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Section 1: 8-K (Q3 2019 EARNINGS RELEASE 8-K)

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false0001628908 0001628908 2019-11-05 2019-11-05


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM 8-K
_________________________

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

November 5, 2019
Date of Report (Date of earliest event reported)   

Evolent Health, Inc.
(Exact name of registrant as specified in its charter)
_________________________
 
Delaware
 
001-37415
 
32-0454912
 
 
(State or other jurisdiction of
incorporation or organization)
 
Commission File Number: 
 
(I.R.S. Employer
Identification No.)
 
 
 
 
 
 
 
 
 
 
 
 
 
800 N. Glebe Road
,
Suite 500
,
Arlington
,
Virginia
,
22203
 
 
(Address of principal executive offices)(zip code)
 
 
 

  
(571) 389-6000
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former name, former address and former fiscal year, if changed since last report.)
_________________________


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A Common Stock of Evolent Health, Inc., par value $0.01 per share
EVH
New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company






If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐






Item 2.02.  Results of Operations and Financial Condition
 
On November 5, 2019, Evolent Health, Inc. issued a press release announcing its financial results for the quarter ended September 30, 2019, a copy of which is furnished herewith as Exhibit 99.1.
   
Item 9.01.  Financial Statements and Exhibits

(d) Exhibits

The following exhibits are being furnished with this Form 8-K
 
Exhibit


Number

Description








SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

EVOLENT HEALTH, INC.
 
 
By:
 /s/ Jonathan Weinberg
Name:
Jonathan Weinberg
Title:
General Counsel and Secretary


Dated: November 5, 2019



(Back To Top)

Section 2: EX-99.1 (Q3 19 EARNINGS RELEASE)

Exhibit
Exhibit 99.1

 
400839412_evhlogoa12.jpg

 
 

Evolent Health Announces Third Quarter 2019 Results
WASHINGTON, D.C., November 5, 2019Evolent Health, Inc. (NYSE: EVH), a company providing an integrated value-based care platform to the nation’s leading physician and payer organizations, today announced financial results for the quarter ended September 30, 2019.

Highlights from the third quarter of 2019 announcement include (all comparisons are to the quarter ended September 30, 2018):

GAAP revenue of $220.1 million, an increase of 46.8%; Adjusted Revenue of $220.3 million, an increase of 46.7%.
Net income (loss) attributable to Evolent Health, Inc. of $(25.5) million, Adjusted EBITDA of $3.3 million.
Lives on platform of approximately 3.7 million.
New partnership agreement for health plan services with Maryland Physicians Care MCO (MPC) to support Medicaid operations in Maryland for more than 200,000 Medicaid beneficiaries.
Expanded relationship with an existing partner for oncology and cardiovascular services.
 
Frank Williams, Chief Executive Officer of Evolent Health, Inc., commented, “Overall, we are quite pleased with our top and bottom-line results for the third quarter and the progress we have made in meeting our key strategic objectives for 2019. With seven new partners, as well as a strong pipeline and renewal environment, we have a high level of visibility for top-line growth and margin expansion as we head into 2020.”

Mr. Williams commented, “Across the market, there is a broad, urgent focus on reducing health care costs and improving outcomes for both health care providers and managed care and government payers. This has created significant opportunities in our pipeline for our health plan services, specialty management services and population health services, particularly in Medicare and Medicaid. By serving as the bridge between providers and payers and delivering strong operational and clinical results for our partners, we are uniquely positioned in a large and growing market to establish new partnerships and significantly expand existing relationships.”

Mr. Williams added, “We are excited to announce a new partnership with Maryland Physicians Care MCO, a Managed Care Organization that administers health care services to Medicaid beneficiaries enrolled in the Maryland HealthChoice program. MPC is highly-regarded in its market and has a strong reputation for providing exceptional care and services to its members. We look forward to leveraging our robust health plan and clinical platform to help MPC optimize health services for more than 200,000 Medicaid beneficiaries.”

Mr. Williams concluded, “This quarter, we also continued to work closely with the Passport Health Plan team to make meaningful progress in driving administrative efficiency, optimizing network performance, improving clinical outcomes and driving a strong service experience for members. While Passport is currently awaiting a decision from the Kentucky Department of Medicaid Services on whether it will be awarded a new Medicaid contract, we are heartened by the fact that Passport posted a positive operating margin this quarter and continues to make strong progress.”


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Financial Results of Evolent Health, Inc.
In our earnings releases, prepared remarks, conference calls, slide presentations and webcasts, we may use or discuss non-GAAP financial measures. Definitions of the non-GAAP financial measures, as well as reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures, are included in this earnings release. See “Financial Statement Presentation” and “Non-GAAP Financial Measures” for more information.

Reported Results

Evolent Health, Inc. reported the following GAAP results:

Total revenue of $220.1 million and $149.9 million for the three months ended September 30, 2019 and 2018, respectively, an increase of 46.8%;
Services revenue of $179.9 million and $130.9 million for the three months ended September 30, 2019 and 2018, respectively, before intersegment eliminations of $3.3 million and $3.5 million, respectively; and
True Health premiums revenue of $43.8 million and $22.8 million for the three months ended September 30, 2019 and 2018, respectively, before intersegment eliminations of $0.2 million and $0.2 million, respectively.
Cost of revenue of $131.8 million and $74.0 million for the three months ended September 30, 2019 and 2018, respectively, an increase of 78.1%;
Claims expenses of $34.8 million and $17.0 million for the three months ended September 30, 2019 and 2018, respectively, an increase of 104.8%;
Selling, general and administrative expenses of $58.8 million and $59.6 million for the three months ended September 30, 2019 and 2018, respectively, a decrease of 1.3%;
Net income (loss) attributable to Evolent Health, Inc. of $(25.5) million and $(12.4) million for the three months ended September 30, 2019 and 2018, respectively;
Earnings (loss) available to common shareholders, basic and diluted, of $(25.5) million and $(12.4) million for the three months ended September 30, 2019 and 2018, respectively; and
Earnings (loss) available to common shareholders, per basic and diluted share, of $(0.30) and $(0.16) for the three months ended September 30, 2019 and 2018, respectively.

