Full Press Release Details
Evolent Health Announces Third Quarter 2016 Results
Washington, DC, (November 9, 2016) - Evolent Health, Inc. (NYSE: EVH), a company providing an integrated value-based care platform to the nation's leading health systems and physician organizations, today announced financial results for the quarter ended September 30, 2016.
Highlights from the third quarter of 2016 announcement include (all comparisons are to the quarter ended September 30, 2015):
Frank Williams, Chief Executive Officer of Evolent Health, Inc., commented, "We are pleased to report strong results, having exceeded our financial and operational goals for the quarter as well as strengthening our strategic position in the marketplace. As of today with the addition of Valence Health, we now have long-term operating agreements in place serving approximately 2.5 million members in more than 25 markets nationally. Across the past 90 days, we have had some notable accomplishments, including expanding our partnership with Passport Health Plan to include risk adjustment and pharmacy benefits management services for its 280,000 members, welcoming Valence Health's partners to the Evolent network-including 400,000 MDWise members that go live in early 2017-and welcoming Banner Health and Hill Physicians Medical Group as new long-term operating partners."
Mr. Williams continued, "The addition of two highly sophisticated value-based care organizations in Banner Health and Hill Physicians Medical Group is a testament to the breadth and depth of the Evolent platform in its ability to help providers manage increasing clinical, operational and administrative complexity. Given all of the progress in the last quarter from a market development perspective, as well as consistent expansion across our current client portfolio, we enter 2017 with a high degree of visibility into continued strong revenue growth that is consistent with our long-term objectives."
Financial Results of Evolent Health, Inc.
Evolent Health, Inc. completed a reorganization of its corporate structure on June 4, 2015 (the "Reorganization"), in connection with the initial public offering of its Class A common stock ("IPO"). Prior to the Reorganization, Evolent Health, Inc. had no operations. As a result, the financial statements of Evolent Health, Inc. for the nine months ended September 30, 2015, do not reflect a complete view of the operational results for that period. In order to provide consistent and comparable metrics for the periods before and after June 4, 2015, the adjusted results of Evolent Health, Inc. presented and discussed in this release reflect the Reorganization as if it had occurred on January 1, 2015, and therefore include the results of Evolent Health LLC for the entire nine month period ended September 30, 2015.
The adjusted results also include certain other adjustments. See "Financial Statement Presentation" and "Non-GAAP Financial Measures" for more information.
Evolent Health, Inc. reported the following United States of America generally accepted accounting principles ("GAAP") results:
Total cash, cash equivalents and investments as of September 30, 2016, were $159.5 million.
In addition to closing the previously announced acquisition of Valence Health, the Company completed the acquisition of Aldera Holdings, Inc. ("Aldera") on November 1, 2016. Aldera is the primary software provider for the Valence Health TPA platform.
The fourth quarter will be the first time that we will include the results of Valence and Aldera. Our results will reflect a full quarter of Valence operations and Aldera operations subsequent to November 1st. For the fourth quarter, we are forecasting Adjusted Revenue to be in the range of approximately $84.0 million to $86.0 million and Adjusted EBITDA to be in the range of approximately $(9.5) million to $(7.5) million. To break it down further, for the core Evolent business, we are maintaining our previously provided Adjusted Revenue guidance for the fourth quarter of approximately $60.0 million to $61.0 million and we are modestly revising our Adjusted EBITDA forecast from a range of approximately $(5.5) million to $(4.5) million to a range of approximately $(5.0) million to $(4.0) million. Additionally, the combined results of Valence and Aldera are forecasted to produce Adjusted Revenue in the range of approximately $24.0 million to $25.0 million, which includes revenue associated with certain state co-operatives that we do not expect to retain as customers in 2017, as well as approximately $1.0 million from Aldera. Adjusted EBITDA for the combined results of Valence and Aldera is forecasted to be in the range of approximately $(4.5) million to $(3.5) million. Aldera is not expected to impact Adjusted EBITDA in the quarter. The Adjusted EBITDA forecast for Valence includes approximately $2.0 million of expenses, without corresponding incremental revenue, associated with new clients that go live at the beginning of 2017.
Our fourth quarter guidance, combined with our year-to-date September results, translates to the following full-year guidance: Adjusted Revenue in the range of approximately $250.0 million to $252.0 million and Adjusted EBITDA in the range of approximately $(23.0) million to $(21.0) million.
