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Section 1: 8-K (8-K)

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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

February 26, 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: 
(IRS 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 or former address, 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))

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 February 26, 2019, Evolent Health, Inc. issued a press release announcing its financial results for the quarter and full year ended December 31, 2018, 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 hereunto duly authorized.

EVOLENT HEALTH, INC.
 
 
By:
 /s/ Lydia Stone
Name:
Lydia Stone
Title:
Chief Accounting Officer
 
and Corporate Controller
 
 
By:
 /s/ Jonathan Weinberg
Name:
Jonathan Weinberg
Title:
General Counsel and Secretary

Dated: February 26, 2019





EXHIBIT INDEX

Exhibit
 
 
Number
 
Description
 
 
 



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


 
396885542_evhlogoa05.jpg
 
 

Evolent Health Announces Fourth Quarter and Full Year 2018 Results

WASHINGTON, D.C., February 26, 2019 Evolent 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 and full year ended December 31, 2018.

Highlights from the fourth quarter and full year 2018 announcement include (all comparisons are to the quarter and full year ended December 31, 2017):

Quarter ended December 31, 2018:

GAAP revenue of $193.1 million, an increase of 69.8%; Adjusted Revenue of $193.3 million, an increase of 69.6%
Net income (loss) attributable to Evolent Health, Inc. of $(16.7) million, Adjusted EBITDA of $5.6 million
Lives on platform of approximately 3.6 million, an increase of 32.9%

Full year ended December 31, 2018:

GAAP revenue of $627.1 million, an increase of 44.2%; Adjusted Revenue of $632.4 million, an increase of 44.9%
Net income (loss) attributable to Evolent Health, Inc. of $(52.7) million, Adjusted EBITDA of $23.2 million
Acquisition of assets of New Mexico Health Connections
Acquisition of New Century Health
New partnerships entered in 2018 included Baptist Health Care, Lee Health, Torrance Health IPA and SOMOS IPA

Additional announcements:

Evolent adds two new provider partners: Empower Healthcare Solutions and River City Medical Group.

Frank Williams, chief executive officer of Evolent Health, Inc., commented, “Overall, we are pleased with our results for the quarter and the calendar year, having achieved our key operational and financial objectives while advancing our position as the preferred partner for providers moving to value-based care.”

Evolent ended 2018 at the high end of its anticipated range for new partnerships and expanded its presence in New York, Florida, California and several other markets. In the aggregate, the company added approximately 800,000 lives to its platform bringing the total life count to approximately 3.6 million as of December 31, 2018, representing 32.9% growth over the prior year. The company also completed the acquisition of New Century Health, a specialty care management company that uses evidence-based care to manage complex specialties, including cancer and cardiovascular care.

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Mr. Williams commented, “We are excited to add two new partners to our national network: Empower Healthcare Solutions in Arkansas and River City Medical Group in northern California. We look forward to leveraging our deep Medicaid expertise, proprietary technology and health plan administration services platform to drive strong clinical and financial results for these partners as we help them serve Medicaid beneficiaries in their communities.”
Mr. Williams continued, “We enter 2019 encouraged by the recent policy changes in Medicare and Medicaid and the positive medium-term implications for the movement to value-based care. Increased market interest is also reflected in the breadth and depth of our current pipeline. At the same time, we do anticipate lower growth in the first half of 2019 due to the wind-down of a few of our health plan relationships, as well as lower than expected membership growth from our newly launched Medicaid plans in Florida.”

Mr. Williams added, “Looking ahead, we are focused on several key areas to set up a strong second half in 2019, consistent with our long-term strategic and financial objectives. First, continuing our investment in driving clinical performance improvement across the Evolent network, which represents a key point of differentiation in the market. Second, putting in place a leaner cost structure that optimizes operational performance and is consistent with our long-term growth strategy. Third, driving membership growth in our partners’ Medicaid plans in Florida and leveraging their strong provider brands in their respective regions. Finally, working diligently toward deal closure across several late-stage pipeline opportunities in Medicare ACO, Medicare Advantage, Medicaid and New Century Health specialty care management.”

Mr. Williams concluded, “Overall, we remain confident that, with strong execution on our key priorities, we can set up a strong second half in 2019 and into 2020 and continue to solidify our position as a leader in the market movement to value-based care.”
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 United States of America generally accepted accounting principles (“GAAP”) results:

Revenue of $193.1 million and $113.7 million for the three months ended December 31, 2018 and 2017, respectively, an increase of 69.8%. Revenue of $627.1 million and $435.0 million for the years ended December 31, 2018 and 2017, respectively, an increase of 44.2%.
Services revenue of $171.3 million for the three months ended December 31, 2018, before intersegment eliminations of $(3.4) million. Services revenue of $547.4 million for the year ended December 31, 2018, before intersegment eliminations of $(14.3) million; and
True Health premiums revenue of $25.4 million for the three months ended December 31, 2018, before intersegment eliminations of $(0.2) million. True Health premiums revenue of $94.8 million for the year ended December 31, 2018, before intersegment eliminations of $(0.8) million.
Cost of revenue of $112.8 million and $65.5 million for the three months ended December 31, 2018 and 2017, respectively, an increase of 72.1%. Cost of revenue of $327.8 million and $269.4 million for the years ended December 31, 2018 and 2017, respectively, an increase of 21.7%.

2



Claims expenses of $18.8 million for the three months ended December 31, 2018. Claims expenses of $70.9 million for the year ended December 31, 2018.
Selling, general and administrative expenses of $62.9 million and $55.2 million for the three months ended December 31, 2018 and 2017, respectively, an increase of 14.0%. Selling, general and administrative expenses of $235.4 million and $205.7 million for the years ended December 31, 2018 and 2017, respectively, an increase of 14.5%.
Net income (loss) attributable to Evolent Health, Inc. of $(16.7) million and $(13.2) million for the three months ended December 31, 2018 and 2017, respectively. Net income (loss) attributable to Evolent Health, Inc. of $(52.7) million and $(60.7) million for the years ended December 31, 2018 and 2017, respectively.
Earnings (loss) available to common shareholders, basic and diluted, of $(16.7) million and $(13.2) million for the three months ended December 31, 2018 and 2017, respectively.
Earnings (loss) available to common shareholders, basic and diluted, of $(52.7) million and $(60.7) million for the years ended December 31, 2018 and 2017, respectively.
Earnings (loss) available to common shareholders, per basic and diluted share, of $(0.21) and $(0.18) for the three months ended December 31, 2018 and 2017, respectively.
Earnings (loss) available to common shareholders, per basic and diluted share, of $(0.68) and $(0.94) for the full years ended December 31, 2018 and 2017, respectively.

Adjusted Results

Adjusted Revenue of $193.3 million and $114.0 million for the three months ended December 31, 2018 and 2017, respectively, an increase of 69.6%. Adjusted Revenue of $632.4 million and $436.4 million for the years ended December 31, 2018 and 2017, respectively, an increase of 44.9%.
Adjusted Services Revenue of $171.5 million for the three months ended December 31, 2018, before intersegment eliminations of $(3.4) million. Adjusted Services Revenue of $552.8 million for the year ended December 31, 2018, before intersegment eliminations of $(14.3) million; and
True Health premiums revenue of $25.4 million for the three months ended December 31, 2018, before intersegment eliminations of $(0.2) million. True Health premiums revenue of $94.8 million for the year ended December 31, 2018, before intersegment eliminations of $(0.8) million.
Adjusted Cost of Revenue of $111.8 million and $64.2 million for the three months ended December 31, 2018 and 2017, respectively, an increase of 74.3%. Adjusted Cost of Revenue of $323.4 million and $262.5 million for the years ended December 31, 2018 and 2017, respectively, an increase of 23.2%.
Claims expenses of $18.8 million for the three months ended December 31, 2018. Claims expenses of $70.9 million for the year ended December 31, 2018.
Adjusted selling, general and administrative expenses of $57.1 million and $46.3 million for the three months ended December 31, 2018 and 2017, respectively, an increase of 23.2%. Adjusted selling, general and administrative expenses of $214.9 million and $176.1 million for the years ended December 31, 2018 and 2017, respectively, an increase of 22.0%;
Adjusted EBITDA of $5.6 million and $3.5 million for the three months ended December 31, 2018 and 2017, respectively. Adjusted EBITDA of $23.2 million and $(2.2) million for the years ended December 31, 2018 and 2017, respectively.
Adjusted Earnings (Loss) Available to Class A and Class B Shareholders of $(5.4) million and $(3.1) million for the three months ended December 31, 2018 and 2017, respectively.
Adjusted Earnings (Loss) Available to Class A and Class B Shareholders of $(9.4) million and $(24.8) million for the years ended December 31, 2018 and 2017, respectively.
Adjusted Earnings (Loss) per Share Available to Class A and Class B Shareholders of $(0.07) and $(0.04) for the three months ended December 31, 2018 and 2017, respectively.
Adjusted Earnings (Loss) per Share Available to Class A and Class B Shareholders of $(0.12) and $(0.35) for the years ended December 31, 2018 and 2017, respectively.

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Total cash and cash equivalents and investments as of December 31, 2018, was $238.3 million.

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, Adjusted Revenue is expected to be in the range of approximately $805.0 million to $880.0 million. The components of Adjusted Revenue include Adjusted Services Revenue, which is forecasted to be approximately $650.0 million to $710.0 million, and True Health premiums revenue, which is forecasted to be approximately $170.0 million to $190.0 million; intersegment eliminations are forecasted to be approximately $(15.0) to $(20.0) million for the full year. Adjusted EBITDA for the full year is expected to be breakeven to $15.0 million.

For the three months ended March 31, 2019, Adjusted Revenue is expected to be in the range of approximately $188.0 million to $197.0 million. The components of Adjusted Revenue include Adjusted Services Revenue, which is forecasted to be approximately $149.0 million to $153.0 million, and True Health premiums revenue, which is forecasted to be approximately $42.5 million to $47.5 million; intersegment eliminations are forecasted to be approximately $(3.8) million for the quarter. Adjusted EBITDA is expected to be in the range of approximately $(16.0) million to $(14.0) 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”). A reconciliation of forward looking non-GAAP financial measures to the most comparable GAAP financial measure is provided in the “Guidance Reconciliation” table below.

Web and Conference Call Information

As previously announced, Evolent Health, Inc. will hold a conference call to discuss its fourth quarter and full year performance this evening, February 26, 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 30 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
InvestorRelations@evolenthealth.com
KConquest@evolenthealth.com

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 year ended December 31, 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. Under ASC 605, and based on proportionate performance revenue recognition, we would have recognized an additional $4.5 million in revenue during 2018, primarily within our Adjusted Transformation Services Revenue. The company has therefore included this revenue, and related profit, in its adjusted results for the year ended December 31, 2018, as they had not been previously reported prior to 2018 and the contracts are expected to be completed within 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.


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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 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, and items arising from acquisitions and business combinations, such as changes in fair value of contingent consideration and indemnification assets.

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, changes in fair value of contingent consideration and indemnification assets, income (loss) from equity method investees, other income (expense), net, net (income) loss attributable to non-controlling interests, 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 (which for the year ended December 31, 2018, includes the ASC 606 transition adjustment described above). 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, changes in fair value of contingent consideration and indemnification assets, net (income) loss attributable to non-controlling interests, 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 (which for the year ended December 31, 2018, includes the ASC transition adjustment described above).


6



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.
 
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.

7




Evolent Health, Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(unaudited)
(in thousands, except per share data)
For the Three
 
For the Years
 
Months Ended
 
Ended
 
December 31,
 
December 31,
 
2018
 
2017
 
2018
 
2017
Revenue
 
 
 
 
 
 
 
Transformation services
$
8,966

 
$
5,666

 
$
32,916

 
$
29,466

Platform and operations services
158,932

 
108,063

 
500,190

 
405,484

Premiums
25,206

 

 
93,957

 

Total revenue
193,104

 
113,729

 
627,063

 
434,950

 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
Cost of revenue (exclusive of depreciation and amortization
 
 
 
 
 
 
 
expenses presented separately below)
112,836

 
65,549

 
327,825

 
269,352

Claims expenses
18,764

 

 
70,889

 

Selling, general and administrative expenses
62,923

 
55,196

 
235,418

 
205,670

Depreciation and amortization expenses
14,633

 
11,132

 
44,515

 
32,368

Change in fair value of contingent consideration
 
 
 
 
 
 
 
and indemnification asset
(2,700
)
 
100

 
(4,104
)
 
400

Total operating expenses
206,456

 
131,977

 
674,543

 
507,790

Operating income (loss)
(13,352
)
 
(18,248
)
 
(47,480
)
 
(72,840
)
Interest income
522

 
843

 
3,440

 
1,656

Interest expense
(2,923
)
 
(855
)
 
(5,484
)
 
(3,636
)
Income (loss) from equity method investees
(1,949
)
 
(309
)
 
(4,736
)
 
(1,755
)
Other Income (expense), net
173

 
150

 
109

 
171

Income (loss) before income taxes
 
 
 
 
 
 
 
and non-controlling interests
(17,529
)
 
(18,419
)
 
(54,151
)
 
(76,404
)
Provision (benefit) for income taxes
11

 
(4,628
)
 
40

 
(6,637
)
Net income (loss)
(17,540
)
 
(13,791
)
 
(54,191
)
 
(69,767
)
Net income (loss) attributable to non-controlling interests
(853
)
 
(631
)
 
(1,533
)
 
(9,102
)
Net income (loss) attributable to Evolent Health, Inc.
$
(16,687
)
 
$
(13,160
)
 
$
(52,658
)
 
$
(60,665
)
 
 
 
 
 
 
 
 
Earnings (Loss) Available to Common Shareholders
 
 
 
 
 
 
Basic and Diluted
$
(16,687
)
 
$
(13,160
)
 
$
(52,658
)
 
$
(60,665
)
 
 
 
 
 
 
 
 
Earnings (Loss) per Common Share
 
 
 
 
 
 
 
Basic and Diluted
$
(0.21
)
 
$
(0.18
)
 
$
(0.68
)
 
$
(0.94
)
 
 
 
 
 
 
 
 
Weighted-Average Common Shares Outstanding
 
 
 
 
 
 
Basic and Diluted
78,723

 
74,689

 
77,338

 
64,351

 
 
 
 
 
 
 
 
Comprehensive income (loss)
 
 
 
 
 
 
 
Net income (loss)
(17,540
)
 
(13,791
)
 
(54,191
)
 
(69,767
)
Other comprehensive income (loss), net of taxes, related to:
Foreign currency translation adjustment
82

 

 
(182
)
 

Total comprehensive income (loss)
(17,458
)
 
(13,791
)
 
(54,373
)
 
(69,767
)
Total comprehensive income (loss) attributable to
 
 
 
 
 
 
 
non-controlling interests
(853
)
 
(631
)
 
(1,533
)
 
(9,102
)
Total comprehensive income (loss) attributable to
Evolent Health, Inc.
(16,605
)
 
(13,160
)
 
(52,840
)
 
(60,665
)

8



Evolent Health, Inc.
Condensed Consolidated Balance Sheets
(unaudited)

(in thousands)
As of
 
December 31,
 
2018
 
2017
Cash and cash equivalents
$
228,320

 
$
238,433

Restricted cash
160,005

 
56,930

Restricted investments
818

 
8,755

Note receivable

 
20,000

Total current assets
487,966

 
378,182

Investments, at amortized cost
10,010

 

Intangible assets, net
335,036

 
241,261

Goodwill
768,124

 
628,186

Total assets
1,722,281

 
1,312,697

 
 
 
 
Accounts payable
146,760

 
42,930

Long-term debt, net of discount
221,041

 
121,394

Total liabilities
532,925

 
266,391

Total shareholders' equity (deficit) attributable
 
 
 
to Evolent Health, Inc.
1,143,824

 
1,010,879

Non-controlling interests
45,532

 
35,427

Total liabilities and shareholders' equity (deficit)
1,722,281

 
1,312,697



9



Evolent Health, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)

(in thousands)
For the Years
 
Ended
 
December 31,
 
2018
 
2017
Net cash and restricted cash provided by (used in) operating activities
$
(20,651
)
 
$
(27,958
)
Net cash and restricted cash provided by (used in) investing activities
(160,375
)
 
(12,265
)
Net cash and restricted cash provided by (used in) financing activities
274,024

 
165,557

Effect of exchange rate on cash and cash equivalents and restricted cash
(36
)
 

 
 
 
 
Net increase (decrease) in cash and cash equivalents and restricted cash
92,962

 
125,334

Cash and cash equivalents and restricted cash as of beginning-of-year
295,363

 
170,029

Cash and cash equivalents and restricted cash as of end-of-year
$
388,325

 
$
295,363


10



Evolent Health, Inc.
Reconciliation of Adjusted Results of Operations
(unaudited)
(in thousands)
For the Three Months Ended December 31, 2018
 
 
For the Three Months Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
$
8,966

 
$

 
$
8,966

 
 
$
5,666

 
$

 
$
5,666

 
$
3,300

 
58.2
 %
 
$
3,300

 
58.2
%
Platform and operations services (1)
158,932

 
214

 
159,146

 
 
108,063

 
243

 
108,306

 
50,869

 
47.1
 %
 
50,840

 
46.9
%
Premiums
25,206

 

 
25,206

 
 

 