Total cash and cash equivalents and investments, at amortized cost, as of September 30, 2019, were $115.6 million.

Adjusted Results

Adjusted Revenue of $220.3 million and $150.2 million for the three months ended September 30, 2019 and 2018, respectively, an increase of 46.7%;
Adjusted Services Revenue of $180.0 million and $131.1 million for the three months ended September 30, 2019 and 2018, respectively, before intersegment eliminations of $3.3 million and $3.5 million, respectively; and
True Health premiums revenue of $43.8 million and $22.8 million for the three months ended September 30, 2019 and 2018, respectively, before intersegment eliminations of $0.2 million and $0.2 million, respectively.
Adjusted Cost of Revenue of $129.0 million and $73.0 million for the three months ended September 30, 2019 and 2018, respectively, an increase of 76.8%;
Claims expenses of $34.8 million and $17.0 million for the three months ended September 30, 2019 and 2018, respectively, an increase of 104.8%;
Adjusted Selling, General and Administrative Expenses of $53.1 million and $55.4 million for the three months ended September 30, 2019 and 2018, respectively, a decrease of 4.1%;
Adjusted EBITDA of $3.3 million and $4.8 million for the three months ended September 30, 2019 and 2018, respectively;

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Services Adjusted EBITDA of $3.1 million and $4.1 million for three months ended September 30, 2019 and 2018, respectively; and
True Health Adjusted EBITDA of $0.2 million and $0.7 million for the three months ended September 30, 2019 and 2018, respectively.
Adjusted Earnings (Loss) Available for Class A and Class B Shareholders of $(7.7) million and $(3.0) million for the three months ended September 30, 2019 and 2018, respectively; and
Adjusted Earnings (Loss) per Share Available for Class A and Class B Shareholders of $(0.09) and $(0.04) for the three months ended September 30, 2019 and 2018, respectively.

Business Outlook

We are not providing forward looking guidance for GAAP reported financial measures. A reconciliation of forward looking non-GAAP financial measures to the most comparable GAAP financial measure is provided in the “Guidance Reconciliation” table below.

For the full year 2019, we are narrowing the range for Adjusted Revenue to be in the range of $838.0 million to $850.0 million. The components of Adjusted Revenue include Adjusted Services Revenue, which is forecasted to be approximately $679.0 million to $689.0 million, and True Health premiums revenue, which is forecasted to be approximately $172.9 million to $174.9 million; intersegment eliminations are forecasted to be approximately $(13.7) million for the full year. We are forecasting Adjusted EBITDA to be in the range of $(11.1) million to $(8.1) million.

For the three months ending December 31, 2019, Adjusted Revenue is expected to be in the range of approximately $227.5 million to $239.5 million. The components of Adjusted Revenue include Adjusted Services Revenue, which is forecasted to be approximately $195.0 million to $205.0 million, and True Health premiums revenue, which is forecasted to be approximately $36.0 million to $38.0 million; intersegment eliminations are forecasted to be approximately $(3.5) million for the quarter. Adjusted EBITDA is expected to be in the range of approximately $8.0 million to $11.0 million.

This “Business Outlook” section contains forward-looking statements, and actual results may differ materially. Factors that may cause actual results to differ materially from our current expectations are set forth below in “Forward Looking Statements - Cautionary Language” and Evolent Health, Inc.’s filings with the Securities and Exchange Commission (“SEC”).

Web and Conference Call Information
As previously announced, Evolent Health, Inc. will hold a conference call to discuss its third quarter performance this evening, November 5, 2019, at 5:00 p.m., Eastern Time. The conference call will be available via live webcast on the Company’s Investor Relations website at http://ir.evolenthealth.com. To participate by telephone, dial 855.940.9467 or 412.317.6034 for international callers, and ask to join the Evolent Health call. Participants are advised to dial in at least fifteen minutes prior to the call to register. The call will be archived on the company’s website for one week and will be available beginning later this evening. Evolent Health invites all interested parties to attend the conference call.
###
About Evolent Health
Evolent Health partners with leading provider and payer organizations to achieve superior clinical and financial results in value-based care and under full-risk arrangements. With a provider heritage and over 20 years of health plan administration experience, Evolent operates in more than 35 U.S. health care markets, actively managing care across Medicare, Medicaid, commercial and self-funded adult and pediatric populations. With the experience to drive change, Evolent confidently stands by a commitment to achieve results. For more information, visit www.evolenthealth.com.


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Contacts:

Bob East
Kim Conquest
443.213.0500
540.435.2095
Investor Relations
Media Relations

Financial Statement Presentation
Evolent Health, Inc. is a holding company and its principal asset is all of the Class A common units in its operating subsidiary, Evolent Health LLC, which has owned all of our operating assets and substantially all of our business since inception. The financial results of Evolent Health LLC are consolidated in the financial statements of Evolent Health, Inc.
Non-GAAP Financial Measures
In addition to disclosing financial results that are determined in accordance with GAAP, we present and discuss Adjusted Revenue, Adjusted Services Revenue, Adjusted Transformation Services Revenue, Adjusted Platform and Operations Services Revenue, Adjusted Cost of Revenue, Adjusted Selling, General and Administrative Expenses, Adjusted Depreciation and Amortization Expenses, Adjusted Total Operating Expenses, Adjusted Operating Income (Loss), Adjusted EBITDA, Services Adjusted EBITDA, True Health Adjusted EBITDA, Adjusted Earnings (Loss) Available to Class A and Class B Shareholders, Adjusted Earnings (Loss) per Share Available to Class A and Class B Shareholders and Adjusted Weighted-Average Class A and Class B Shares, which are all non-GAAP financial measures, as supplemental measures to help investors evaluate our fundamental operational performance.