We do not provide separate reconciliations for Adjusted Revenue and Adjusted EBITDA for the core Evolent business, or the Valence and Aldera acquired entities due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including purchase accounting adjustments, transaction costs, and provision/benefit for income taxes at the relevant entity level, the amount of which could be significant.
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 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 9, 2016, 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 to 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 90 days 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 health systems to drive value-based care transformation. By providing clinical, analytical and financial capabilities, Evolent Health helps physicians and health systems achieve superior quality and cost results. Evolent Health's approach breaks down barriers, aligns incentives and powers a new model of care delivery resulting in meaningful alignment between providers, payers, physicians and patients. Learn more at: www.evolenthealth.com.
| Bob East | Robin Glass |
| 443.213.0500 | 571.389.6005 |
| Investor Relations | Media Relations |
| InvestorRelations@evolenthealth.com | RGlass@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. Prior to the Reorganization on June 4, 2015, the predecessor of Evolent Health, Inc. accounted for Evolent Health LLC as an equity method investment. The financial results of Evolent Health LLC have been consolidated in the financial statements of Evolent Health, Inc. following the Reorganization. As a result, the financial statements of Evolent Health, Inc. for the nine months ended September 30, 2015, do not reflect a complete view of the operational results for that period. In order to provide a consistent presentation for the periods before and after June 4, 2015, and effectively provide comparative results, the adjusted results of Evolent Health, Inc. presented and discussed in this release reflect the Reorganization as if it had occurred on January 1, 2015, and therefore include the operations
of Evolent Health LLC for the period from January 1, 2015, through June 3, 2015, as well as for the period from June 4, 2015, through September 30, 2015, when the results were consolidated. Including Evolent Health LLC's results for this period is not consistent with GAAP and should not be considered as an alternative to comparable GAAP measures. Certain tables below relating to the nine month periods ended September 30, 2016, and 2015, reflect certain income statement line items as adjusted to reflect results from operations for the nine month period ended September 30, 2015, as if the Reorganization had occurred on January 1, 2015. The presentation also reflects other adjustments described in "Non-GAAP Financial Measures."
Non-GAAP Financial Measures
In addition to disclosing financial results that are determined in accordance with GAAP, we present and discuss Adjusted Revenue, Adjusted Transformation Revenue, Adjusted Platform and Operations Revenue, Adjusted Cost of Revenue, Adjusted Selling, General and Administrative Expenses, Adjusted Depreciation and Amortization Expenses, Adjusted Operating Income (Loss), Adjusted EBITDA,
Adjusted Earnings (Loss) Available for Class A and Class B Shareholders, Adjusted Earnings (Loss) per Share Available for 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.
As described above, the financial statements of Evolent Health, Inc. for the nine months ended September 30, 2015, do not reflect a complete view of the operational results for that period. In order to provide consistent and comparable metrics for the periods before and after June 4, 2015, the adjusted results of Evolent Health, Inc. presented and discussed in this release reflect the Reorganization as if it had occurred on January 1, 2015, and therefore include the results of Evolent Health LLC for the entire nine month period ended September 30, 2015. The adjusted results also include certain other adjustments.
