UNITED STATES |
SECURITIES AND EXCHANGE COMMISSION |
WASHINGTON, D.C. 20549 |
Delaware | 001-37415 | 32-0454912 |
(State or other jurisdiction of incorporation or organization) | Commission File Number: | (I.R.S. Employer Identification No.) |
800 N. Glebe Road, Suite 500, Arlington, Virginia 22203 | ||
(Address of principal executive offices)(zip code) |
Exhibit | ||
Number | Description | |
99.1 | Press release dated November 5, 2015, announcing Evolent Health, Inc.'s financial results for the quarter | |
ended September 30, 2015 |
EVOLENT HEALTH, INC. | |
By: | /s/ Lydia Stone |
Name: | Lydia Stone |
Title: | Principal Accounting Officer |
and Corporate Controller |
Exhibit | ||
Number | Description | |
99.1 | Press release dated November 5, 2015, announcing Evolent Health, Inc.'s financial results for the quarter | |
ended September 30, 2015 |
![]() | |
• | GAAP revenue of $40.4 million; Adjusted revenue of $43.3 million, which is an increase of 45% |
• | Lives on the platform of 717,587, an increase of 146% |
• | Net income (loss) attributable to common shareholders of $(12.0) million, compared to $(3.2) million |
• | Adjusted EBITDA of $(6.7) million, compared to $(5.1) million |
• | Adjusted Revenue for the three months ended September 30, 2015 increased 44.8% to $43.3 million, compared to $29.9 million for the three months ended September 30, 2014. Adjusted Revenue for the nine months ended September 30, 2015 increased 57.5% to $116.8 million, compared to $74.2 million for the nine months ended September 30, 2014. |
• | Adjusted Cost of Revenue was $24.4 million or 56.3% of Adjusted Revenue for the three months ended September 30, 2015, compared to $19.3 million or 64.6% of Adjusted Revenue for the three months ended September 30, 2014. Adjusted Cost of Revenue was $75.3 million or 64.5% of Adjusted Revenue for the nine months ended September 30, 2015 compared to $51.8 million or 69.9% of Adjusted Revenue for the nine months ended September 30, 2014. |
• | Adjusted EBITDA for the three months ended September 30, 2015 was $(6.7) million, compared to $(5.1) million for the three months ended September 30, 2014. Adjusted EBITDA for the nine months ended September 30, 2015 was $(25.8) million, compared to $(24.0) million for the nine months ended September 30, 2014. |
• | Adjusted Loss Available for Common Shareholders for the three months ended September 30, 2015 and 2014 was $(9.6) million and $(7.8) million, respectively. Adjusted Loss Available for Common Shareholders for the nine months ended September 30, 2015 and 2014 was $(34.4) million and $(30.5) million, respectively. |
• | Adjusted Loss per Share Available for Common Shareholders for the three months ended September 30, 2015 and 2014 was $(0.16) and $(0.31), respectively. Adjusted Loss per Share Available for Common Shareholders for the nine months ended September 30, 2015 and 2014 was $(0.83) and $(1.24), respectively. |
Bob East | Robin Glass |
(443) 213-0500 | (571) 389-6005 |
Investor Relations | Media Relations |
InvestorRelations@evolenthealth.com | RGlass@evolenthealth.com |
(in thousands) | For the Three Months Ended September 30, 2015 | For the Three Months Ended September 30, 2014 | |||||||||||||||||||||||||||||||||||||||||||
Add: | |||||||||||||||||||||||||||||||||||||||||||||
Evolent | Add: | Less: | Less: | Evolent | Evolent | Evolent | Less: | Evolent | |||||||||||||||||||||||||||||||||||||
Health, Inc. | Purchase | Stock-based | Transaction | Health, Inc. | Health, Inc. | Health LLC | Stock-based | Health, Inc. | Change Over Prior Period | ||||||||||||||||||||||||||||||||||||
as Reported | Accounting (1) | Compensation | Costs | as Adjusted | as Reported | Operations (2) | Compensation | Adjusted | $ | % | |||||||||||||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||||||||||||||||||
Transformation | $ | 6,783 | $ | 783 | $ | — | $ | — | $ | 7,566 | $ | — | $ | 11,886 | $ | — | $ | 11,886 | $ | (4,320 | ) | (36.3 | )% | ||||||||||||||||||||||
Platform and operations | 33,623 | 2,087 | — | — | 35,710 | — | 18,010 | — | 18,010 | 17,700 | 98.3 | % | |||||||||||||||||||||||||||||||||
Total revenue | 40,406 | 2,870 | — | — | 43,276 | — | 29,896 | — | 29,896 | 13,380 | 44.8 | % | |||||||||||||||||||||||||||||||||
Expenses | |||||||||||||||||||||||||||||||||||||||||||||
Cost of revenue (exclusive | |||||||||||||||||||||||||||||||||||||||||||||
of depreciation and | |||||||||||||||||||||||||||||||||||||||||||||
amortization presented | |||||||||||||||||||||||||||||||||||||||||||||
separately below) | 24,762 | — | 384 | — | 24,378 | — | 19,326 | 27 | 19,299 | 5,079 | 26.3 | % | |||||||||||||||||||||||||||||||||
Selling, general and | |||||||||||||||||||||||||||||||||||||||||||||
administrative expenses | 29,834 | — | 3,998 | 264 | 25,572 | — | 15,977 | 298 | 15,679 | 9,893 | 63.1 | % | |||||||||||||||||||||||||||||||||
Depreciation and | |||||||||||||||||||||||||||||||||||||||||||||
amortization expenses | 3,056 | — | — | — | 3,056 | — | 698 | — | 698 | 2,358 | N/A | ||||||||||||||||||||||||||||||||||
Total operating | |||||||||||||||||||||||||||||||||||||||||||||
expenses | 57,652 | — | 4,382 | 264 | 53,006 | — | 36,001 | 325 | 35,676 | 17,330 | 48.6 | % | |||||||||||||||||||||||||||||||||
Operating income | |||||||||||||||||||||||||||||||||||||||||||||
(loss) | $ | (17,246 | ) | $ | 2,870 | $ | (4,382 | ) | $ | (264 | ) | $ | (9,730 | ) | $ | — | $ | (6,105 | ) | $ | (325 | ) | $ | (5,780 | ) | $ | (3,950 | ) | 68.3 | % |
(2) | Represents the operational results of Evolent Health LLC for the period July 1, 2014, through September 30, 2014 |
(in thousands) | For the Nine Months Ended September 30, 2015 | For the Nine Months Ended September 30, 2014 | |||||||||||||||||||||||||||||||||||||||||||||||
Add: | Add: | ||||||||||||||||||||||||||||||||||||||||||||||||
Evolent | Evolent | Add: | Less: | Less: | Evolent | Evolent | Evolent | Less: | Evolent | ||||||||||||||||||||||||||||||||||||||||
Health, Inc. | Health LLC | Purchase | Stock-based | Transaction | Health, Inc. | Health, Inc. | Health LLC | Stock-based | Health, Inc. | Change Over Prior Period | |||||||||||||||||||||||||||||||||||||||
as Reported | Operations (1) | Accounting (2) | Compensation | Costs | as Adjusted | as Reported | Operations (3) | Compensation | Adjusted | $ | % | ||||||||||||||||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||||||||||||||||||||||
Transformation | $ | 9,486 | $ | 15,755 | $ | 1,147 | $ | — | $ | — | $ | 26,388 | $ | — | $ | 27,837 | $ | — | $ | 27,837 | $ | (1,449 | ) | (5.2 | )% | ||||||||||||||||||||||||
Platform and operations | 41,334 | 46,059 | 2,998 | — | — | 90,391 | — | 46,324 | — | 46,324 | 44,067 | 95.1 | % | ||||||||||||||||||||||||||||||||||||
Total revenue | 50,820 | 61,814 | 4,145 | — | — | 116,779 | — | 74,161 | — | 74,161 | 42,618 | 57.5 | % | ||||||||||||||||||||||||||||||||||||
Expenses | |||||||||||||||||||||||||||||||||||||||||||||||||
Cost of revenue (exclusive | |||||||||||||||||||||||||||||||||||||||||||||||||
of depreciation and | |||||||||||||||||||||||||||||||||||||||||||||||||
amortization presented | |||||||||||||||||||||||||||||||||||||||||||||||||
separately below) | 32,649 | 44,839 | — | 2,167 | — | 75,321 | — | 52,193 | 350 | 51,843 | 23,478 | 45.3 | % | ||||||||||||||||||||||||||||||||||||
Selling, general and | |||||||||||||||||||||||||||||||||||||||||||||||||
administrative expenses | 42,916 | 58,457 | — | 30,107 | 4,039 | 67,227 | — | 50,683 | 4,372 | 46,311 | 20,916 | 45.2 | % | ||||||||||||||||||||||||||||||||||||
Depreciation and | |||||||||||||||||||||||||||||||||||||||||||||||||
amortization expenses | 4,040 | 2,637 | — | — | — | 6,677 | — | 1,995 | — | 1,995 | 4,682 | 234.7 | % | ||||||||||||||||||||||||||||||||||||