Adjusted Transformation Services Revenue and Adjusted Platform and Operations Services Revenue are defined as transformation services revenue and platform and operations services revenue, respectively, before the effect of intersegment eliminations and adjusted to exclude the impact of purchase accounting adjustments. In addition, the company’s Adjusted Transformation Services Revenue and Adjusted Platform and Operations Services Revenue for the nine months ended September 30, 2018, include a $4.5 million adjustment related to revenue that was contracted for prior to 2018 and that was properly excluded from revenue in our 2017 results under the revenue recognition rules then in effect under Accounting Standards Codification (“ASC”) 605. On January 1, 2018, we adopted the new revenue recognition rules under ASC 606 using the modified retrospective method, which required us to include this $4.5 million as part of the cumulative transition adjustment to beginning retained earnings as of January 1, 2018. This is a one-time adjustment and it will not reoccur in future periods.

Adjusted Services Revenue is defined as the sum of Adjusted Transformation Services Revenue and Adjusted Platform and Operations Services Revenue. Adjusted Revenue is defined as the sum of Adjusted Services Revenue and True Health premiums revenue, less relevant intersegment eliminations. Management uses Adjusted Revenue, Adjusted Services Revenue, Adjusted Transformation Services Revenue and Adjusted Platform and Operations Services Revenue as supplemental performance measures because they reflect a complete view of the operational results. The measures are also useful to investors because they reflect the full view of our operational performance in line with how we generate our long term forecasts.

Adjusted Cost of Revenue and Adjusted Selling, General and Administrative Expenses are defined as cost of revenue and selling, general and administrative expenses, respectively, adjusted to exclude the impact of stock-based compensation expenses, severance costs, amortization of contract cost assets recorded as a result of a one-time ASC 606 transition adjustment, transaction costs related to acquisitions and business combinations, securities offerings and other one-time adjustments. Management uses Adjusted Cost of Revenue and Adjusted Selling, General and Administrative Expenses as supplemental performance

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measures, which are also useful to investors, because they facilitate an understanding of our long term operational costs while removing the effect of costs that are one-time (e.g. transaction costs) and non-cash (e.g. stock-based compensation expenses) in nature. Additionally, these supplemental performance measures facilitate understanding a breakdown of our Adjusted Total Operating Expenses.

Adjusted Depreciation and Amortization Expenses is defined as depreciation and amortization expenses adjusted to exclude the impact of amortization expenses related to intangible assets acquired through acquisitions and business combinations. Management uses Adjusted Depreciation and Amortization Expenses as a supplemental performance measure because it reflects a complete view of the operational results. The measure is also useful to investors because it facilitates understanding a breakdown of our Adjusted Total Operating Expenses.

Adjusted Total Operating Expenses is defined as the sum of Adjusted Cost of Revenue, Adjusted Selling, General and Administrative Expenses and Adjusted Depreciation and Amortization Expenses, and reflects the adjustments made in those non-GAAP measures. Adjusted Total Operating Expenses is further adjusted to exclude the impact of one-time adjustments, such as goodwill impairment, severance costs, items arising from acquisitions and business combinations and other transactions, such as gain (loss) on disposal of assets, changes in fair value of contingent consideration and indemnification asset.

Adjusted Operating Income (Loss) is defined as Adjusted Revenue less Adjusted Total Operating Expenses, and reflects the adjustments made in those non-GAAP measures.

Adjusted EBITDA is the sum of Services Adjusted EBITDA and True Health Adjusted EBITDA and is defined as EBITDA (net income (loss) attributable to Evolent Health, Inc. before interest income, interest expense, (provision) benefit for income taxes, depreciation and amortization expenses), adjusted to exclude income (loss) from equity method investees, gain (loss) on disposal of assets, changes in fair value of contingent consideration and indemnification asset, other income (expense), net, net (income) loss attributable to non-controlling interests, ASC 606 transition adjustments, purchase accounting adjustments, stock-based compensation expenses, severance costs, amortization of contract cost assets recorded as a result of a one-time ASC 606 transition adjustment, transaction costs related to acquisitions and business combinations, and other one-time adjustments. Management uses Adjusted EBITDA as a supplemental performance measure because the removal of transaction costs, one-time or non-cash items (e.g. depreciation, amortization and stock-based compensation expenses) allows us to focus on operational performance. We believe that this measure is also useful to investors because it allows further insight into the period over period operational performance in a manner that is comparable to other organizations in our industry and in the market in general.

Adjusted Earnings (Loss) Available to Class A and Class B Shareholders is defined as earnings (loss) available to common shareholders adjusted to exclude income (loss) from equity method investees, (provision) benefit for income taxes, other income (expenses), net, gain (loss) on disposal of assets, change in fair value of contingent consideration and indemnification asset, net (income) loss attributable to non-controlling interests, ASC 606 transition adjustments, purchase accounting adjustments, stock-based compensation expenses, severance costs, amortization of contract cost assets recorded as a result of a one-time ASC 606 transition adjustment, transaction costs related to acquisitions and business combinations and other one-time adjustments.

Adjusted Weighted-Average Class A and Class B Shares is defined as weighted average common shares (diluted) adjusted to include, in periods of net loss, the dilutive or potentially dilutive effect of the assumed conversion of Class B common shares to Class A common shares.