Adjusted Revenue, Adjusted Transformation Revenue and Adjusted Platform and Operations Revenue are defined as revenue, transformation revenue, and platform and operations revenue, respectively, adjusted to include revenue, transformation revenue and platform and operations revenue, as applicable, of Evolent Health LLC for periods prior to the Reorganization, and to exclude the impact of purchase accounting adjustments. Management uses Adjusted Revenue, Adjusted Transformation Revenue and Adjusted Platform and Operations 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 include cost of revenue and selling, general and administrative expenses, as applicable, of Evolent Health LLC for periods prior to the Reorganization, and to exclude the impact of stock-based compensation expenses and transaction costs related to acquisitions and business combinations, the Reorganization, IPO and other securities offerings. 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 (transaction costs) or non-cash (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 include depreciation and amortization expenses of Evolent Health LLC for periods prior to the Reorganization. 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 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 defined as EBITDA (net income (loss) attributable to Evolent Health, Inc. before interest income (expense), net, (provision) benefit for income taxes, depreciation and amortization expenses), adjusted to include net income (loss) of Evolent Health LLC (less interest income (expense), net, depreciation and amortization expenses and other income (expense), net, of Evolent Health LLC) for the periods prior to the Reorganization, and to exclude goodwill impairment, gain on consolidation, income (loss) from affiliates, other income (expense), net, net (income) loss attributable to non-controlling interests, purchase accounting adjustments, stock-based compensation expenses and transaction costs related to acquisitions and business combinations, the Reorganization, IPO and related offerings. Management uses Adjusted EBITDA as a supplemental performance measure because the removal of onetime (transaction costs) or non-cash items (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 for Class A and Class B Shareholders is defined as earnings (loss) available for common shareholders adjusted to exclude the impact of undeclared cumulative preferred dividends for the periods prior to the Reorganization; and to include net income (loss) of Evolent Health LLC for the periods prior to the Reorganization, and to exclude goodwill impairment, gain on consolidation, income (loss) from affiliates, (provision) benefit for income taxes, purchase accounting adjustments, stock-based compensation expenses and transaction costs related to acquisitions and business combinations, the Reorganization, IPO and related offerings.
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 for Class A and Class B Shareholders is defined as Adjusted Earnings (Loss) Available for 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 for Class A and Class B Shareholders, Adjusted Weighted-Average Class A and Class B Shares and Adjusted Earnings (Loss) per Share Available for 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.
Evolent Health, Inc.
Consolidated Statements of Operations
| (in thousands, except per share data) | For the Three | For the Nine | |||||||||||||
| Months Ended | Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Revenue | |||||||||||||||
| Transformation | $ | 7,757 | $ | 6,783 | $ | 26,259 | $ | 9,486 | |||||||
| Platform and operations | 52,453 | 33,623 | 139,918 | 41,334 | |||||||||||
| Total revenue | 60,210 | 40,406 | 166,177 | 50,820 | |||||||||||
| Expenses | |||||||||||||||
| Cost of revenue (exclusive of | |||||||||||||||
| depreciation and amortization expenses | |||||||||||||||
| presented separately below) | 33,905 | 24,762 | 95,294 | 32,649 | |||||||||||
| Selling, general and administrative expenses | 38,398 | 29,834 | 103,101 | 42,916 | |||||||||||
| Depreciation and amortization expenses | 3,746 | 3,056 | 10,728 | 4,040 | |||||||||||
| Goodwill impairment | - | - | 160,600 | - | |||||||||||
| Total operating expenses | 76,049 | 57,652 | 369,723 | 79,605 | |||||||||||
| Operating income (loss) | (15,839 | ) | (17,246 | ) | (203,546 | ) | (28,785 | ) | |||||||
| Interest income (expense), net | 255 | 54 | 805 | 67 | |||||||||||
| Gain on consolidation | - | - | - | 414,133 | |||||||||||
| Income (loss) from affiliates | (448 | ) | - | (462 | ) | (28,165 | ) | ||||||||
| Other Income (expense), net | 1 | - | 4 | - | |||||||||||
| Income (loss) before income taxes | |||||||||||||||
| and non-controlling interests | (16,031 | ) | (17,192 | ) | (203,199 | ) | 357,250 | ||||||||
| Provision (benefit) for income taxes | (256 | ) | (104 | ) | (1,614 | ) | 29,169 | ||||||||
| Net income (loss) | (15,775 | ) | (17,088 | ) | (201,585 | ) | 328,081 | ||||||||
| Net income (loss) attributable to | |||||||||||||||
| non-controlling interests | (4,567 | ) | (5,108 | ) | (59,250 | ) | (8,532 | ) | |||||||
| Net income (loss) attributable to | |||||||||||||||
| Evolent Health, Inc. | $ | (11,208 | ) | $ | (11,980 | ) | $ | (142,335 | ) | $ | 336,613 | ||||
| Earnings (Loss) Available for Common Shareholders | |||||||||||||||
| Basic | $ | (11,208 | ) | $ | (11,980 | ) | $ | (142,335 | ) | $ | 334,429 | ||||
| Diluted | (11,208 | ) | (11,980 | ) | (142,335 | ) | 328,081 | ||||||||
| Earnings (Loss) per Common Share | |||||||||||||||
| Basic | $ | (0.26 | ) | $ | (0.29 | ) | $ | (3.34 | ) | $ | 17.05 | ||||
| Diluted | (0.26 | ) | (0.29 | ) | (3.34 | ) | 7.93 | ||||||||
| Weighted-Average Common Shares Outstanding | |||||||||||||||
| Basic | 43,110 | 41,468 | 42,632 | 19,618 | |||||||||||
| Diluted | 43,110 | 41,468 | 42,632 | 41,398 |
Evolent Health, Inc.
