Evolent Health, Inc. (EVH) Q4 2024 Earnings Summary

Executive Summary

Revenue rose to $646.5 million (+16.3% y/y), but Adjusted EBITDA compressed to $22.6 million (3.5% margin), landing at the very low end of prior Q4 guidance; GAAP net loss improved to $30.6 million from $41.4 million in Q4 2023 .
Management executed contract amendments across three Performance Suite negotiations, targeting a $115 million annual improvement in both GAAP net income and Adjusted EBITDA vs. Q4-2024 run-rate; 100% retention across top customers representing >90% of 2024 revenue .
2025 guidance introduced: revenue $2.06–$2.11 billion and Adjusted EBITDA $135–$165 million; Q1 2025 guidance revenue $440–$470 million and Adjusted EBITDA $31–$37 million. Company also expects ~$35 million in 2025 capitalized software spend .
Narrative catalysts: oncology cost inflation assumptions (12% trend midpoint), newly enhanced risk corridors, contract amendments, and acceleration of AI-enabled automation (Auth Intelligence) with $10 million 2025 drag and >$20 million direct-cost savings exiting 2025, setting up margin expansion in 2026+ .

What Went Well and What Went Wrong

What Went Well

Contracting progress and visibility: “signed contract amendments in all three Performance Suite negotiations” with $115 million projected adjusted EBITDA/net income improvement vs. Q4 exit run-rate; 100% retention across top customers (>90% of 2024 revenue) .
Commercial momentum: two new revenue agreements (New England client expanding tech & services across cardiology/MSK/imaging including MA; a primary care practice joining Complex Care ACO) .
Strategic partner extension: Centene contract extended one year with adjustments to enable patient/physician-friendly automation, benefiting P&L from 2026 onward .
Quote (CEO): “Evolent delivered fourth quarter and 2024 full-year results within the outlook range we provided in November... recent changes... make us feel confident in our financial outlook” .
Quote (CEO): “We have a strong team, a product that our customers value and a clinical approach that... manages healthcare affordability while also enabling the kind of care we would want for our family members” .

What Went Wrong

Continued margin pressure: Adjusted EBITDA margin fell to 3.5% in Q4 (from 5.1% in Q3), driven by elevated oncology costs; Performance Suite margin at 3% in Q4 with oncology book losses of -7% .
Revenue recognition reset: 2025 guidance reflects a one-time ~$765 million reduction from converting one Performance Suite contract to tech & services and net vs. gross revenue recognition changes for two contracts, lowering the reported baseline (no impact to bottom-line expectations) .
2025 headwinds: ~$45 million EBITDA drag (MA exits ~$20 million; elevated oncology trend ~$25 million), plus ~$10 million net implementation costs for AI automation in 2025 .
Cash dynamics: Q4 cash from operations was negative due to working capital needs tied to reconciliations for underperforming risk contracts that were later restructured; cash and equivalents were $104 million at 12/31/24 .

Financial Results

Quarterly Financials

Metric	Q2 2024	Q3 2024	Q4 2024	Consensus Estimate
Revenue ($USD Millions)	$647.1	$621.4	$646.5	N/A (S&P Global data unavailable)*
Net Loss ($USD Millions)	$(6.4)	$(31.2)	$(30.6)	N/A (S&P Global data unavailable)*
Loss per Share (Basic/Diluted, $)	$(0.06)	$(0.27)	$(0.27)	N/A (S&P Global data unavailable)*
Adjusted EBITDA ($USD Millions)	$52.0	$31.8	$22.6	N/A (S&P Global data unavailable)*
Adjusted EBITDA Margin (%)	8.0%	5.1%	3.5%	N/A (S&P Global data unavailable)*
Net Loss Margin (%)	(1.0)%	(5.0)%	(4.7)%	N/A (S&P Global data unavailable)*

*Estimates unavailable due to S&P Global API limit; Values normally retrieved from S&P Global.