Adjusted Earnings (Loss) per Share Available to Class A and Class B Shareholders is defined as Adjusted Earnings (Loss) Available to Class A and Class B Shareholders divided by Adjusted Weighted-Average Class A and Class B Shares, and reflects the adjustments made in those non-GAAP measures.
 

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Management uses Adjusted Earnings (Loss) Available to Class A and Class B Shareholders, Adjusted Weighted-Average Class A and Class B Shares and Adjusted Earnings (Loss) per Share Available to Class A and Class B Shareholders because these performance measures represent our core operating performance distributed amongst all of our investors which is not represented by the GAAP results across time due to our complex equity structure. We believe that these measures are also useful to investors for the same reason.

These adjusted measures do not represent and should not be considered as alternatives to GAAP measurements, and our calculations thereof may not be comparable to similarly entitled measures reported by other companies. A reconciliation of these adjusted measures to their most comparable GAAP financial measures is presented in the tables below. We believe these measures are useful across time in evaluating our fundamental core operating performance.


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Evolent Health, Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(unaudited)
(in thousands, except per share data)
For the Three
 
For the Nine
 
Months Ended
 
Months Ended
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
Revenue
 
 
 
 
 
 
 
Transformation services
$
5,184

 
$
9,230

 
$
10,481

 
$
23,950

Platform and operations services
171,438

 
118,094

 
463,252

 
341,258

Premiums
43,521

 
22,623

 
136,125

 
68,751

Total revenue
220,143

 
149,947

 
609,858

 
433,959

 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
Cost of revenue (exclusive of depreciation and amortization
 
 
 
 
 
 
 
expenses presented separately below)
131,763

 
73,967

 
357,587

 
214,945

Claims expenses
34,802

 
16,992

 
108,644

 
52,169

Selling, general and administrative expenses
58,808

 
59,566

 
200,578

 
172,495

Depreciation and amortization expenses
15,408

 
10,352

 
44,966

 
29,882

(Gain) loss on disposal of assets

 

 
(9,600
)
 

Change in fair value of contingent consideration and indemnification asset
(500
)
 
100

 
(300
)
 
(1,404
)
Total operating expenses
240,281

 
160,977

 
701,875

 
468,087

Operating income (loss)
(20,138
)
 
(11,030
)
 
(92,017
)
 
(34,128
)
Interest income
1,124

 
968

 
3,026

 
2,918

Interest expense
(3,630
)
 
(853
)
 
(10,812
)
 
(2,561
)
Income (loss) from equity method investees
(3,859
)
 
(1,381
)
 
(6,187
)
 
(2,787
)
Other Income (expense), net
(84
)
 
(124
)
 
(244
)
 
(64
)
Income (loss) before income taxes and
 
 
 
 
 
 
 
non-controlling interests
(26,587
)
 
(12,420
)
 
(106,234
)
 
(36,622
)
Provision (benefit) for income taxes
(849
)
 
135

 
53

 
29

Net income (loss)
(25,738
)
 
(12,555
)
 
(106,287
)
 
(36,651
)
Net income (loss) attributable to non-controlling interests
(217
)
 
(126
)
 
(2,412
)
 
(680
)
Net income (loss) attributable to Evolent Health, Inc.
$
(25,521
)
 
$
(12,429
)
 
$
(103,875
)
 
$
(35,971
)
 
 
 
 
 
 
 
 
Earnings (Loss) Available to Common Shareholders
 
 
 
 
 
 
 
Basic and Diluted
$
(25,521
)
 
$
(12,429
)
 
$
(103,875
)
 
$
(35,971
)
 
 
 
 
 
 
 
 
Earnings (Loss) per Common Share
 
 
 
 
 
 
 
Basic and Diluted
$
(0.30
)
 
$
(0.16
)
 
$
(1.27
)
 
$
(0.47
)
 
 
 
 
 
 
 
 
Weighted-Average Common Shares Outstanding
 
 
 
 
 
 
 
Basic and Diluted
83,819

 
77,999

 
81,831

 
76,871

 
 
 
 
 
 
 
 
Comprehensive income (loss)
 
 
 
 
 
 
 
Net income (loss)
$
(25,738
)
 
$
(12,555
)
 
$
(106,287
)
 
$
(36,651
)
Other comprehensive income (loss), net of taxes, related to:
 
 
 
 
 
 
 
Foreign currency translation adjustment
(68
)
 
(116
)
 
(33
)
 
(264
)
Total comprehensive income (loss)
(25,806
)
 
(12,671
)
 
(106,320
)
 
(36,915
)
Total comprehensive income (loss) attributable to
 
 
 
 
 
 
 
non-controlling interests
(217
)
 
(126
)
 
(2,412
)
 
(680
)
Total comprehensive income (loss) attributable to
 
 
 
 
 
 
 
Evolent Health, Inc.
$
(25,589
)
 
$
(12,545
)
 
$
(103,908
)
 
$
(36,235
)

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Evolent Health, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
 
(in thousands)
 
As of
 
 
As of
 
 
September 30,
December 31,
 
 
2019
 
 
2018
 
Cash and cash equivalents
 
$
96,734

 
 
$
228,320

 
Restricted cash
 
109,019

 
 
160,005

 
Restricted investments
 
813

 
 
818

 
Total current assets
 
308,012

 
 
487,966

 
Investments, at amortized cost
 
18,910

 
 
10,010

 
Intangible assets, net
 
317,200

 
 
335,036

 
Goodwill
 
771,887

 
 
768,124

 
Total assets
 
1,713,901

 
 
1,722,281

 
 
 
 
 
 
 
 
Accounts payable
 
120,024

 
 
146,760

 
Long-term debt, net of discount
 
227,996

 
 
221,041

 
Total liabilities
 
589,553

 
 
532,925

 
Total shareholders' equity (deficit) attributable to
 
 
 
 
 
 
Evolent Health, Inc.
 