Condensed Consolidated Balance Sheets
| (in thousands) | As of | As of | |||||||
| September 30, | December 31, | ||||||||
| 2016 | 2015 | ||||||||
| Cash and cash equivalents | $ | 109,777 | $ | 145,726 | |||||
| Investments, at amortized cost | 49,693 | 9,445 | |||||||
| Total current assets | 191,429 | 184,463 | |||||||
| Investments, at amortized cost | - | 44,618 | |||||||
| Intangible assets, net | 162,789 | 163,152 | |||||||
| Goodwill | 459,703 | 608,903 | |||||||
| Total assets | 851,280 | 1,015,514 | |||||||
| Total liabilities | 91,423 | 80,935 | |||||||
| Total shareholders' equity (deficit) attributable to | |||||||||
| Evolent Health, Inc. | 562,228 | 649,341 | |||||||
| Non-controlling interests | 197,629 | 285,238 | |||||||
| Total liabilities and shareholders' equity (deficit) | 851,280 | 1,015,514 |
Evolent Health, Inc.
Condensed Consolidated Statements of Cash Flows
| (in thousands) | For the Nine | ||||||
| Months Ended | |||||||
| September 30, | |||||||
| 2016 | 2015 | ||||||
| Net cash provided by (used in) operating activities | $ | (14,005 | ) | $ | (12,157 | ) | |
| Net cash provided by (used in) investing activities | (22,823 | ) | 11,135 | ||||
| Net cash provided by (used in) financing activities | 879 | 209,179 | |||||
| Net increase (decrease) in cash and cash equivalents | (35,949 | ) | 208,157 | ||||
| Cash and cash equivalents as of beginning-of-period | 145,726 | - | |||||
| Cash and cash equivalents as of end-of-period | $ | 109,777 | $ | 208,157 |
Evolent Health, Inc.
Adjusted Results of Operations
| (in thousands) | For the Three Months Ended September 30, 2016 | For the Three Months Ended September 30, 2015 | |||||||||||||||||||||||||||||||||||||
| 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 (1) | $ | 7,757 | $ | - | $ | 7,757 | $ | 6,783 | $ | 783 | $ | 7,566 | $ | 974 | 14.4 | % | $ | 191 | 2.5 | % | |||||||||||||||||||
| Platform and operations (1) | 52,453 | - | 52,453 | 33,623 | 2,087 | 35,710 | 18,830 | 56.0 | % | 16,743 | 46.9 | % | |||||||||||||||||||||||||||
| Total revenue | 60,210 | - | 60,210 | 40,406 | 2,870 | 43,276 | 19,804 | 49.0 | % | 16,934 | 39.1 | % | |||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||||||
| Cost of revenue (exclusive of | |||||||||||||||||||||||||||||||||||||||
| depreciation and amortization | |||||||||||||||||||||||||||||||||||||||
| expenses presented | |||||||||||||||||||||||||||||||||||||||
| separately below) (2) | 33,905 | (176 | ) | 33,729 | 24,762 | (384 | ) | 24,378 | 9,143 | 36.9 | % | 9,351 | 38.4 | % | |||||||||||||||||||||||||
| Selling, general and | |||||||||||||||||||||||||||||||||||||||
| administrative expenses (3) | 38,398 | (8,793 | ) | 29,605 | 29,834 | (4,262 | ) | 25,572 | 8,564 | 28.7 | % | 4,033 | 15.8 | % | |||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||||||||||||
| expenses | 3,746 | - | 3,746 | 3,056 | - | 3,056 | 690 | 22.6 | % | 690 | 22.6 | % | |||||||||||||||||||||||||||
| Total operating expenses | 76,049 | (8,969 | ) | 67,080 | 57,652 | (4,646 | ) | 53,006 | 18,397 | 31.9 | % | 14,074 | 26.6 | % | |||||||||||||||||||||||||
| Operating income (loss) | $ | (15,839 | ) | $ | 8,969 | $ | (6,870 | ) | $ | (17,246 | ) | $ | 7,516 | $ | (9,730 | ) | $ | 1,407 | 8.2 | % | $ | 2,860 | 29.4 | % |
Evolent Health, Inc.