Yearly Comparison

Metric	FY 2023	FY 2024
Revenue ($USD Millions)	$1,963.9	$2,554.7
Net Loss ($USD Millions)	$(142.3)	$(93.5)
Net Loss Margin (%)	(7.2)%	(3.7)%
Adjusted EBITDA ($USD Millions)	$194.7	$160.5
Adjusted EBITDA Margin (%)	9.9%	6.3%

Suite Operational Metrics (KPIs)

KPI	Q2 2024	Q3 2024	Q4 2024
Performance Suite Lives	6,901	6,916	7,145
Specialty Tech & Services Lives	71,701	74,192	75,161
Administrative Services Lives	1,268	1,258	1,203
Cases	15	13	16
Average Unique Members	39,856	41,444	40,712
Performance Suite Avg PMPM ($)	22.30	20.97	21.32
Specialty Tech & Services Avg PMPM ($)	0.38	0.38	0.37
Administrative Services Avg PMPM ($)	15.97	15.74	16.43
Revenue per Case ($)	2,849	3,113	3,073

Balance Sheet and Cash Flow Highlights (Year-End)

Metric	FY 2023	FY 2024
Cash & Cash Equivalents ($USD Millions)	$192.8	$104.2
Total Assets ($USD Millions)	$2,680.3	$2,544.4
Long-term Debt, net ($USD Millions)	$597.0	$490.5
Reserve for Claims & Performance-based Arrangements ($USD Millions)	$404.0	$318.7
Net Cash from Operating Activities ($USD Millions)	$142.6	$18.8

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Millions)	Q4 2024	$642–$667 (Nov. 7, 2024)	Actual $646.5 (Feb. 20, 2025)	Met within range
Adjusted EBITDA ($USD Millions)	Q4 2024	$22–$37 (Nov. 7, 2024)	Actual $22.6 (Feb. 20, 2025)	At low end
Revenue ($USD Billions)	FY 2024	$2.56–$2.60 (Aug. 8, 2024)	$2.55–$2.575 (Nov. 7, 2024)	Lowered
Adjusted EBITDA ($USD Millions)	FY 2024	$230–$245 (Aug. 8, 2024)	$160–$175 (Nov. 7, 2024)	Lowered
Revenue ($USD Millions)	Q1 2025	N/A	$440–$470 (Feb. 20, 2025)	New
Adjusted EBITDA ($USD Millions)	Q1 2025	N/A	$31–$37 (Feb. 20, 2025)	New
Revenue ($USD Billions)	FY 2025	N/A	$2.06–$2.11 (Feb. 20, 2025)	New
Adjusted EBITDA ($USD Millions)	FY 2025	N/A	$135–$165 (Feb. 20, 2025)	New
Capitalized Software ($USD Millions)	FY 2025	N/A	~$35 (Feb. 20, 2025)	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024, Q3 2024)	Current Period (Q4 2024)	Trend
Oncology cost trend	Q2: Elevated prevalence/acuity; rate increases (~$60M annualized); trend stable vs Q2 assumptions	Assume 12% 2025 oncology cost growth; ±2% sensitivity = ~$9–$12M EBITDA impact	Elevated but bounded via corridors
Performance Suite risk management	Q3: Seeking $100M rate increases for 2025; enhanced corridors; exit options to tech & services	Three renegotiations complete; $115M improvement vs Q4 run-rate; 75% of PS revenue covered by enhanced features	Protections increased, visibility improved
AI/automation (Auth Intelligence)	Q2: Machinify acquisition; target up to $50M annualized EBITDA; lowered software capitalization short-term	$10M 2025 EBITDA drag; >$20M direct-cost savings annualized by end-2025; longer-term >$50M	Investment now, margin lift later
Membership/mix (MA/Medicaid)	Q2: Medicaid redeterminations largely captured; MSSP timing effects	2025 headwinds: MA exits ~$20M EBITDA; oncology authorization trends consistent with forecast	Mixed: headwind in MA, conservative oncology planning
Revenue recognition	Q3: True-down in Q3 due to narrowed scope; bottom-line neutral	2025 baseline lowered ~$765M via conversion/net vs. gross recognition; no EBITDA impact	Cleaner reporting, simplified PS focus
Pipeline and new wins	Q2: 4 agreements; Q3: record 6 agreements incl. top-5 national payer	Q4: two agreements; midyear go-live targeted for top-5 payer Performance Suite	Robust pipeline continuing