Total operating | |||||||||||||||||||||||||||||||||||||||||||||||||
expenses | 79,605 | 105,933 | — | 32,274 | 4,039 | 149,225 | — | 104,871 | 4,722 | 100,149 | 49,076 | 49.0 | % | ||||||||||||||||||||||||||||||||||||
Operating income | |||||||||||||||||||||||||||||||||||||||||||||||||
(loss) | $ | (28,785 | ) | $ | (44,119 | ) | $ | 4,145 | $ | (32,274 | ) | $ | (4,039 | ) | $ | (32,446 | ) | $ | — | $ | (30,710 | ) | $ | (4,722 | ) | $ | (25,988 | ) | $ | (6,458 | ) | 24.8 | % |
(1) | Represents the operational results of Evolent Health LLC for the period January 1, 2015, through June 3, 2015, prior to consolidation |
(2) | Represents adjustments to remove the results of purchase accounting |
(3) | Represents the operational results of Evolent Health LLC for the period January 1, 2014, through September 30, 2014 |
(in thousands) | For the Three | For the Nine | ||||||||||||||
Months Ended | Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net Income (Loss) Attributable to | ||||||||||||||||
Evolent Health, Inc. | $ | (11,980 | ) | $ | (3,167 | ) | $ | 336,613 | $ | (14,548 | ) | |||||
Add: | ||||||||||||||||
Net income (loss) of Evolent Health LLC | — | (6,051 | ) | (1) | (44,079 | ) | (1) | (30,593 | ) | (1) | ||||||
Less: | ||||||||||||||||
Purchase accounting adjustments | (2,870 | ) | — | (4,145 | ) | — | ||||||||||
Gain on consolidation | — | — | 414,133 | — | ||||||||||||
Income (loss) from affiliate | — | (3,167 | ) | (28,165 | ) | (14,548 | ) | |||||||||
(Provision) benefit for income taxes | 104 | — | (29,169 | ) | — | |||||||||||
Net (income) loss attributable to | ||||||||||||||||
non-controlling interests | 5,108 | — | 8,532 | — | ||||||||||||
Stock-based compensation | (4,382 | ) | (325 | ) | (32,274 | ) | (4,722 | ) | ||||||||
Transaction costs | (264 | ) | — | (4,039 | ) | — | ||||||||||
Interest income (expense), net | 54 | 54 | 105 | 139 | ||||||||||||
Other income (expense), net | — | — | 2 | (22 | ) | |||||||||||
Depreciation and amortization expense | (3,056 | ) | (698 | ) | (6,677 | ) | (1,995 | ) | ||||||||
Adjusted EBITDA | $ | (6,674 | ) | $ | (5,082 | ) | $ | (25,769 | ) | $ | (23,993 | ) |
(1) | Represents the net income (loss) for the beginning-of-period through June 3, 2015, or for the three or nine months ended September 30, 2014, for the respective periods |
(in thousands, except per share data) | For the Three | For the Nine | ||||||||||||||
Months Ended | Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Earnings (Loss) Available for | ||||||||||||||||
Common Shareholders - Diluted (a) | $ | (11,980 | ) | $ | (5,196 | ) | $ | 328,081 | $ | (19,143 | ) | |||||
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) | (11,980 | ) | (5,196 | ) | 334,429 | (19,143 | ) | |||||||||
Add: | ||||||||||||||||
Net income (loss) of Evolent Health LLC (1) | — | (6,051 | ) | (1) | (44,079 | ) | (1) | (30,593 | ) | (1) | ||||||
Less: | ||||||||||||||||
Purchase accounting adjustments | (2,870 | ) | — | (4,145 | ) | — | ||||||||||
Gain on consolidation | — | — | 414,133 | — | ||||||||||||
Income (loss) from affiliate | — | (3,167 | ) | (28,165 | ) | (14,548 | ) | |||||||||
(Provision) benefit for income taxes | — | — | (29,273 | ) | — | |||||||||||
Net (income) loss attributable to | ||||||||||||||||
non-controlling interests | 5,108 | — | 8,532 | — | ||||||||||||
Stock-based compensation | (4,382 | ) | (325 | ) | (32,274 | ) | (4,722 | ) | ||||||||
Transaction costs | (264 | ) | — | (4,039 | ) | — | ||||||||||
Adjusted Earnings (Loss) Available | ||||||||||||||||
for Common Shareholders (c) (2) | $ | (9,572 | ) | $ | (7,755 | ) | $ | (34,419 | ) | $ | (30,466 | ) | ||||
Earnings (Loss) per Share Available | ||||||||||||||||
for Common Shareholders - Diluted (a) (2) | $ | (0.29 | ) | $ | (2.07 | ) | $ | 7.93 | $ | (8.77 | ) | |||||
Earnings (Loss) per Share Available | ||||||||||||||||
for Common Shareholders - Basic (b) (2) | $ | (0.29 | ) | $ | (2.07 | ) | $ | 17.05 | $ | (8.77 | ) | |||||
Adjusted Earnings (Loss) per Share Available | ||||||||||||||||
for Common Shareholders (c) (3) | $ | (0.16 | ) | $ | (0.31 | ) | $ | (0.83 | ) | $ | (1.24 | ) | ||||
Weighted-average common shares - basic | 41,468 | 2,506 | 19,618 | 2,184 | ||||||||||||
Weighted-average common shares - diluted | 41,468 | 2,506 | 41,398 | 2,184 | ||||||||||||
Weighted-average common shares - adjusted (4) | 60,895 | 25,096 | 41,398 | 24,660 |
(1) | Represents the net income (loss) for the beginning-of-period through June 3, 2015, or for the three or nine months ended September 30, 2014, for the respective periods |
(2) | For periods of net loss, shares used in the earnings per share calculation represent basic shares as using diluted shares would be anti-dilutive |
(3) | Represents Adjusted Earnings (Loss) Available for Common Shareholders divided by Adjusted Weighted-Average Common Shares as described in Note 4 below |
(4) | Represents the weighted-average shares of all dilutive or potentially dilutive shares over the respective periods including in periods of loss. See the reconciliation of Adjusted Weighted-Average Common Shares to GAAP diluted weighted-average common shares on the following page. |
(in thousands) | For the Three | For the Nine | |||||||||
Months Ended | Months Ended | ||||||||||
September 30, | September 30, | ||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||
Weighted-average common shares - diluted | 41,468 | 2,506 | 41,398 | 2,184 | |||||||
Dilutive effect of restricted stock | 55 | 1,122 | — | 520 | |||||||
Dilutive effect of options | 1,847 | — | — | — | |||||||
Assumed conversion of convertible preferred | |||||||||||
stock at beginning-of-period | — | 21,468 | — | 21,956 | |||||||
Assumed conversion of Class B common | |||||||||||
shares to Class A common shares | 17,525 | — | — | — | |||||||
Weighted-average common shares - adjusted | 60,895 | 25,096 | 41,398 | 24,660 |
(in thousands) | As of | As of | ||||||
September 30, | December 31, | |||||||
2015 | 2014 | |||||||
Cash and cash equivalents | $ | 208,157 | $ | — | ||||
Total current assets | 246,221 | 1,074 | ||||||
Goodwill | 608,903 | — | ||||||
Intangible assets, net | 165,661 | — | ||||||
Total assets | 1,056,181 | 38,277 | ||||||
Total liabilities | 120,129 | 1,074 | ||||||
Total redeemable preferred stock | — | 39,273 | ||||||
Total shareholders' equity (deficit) attributable to Evolent Health, Inc. | 646,666 | (2,070 | ) | |||||
Non-controlling interests | 289,386 | — | ||||||
Total liabilities, redeemable preferred stock and shareholders' equity (deficit) | 1,056,181 | 38,277 |
(in thousands) | For the Three | For the Nine | |||||||||||||
Months Ended | Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenue | |||||||||||||||
Transformation | $ | 6,783 | $ | — | $ | 9,486 | $ | — | |||||||
Platform and operations | 33,623 | — | 41,334 | — | |||||||||||
Total revenue | 40,406 | — | 50,820 | — | |||||||||||
Expenses | |||||||||||||||
Cost of revenue (exclusive of depreciation | |||||||||||||||
and amortization presented below) | 24,762 | — | 32,649 | — | |||||||||||
Selling, general and administrative expenses | 29,834 | — | 42,916 | — | |||||||||||
Depreciation and amortization expenses | 3,056 | — | 4,040 | — | |||||||||||
Total operating expenses | 57,652 | — | 79,605 | — | |||||||||||
Operating income (loss) | (17,246 | ) | — | (28,785 | ) | — | |||||||||
Interest income (expense), net | 54 | — | 67 | — | |||||||||||
Gain on consolidation | — | — | 414,133 | — | |||||||||||
Income (loss) from affiliate | — | (3,167 | ) | (28,165 | ) | (14,548 | ) | ||||||||
Income (loss) before income taxes | |||||||||||||||
and non-controlling interests | (17,192 | ) | (3,167 | ) | 357,250 | (14,548 | ) | ||||||||
