Evolent Health(EVH) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fourth quarter revenue totaled $556.1 million, representing a year-over-year growth of 45.4$48.1 million, reflecting a growth of 48.9% [25] - For the full year 2023, revenue reached $1.96 billion, also a 45$194.7 million [52] Business Line Data and Key Metrics Changes - Evolent's core specialty care offerings accounted for 88% of total revenue in the fourth quarter, with specialty care revenue growing approximately 74% year-over-year [25] - The NIA acquisition contributed approximately 19% to reported growth, while 55% of the growth came from organic sources [25] Market Data and Key Metrics Changes - The company experienced a gross Medicaid membership decline of 8.5% on a same-store basis, with expectations of a total decline in the mid-teens by mid-2024 [91] - In Medicare Advantage, which represents about 42% of revenue, there has been elevated utilization, particularly for inpatient and supplemental benefit cost drivers [68] Company Strategy and Development Direction - The company is focused on strong organic growth, profitability, and disciplined capital allocation as guiding principles [27] - Evolent is expanding its Performance Suite into advanced imaging and has signed new revenue agreements to enhance its service offerings [55][56] - The company aims to achieve a $300 million adjusted EBITDA run rate exit target for 2024, with a strong pipeline of new revenue agreements [24][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the$300 million adjusted EBITDA target, citing consistent performance across several years [7] - The company noted that headwinds from Medicaid redeterminations are mostly behind them, with expectations for continued organic growth [71] - Management highlighted the importance of engaging partners to manage specialty care costs effectively, which is increasingly sought after by health plans [57] Other Important Information - The company ended 2023 with a cash balance of $193 million, exceeding its goal of increasing cash by more than$120 million [41] - Evolent's average product members grew to almost 80 million for the quarter, despite challenges in the Medicaid segment [26] Q&A Session Summary Question: How does the new Performance Suite offering impact market sizing? - Management indicated that the new offering does increase the total addressable market, although it remains a small portion of the overall market [123] Question: What is the expected impact of the Medicaid redeterminations? - Management confirmed that the impact aligns with expectations, with a projected decline in membership and a modest increase in utilization metrics [91] Question: What are the paths to achieve the $4 million EBITDA target? - Management noted multiple paths to achieve the target, primarily through Technology and Services, and emphasized a strong pipeline of opportunities [76] Question: How does the company view the expansion of Performance Suite outside of Florida and Arizona? - Management stated that expansion opportunities exist but emphasized the importance of delivering outstanding performance first [115][132]