1,108,460

 
 
1,143,824

 
Non-controlling interests
 
15,888

 
 
45,532

 
Total liabilities and shareholders' equity (deficit)
 
1,713,901

 
 
1,722,281

 


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Evolent Health, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
 
(in thousands)
For the Nine
 
Months Ended
 
September 30,
 
2019
 
2018
Net cash and restricted cash provided by (used in) operating activities
$
(55,832
)
 
$
4,317

Net cash and restricted cash provided by (used in) investing activities
(102,460
)
 
(24,933
)
Net cash and restricted cash provided by (used in) financing activities
(24,299
)
 
(7,935
)
Effect of exchange rate on cash and cash equivalents and restricted cash
19

 
35

 
 
 
 
Net increase (decrease) in cash and cash equivalents and restricted cash
(182,572
)
 
(28,516
)
Cash and cash equivalents and restricted cash as of beginning-of-period
388,325

 
295,363

Cash and cash equivalents and restricted cash as of end-of-period
$
205,753

 
$
266,847



9



Evolent Health, Inc.
Reconciliation of Adjusted Results of Operations
(unaudited)
(in thousands)
For the Three Months Ended September 30, 2019
 
 
For the Three Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Evolent Health, Inc.
 
Evolent Health, Inc.
 
Evolent
 
 
 
Evolent
 
 
Evolent
 
 
 
Evolent
 
as Reported
 
as Adjusted
 
Health, Inc.
 
 
 
Health, Inc.
 
 
Health, Inc.
 
 
 
Health, Inc.
 
Change Over Prior Period
 
Change Over Prior Period
 
as Reported
 
Adjustments
 
as Adjusted
 
 
as Reported
 
Adjustments
 
as Adjusted
 
$
 
%
 
$
 
%
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transformation services
$
5,184

 
$

 
$
5,184

 
 
$
9,230

 
$

 
$
9,230

 
$
(4,046
)
 
(43.8
)%
 
$
(4,046
)
 
(43.8
)%
Platform and operations services (1)
171,438

 
165

 
171,603

 
 
118,094

 
214

 
118,308

 
53,344

 
45.2
 %
 
53,295

 
45.0
 %
Premiums
43,521

 

 
43,521

 
 
22,623

 

 
22,623

 
20,898

 
92.4
 %
 
20,898

 
92.4
 %
Total revenue
220,143

 
165

 
220,308

 
 
149,947

 
214

 
150,161

 
70,196

 
46.8
 %
 
70,147

 
46.7
 %
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue (exclusive of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
depreciation and amortization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
expenses presented
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
separately below) (2)
131,763

 
(2,720
)
 
129,043

 
 
73,967

 
(988
)
 
72,979

 
57,796

 
78.1
 %
 
56,064

 
76.8
 %
Claims expenses
34,802

 

 
34,802

 
 
16,992

 

 
16,992

 
17,810

 
104.8
 %
 
17,810

 
104.8
 %
Selling, general and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
administrative expenses (3)
58,808

 
(5,678
)
 
53,130

 
 
59,566

 
(4,173
)
 
55,393

 
(758
)
 
(1.3
)%
 
(2,263
)
 
(4.1
)%
Depreciation and amortization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
expenses (4)
15,408

 
(6,101
)
 
9,307

 
 
10,352

 
(2,739
)
 
7,613

 
5,056

 
48.8
 %
 
1,694

 
22.3
 %
Change in fair value of contingent
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
consideration and indemnification asset (5)
(500
)
 
500

 

 
 
100

 
(100
)
 

 
(600
)
 
(600.0
)%
 

 
 %
Total operating expenses
240,281

 
(13,999
)
 
226,282

 
 
160,977


(8,000
)

152,977

 
79,304

 
49.3
 %
 
73,305

 
47.9
 %
Operating income (loss)
$
(20,138
)
 
$
14,164

 
$
(5,974
)
 
 
$
(11,030
)
 
$
8,214

 
$
(2,816
)
 
$
(9,108
)
 
(82.6
)%
 
$
(3,158
)
 
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating expenses as a


 
 
 


 
 


 
 
 


 
 
 
 
 
 
 
 
percentage of total revenue
109.1
%
 
 
 
102.7
%
 
 
107.4
%
 
 
 
101.9
%
 
 
 
 
 
 
 
 

(1) 
Adjustments to platform and operations services revenue include deferred revenue purchase accounting adjustments of approximately $0.2 million for the three months ended September 30, 2019 and 2018, resulting from our acquisitions and business combinations.
(2) 
Adjustments to cost of revenue include approximately $1.6 million and $0.4 million in stock-based compensation expense for the three months ended September 30, 2019 and 2018, respectively. The adjustments also include approximately $0.4 million and $0.6 million related to the amortization of contract cost assets recorded as a result of the one-time ASC 606 transition adjustment for the three months ended September 30, 2019 and 2018, respectively. Adjustments also include contract cost assets impairment charge of $0.6 million for the three months ended September 30, 2019. Adjustments also include transaction costs of $0.1 million for the three months ended September 30, 2019, resulting from acquisitions and business combinations.
(3) 
Adjustments to selling, general and administrative expenses include $4.2 million and $3.7 million in stock-based compensation expense for the three months ended September 30, 2019 and 2018, respectively. Adjustments also include transaction costs of $1.2 million and $0.5 million for the three months ended September 30, 2019 and 2018, respectively, resulting from acquisitions and business combinations. Adjustments also include one-time severance costs of approximately $0.3 million for the three months ended September 30, 2019.
(4) 
Adjustments to depreciation and amortization expenses of approximately $6.1 million and $2.7 million for the three months ended September 30, 2019 and 2018, respectively, relate to amortization of intangible assets acquired via asset acquisition and business combinations.
(5) 
The adjustment reverses the impact of changes in fair value of our contingent consideration.

10




Evolent Health, Inc.
Reconciliation of Adjusted Results of Operations
(unaudited)
(in thousands)
For the Nine Months Ended September 30, 2019
 
 
For the Nine Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Evolent Health, Inc.
 
Evolent Health, Inc.
 
Evolent
 
 
 
Evolent
 
 
Evolent
 
 
 
Evolent
 
as Reported
 
as Adjusted
 
Health, Inc.
 
 
 
Health, Inc.
 
 
Health, Inc.
 
 
 
Health, Inc.
 
Change Over Prior Period
 
Change Over Prior Period
 
as Reported
 
Adjustments
 
as Adjusted
 
 
as Reported
 
Adjustments
 
as Adjusted
 
$
 
%
 
$
 
%
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transformation services (1)
$
10,481

 
$

 
$
10,481

 
 
$
23,950

 
$
3,655

 
$
27,605

 
$
(13,469
)
 
(56.2
)%
 
$
(17,124
)
 
(62.0
)%
Platform and operations services (1)
463,252

 
926

 
464,178

 
 
341,258

 
1,490

 
342,748

 
121,994

 
35.7
 %
 
121,430

 
35.4
 %
Premiums
136,125

 

 
136,125

 
 
68,751

 

 
68,751

 
67,374

 
98.0
 %
 
67,374

 
98.0
 %
Total revenue
609,858

 
926

 
610,784

 
 
433,959

 
5,145

 
439,104

 
175,899

 
40.5
 %
 
171,680

 
39.1
 %
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue (exclusive of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
depreciation and amortization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
expenses presented
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
separately below) (2)
357,587

 
(6,067
)
 
351,520

 
 
214,945

 
(3,439
)
 
211,506

 
142,642

 
66.4
 %
 
140,014

 
66.2
 %
Claims expenses
108,644

 

 
108,644

 
 
52,169

 

 
52,169

 
56,475

 
108.3
 %
 
56,475

 
108.3
 %
Selling, general and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
administrative expenses (3)
200,578

 
(30,839
)
 
169,739

 
 
172,495

 
(14,661
)
 
157,834

 
28,083

 
16.3
 %
 
11,905

 
7.5
 %
Depreciation and amortization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
expenses (4)
44,966

 
(18,195
)
 
26,771

 
 
29,882

 
(8,144
)
 
21,738

 
15,084

 
50.5
 %
 
5,033

 
23.2
 %
(Gain) loss on disposal of assets (5)
(9,600
)
 
9,600

 

 
 

 

 

 
(9,600
)
 
 %
 

 
 %
Change in fair value of contingent
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
consideration and indemnification asset (6)
(300
)
 
300

 

 
 
(1,404
)
 
1,404

 

 
1,104

 
78.6
 %
 

 
 %
Total operating expenses
701,875

 
(45,201
)
 
656,674

 
 
468,087

 
(24,840
)
 
443,247

 
233,788

 
49.9
 %
 
213,427

 
48.2
 %
Operating income (loss)
$
(92,017
)
 
$
46,127

 
$
(45,890
)
 
 
$
(34,128
)
 
$
29,985

 
$
(4,143
)
 
$
(57,889
)
 
(169.6
)%
 
$
(41,747
)
 
(1,007.7
)%
Total operating expenses as a
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
percentage of total revenue
115.1
%
 
 
 
107.5
%
 
 
107.9
%
 
 
 
100.9
%
 
 
 
 
 
 
 
 

(1) 
Adjustments to platform and operations services revenue include deferred revenue purchase accounting adjustments of approximately $0.9 million and $0.6 million for the nine months ended September 30, 2019 and 2018, respectively, resulting from our acquisitions and business combinations. Adjustments to transformation services revenue and platform and operations services revenue for the nine months ended September 30, 2018, also include approximately $3.7 million and $0.8 million, respectively, resulting from our transition adjustments related to the implementation of ASC 606.
(2) 
Adjustments to cost of revenue include approximately $3.3 million and $1.1 million in stock-based compensation expense for the nine months ended September 30, 2019 and 2018, respectively. The adjustments also include approximately $1.9 million and $1.7 million related to the amortization of contract cost assets recorded as a result of the one-time ASC 606 transition adjustment for the nine months ended September 30, 2019 and 2018, respectively. Adjustments also include contract cost assets impairment charge of $0.6 million for the nine months ended September 30, 2019. Adjustments also include transaction costs of $0.3 million resulting from acquisitions and business combinations for the nine months ended September 30, 2019. Adjustments also include one-time severance costs of approximately $0.7 million for the nine months ended September 30, 2018.
(3) 
Adjustments to selling, general and administrative expenses include $11.8 million and $11.4 million in stock-based compensation expense for the nine months ended September 30, 2019 and 2018, respectively. The adjustments also include approximately $0.1 million and $0.1 million related to the amortization of contract cost assets recorded as a result of the one-time ASC 606 transition adjustment for the nine months ended September 30, 2019 and 2018, respectively. Adjustments also include transaction costs of $4.1 million and $2.3 million for the nine months ended September 30, 2019 and 2018, respectively, resulting from acquisitions and business combinations. Adjustments also include one-time severance costs of approximately $14.8 million and $0.8 million for the nine months ended September 30, 2019 and 2018, respectively.

