estimate of $0.09 by 211.11% [1] Financial Performance - Evolent Health's stock has returned -16.7% over the past month, contrasting with the Zacks S&P 500 composite's +1.2% change, suggesting underperformance relative to the broader market [3] - The company currently holds a Zacks Rank 3 (Hold), indicating it may perform in line with the market in the near term [3] Key Metrics Analysis - Average PMPM Fees / Revenue per Case for Performance Suite was $13.76, below the estimated $14.21 [4] - Average PMPM Fees / Revenue per Case for Specialty Technology and Services Suite was $0.35, slightly below the estimated $0.36 [4] - Average PMPM Fees / Revenue per Case for Administrative Services was $15.13, compared to the estimated $15.82 [4] - Average Lives on Platform / Cases for Cases was 13 thousand, below the estimated 14.39 thousand [4] - Average Lives on Platform / Cases for Performance Suite was 6.49 million, slightly above the estimated 6.48 million [4] - Average Lives on Platform / Cases for Specialty Technology and Services Suite was 77.02 million, below the estimated 77.71 million [4] - Average Lives on Platform / Cases for Administrative Services was 1.23 million, slightly above the estimated 1.22 million [4] - Average PMPM Fees / Revenue per Case for Cases was $2,969.00, below the estimated $3,008.56 [4]

Company Performance - Evolent Health reported a quarterly loss of $0.1 per share, missing the Zacks Consensus Estimate of $0.09, and down from earnings of $0.3 per share a year ago, representing an earnings surprise of -211.11% [1] - The company posted revenues of $444.33 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 2.86%, and down from $647.15 million year-over-year [2] - Evolent Health has not surpassed consensus EPS estimates over the last four quarters and has topped consensus revenue estimates only once during the same period [2] Stock Performance - Evolent Health shares have declined approximately 16.4% since the beginning of the year, contrasting with the S&P 500's gain of 7.9% [3] - The current Zacks Rank for Evolent Health is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.12 on revenues of $539.68 million, and for the current fiscal year, it is $0.40 on revenues of $2.06 billion [7] - The outlook for the Medical Info Systems industry, where Evolent Health operates, is currently in the top 37% of Zacks industries, suggesting a favorable environment for stock performance [8]

Financial Data and Key Metrics Changes - Q2 adjusted EBITDA was $37.5 million, in the top half of the range, driven by strong results across technology and services and performance suite models [16] - Q2 revenue was $444 million, $11 million below the midpoint of guidance, primarily due to lower revenue for 2024 and go-live timing issues [19][20] - The company updated its full-year revenue outlook to between $1.85 billion and $1.88 billion [27] Business Line Data and Key Metrics Changes - The performance suite normalized oncology trend was approximately 10.5%, modestly below the initial forecast of 12% [16] - The company achieved four new revenue agreements, bringing the total to 11 new agreements year-to-date [5] - The oncology performance suite offering is expanding to include inpatient or Part A oncology costs, reflecting an addressable market expansion [8] Market Data and Key Metrics Changes - About 25% of Q2 revenue and over 80% of new business announced for 2026 is in Medicare, with expectations of a return to normal macro membership growth [25] - Approximately 10% of Q2 revenue is in the commercial fully insured line of business, expected to remain stable [25] - Medicaid revenue accounted for about 45% of Q2 revenue, with typical annual growth of 2% to 3% expected [25] Company Strategy and Development Direction - The company is focused on organic growth, margin expansion, and capital allocation, with no plans for M&A in the near term [12] - The strategy includes enhancing AI and automation capabilities to improve efficiency and member experience [10] - The company aims to grow adjusted EBITDA at 20% per year despite industry volatility [14] Management's Comments on Operating Environment and Future Outlook - Management noted a challenging operating environment with elevated utilization and lagging premiums [12] - The company expects strong selling conditions in the coming years due to pressures on health plans [8] - Management remains cautiously optimistic about future performance, maintaining a conservative approach to forecasting [9] Other Important Information - The company plans to launch its partnership with Aetna in Q1 2026, targeting 250,000 Medicare Advantage members in Florida [6][7] - The company has a strong late-stage pipeline and anticipates additional growth announcements in the fall [8] Q&A Session Summary Question: Aetna partnership and market density - Management highlighted the significance of the Aetna partnership and its potential for expansion into additional states, with expected margin ramp consistent with typical performance suite margins [29][33] Question: Changes in contract structuring and customer engagement - Management noted that the pipeline has grown to $1 billion, driven by enhanced contract terms and the industry's challenges in managing high-cost specialty categories [35][37] Question: Aetna contract launch timeline - Management expressed confidence in the Aetna contract launch timeframe, emphasizing the importance of having all necessary components in place for a successful rollout [40] Question: Exchange business and ACA risk pools - Management acknowledged the lower margin nature of the exchange business and indicated a focus on protecting downside risks while growing the business [43][45] Question: Performance Suite pipeline and specialty focus - Management indicated that the Performance Suite pipeline is heavily focused on oncology, with a mix of national and regional plans [47][49] Question: Revenue growth expectations for 2026 - Management projected a clear path to exceeding $2.5 billion in revenue for 2026, based on the weighted pipeline and expected go-live timing [53][55]

Financial Performance - Revenue reached $4443 million, which includes a $46 million reduction due to favorable prior year claims development[6] - Adjusted EBITDA was $375 million, placing it in the upper range of expectations, with an adjusted EBITDA margin of 85%[6] - The company reported a net loss attributable to common shareholders of $511 million for Q2 2025, compared to a net loss of $64 million in Q2 2024[6] Growth & Outlook - Evolent announced four new revenue arrangements in Tech & Services and the Performance Suite, bringing the year-to-date total to 11 new arrangements[6] - The company updated the Q1 2026 go-live date for a new relationship with a large national Performance Suite partner to ensure optimal data exchange[6] - The 2025 full-year revenue is projected to be between $185 billion and $188 billion, with adjusted EBITDA between $140 million and $165 million[8] Capital & Liquidity - As of June 30, 2025, Evolent had $1510 million in cash and cash equivalents, along with $625 million in revolver availability[6] - The period-end net leverage stood at 53x based on LTM Adjusted EBITDA of $1288 million[6] - Total debt was reported as $820574 million, with net debt at $686505 million[18]