Q4 2023 Summary
Published Feb 18, 2025, 5:23 PM UTCInitial Price$26.96October 1, 2023
Final Price$33.03December 31, 2023
Price Change$6.07
% Change+22.51%
- Cross-selling opportunities from the NIA acquisition are paying off, with several cross-sells already announced contributing to revenue growth. The company is seeing imaging opportunities materialize, with sales cycles of about 6 months.
- The company is ahead of schedule to achieve its $300 million adjusted EBITDA exit run rate target, with multiple paths to get there and a strong pipeline of opportunities. Management feels confident about closing the gap by the end of the year.
- There are significant opportunities to expand into radiation and surgical oncology services across existing clients. This expansion represents a real development for the company and will benefit both the technology and performance suite sides, with the opportunity being not immaterial in terms of per member per month (PMPM) revenue.
- Medicaid redeterminations are causing a decline in membership, leading to revenue and EBITDA headwinds. The company expects a total decline in the mid-teens by the middle of this year and estimates a $3 million impact on the bottom line in Q4, with an additional $3.5 million quarterly impact expected by summer. This decline could negatively affect growth prospects.
- Potential risks from increased medical utilization in Medicare Advantage plans. Despite management stating they have not seen statistically significant trends indicating elevated costs, they have included a $10 million buffer in their guidance for unexpected utilization. This suggests concern over possible elevated medical costs impacting margins in 2024.
- Evolent does not currently take risk in musculoskeletal (MSK) conditions, despite an overall increase in hip and knee procedures in the broader space. This means the company may be missing out on opportunities in a growing area until at least 2025 when they plan to launch a risk-taking product in MSK.