Provision (benefit) for income taxes | (104 | ) | — | 29,169 | — | ||||||||||
Net income (loss) | (17,088 | ) | (3,167 | ) | 328,081 | (14,548 | ) | ||||||||
Net income (loss) attributable to | |||||||||||||||
non-controlling interests | (5,108 | ) | — | (8,532 | ) | — | |||||||||
Net income (loss) attributable to | |||||||||||||||
Evolent Health, Inc. | $ | (11,980 | ) | $ | (3,167 | ) | $ | 336,613 | $ | (14,548 | ) | ||||
Earnings (Loss) Available to Common Shareholders | |||||||||||||||
Basic | $ | (11,980 | ) | $ | (5,196 | ) | $ | 334,429 | $ | (19,143 | ) | ||||
Diluted | (11,980 | ) | (5,196 | ) | 328,081 | (19,143 | ) | ||||||||
Earnings (Loss) per Common Share | |||||||||||||||
Basic | $ | (0.29 | ) | $ | (2.07 | ) | $ | 17.05 | $ | (8.77 | ) | ||||
Diluted | (0.29 | ) | (2.07 | ) | 7.93 | (8.77 | ) | ||||||||
Weighted-Average Common Shares Outstanding | |||||||||||||||
Basic | 41,468 | 2,506 | 19,618 | 2,184 | |||||||||||
Diluted | 41,468 | 2,506 | 41,398 | 2,184 |
(in thousands) | For the Nine | ||||||
Months Ended | |||||||
September 30, | |||||||
2015 | 2014 | ||||||
Net cash provided by (used in) operating activities | $ | (12,157 | ) | $ | — | ||
Net cash provided by (used in) investing activities | 11,135 | — | |||||
Net cash provided by (used in) financing activities | 209,179 | — | |||||
Net increase (decrease) in cash and cash equivalents | 208,157 | — | |||||
Cash and cash equivalents as of beginning-of-period | — | — | |||||
Cash and cash equivalents as of end-of-period | $ | 208,157 | $ | — |
• | the structural change in the market for health care in the United States; |
• | our ability to effectively manage our growth; |
• | the significant portion of revenue we derive from our largest partners; |
• | our ability to offer new and innovative products and services; |
• | the growth and success of our partners, which is difficult to predict and is subject to factors outside of our control; |
• | our ability to attract new partners; |
• | our ability to recover the significant upfront costs in our partner relationships; |
• | our ability to estimate the size of our target market; |
• | our ability to maintain and enhance our reputation and brand recognition; |
• | consolidation in the health care industry; |
• | competition which could limit our ability to maintain or expand market share within our industry; |
• | our ability to partner with providers due to exclusivity provisions in our contracts; |
• | uncertainty in the health care regulatory framework; |
• | restrictions and penalties as a result of privacy and data protection laws; |
• | adequate protection of our intellectual property; |
• | any alleged infringement, misappropriation or violation of third-party proprietary rights; |
• | our use of “open source” software; |
• | our reliance on third parties; |
• | our ability to use, disclose, de-identify or license data and to integrate third-party technologies; |
• | data loss or corruption due to failures or errors in our systems and service disruptions at our data centers; |
• | breaches or failures of our security measures; |
• | our reliance on Internet infrastructure, bandwidth providers, data center providers, other third parties and our own systems for providing services to our users; |
• | our dependency on our key personnel, and our ability to attract, hire, integrate and retain key personnel; |
• | risks related to future acquisition opportunities; |
• | our future indebtedness and our ability to obtain additional financing; |
• | our ability to achieve profitability in the future; |
• | the requirements of being a public company; |
• | the risk of potential future litigation; |
• | our finalization of the annual goodwill impairment test; and |
• | our ability to remediate the material weakness in our internal control over financial reporting. |