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: | (IRS 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 August 7, 2017, announcing Evolent Health, Inc.'s financial results for the quarter | |
ended June 30, 2017 |
EVOLENT HEALTH, INC. | |
By: | /s/ Lydia Stone |
Name: | Lydia Stone |
Title: | Chief Accounting Officer |
and Corporate Controller |
Exhibit | ||
Number | Description | |
99.1 | Press release dated August 7, 2017, announcing Evolent Health, Inc.'s financial results for the quarter | |
ended June 30, 2017 |
• | GAAP revenue of $107.1 million, an increase of 89.4%; Adjusted Revenue of $107.3 million, an increase of 89.9% |
• | Net income (loss) attributable to Evolent Health, Inc. of $(16.9) million, Adjusted EBITDA of $(3.6) million |
• | Lives on platform of approximately 2.8 million, an increase of 98.2% |
• | New partnership agreement with Crystal Run Healthcare in New York, providing third-party administration services and population health management |
• | Revenue of $107.1 million and $56.5 million for the three months ended June 30, 2017 and 2016, respectively, an increase of 89.4%; |
• | Cost of revenue of $68.0 million and $32.8 million for the three months ended June 30, 2017 and 2016, respectively, an increase of 107.4%; |
• | Net income (loss) attributable to Evolent Health, Inc. of $(16.9) million and $(8.4) million for the three months ended June 30, 2017 and 2016, respectively; |
• | Earnings (loss) available to common shareholders, basic and diluted, of $(16.9) million and $(8.4) million for the three months ended June 30, 2017 and 2016, respectively; and |
• | Earnings (loss) available to common shareholders, per basic and diluted share, of $(0.28) and $(0.20) for the three months ended June 30, 2017 and 2016, respectively. |
• | Adjusted Revenue of $107.3 million and $56.5 million for the three months ended June 30, 2017 and 2016, respectively, an increase of 89.9%; |
• | Adjusted Cost of Revenue of $66.2 million and $32.1 million for the three months ended June 30, 2017 and 2016, respectively, an increase of 105.8%; |
• | Adjusted EBITDA of $(3.6) million and $(3.9) million for the three months ended June 30, 2017 and 2016, respectively; |
• | Adjusted Earnings (Loss) Available for Class A and Class B Shareholders of $(8.8) million and $(7.2) million for the three months ended June 30, 2017 and 2016, respectively; and |
• | Adjusted Earnings (Loss) per Share Available for Class A and Class B Shareholders of $(0.13) and $(0.12) for the three months ended June 30, 2017 and 2016, respectively. |
Bob East | Robin Glass |
443.213.0500 | 571.389.6005 |
Investor Relations | Media Relations |
InvestorRelations@evolenthealth.com | RGlass@evolenthealth.com |
(in thousands, except per share data) | For the Three | For the Six | |||||||||||||
Months Ended | Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue | |||||||||||||||
Transformation | $ | 5,361 | $ | 10,388 | $ | 15,596 | $ | 18,502 | |||||||
Platform and operations | 101,710 | 46,130 | 197,714 | 87,465 | |||||||||||
Total revenue | 107,071 | 56,518 | 213,310 | 105,967 | |||||||||||
Expenses | |||||||||||||||
Cost of revenue (exclusive of | |||||||||||||||
depreciation and amortization expenses | |||||||||||||||
presented separately below) | 67,994 | 32,779 | 135,523 | 61,390 | |||||||||||
Selling, general and administrative expenses | 51,090 | 32,756 | 104,641 | 64,702 | |||||||||||
Depreciation and amortization expenses | 6,904 | 3,612 | 13,519 | 6,983 | |||||||||||
Goodwill impairment | — | — | — | 160,600 | |||||||||||
Loss on change in fair value | |||||||||||||||
of contingent consideration | 200 | — | 200 | — | |||||||||||
Total operating expenses | 126,188 | 69,147 | 253,883 | 293,675 | |||||||||||
Operating income (loss) | (19,117 | ) | (12,629 | ) | (40,573 | ) | (187,708 | ) | |||||||
Interest income | 218 | 272 | 403 | 551 | |||||||||||
Interest expense | (947 | ) | — | (1,901 | ) | — | |||||||||
Income (loss) from affiliates | (555 | ) | (14 | ) | (1,077 | ) | (14 | ) | |||||||
Other Income (expense), net | 3 | 1 | 5 | 2 | |||||||||||
Income (loss) before income taxes | |||||||||||||||
and non-controlling interests | (20,398 | ) | (12,370 | ) | (43,143 | ) | (187,169 | ) | |||||||
Provision (benefit) for income taxes | (700 | ) | (371 | ) | (295 | ) | (1,359 | ) | |||||||
Net income (loss) | (19,698 | ) | (11,999 | ) | (42,848 | ) | (185,810 | ) | |||||||
Net income (loss) attributable to | |||||||||||||||
non-controlling interests | (2,793 | ) | (3,612 | ) | (7,930 | ) | (54,683 | ) | |||||||
Net income (loss) attributable to | |||||||||||||||
Evolent Health, Inc. | $ | (16,905 | ) | $ | (8,387 | ) | $ | (34,918 | ) | $ | (131,127 | ) | |||
Earnings (Loss) Available to Common Shareholders | |||||||||||||||
Basic | $ | (16,905 | ) | $ | (8,387 | ) | $ | (34,918 | ) | $ | (131,127 | ) | |||
Diluted | (16,905 | ) | (8,387 | ) | (34,918 | ) | (131,127 | ) | |||||||
Earnings (Loss) per Common Share | |||||||||||||||
Basic | $ | (0.28 | ) | $ | (0.20 | ) | $ | (0.62 | ) | $ | (3.09 | ) | |||
Diluted | (0.28 | ) | (0.20 | ) | (0.62 | ) | (3.09 | ) | |||||||
Weighted-Average Common Shares Outstanding | |||||||||||||||
Basic | 59,478 | 42,594 | 56,057 | 42,390 | |||||||||||
Diluted | 59,478 | 42,594 | 56,057 | 42,390 |
(in thousands) | As of | As of | ||||||
June 30, | December 31, | |||||||
2017 | 2016 | |||||||
Cash and cash equivalents | $ | 99,975 | $ | 134,563 | ||||
Investments, at amortized cost | 24,027 | 44,341 | ||||||
Total current assets | 192,620 | 264,966 | ||||||
Intangible assets, net | 254,460 | 258,923 | ||||||
Goodwill | 628,653 | 626,569 | ||||||
Total assets | 1,138,352 | 1,199,839 | ||||||
Long-term debt, net of discount | 120,935 | 120,283 | ||||||
Total liabilities | 243,903 | 287,725 | ||||||
Total shareholders' equity (deficit) attributable to | ||||||||
Evolent Health, Inc. | 859,769 | 702,526 | ||||||
Non-controlling interests | 34,680 | 209,588 | ||||||
Total liabilities and shareholders' equity (deficit) | 1,138,352 | 1,199,839 |
(in thousands) | For the Six | ||||||
Months Ended | |||||||
June 30, | |||||||
2017 | 2016 | ||||||
Net cash provided by (used in) operating activities | $ | (44,712 | ) | $ | (21,918 | ) | |
Net cash provided by (used in) investing activities | 7,739 | (18,466 | ) | ||||
Net cash provided by (used in) financing activities | 2,385 | (204 | ) | ||||
Net increase (decrease) in cash and cash equivalents | (34,588 | ) | (40,588 | ) | |||
Cash and cash equivalents as of beginning-of-period | 134,563 | 145,726 | |||||
Cash and cash equivalents as of end-of-period | $ | 99,975 | $ | 105,138 |
(in thousands) | For the Three Months Ended June 30, 2017 | For the Three Months Ended June 30, 2016 | ||||||||||||||||||||||||||||||||||||
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 | $ | 5,361 | $ | — | $ | 5,361 | $ | 10,388 | $ | — | $ | 10,388 | $ | (5,027 | ) | (48.4 | )% | $ | (5,027 | ) | (48.4 | )% | ||||||||||||||||
Platform and operations (1) | 101,710 | 244 | 101,954 | 46,130 | — | 46,130 | 55,580 | 120.5 | % | 55,824 | 121.0 | % | ||||||||||||||||||||||||||
Total revenue | 107,071 | 244 | 107,315 | 56,518 | — | 56,518 | 50,553 | 89.4 | % | 50,797 | 89.9 | % | ||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||
Cost of revenue (exclusive of | ||||||||||||||||||||||||||||||||||||||
depreciation and amortization | ||||||||||||||||||||||||||||||||||||||
expenses presented | ||||||||||||||||||||||||||||||||||||||
separately below) (2) | 67,994 | (1,837 | ) | 66,157 | 32,779 | (636 | ) | 32,143 | 35,215 | 107.4 | % | 34,014 | 105.8 | % | ||||||||||||||||||||||||
Selling, general and | ||||||||||||||||||||||||||||||||||||||
administrative expenses (3) | 51,090 | (6,370 | ) | 44,720 | 32,756 | (4,475 | ) | 28,281 | 18,334 | 56.0 | % | 16,439 | 58.1 | % | ||||||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||||||||||||||||||||
expenses (4) | 6,904 | (2,383 | ) | 4,521 | 3,612 | — | 3,612 | 3,292 | 91.1 | % | 909 | 25.2 | % | |||||||||||||||||||||||||
Loss on change in fair value | ||||||||||||||||||||||||||||||||||||||
of contingent consideration (5) | 200 | (200 | ) | — | — | — | — | 200 | — | % | — | — | % | |||||||||||||||||||||||||
Total operating expenses | 126,188 | (10,790 | ) | 115,398 | 69,147 | (5,111 | ) | 64,036 | 57,041 | 82.5 | % | 51,362 | 80.2 | % | ||||||||||||||||||||||||
Operating income (loss) | $ | (19,117 | ) | $ | 11,034 | $ | (8,083 | ) | $ | (12,629 | ) | $ | 5,111 | $ | (7,518 | ) | $ | (6,488 | ) | (51.4 | )% | $ | (565 | ) | (7.5 | )% | ||||||||||||
Total operating expenses as a | ||||||||||||||||||||||||||||||||||||||
percentage of total revenue | 117.9 | % | 107.5 | % | 122.3 | % | 113.3 | % |
(1) | Adjustments to platform and operations revenue include deferred revenue purchase accounting adjustments of approximately $0.2 million for the three months ended June 30, 2017, resulting from our acquisitions and business combinations. |
(2) | Adjustments to cost of revenue include $0.4 million and $0.4 million in stock-based compensation expense for the three months ended June 30, 2017 and 2016, respectively. Stock-based compensation expense includes the value of equity awards granted to employees and non-employee directors of the Company or its consolidated subsidiaries. Adjustments also include transaction costs of approximately $1.4 million and $0.2 million for the three months ended June 30, 2017 and 2016, respectively, resulting from acquisitions and business combinations. |
(3) | Adjustments to selling, general and administrative expenses include $5.0 million and $4.3 million in stock-based compensation expense for the three months ended June 30, 2017 and 2016, respectively. Stock-based compensation expense includes the value of equity awards granted to employees and non-employee directors of the Company or its consolidated subsidiaries. Adjustments also include transaction costs of $1.9 million and $0.2 million for the three months ended June 30, 2017 and 2016, respectively, resulting from acquisitions and business combinations and costs relating to our securities offerings. These adjustments for the three months ended June 30, 2017, were offset by a one-time benefit of approximately $0.5 million related to a lease termination in conjunction with the Valence Health acquisition. |
(4) | Adjustments to depreciation and amortization expenses of approximately $2.4 million for the three months ended June 30, 2017, relate to amortization of intangible assets acquired via asset acquisition and business combinations. |
(5) | The adjustment represents a loss of $0.2 million for the three months ended June 30, 2017, due to a change in the fair value of contingent consideration related to our Passport transaction. |
(in thousands) | For the Six Months Ended June 30, 2017 | For the Six Months Ended June 30, 2016 | ||||||||||||||||||||||||||||||||||||
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) | $ | 15,596 | $ | — | $ | 15,596 | $ | 18,502 | $ | 87 | $ | 18,589 | $ | (2,906 | ) | (15.7 | )% | $ | (2,993 | ) | (16.1 | )% | ||||||||||||||||
Platform and operations (1) | 197,714 | 775 | 198,489 | 87,465 | — | 87,465 | 110,249 | 126.0 | % | 111,024 | 126.9 | % | ||||||||||||||||||||||||||
Total revenue | 213,310 | 775 | 214,085 | 105,967 | 87 | 106,054 | 107,343 | 101.3 | % | 108,031 | 101.9 | % | ||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||
Cost of revenue (exclusive of | ||||||||||||||||||||||||||||||||||||||
depreciation and amortization | ||||||||||||||||||||||||||||||||||||||
expenses presented | ||||||||||||||||||||||||||||||||||||||
separately below) (2) | 135,523 | (2,860 | ) | 132,663 | 61,390 | (1,090 | ) | 60,300 | 74,133 | 120.8 | % | 72,363 | 120.0 | % | ||||||||||||||||||||||||
Selling, general and | ||||||||||||||||||||||||||||||||||||||
administrative expenses (3) | 104,641 | (14,882 | ) | 89,759 | 64,702 | (8,412 | ) | 56,290 | 39,939 | 61.7 | % | 33,469 | 59.5 | % | ||||||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||||||||||||||||||||
expenses (4) | 13,519 | (4,708 | ) | 8,811 | 6,983 | — | 6,983 | 6,536 | 93.6 | % | 1,828 | 26.2 | % | |||||||||||||||||||||||||
Goodwill impairment (5) | — | — | — | 160,600 | (160,600 | ) | — | (160,600 | ) | (100.0 | )% | — | — | % | ||||||||||||||||||||||||
Loss on change in fair value | ||||||||||||||||||||||||||||||||||||||
of contingent consideration (6) | 200 | (200 | ) | — | — | — | — | 200 | — | % | — | — | % | |||||||||||||||||||||||||
Total operating expenses | 253,883 | (22,650 | ) | 231,233 | 293,675 | (170,102 | ) | 123,573 | (39,792 | ) | (13.5 | )% | 107,660 | 87.1 | % | |||||||||||||||||||||||
Operating income (loss) | $ | (40,573 | ) | $ | 23,425 | $ | (17,148 | ) | $ | (187,708 | ) | $ | 170,189 | $ | (17,519 | ) | $ | 147,135 | 78.4 | % | $ | 371 | 2.1 | % | ||||||||||||||
Total operating expenses as a | ||||||||||||||||||||||||||||||||||||||
percentage of total revenue | 119.0 | % | 108.0 | % | 277.1 | % | 116.5 | % |
(1) | Adjustments to platform and operations revenue include deferred revenue purchase accounting adjustments of approximately $0.8 million for the six months ended June 30, 2017, resulting from our acquisitions and business combinations. As part of the Reorganization and as a result of gaining control of Evolent Health LLC, we recorded the fair value of deferred revenue resulting in a $4.9 million reduction to the book value. This resulted in an adjustment of less than $0.1 million to transformation revenue for the six months ended June 30, 2016. |
(2) | Adjustments to cost of revenue include $0.7 million and $0.9 million in stock-based compensation expense for the six months ended June 30, 2017 and 2016, respectively. Stock-based compensation expense includes the value of equity awards granted to employees and non-employee directors of the Company or its consolidated subsidiaries. Adjustments also include transaction costs of approximately $2.1 million and $0.2 million for the six months ended June 30, 2017 and 2016, respectively, resulting from acquisitions and business combinations. |
(3) | Adjustments to selling, general and administrative expenses include $9.7 million and $8.2 million in stock-based compensation expense for the six months ended June 30, 2017 and 2016, respectively. Stock-based compensation expense includes the value of equity awards granted to employees and non-employee directors of the Company or its consolidated subsidiaries. Adjustments also include transaction costs of $5.7 million and $0.2 million for the six months ended June 30, 2017 and 2016, respectively, resulting from acquisitions and business combinations and costs relating to our securities offerings. These adjustments for the six months ended June 30, 2017, were offset by a one-time benefit of approximately $0.5 million related to a lease termination in conjunction with the Valence Health acquisition. |
(4) | Adjustments to depreciation and amortization expenses of approximately $4.7 million for the six months ended June 30, 2017, relate to amortization of intangible assets acquired via asset acquisition and business combinations. |
(5) | Represents a write down of goodwill of $160.6 million during the first quarter of 2016. |
(6) | The adjustment represents a loss of $0.2 million for the six months ended June 30, 2017, due to a change in the fair value of contingent consideration related to our Passport transaction. |
(in thousands) | For the Three | For the Six | |||||||||||||
Months Ended | Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net Income (Loss) Attributable to | |||||||||||||||
Evolent Health, Inc. | $ | (16,905 | ) | $ | (8,387 | ) | $ | (34,918 | ) | $ | (131,127 | ) | |||
Less: | |||||||||||||||
Interest income | 218 | 272 | 403 | 551 | |||||||||||
Interest expense | (947 | ) | — | (1,901 | ) | — | |||||||||
(Provision) benefit for income taxes | 700 | 371 | 295 | 1,359 | |||||||||||
Depreciation and amortization expenses | (6,904 | ) | (3,612 | ) | (13,519 | ) | (6,983 | ) | |||||||
EBITDA | (9,972 | ) | (5,418 | ) | (20,196 | ) | (126,054 | ) | |||||||
Less: | |||||||||||||||
Goodwill impairment | — | — | — | (160,600 | ) | ||||||||||
Income (loss) from affiliates | (555 | ) | (14 | ) | (1,077 | ) | (14 | ) | |||||||
Loss on change in fair value | |||||||||||||||
of contingent consideration | (200 | ) | — | (200 | ) | — | |||||||||
