Evolent Health(EVH) - 2021 Q3 - Quarterly Report

Financial Position - Total assets decreased to $1,253.5 million as of September 30, 2021, down from $1,371.7 million at December 31, 2020, representing a decline of approximately 8.6%[12] - Current assets totaled $478.2 million, a decrease from $547.6 million, indicating a reduction of about 12.6%[12] - Total liabilities decreased to $646.0 million from $752.1 million, a reduction of about 13.9%[12] - Long-term debt decreased to $211.1 million from $263.3 million, showing a decline of approximately 19.8%[12] - Shareholders' equity decreased to $607.5 million from $619.6 million, a decline of about 1.5%[12] - Cash and cash equivalents were reported at $252.5 million, down from $319.0 million, indicating a decrease of about 21.0%[12] Revenue and Earnings - Total revenue for the three months ended September 30, 2021, was $222.5 million, a decrease of 7.1% compared to $239.6 million for the same period in 2020[13] - For the nine months ended September 30, 2021, total revenue was $423.072 million, compared to $395.255 million for the same period in 2020, reflecting a growth of approximately 7.1%[55] - The company reported a net loss attributable to common shareholders for the three months ended September 30, 2021, was $13.0 million, compared to a net loss of $37.3 million for the same period in 2020[13] - Adjusted EBITDA for the three months ended September 30, 2021, was $(6.765) million, compared to $13.783 million for the same period in 2020, indicating a significant decrease[135] - The net loss for the nine months ended September 30, 2021, was $31.954 million, a significant improvement from a net loss of $320.443 million for the same period in 2020[20] Operating Expenses - The total operating expenses for the nine months ended September 30, 2021, were $689.8 million, a decrease from $945.5 million for the same period in 2020[13] - Total compensation expense for the three months ended September 30, 2021, was $4,395,000, an increase of 38.8% from $3,164,000 in the same period of 2020[104] - The company reported a stock-based compensation expense of $4.4 million for the three months ended September 30, 2021[16] Cash Flow - Cash flows used in operating activities for the nine months ended September 30, 2021, totaled $(27.909) million, compared to $(3.374) million for the same period in 2020[20] - The company reported a net cash and restricted cash provided by investing activities of $38.582 million for the nine months ended September 30, 2021[20] - The company had unrestricted cash and cash equivalents of $252.5 million as of September 30, 2021, indicating sufficient liquidity for the next twelve months[25] Claims and Reserves - The company maintained reserves for liabilities related to payments to providers and pharmacies under performance-based arrangements, which are crucial for managing total cost of care[134] - The ending balance for reserves for claims and performance-based arrangements as of September 30, 2021, was $191,878,000, compared to $208,313,000 as of September 30, 2020, indicating a decrease of approximately 7.9% year-over-year[137] - The total incurred costs related to the current year for claims and performance-based arrangements amounted to $383,479,000 for the nine months ended September 30, 2021, compared to $379,206,000 for the same period in 2020, reflecting a slight increase[137] Debt and Financing - The Company issued $117.1 million of 3.50% Convertible Senior Notes due 2024, with an initial conversion price of approximately $18.23 per share, convertible into 6.4 million shares of Class A common stock[73] - The Company entered into a credit agreement for a secured term loan of $75.0 million and a delayed draw term loan facility of up to $50.0 million, with an interest rate option of Eurodollar rate plus 8.00% or base rate plus 7.00%[76] - The Company repaid $98.6 million to Ares Capital Corporation under the Credit Agreement, including a make-whole premium of $9.7 million, resulting in a loss on repayment of $19.2 million[78] Segment Information - The company bifurcated its previous Services segment into two segments: Evolent Health Services and Clinical Solutions, effective in the first quarter of 2021[24] - The Company’s reportable segments include Evolent Health Services and Clinical Solutions, with Adjusted EBITDA used as a performance measure[127] Goodwill and Intangible Assets - Goodwill is reviewed annually for impairment, with the company conducting its annual impairment review during the fourth quarter[34] - Identified intangible assets are amortized over their estimated useful lives, which range from 4 to 25 years depending on the asset classification[36] - The balance of goodwill as of September 30, 2021, was $349,010 thousand, slightly down from $349,017 thousand as of September 30, 2020[70] Tax and Legal Matters - The company has not recorded a liability under the Tax Receivables Agreement due to being in a full valuation allowance position[95] - The company is engaged in ongoing litigation, including a class action complaint filed in 2019, with the outcome currently uncertain[95] Market and Revenue Concentration - The company is subject to significant revenue concentration risk, with a substantial portion of revenue derived from a small number of partners[98] - Cook County Health and Hospitals System represented 43.7% of consolidated trade accounts receivable as of September 30, 2021, while Florida Blue Medicare, Inc. accounted for 33.3%[98]