Management Commentary

Strategic posture: “We have contractually improved our ability to forecast earnings... evolving our Performance Suite... placing a cap on Evolent’s downside risk” (CEO closing) .
Profitability bridge: “We secured $115 million in projected adjusted EBITDA improvement compared to our Q4 exit run rate... restores oncology Performance Suite portfolio to profitability for 2025” (CEO) .
Automation economics: “Expect improvement in direct costs exceeding $20 million annualized by end of 2025... net implementation costs... ~$10 million drag in 2025... longer term... over $50 million annually” (CEO) .
Conservative planning: “We are assuming oncology cost growth in 2025 of 12%... rate increases and contractual updates... recover ~400 bps of decline” (CFO) .
Liquidity/capital allocation: “Borrowed available credit facility at end of January... adjusting for that transaction, cash on 12/31 would have been $300 million... priorities: product development and reducing leverage” (CFO) .

Q&A Highlights

Confidence in guide and sensitivities: ±2% oncology trend shifts imply ~$9M downside/$12M upside to EBITDA, bounding volatility under new corridors .
Coverage breadth: ~75% of Performance Suite revenue now includes enhanced features (caps/floors), improving predictability across oncology and cardiology .
Centene extension: Adjustments enable automation investments in 2025 with benefits in 2026+; extension reflects partner confidence .
Faster ramp to mature margins: New PS relationships expected to reach mature margins in ~18 months vs. prior ~3 years .
Implementation cadence: Top-5 national payer win expected to go live midyear; 48% of 2025 Adjusted EBITDA expected in H1 .

Estimates Context

S&P Global consensus estimates for Q4 2024 (revenue/EPS/EBITDA/target price) were unavailable due to API request limits; formal beat/miss vs. Street cannot be assessed here.*
Directionally, Q4 results landed inside the prior guidance range, with Adjusted EBITDA at the low end; 2025 guide (Adjusted EBITDA $135–$165 million) reflects conservative oncology assumptions and known headwinds (MA exits and automation implementation), suggesting Street models should reflect lower near-term profitability vs. historical long-term targets .

*Consensus values normally retrieved from S&P Global.

Key Takeaways for Investors

Earnings visibility improved: Enhanced risk corridors and renegotiations cap downside and support margin recovery; expect ~400 bps recovery vs. 2024 declines, with ~300 bps additional maturation potential over time .
2025 is a reset and rebuild year: Guide embeds conservative oncology inflation (12%) and MA exits; automation drag (~$10M) is investment for 2026+ cost takeout (> $20M exiting 2025; >$50M long-term) .
Reported revenue baseline reset (~$765M): Conversion and net vs. gross changes simplify reporting and refocus Performance Suite on oncology/cardiology without hurting profitability expectations .
Pipeline remains robust: Two Q4 agreements and mid-2025 go-live for top-5 national payer Performance Suite provide organic growth support (company reiterates ~15–18% adjusted revenue growth view after normalization) .
Cash/liquidity position solid: Access to credit lines and planned liability management (2025 converts, term loan) support operational flexibility through 2025 .
Watch 2025 cadence: Management expects ~48% of Adjusted EBITDA in H1; monitor oncology trend sensitivities and timing of contract expansions to gauge upside/downside to guide .
Medium-term thesis: AI-enabled automation, tightened risk constructs, and durable specialty demand (oncology/cardiology/MSK) position Evolent for margin expansion and 20%+ EBITDA growth beyond 2025 targets under normalized trend scenarios .

Appendix: Other Relevant Q4-period Press Releases

Jan 27, 2025: Notice of Q4 release timing (administrative) .
Feb 4, 2025: Board changes (governance) .
Dec 18, 2024: Incoming Chief Medical Officer appointment (leadership/clinical strategy) .

Citations:
Press release and 8-K:
Q4 2024 call:
Q3 2024 press and call:
Q2 2024 press and call: