Evolent Health, Inc. (EVH) Q2 2025 Earnings Summary

Executive Summary

Q2 2025 revenue was $444.3M, below consensus ($459.4M*) and down year-over-year, while adjusted EBITDA was $37.5M, ahead of guidance and above consensus ($35.9M*) as management “exceeded our EBITDA targets” and raised full-year profitability outlook .
Full-year 2025 guidance was revised: revenue lowered to $1.85B–$1.88B (from $2.06B–$2.11B) on go‑live timing, while adjusted EBITDA was raised to $140M–$165M (from $135M–$165M), reflecting strong execution and conservative reserving amid oncology trends .
Four new revenue agreements brought YTD signings to 11; notably, Evolent named Aetna as its national partner in Florida MA (250K lives), with launch targeted for Q1 2026 and intent to expand to additional states—supporting a path to 2026 revenues “in excess of $2.5B” .
Management highlighted accelerating pipeline, contract protections, and AI-driven operational improvements (11% review efficiency, targeting 80% auto-approvals), positioning EVH as a countercyclical cost-and-quality partner as CMS streamlines prior authorization (WISER model) .
Near-term stock catalysts: revenue guide cut vs EBITDA raise, explicit Aetna disclosure and 2026 revenue trajectory, oncology trend commentary and contract protections; working capital actions and DSO normalization expected to drive ~$40M operating cash flow April–December .

What Went Well and What Went Wrong

What Went Well

“Evolent exceeded our EBITDA targets for the second quarter and raised our profitability outlook for the full year,” with adjusted EBITDA margin of 8.5% vs 8.0% YoY .
Pipeline acceleration: “we would expect to exceed our historical growth rates for 2026,” supported by four new agreements in Q2 and 11 YTD signings; CFO sees a path to 2026 revenues “in excess of $2.5B” .
AI progress: integrated Auth Intelligence, improving review efficiency by ~11% QoQ; targeting 80% auto-approval of authorization volume in 24 months and exiting 2025 with ~$20M annualized EBITDA run-rate improvement .

What Went Wrong

Top-line softness vs plan: Q2 revenue ($444.3M) was $11M below the midpoint, driven by a $4.6M negative prior-year revenue update and a go‑live delay for a Performance Suite market; Q1's $55M gross revenue switched to net in Q2, muting the reported step-up .
GAAP loss widened: net loss of $(51.1)M (loss margin −11.5%) vs $(6.4)M in Q2 2024, reflecting higher interest expense and preferred dividends/accretion .
Full-year revenue guidance cut to $1.85B–$1.88B on updated go‑live timing; working capital variability required actions to normalize DSO (received $24M catch‑up in July) and resulted in optional non‑dilutive capital access via Ares commitments .

Financial Results

Consolidated P&L and EPS (GAAP and Adjusted)

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($M)	$647.1	$483.6	$444.3
Adjusted EBITDA ($M)	$52.0	$36.9	$37.5
Adjusted EBITDA Margin (%)	8.0%	7.6%	8.5%
Net Loss ($M)	$(6.4)	$(72.3)	$(51.1)
Net Loss Margin (%)	−1.0%	−14.9%	−11.5%
GAAP EPS ($)	$(0.06)	$(0.63)	$(0.44)
Adjusted EPS ($)	$0.18	$0.06	$(0.10)

Notes: EVH cites adjusted metrics and reconciliations in the releases/8‑K.

Actual vs Consensus (Q2 2025)

Metric	Actual	Consensus*	Surprise
Revenue ($M)	$444.3	$459.4*	Miss
Adjusted EBITDA ($M)	$37.5	$35.9*	Beat
Adjusted/Primary EPS ($)	$(0.10)	$0.081*	Miss
EPS # of Estimates	—	10*	—
Revenue # of Estimates	—	14*	—

Values retrieved from S&P Global.*

Segment/KPI Snapshot

KPI	Q2 2024	Q1 2025	Q2 2025
Performance Suite Lives (000s)	6.901	6.486	6.490
Specialty Tech & Services Lives (000s)	71.701	77.079	77.019
Administrative Services Lives (000s)	1.268	1.213	1.231
Average Unique Members (000s)	39.856	40.628	40.201
Performance Suite Avg PMPM ($)	22.30	15.57	13.76
Specialty Tech & Services Avg PMPM ($)	0.38	0.36	0.35
Administrative Services Avg PMPM ($)	15.97	15.72	15.13
Cases (count)	15	14	13
Revenue per Case ($)	2,849	2,947	2,969

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($B)	FY 2025	$2.06–$2.11	$1.85–$1.88	Lowered
Adjusted EBITDA ($M)	FY 2025	$135–$165	$140–$165	Raised (midpoint)
Revenue ($M)	Q3 2025	—	$460–$480	Initiated
Adjusted EBITDA ($M)	Q3 2025	—	$34–$42	Initiated
Capitalized Software ($M)	FY 2025	~$35	~$35	Maintained

Drivers: Revised revenue reflects updated go‑live timing for Performance Suite launches; EBITDA range raised on strong execution and conservative reserving in oncology .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2: Q4 2024; Q-1: Q1 2025)	Current Period (Q2 2025)	Trend
AI/automation (Auth Intelligence)	Announced AI initiatives; repositioning actions to improve profitability . Q1: “AI-based automation initiatives, like Auth Intel, are tracking favorably” .	11% review efficiency improvement; goal 80% auto-approvals in 24 months; $20M run-rate EBITDA improvement exiting 2025 .	Accelerating execution, tangible efficiency gains
Oncology trend & reserving	Q4: elevated oncology costs; contract amendments for protections . Q1: results at high end; Performance Suite margins tracking favorably .	YTD normalized oncology trend ~10.5% (vs 12% forecast); conservative Q2 reserves; 2H guide assumes ~12% trend including benefits rush in exchanges .	Stabilizing vs prior spike; prudent conservatism maintained
Prior authorization/regulatory	N/A	CMS commitments to streamline prior auth; WISER pilot in Medicare; EVH positioned to benefit from interoperability and clinical data exchange requirements .	Regulatory tailwind for EVH’s model
Pipeline/bookings & 2026 revenue	Q4: contract retention 100% across top customers; new agreements . Q1: five new agreements; strong selling environment .	11 YTD agreements; Aetna named; weighted pipeline >$1B; path to ≥$2.5B 2026 revenues .	Strengthening pipeline and visibility
Contract structure/protections	Q4: amended Performance Suite contracts expected $115M annual improvement in 2025 vs Q4 run-rate .	All prospective Performance Suite deals under new risk model (corridors, standardized data, liability limits) .	Enhanced downside protection; moderated upside
Payer mix & macro	Q4: industry cost shifts; diversified business performing at/better than expectations outside Performance Suite . Q1: reiterated FY EBITDA; strong demand .	Q2 revenue mix: ~25% Medicare (stabilizing), ~45% Medicaid (policy impacts not meaningful until 2027), ~20% ACA (likely 2026 headwinds) .	Mix tilting toward Medicare for growth; watching ACA dynamics
Working capital/cash flow	Q4: liquidity highlighted . Q1: capital allocation discipline .	Collection slowdown in Q2; $24M catch-up in July; contract payment term amendments; expect ~$40M CFO April–Dec .	Normalizing DSO; improving cash conversion

Management Commentary

CEO: “We continue to see a rapidly accelerating pipeline… we would expect to exceed our historical growth rates for 2026.” Also, “we remain confident in achieving the near-term AI and automation targets exiting 2025” .
CEO on Aetna: “We’re honored to be partnering… set up for it to be the first of multiple states… launch together in Q1 2026” .
CFO: “Q2 adjusted EBITDA of $37.5M was in the top half of our range… oncology trend ~10.5%… we are maintaining a conservative approach to reserving” .
CFO on pipeline visibility: “We see a clear path to delivering 2026 revenues in excess of $2.5B” and “all prospective Performance Suite deals are under our new risk model” .
Regulatory stance: “CMS… commitments for streamlining prior authorization… and the WISER model… encapsulates the moment that faces the industry,” aligning with EVH’s roadmap .

Q&A Highlights

Aetna partnership: 250K MA lives in Florida, disciplined “slow down to speed up” approach to data exchange to enable faster state expansion; margin ramp consistent with 10% Performance Suite target in first two years .
Contracting & protections: Weighted pipeline >$1B; all Performance Suite deals include corridors, standardized data flows, liability limits—trading some upside for more protection amid industry volatility .
Payer mix outlook: Medicare (~25% of Q2 revenue) stabilizing with favorable 2026 rate notice; Medicaid (~45%) policy impacts not meaningful until 2027; ACA (~20%) likely 2026 headwinds on subsidies .
Oncology trend guidance: 1H 2025 ~10.5%; 2H guide assumes ~12% trend at midpoint, including potential benefits rush in exchanges .
Working capital: Q2 collection slowdown; $24M catch‑up post‑quarter; amended payment terms expected to normalize DSO and support ~$40M CFO Apr–Dec .

Estimates Context

Q2 2025 results vs S&P Global consensus: revenue $444.3M vs $459.4M* (miss), adjusted EBITDA $37.5M vs $35.9M* (beat), adjusted/primary EPS $(0.10) vs $0.081* (miss). 10 EPS estimates, 14 revenue estimates .
Implications: Street likely lowers FY revenue trajectory to reflect go‑live timing, while raising EBITDA confidence within the $140M–$165M range given execution, reserve conservatism, and AI/efficiency tailwinds .