Adjusted Results of Operations
| (in thousands) | For the Nine Months Ended September 30, 2016 | For the Nine Months Ended September 30, 2015 | ||||||||||||||||||||||||||||||||||
| Add: | Evolent Health, Inc. | |||||||||||||||||||||||||||||||||||
| Evolent | Evolent | Evolent | Evolent | Evolent | as Adjusted | |||||||||||||||||||||||||||||||
| Health, Inc. | Health, Inc. | Health, Inc. | Health LLC | Health, Inc. | Change Over Prior Period * | |||||||||||||||||||||||||||||||
| as Reported | Adjustments | as Adjusted | as Reported | Operations (1) | Adjustments | as Adjusted | $ | % | ||||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||||||||||
| Transformation (2) | $ | 26,259 | $ | 87 | $ | 26,346 | $ | 9,486 | $ | 15,755 | $ | 1,147 | $ | 26,388 | $ | (42 | ) | (0.2 | )% | |||||||||||||||||
| Platform and operations (2) | 139,918 | - | 139,918 | 41,334 | 46,059 | 2,998 | 90,391 | 49,527 | 54.8 | % | ||||||||||||||||||||||||||
| Total revenue | 166,177 | 87 | 166,264 | 50,820 | 61,814 | 4,145 | 116,779 | 49,485 | 42.4 | % | ||||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||||||
| Cost of revenue (exclusive of | ||||||||||||||||||||||||||||||||||||
| depreciation and amortization | ||||||||||||||||||||||||||||||||||||
| expenses presented | ||||||||||||||||||||||||||||||||||||
| separately below) (3) | 95,294 | (1,266 | ) | 94,028 | 32,649 | 44,839 | (2,167 | ) | 75,321 | 18,707 | 24.8 | % | ||||||||||||||||||||||||
| Selling, general and | ||||||||||||||||||||||||||||||||||||
| administrative expenses (4) | 103,101 | (17,206 | ) | 85,895 | 42,916 | 58,457 | (34,146 | ) | 67,227 | 18,668 | 27.8 | % | ||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||||||||||||
| expenses | 10,728 | - | 10,728 | 4,040 | 2,637 | - | 6,677 | 4,051 | 60.7 | % | ||||||||||||||||||||||||||
| Goodwill impairment (5) | 160,600 | (160,600 | ) | - | - | - | - | - | - | N/A | ||||||||||||||||||||||||||
| Total operating expenses | 369,723 | (179,072 | ) | 190,651 | 79,605 | 105,933 | (36,313 | ) | 149,225 | 41,426 | 27.8 | % | ||||||||||||||||||||||||
| Operating income (loss) | $ | (203,546 | ) | $ | 179,159 | $ | (24,387 | ) | $ | (28,785 | ) | $ | (44,119 | ) | $ | 40,458 | $ | (32,446 | ) | $ | 8,059 | 24.8 | % |
Evolent Health, Inc.
Reconciliation of Adjusted EBITDA to Net Income (Loss)
Attributable to Evolent Health, Inc.
| (in thousands) | For the Three | For the Nine | ||||||||||||||
| Months Ended | Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net Income (Loss) Attributable to | ||||||||||||||||
| Evolent Health, Inc. | $ | (11,208 | ) | $ | (11,980 | ) | $ | (142,335 | ) | $ | 336,613 | |||||
| Less: | ||||||||||||||||
| Interest income (expense), net | 255 | 54 | 805 | 67 | ||||||||||||
| (Provision) benefit for income taxes | 256 | 104 | 1,614 | (29,169 | ) | |||||||||||
| Depreciation and amortization expenses | (3,746 | ) | (3,056 | ) | (10,728 | ) | (4,040 | ) | ||||||||
| EBITDA | (7,973 | ) | (9,082 | ) | (134,026 | ) | 369,755 | |||||||||
| Results of Evolent Health LLC | ||||||||||||||||
| Add: | ||||||||||||||||
| Net income (loss) | - | - | - | (44,079 | ) | (1) | ||||||||||
| Less: | ||||||||||||||||
| Interest income (expense), net | - | - | - | 38 | (1) | |||||||||||
| Depreciation and amortization expenses | - | - | - | (2,637 | ) | (1) | ||||||||||
| Other income (expense), net | - | - | - | 2 | (1) | |||||||||||
| Less: | ||||||||||||||||
| Goodwill impairment | - | - | (160,600 | ) | - | |||||||||||
| Gain on consolidation | - | - | - | 414,133 | ||||||||||||
| Income (loss) from affiliates | (448 | ) | - | (462 | ) | (28,165 | ) | |||||||||
| Other income (expense), net | 1 | - | 4 | - | ||||||||||||
| Net (income) loss attributable to | ||||||||||||||||
| non-controlling interests | 4,567 | 5,108 | 59,250 | 8,532 | ||||||||||||
| Purchase accounting adjustments | - | (2,870 | ) | (87 | ) | (4,145 | ) | |||||||||
| Stock-based compensation expense | (4,799 | ) | (4,382 | ) | (13,844 | ) | (32,274 | ) | ||||||||
| Transaction costs | (4,170 | ) | (264 | ) | (4,628 | ) | (4,039 | ) | ||||||||
| Adjusted EBITDA | $ | (3,124 | ) | $ | (6,674 | ) | $ | (13,659 | ) | $ | (25,769 | ) |
Evolent Health, Inc.
Reconciliation of Adjusted Earnings (Loss) Available for Class A and Class B
Shareholders to Earnings (Loss) Available for Common Shareholders
| (in thousands, except per share data) | For the Three | For the Nine | ||||||||||||||
| Months Ended | Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Earnings (Loss) Available for | ||||||||||||||||
| Common Shareholders - Diluted (a) | $ | (11,208 | ) | $ | (11,980 | ) | $ | (142,335 | ) | $ | 328,081 | |||||
| Less: | ||||||||||||||||
| Net income (loss) attributable to | ||||||||||||||||
| non-controlling interests | - | - | - | (8,532 | ) | |||||||||||
| Undeclared cumulative preferred dividends | - | - | - | 2,184 | ||||||||||||
| Earnings (Loss) Available for | ||||||||||||||||
| Common Shareholders - Basic (b) | (11,208 | ) | (11,980 | ) | (142,335 | ) | 334,429 | |||||||||
| Add: | ||||||||||||||||
| Net income (loss) of Evolent Health LLC | - | - | - | (44,079 | ) | (1) | ||||||||||
| Less: | ||||||||||||||||
| Goodwill impairment | - | - | (160,600 | ) | - | |||||||||||
| Gain on consolidation | - | - | - | 414,133 | ||||||||||||
| Income (loss) from affiliates | (448 | ) | - | (462 | ) | (28,165 | ) | |||||||||
| (Provision) benefit for income taxes | 256 | - | 1,614 | (29,273 | ) | |||||||||||
| Net (income) loss attributable to | ||||||||||||||||
| non-controlling interests | 4,567 | 5,108 | 59,250 | 8,532 | ||||||||||||
| Purchase accounting adjustments | - | (2,870 | ) | (87 | ) | (4,145 | ) | |||||||||
| Stock-based compensation expense | (4,799 | ) | (4,382 | ) | (13,844 | ) | (32,274 | ) | ||||||||
| Transaction costs | (4,170 | ) | (264 | ) | (4,628 | ) | (4,039 | ) | ||||||||
| Adjusted Earnings (Loss) Available | ||||||||||||||||
| for Class A and Class B Shareholders (c) | $ | (6,614 | ) | $ | (9,572 | ) | $ | (23,578 | ) | $ | (34,419 | ) | ||||
| Earnings (Loss) per Share Available | ||||||||||||||||
| for Common Shareholders - Diluted (a) (2) | $ | (0.26 | ) | $ | (0.29 | ) | $ | (3.34 | ) | $ | 7.93 | |||||
| Earnings (Loss) per Share Available | ||||||||||||||||
| for Common Shareholders - Basic (b) (2) | $ | (0.26 | ) | $ | (0.29 | ) | $ | (3.34 | ) | $ | 17.05 | |||||
| Adjusted Earnings (Loss) per Share Available | ||||||||||||||||
| for Class A and Class B Shareholders (c) (3) | $ | (0.11 | ) | $ | (0.16 | ) | $ | (0.39 | ) | $ | (0.83 | ) | ||||
| Weighted-average common shares - basic | 43,110 | 41,468 | 42,632 | 19,618 | ||||||||||||
| Weighted-average common shares - diluted | 43,110 | 41,468 | 42,632 | 41,398 | ||||||||||||
| Adjusted Weighted-Average Class A | ||||||||||||||||
| and Class B Shares (4) | 60,255 | 58,993 | 60,029 | 41,398 |
Evolent Health, Inc.
Reconciliation of Adjusted Weighted-Average Class A and Class B
Shares to Diluted Weighted-Average Common Shares
| (in thousands) | For the Three | For the Nine | |||||||||
| Months Ended | Months Ended | ||||||||||
| September 30, | September 30, | ||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||
| Weighted-average common shares - diluted | 43,110 | 41,468 | 42,632 | 41,398 | |||||||
| Assumed conversion of Class B common | |||||||||||
| shares to Class A common shares | 17,145 | 17,525 | 17,397 | - | |||||||
| Adjusted Weighted-Average Class A and Class B Shares | 60,255 | 58,993 | 60,029 | 41,398 |
Evolent Health, Inc.
Guidance Reconciliation
| (in thousands) | For the Three | For the Twelve | ||||||||
| Months Ended | Months Ended | |||||||||
| December 31, | December 31, | |||||||||
| 2016 | 2016 | |||||||||
| Revenue | $ | 83,000 | $ | 249,000 | ||||||
| Purchase Accounting Adjustments | 2,000 | 2,000 | ||||||||
| Adjusted Revenue | $ | 85,000 | $ | 251,000 | ||||||
| Net Income (Loss) Attributable to | ||||||||||
| Evolent Health, Inc. | $ | (18,000 | ) | $ | (175,500 | ) | ||||
| Less: | ||||||||||
| Interest income (expense), net | 200 | 1,000 | ||||||||
| (Provision) benefit for income taxes | 2,000 | 3,500 | ||||||||
| Depreciation and amortization expenses | (8,000 | ) | (21,000 | ) | ||||||
| EBITDA | (12,200 | ) | (159,000 | ) | ||||||
| Less: | ||||||||||
| Goodwill impairment | - | (160,600 | ) | |||||||
| Income (loss) from affiliates | (200 | ) | (900 | ) | ||||||
| Net (income) loss attributable to | ||||||||||
| non-controlling interests | 4,500 | 48,000 | ||||||||
| Stock-based compensation | (4,000 | ) | (15,000 | ) | ||||||
| Transaction costs | (4,000 | ) | (8,500 | ) | ||||||
| Adjusted EBITDA | $ | (8,500 | ) | $ | (22,000 | ) |
The guidance reconciliation provided above reconciles the midpoint of the respective guidance ranges to the most comparable GAAP measure.
FORWARD-LOOKING STATEMENTS - CAUTIONARY LANGUAGE
Certain statements made in this release and in other written or oral statements made by us or on our behalf are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"). A forward-looking statement is a statement that is not a historical fact and, without limitation, includes any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like: "believe," "anticipate," "expect," "estimate," "aim," "predict," "potential," "continue," "plan," "project," "will," "should," "shall," "may," "might" and other words or phrases with similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, trends in our businesses, prospective services, future performance or financial results and the outcome of contingencies, such as legal proceedings. We claim the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA.
These statements are only predictions based on our current expectations and projections about future events. Forward-looking statements involve risks and uncertainties that may cause actual results, level of activity, performance or achievements to differ materially from the results contained in the forward-looking statements. Risks and uncertainties that may cause actual results to vary materially, some of which are described within the forward-looking statements, include, among others:
The risks included here are not exhaustive. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Our 2015 Form 10-K and other documents filed with the SEC include additional factors that could affect our businesses and financial performance. Moreover, we operate in a rapidly changing and competitive environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors.
Further, it is not possible to assess the effect of all risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. In addition, we disclaim any obligation to update any forward-looking statements to reflect events or circumstances that occur after the date of this report.