 

 
25,206

 
 %
 
25,206

 
%
Total revenue
193,104

 
214

 
193,318

 
 
113,729

 
243

 
113,972

 
79,375

 
69.8
 %
 
79,346

 
69.6
%
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue (exclusive of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
depreciation and amortization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
expenses presented
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
separately below) (2)
112,836

 
(987
)
 
111,849

 
 
65,549

 
(1,377
)
 
64,172

 
47,287

 
72.1
 %
 
47,677

 
74.3
%
Claims expenses
18,764

 

 
18,764

 
 

 

 

 
18,764

 
 %
 
18,764

 
%
Selling, general and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
administrative expenses (3)
62,923

 
(5,848
)
 
57,075

 
 
55,196

 
(8,879
)
 
46,317

 
7,727

 
14.0
 %
 
10,758

 
23.2
%
Depreciation and amortization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
expenses (4)
14,633

 
(5,884
)
 
8,749

 
 
11,132

 
(4,395
)
 
6,737

 
3,501

 
31.4
 %
 
2,012

 
29.9
%
Change in fair value of contingent
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
consideration (5)
(2,700
)
 
2,700

 

 
 
100

 
(100
)
 

 
(2,800
)
 
(2,800.0
)%
 

 
%
Total operating expenses
206,456

 
(10,019
)
 
196,437

 
 
131,977

 
(14,751
)
 
117,226

 
74,479

 
56.4
 %
 
79,211

 
67.6
%
Operating income (loss)
$
(13,352
)
 
$
10,233

 
$
(3,119
)
 
 
$
(18,248
)
 
$
14,994

 
$
(3,254
)
 
$
4,896

 
26.8
 %
 
$
135

 
4.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating expenses as a
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
percentage of total revenue
106.9
%
 
 
 
101.6
%
 
 
116.0
%
 
 
 
102.9
%
 
 
 
 
 
 
 
 

(1) 
Adjustments to platform and operations services revenue include deferred revenue purchase accounting adjustments of approximately $0.2 million and $0.2 million for the three months ended December 31, 2018 and 2017, respectively, resulting from our acquisitions and business combinations.
(2) 
Adjustments to cost of revenue include $0.3 million and $0.2 million in stock-based compensation expense for the three months ended December 31, 2018 and 2017, respectively. The adjustments also include approximately $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 December 31, 2018. Adjustments also include transaction costs of approximately $1.1 million for the three months ended December 31, 2017, resulting from acquisitions and business combinations.
(3) 
Adjustments to selling, general and administrative expenses include $4.7 million and $4.0 million in stock-based compensation expense for the three months ended December 31, 2018 and 2017, respectively. Adjustments also include transaction costs of $0.4 million and $4.8 million for the three months ended December 31, 2018 and 2017, respectively, resulting from acquisitions and business combinations and costs relating to our securities offerings. Adjustments for the three months ended December 31, 2018, also include $0.7 million of one-time severance costs.
(4) 
Adjustments to depreciation and amortization expenses of approximately $5.9 million and $4.4 million for the three months ended December 31, 2018 and 2017, respectively, relate to amortization of intangible assets acquired via asset acquisitions and business combinations.
(5) 
The adjustment represents changes in the fair value of contingent consideration associated with a business combination completed in 2016.

11



Evolent Health, Inc.
Reconciliation of Adjusted Results of Operations
(unaudited)
(in thousands)
For the Year Ended December 31, 2018
 
 
For the Year Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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)
$
32,916

 
$
3,655

 
$
36,571

 
 
$
29,466

 
$

 
$
29,466

 
$
3,450

 
11.7
 %
 
$
7,105

 
24.1
%
Platform and operations services (1)
500,190

 
1,704

 
501,894

 
 
405,484

 
1,467

 
406,951

 
94,706

 
23.4
 %
 
94,943

 
23.3
%
Premiums
93,957

 

 
93,957

 
 

 

 

 
93,957

 
 %
 
93,957

 
%
Total revenue
627,063

 
5,359

 
632,422

 
 
434,950

 
1,467

 
436,417

 
192,113

 
44.2
 %
 
196,005

 
44.9
%
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue (exclusive of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
depreciation and amortization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
expenses presented
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
separately below) (2)
327,825

 
(4,426
)
 
323,399

 
 
269,352

 
(6,850
)
 
262,502

 
58,473

 
21.7
 %
 
60,897

 
23.2
%
Claims expenses
70,889

 

 
70,889

 
 

 

 

 
70,889

 
 %
 
70,889

 
%
Selling, general and
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
administrative expenses (3)
235,418

 
(20,509
)
 
214,909

 
 
205,670

 
(29,551
)
 
176,119

 
29,748

 
14.5
 %
 
38,790

 
22.0
%
Depreciation and amortization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
expenses (4)
44,515

 
(14,028
)
 
30,487

 
 
32,368

 
(11,452
)
 
20,916

 
12,147

 
37.5
 %
 
9,571

 
45.8
%
Change in fair value of contingent
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
consideration and indemnification asset (5)
(4,104
)
 
4,104

 

 
 
400

 
(400
)
 

 
(4,504
)
 
(1,126.0
)%
 

 
%
Total operating expenses
674,543

 
(34,859
)
 
639,684

 
 
507,790

 
(48,253
)
 
459,537

 
166,753

 
32.8
 %
 
180,147

 
39.2
%
Operating income (loss)
$
(47,480
)
 
$
40,218

 
$
(7,262
)
 
 
$
(72,840
)
 
$
49,720

 
$
(23,120
)
 
$
25,360

 
34.8
 %
 
$
15,858

 
68.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating expenses as a
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
percentage of total revenue
107.6
%
 
 
 
101.1
%
 
 
116.7
%
 
 
 
105.3
%
 
 
 
 
 
 
 
 

(1) 
Adjustments to transformation services revenue and platform and operations services revenue for the year ended December 31, 2018, include approximately $3.7 million and $0.8 million, respectively, resulting from our transition adjustments related to the implementation of ASC 606. Adjustments to platform and operations services revenue also include deferred revenue purchase accounting adjustments of approximately $0.9 million and $1.5 million for the years ended December 31, 2018 and 2017, respectively, resulting from our acquisitions and business combinations.
(2) 
Adjustments to cost of revenue include $1.5 million and $1.4 million in stock-based compensation expense for the years ended December 31, 2018 and 2017, respectively. The adjustments also include $2.3 million related to the amortization of contract cost assets recorded as a result of the one-time ASC 606 transition adjustment and $0.7 million of one-time severance costs for the year ended December 31, 2018. Adjustments for the year ended December 31, 2017 also include transaction costs of approximately $5.5 million resulting from acquisitions and business combinations.
(3) 
Adjustments to selling, general and administrative expenses include $16.1 million and $19.1 million in stock-based compensation expense for the years ended December 31, 2018 and 2017, respectively. Adjustments also include transaction costs of $2.8 million and $10.5 million for the years ended December 31, 2018 and 2017, respectively, resulting from acquisitions and business combinations and costs relating to our securities offerings. The adjustments also include $0.1 million related to the amortization of contract cost assets recorded as a result of the one-time ASC 606 transition adjustment and $1.6 million of one-time severance costs for the year ended December 31, 2018.
(4) 
Adjustments to depreciation and amortization expenses of approximately $14.0 million and $11.5 million for the years ended December 31, 2018 and 2017, respectively, related to amortization of intangible assets acquired via asset acquisitions and business combinations.
(5) 
The adjustment represents changes in the fair value of contingent consideration and the settlement of an indemnification asset associated with the business combinations completed in 2016.

12



Evolent Health, Inc.
Segment Results
(unaudited)

 
 
 
 
 
 
 
Intersegment
 
 
 
 
 
Services
 
True Health (1)
Eliminations
Consolidated
Adjusted Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Services:
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Transformation Services
 
$
8,966

 
 
$

 
 
$

 
 
$
8,966

 
Adjusted Platform and Operations Services
 
162,522

 
 

 
 
(3,376
)
 
 
159,146

 
Adjusted Services Revenue
 
171,488

 
 

 
 
(3,376
)
 
 
168,112

 
True Health:
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 

 
 
25,410

 
 
(204
)
 
 
25,206

 
Adjusted Revenue
 
171,488

 
 
25,410

 
 
(3,580
)
 
 
193,318

 
Purchase accounting adjustments (2)
 
(214
)
 
 

 
 

 
 
(214
)
 
Total revenue
 
$
171,274

 
 
$
25,410

 
 
$
(3,580
)
 
 
$
193,104

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
Services:
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Transformation Services
 
$
5,666

 
 
$

 
 
$

 
 
$
5,666

 
Adjusted Platform and Operations Services
 
108,306

 
 

 
 

 
 
108,306

 
Adjusted Services Revenue
 
113,972

 
 

 
 

 
 
113,972

 
Adjusted Revenue
 
113,972

 
 

 
 

 
 
113,972

 
Purchase accounting adjustments (2)
 
(243
)
 
 

 
 

 
 
(243
)
 
Total revenue
 
$
113,729

 
 
$

 
 
$

 
 
$
113,729

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segments
 
 
 
 
 
 
Services
 
True Health (1)
Total
 
 
 
Three Months Ended December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
4,635

 
 
$
995

 
 
$
5,630

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
3,483

 
 
$

 
 
$
3,483

 
 
 
 

(1) 
The True Health segment was created in January 2018.
(2) 
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 (1)
Eliminations
Consolidated
Adjusted Revenue
 
 
 
 
 
 
 
 
 
 
 
 
For the Year Ended December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Services:
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Transformation Services
 
$
36,571

 
 
$

 
 
$

 
 
$
36,571

 
Adjusted Platform and Operations Services
 
516,219

 
 

 
 
(14,325
)
 
 
501,894

 
Adjusted Services Revenue
 
552,790

 
 

 
 
(14,325
)
 
 
538,465

 
True Health:
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
 

 
 
94,763

 
 
(806
)
 
 
93,957

 
Adjusted Revenue
 
552,790

 
 
94,763

 
 
(15,131
)
 
 
632,422

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

 
 

 
 
(4,498
)
 
Purchase accounting adjustments (3)
 
(861
)
 
 

 
 

 
 
(861
)
 
Total revenue
 
$
547,431

 
 
$
94,763

 
 
$
(15,131
)
 
 
$
627,063

 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Year Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
Services:
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Transformation Services
 
$
29,466

 
 
$

 
 
$

 
 
$
29,466

 
Adjusted Platform and Operations Services
 
406,951

 
 

 
 

 
 
406,951

 
Adjusted Services Revenue
 
436,417

 
 

 
 

 
 
436,417

 
Adjusted Revenue
 
436,417

 
 

 
 

 
 
436,417

 
Purchase accounting adjustments (3)
 
(1,467
)
 
 

 
 

 
 
(1,467
)
 
Total revenue
 
$
434,950

 
 
$

 
 
$

 
 
$
434,950

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segments
 
 
 
 
 
 
Services
 
True Health (1)
Total
 
 
 
For the Year Ended December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
21,310

 
 
$
1,915

 
 
$
23,225

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Year Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
(2,204
)
 
 
$

 
 
$
(2,204
)
 
 
 
 

(1) 
The True Health segment was created in January 2018.
(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.
(3) 
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.














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 Years
 
Months Ended
 
Ended
 
December 31,
 
December 31,
 
2018
 
2017
 
2018
 
2017
Net Income (Loss) Attributable to
 
 
 
 
 
 
 
Evolent Health, Inc.
$
(16,687
)
 
$
(13,160
)
 
$
(52,658
)
 
$
(60,665
)
Less:
 
 
 
 
 
 
 
Interest income
522

 
843

 
3,440

 
1,656

Interest expense
(2,923
)
 
(855
)
 
(5,484
)
 
(3,636
)
(Provision) benefit for income taxes
(11
)
 
4,628

 
(40
)
 
6,637

Depreciation and amortization expenses
(14,633
)
 
(11,132
)
 
(44,515
)
 
(32,368
)
EBITDA
358

 
(6,644
)
 
(6,059
)
 
(32,954
)
Less:
 
 
 
 
 
 
 
Income (loss) from equity method investees
(1,949
)
 
(309
)
 
(4,736
)
 
(1,755
)
Change in fair value of contingent
 
 
 
 
 
 
 
consideration and indemnification asset
2,700

 
(100
)
 
4,104

 
(400
)
Other income (expense), net
173

 
150

 
109

 
171

Net (income) loss attributable to
 
 
 
 
 
 
 
non-controlling interests
853

 
631

 
1,533

 
9,102

ASC 606 transition adjustments

 

 
(4,498
)
 

Purchase accounting adjustments
(214
)
 
(243
)
 
(861
)
 
(1,467
)
Stock-based compensation expense
(5,049
)
 
(4,265
)
 
(17,609
)
 
(20,437
)
Severance costs
(716
)
 

 
(2,205
)
 

Amortization of contract cost assets
(658
)
 

 
(2,456
)
 

Transaction costs
(412
)
 
(5,991
)
 
(2,665
)
 
(15,964
)
Adjusted EBITDA
$
5,630

 
$
3,483

 
$
23,225

 
$
(2,204
)


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 Years
 
Months Ended
 
Ended
 
December 31,
 
December 31,
 
2018
 
2017
 
2018
 
2017
Earnings (Loss) Available to
 
 
 
 
 
 
 
Common Shareholders - Basic and Diluted (a)
$
(16,687
)
 
$
(13,160
)
 
$
(52,658
)
 
$
(60,665
)
Less:
 
 
 
 
 
 
 
Income (loss) from equity method investees
(1,949
)
 
(309
)
 
(4,736
)
 
(1,755
)
(Provision) benefit for income taxes

 
4,600

 
136

 
6,594

Change in fair value of contingent consideration
 
 
 
 
 
 
 
and indemnification asset
2,700

 
(100
)
 
4,104

 
(400
)
Net (income) loss attributable to
 
 
 
 
 
 
 
non-controlling interests
853

 
631

 
1,533

 
9,102

ASC 606 transition adjustment

 

 
(4,498
)
 

Purchase accounting adjustments
(6,098
)
 
(4,638
)
 
(14,889
)
 
(13,007
)
Stock-based compensation expense
(5,049
)
 
(4,265
)
 
(17,609
)
 
(20,437
)
Severance costs
(716
)
 

 
(2,205
)
 

Amortization of contract cost assets
(658
)
 

 
(2,456
)
 

Transaction costs
(412
)
 
(5,991
)
 
(2,665
)
 
(15,964
)
 
 
 
 
 
 
 
 
Adjusted Earnings (Loss) Available
 
 
 
 
 
 
 
to Class A and Class B Shareholders (b)
$
(5,358
)
 
$
(3,088
)
 
$
(9,373
)
 
$
(24,798
)
 
 
 
 
 
 
 
 
Earnings (Loss) per Share Available
 
 
 
 
 
 
 
to Common Shareholders - Basic and Diluted (a) (1)
$
(0.21
)
 
$
(0.18
)
 
$
(0.68
)
 
$
(0.94
)
 
 
 
 
 
 
 
 
Adjusted Earnings (Loss) per Share Available
 
 
 
 
 
 
 
to Class A and Class B Shareholders (b) (2)
$
(0.07
)
 
$
(0.04
)
 
$
(0.12
)
 
$
(0.35
)
 
 
 
 
 
 
 
 
Weighted-average common shares - basic
78,723

 
74,689

 
77,338

 
64,351

Weighted-average common shares - diluted
78,723

 
74,689

 
77,338

 
64,351

Adjusted Weighted-Average Class A
 
 
 
 
 
 
 
and Class B Shares (3)
82,274

 
77,343

 
79,169

 
71,636


(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 Years
 
Months Ended
 
Ended
 
December 31,
 
December 31,
 
2018
 
2017
 
2018
 
2017
Weighted-average common shares - diluted
78,723

 
74,689

 
77,338

 
64,351

Assumed conversion of Class B common
 
 
 
 
 
 
 
shares to Class A common shares
3,551

 
2,654

 
1,831

 
7,285

Adjusted Weighted-Average Class A and Class B Shares
82,274

 
77,343

 
79,169

 
71,636



17



Evolent Health, Inc.
Guidance Reconciliation
(unaudited)
(in thousands)
For the Three
For the Twelve
 
Months Ended
Months Ended
 
March 31,
December 31,
 
2019
2019
Services revenue
 
$
150,750

 
 
$
679,000

 
Purchase accounting adjustments
 
250

 
 
1,000

 
Adjusted Services Revenue
 
151,000

 
 
680,000

 
Premiums revenue
 
45,000

 
 
180,000

 
Intersegment eliminations
 
(3,750
)
 
 
(17,500
)
 
Adjusted Revenue
 
$
192,250

 
 
$
842,500

 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to
 
 
 
 
 
 
Evolent Health, Inc.
 
$
(47,200
)
 
 
$
(102,500
)
 
Less:
 
 
 
 
 
 
Interest income
 
500

 
 
2,000

 
Interest expense
 
(3,000
)
 
 
(12,000
)
 
Depreciation and amortization expenses
 
(14,600
)
 
 
(58,000
)
 
EBITDA
 
(30,100
)
 
 
(34,500
)
 
Less:
 
 
 
 
 
 
Income (loss) from equity method investees
 
(2,000
)
 
 
(8,000
)
 
Net (income) loss attributable to