11



(4) 
Adjustments to depreciation and amortization expenses of approximately $18.2 million and $8.1 million for the nine months ended September 30, 2019 and 2018, respectively, relate to amortization of intangible assets acquired via asset acquisition and business combinations.
(5) 
The adjustment reverses the impact of deconsolidation gain related to Global Health transaction.
(6) 
The adjustment reverses the impact of changes in fair value of our contingent consideration and indemnification asset.

12



Evolent Health, Inc.
Segment Results
(unaudited)

 
 
 
 
 
 
 
Intersegment
 
 
 
 
 
Services
 
True Health
Eliminations
Consolidated
Adjusted Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
Services:
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Transformation Services
 
$
5,184

 
 
$

 
 
$

 
 
$
5,184

 
Adjusted Platform and Operations Services
 
174,853

 
 

 
 
(3,250
)
 
 
171,603

 
Adjusted Services Revenue
 
180,037

 
 

 
 
(3,250
)
 
 
176,787

 
True Health:
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 

 
 
43,765

 
 
(244
)
 
 
43,521

 
Adjusted Revenue
 
180,037

 
 
43,765

 
 
(3,494
)
 
 
220,308

 
Purchase accounting adjustments (1)
 
(165
)
 
 

 
 

 
 
(165
)
 
Total revenue
 
$
179,872

 
 
$
43,765

 
 
$
(3,494
)
 
 
$
220,143

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Services:
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Transformation Services
 
$
9,230

 
 
$

 
 
$

 
 
$
9,230

 
Adjusted Platform and Operations Services
 
121,845

 
 

 
 
(3,537
)
 
 
118,308

 
Adjusted Services Revenue
 
131,075

 
 

 
 
(3,537
)
 
 
127,538

 
True Health:
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 

 
 
22,829

 
 
(206
)
 
 
22,623

 
Adjusted Revenue
 
131,075

 
 
22,829

 
 
(3,743
)
 
 
150,161

 
Purchase accounting adjustments (1)
 
(214
)
 
 

 
 

 
 
(214
)
 
Total revenue
 
$
130,861

 
 
$
22,829

 
 
$
(3,743
)
 
 
$
149,947

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segments
 
 
 
 
 
 
Services
 
True Health
Total
 
Three Months Ended September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
3,139

 
 
$
194

 
 
$
3,333

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
4,065

 
 
$
732

 
 
$
4,797

 
 
 
 

(1) 
Purchase accounting adjustments pertain to Adjusted Platform and Operations Services Revenue. There were no purchase accounting adjustments in relation to Adjusted Transformation Services Revenue or True Health premiums revenue.

13



Evolent Health, Inc.
Segment Results
(unaudited)

 
 
 
 
 
 
 
Intersegment
 
 
 
 
 
Services
 
True Health
Eliminations
Consolidated
Adjusted Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
Services:
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Transformation Services
 
$
10,481

 
 
$

 
 
$

 
 
$
10,481

 
Adjusted Platform and Operations Services
 
473,564

 
 

 
 
(9,386
)
 
 
464,178

 
Adjusted Services Revenue
 
484,045

 
 

 
 
(9,386
)
 
 
474,659

 
True Health:
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 

 
 
136,905

 
 
(780
)
 
 
136,125

 
Adjusted Revenue
 
484,045

 
 
136,905

 
 
(10,166
)
 
 
610,784

 
Purchase accounting adjustments (1)
 
(926
)
 
 

 
 

 
 
(926
)
 
Total revenue
 
$
483,119

 
 
$
136,905

 
 
$
(10,166
)
 
 
$
609,858

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Services:
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Transformation Services
 
$
27,605

 
 
$

 
 
$

 
 
$
27,605

 
Adjusted Platform and Operations Services
 
353,697

 
 

 
 
(10,949
)
 
 
342,748

 
Adjusted Services Revenue
 
381,302

 
 

 
 
(10,949
)
 
 
370,353

 
True Health:
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 

 
 
69,353

 
 
(602
)
 
 
68,751

 
Adjusted Revenue
 
381,302

 
 
69,353

 
 
(11,551
)
 
 
439,104

 
ASC 606 transition adjustment (2)
 
(4,498
)
 
 

 
 

 
 
(4,498
)
 
Purchase accounting adjustments (1)
 
(647
)
 
 

 
 

 
 
(647
)
 
Total revenue
 
$
376,157

 
 
$
69,353

 
 
$
(11,551
)
 
 
$
433,959

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segments
 
 
 
 
 
 
Services
 
True Health
Total
 
Nine Months Ended September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
(21,157
)
 
 
$
2,038

 
 
$
(19,119
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
16,674

 
 
$
921

 
 
$
17,595

 
 
 
 

(1) 
Purchase accounting adjustments pertain to Adjusted Platform and Operations Services Revenue. There were no purchase accounting adjustments in relation to Adjusted Transformation Services Revenue or True Health premiums revenue.
(2) Adjustment to Adjusted Transformation Services Revenue was approximately $3.7 million and the adjustment to Adjusted Platform and Operations Services Revenue was approximately $0.8 million. See “Non-GAAP Financial Measures” above for more information on adjustments pertaining to the implementation of ASC 606.







14




Evolent Health, Inc.
Reconciliation of Adjusted EBITDA to Net Income (Loss)
Attributable to Evolent Health, Inc.
(unaudited)
 
(in thousands)
For the Three
 
For the Nine
 
Months Ended
 
Months Ended
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
Net Income (Loss) Attributable to
 
 
 
 
 
 
 
Evolent Health, Inc.
$
(25,521
)
 
$
(12,429
)
 
$
(103,875
)
 
$
(35,971
)
Less:
 
 
 
 
 
 
 
Interest income
1,124

 
968

 
3,026

 
2,918

Interest expense
(3,630
)
 
(853
)
 
(10,812
)
 
(2,561
)
(Provision) benefit for income taxes
849

 
(135
)
 
(53
)
 
(29
)
Depreciation and amortization expenses
(15,408
)
 
(10,352
)
 
(44,966
)
 
(29,882
)
EBITDA
(8,456
)
 
(2,057
)
 
(51,070
)
 
(6,417
)
Less:
 
 
 
 
 
 
 
Income (loss) from equity method investees
(3,859
)
 
(1,381
)
 
(6,187
)
 
(2,787
)
Gain (loss) on disposal of assets

 

 
9,600

 

Change in fair value of contingent consideration
 
 
 
 
 
 
 
and indemnification asset
500

 
(100
)
 
300

 
1,404

Other income (expense), net
(84
)
 
(124
)
 
(244
)
 
(64
)
Net (income) loss attributable to
 
 
 
 
 
 
 
non-controlling interests
217

 
126

 
2,412

 
680

ASC 606 transition adjustments

 

 

 
(4,498
)
Purchase accounting adjustments
(165
)
 
(214
)
 
(926
)
 
(647
)
Stock-based compensation expense
(5,758
)
 
(4,047
)
 
(15,045
)
 
(12,560
)
Severance costs
(307
)
 

 
(14,790
)
 
(1,489
)
Amortization of contract cost assets
(1,061
)
 
(658
)
 
(2,613
)
 
(1,797
)
Transaction costs
(1,272
)
 
(456
)
 
(4,458
)
 
(2,254
)
Adjusted EBITDA
$
3,333

 
$
4,797

 
$
(19,119
)
 
$
17,595



15



Evolent Health, Inc.
Reconciliation of Adjusted Earnings (Loss) Available to Class A and Class B
Shareholders to Earnings (Loss) Available to Common Shareholders
(unaudited)
 
(in thousands, except per share data)
For the Three
 
For the Nine
 
Months Ended
 
Months Ended
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
Earnings (Loss) Available to
 
 
 
 
 
 
 
Common Shareholders - Basic and Diluted (a)
$
(25,521
)
 
$
(12,429
)
 
$
(103,875
)
 
$
(35,971
)
Less:
 
 
 
 
 
 
 
Income (loss) from equity method investees
(3,859
)
 
(1,381
)
 
(6,187
)
 
(2,787
)
(Provision) benefit for income taxes

 

 

 
136

Other income (expense), net

 

 
431

 

Gain (loss) on disposal of assets

 

 
9,600

 

Change in fair value of contingent consideration
 
 
 
 
 
 
 
and indemnification asset
500

 
(100
)
 
300

 
1,404

Net (income) loss attributable to
 
 
 
 
 
 
 
non-controlling interests
217

 
126

 
2,412

 
680

ASC 606 Transition Adjustment

 

 

 
(4,498
)
Purchase accounting adjustments
(6,266
)
 
(2,953
)
 
(19,121
)
 
(8,791
)
Stock-based compensation expense
(5,758
)
 
(4,047
)
 
(15,045
)
 
(12,560
)
Severance costs
(307
)
 

 
(14,790
)
 
(1,489
)
Amortization of contract cost assets
(1,061
)
 
(658
)
 
(2,613
)
 
(1,797
)
Transaction costs
(1,272
)
 
(456
)
 
(4,458
)
 
(2,254
)
Adjusted Earnings (Loss) Available
 
 
 
 
 
 
 
to Class A and Class B Shareholders (b)
$
(7,715
)
 
$
(2,960
)
 
$
(54,404
)
 
$
(4,015
)
 
 
 
 
 
 
 
 
Earnings (Loss) per Share Available to
 
 
 
 
 
 
 
Common Shareholders - Basic and Diluted (a) (1)
$
(0.30
)
 
$
(0.16
)
 
$
(1.27
)
 
$
(0.47
)
 
 
 
 
 
 
 
 
Adjusted Earnings (Loss) per Share Available
 
 
 
 
 
 
 
to Class A and Class B Shareholders (b) (2)
$
(0.09
)
 
$
(0.04
)
 
$
(0.65
)
 
$
(0.05
)
 
 
 
 
 
 
 
 
Weighted-average common shares - basic
83,819

 
77,999

 
81,831

 
76,871

Weighted-average common shares - diluted
83,819

 
77,999

 
81,831

 
76,871

Adjusted Weighted-Average Class A
 
 
 
 
 
 
 
and Class B Shares (3)
84,525

 
78,765

 
83,481

 
78,122


(1) 
For periods of net loss, shares used in both the basic and diluted earnings per share calculation represent basic shares as using diluted shares would be anti-dilutive.
(2) 
Represents Adjusted Earnings (Loss) Available to Class A and Class B Shareholders divided by Adjusted Weighted-Average Class A and Class B Shares as described in footnote 3 below.
(3) 
Represents the weighted-average common shares (diluted) adjusted to include, in periods of net loss, the dilutive or potentially dilutive effect of the assumed conversion of Class B common shares to Class A common shares. See the reconciliation of Adjusted Weighted-Average Class A and Class B Shares to diluted weighted-average common shares on the following page.

16



Evolent Health, Inc.
Reconciliation of Adjusted Weighted-Average Class A and Class B
Shares to Diluted Weighted-Average Common Shares
(unaudited)
 
(in thousands)
For the Three
 
For the Nine
 
Months Ended
 
Months Ended
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
Weighted-average common shares - diluted
83,819

 
77,999

 
81,831

 
76,871

Assumed conversion of Class B common