Impact of lease termination | 496 | — | 496 | — | |||||||||||
Other income (expense), net | 3 | 1 | 5 | 2 | |||||||||||
Net (income) loss attributable to | |||||||||||||||
non-controlling interests | 2,793 | 3,612 | 7,930 | 54,683 | |||||||||||
Purchase accounting adjustments | (244 | ) | — | (775 | ) | (87 | ) | ||||||||
Stock-based compensation expense | (5,360 | ) | (4,709 | ) | (10,464 | ) | (9,045 | ) | |||||||
Transaction costs | (3,343 | ) | (402 | ) | (7,774 | ) | (457 | ) | |||||||
Adjusted EBITDA | $ | (3,562 | ) | $ | (3,906 | ) | $ | (8,337 | ) | $ | (10,536 | ) |
(in thousands, except per share data) | For the Three | For the Six | |||||||||||||
Months Ended | Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Earnings (Loss) Available to | |||||||||||||||
Common Shareholders - Basic and Diluted (a) | $ | (16,905 | ) | $ | (8,387 | ) | $ | (34,918 | ) | $ | (131,127 | ) | |||
Less: | |||||||||||||||
Goodwill impairment | — | — | — | (160,600 | ) | ||||||||||
Income (loss) from affiliates | (555 | ) | (14 | ) | (1,077 | ) | (14 | ) | |||||||
(Provision) benefit for income taxes | 700 | 371 | 280 | 1,359 | |||||||||||
Loss on change in fair value | |||||||||||||||
of contingent consideration | (200 | ) | — | (200 | ) | — | |||||||||
Impact of lease termination | 496 | — | 496 | — | |||||||||||
Net (income) loss attributable to | |||||||||||||||
non-controlling interests | 2,793 | 3,612 | 7,930 | 54,683 | |||||||||||
Purchase accounting adjustments | (2,669 | ) | — | (5,569 | ) | (87 | ) | ||||||||
Stock-based compensation expense | (5,360 | ) | (4,709 | ) | (10,464 | ) | (9,045 | ) | |||||||
Transaction costs | (3,343 | ) | (402 | ) | (7,774 | ) | (457 | ) | |||||||
Adjusted Earnings (Loss) Available | |||||||||||||||
to Class A and Class B Shareholders (b) | $ | (8,767 | ) | $ | (7,245 | ) | $ | (18,540 | ) | $ | (16,966 | ) | |||
Earnings (Loss) per Share Available to | |||||||||||||||
Common Shareholders - Basic and Diluted (a) (1) | $ | (0.28 | ) | $ | (0.20 | ) | $ | (0.62 | ) | $ | (3.09 | ) | |||
Adjusted Earnings (Loss) per Share Available | |||||||||||||||
to Class A and Class B Shareholders (b) (2) | $ | (0.13 | ) | $ | (0.12 | ) | $ | (0.27 | ) | $ | (0.28 | ) | |||
Weighted-average common shares - basic | 59,478 | 42,594 | 56,057 | 42,390 | |||||||||||
Weighted-average common shares - diluted | 59,478 | 42,594 | 56,057 | 42,390 | |||||||||||
Adjusted Weighted-Average Class A | |||||||||||||||
and Class B Shares (3) | 68,155 | 60,119 | 68,051 | 59,915 |
(1) | For periods of net loss, shares used in both the basic and diluted earnings per share calculation represent basic shares as using diluted shares would be anti-dilutive. |
(2) | Represents Adjusted Earnings (Loss) Available to Class A and Class B Shareholders divided by Adjusted Weighted-Average Class A and Class B Shares as described in footnote 3 below. |
(3) | Represents the 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. See the reconciliation of Adjusted Weighted-Average Class A and Class B Shares to diluted weighted-average common shares on the following page. |
(in thousands) | For the Three | For the Six | |||||||||
Months Ended | Months Ended | ||||||||||
June 30, | June 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Weighted-average common shares - diluted | 59,478 | 42,594 | 56,057 | 42,390 | |||||||
Assumed conversion of Class B common | |||||||||||
shares to Class A common shares | 8,677 | 17,525 | 11,994 | 17,525 | |||||||
Adjusted Weighted-Average Class A and Class B Shares | 68,155 | 60,119 | 68,051 | 59,915 |
(in thousands) | For the Three | For the Twelve | ||||||||
Months Ended | Months Ended | |||||||||
September 30, | December 31, | |||||||||
2017 | 2017 | |||||||||
Revenue | $ | 103,500 | $ | 425,000 | ||||||
Purchase Accounting Adjustments | 500 | 1,000 | ||||||||
Adjusted Revenue | $ | 104,000 | $ | 426,000 | ||||||
Net Income (Loss) Attributable to | ||||||||||
Evolent Health, Inc. | $ | (15,100 | ) | $ | (63,000 | ) | ||||
Less: | ||||||||||
Interest income | 200 | 800 | ||||||||
Interest expense | (1,000 | ) | (4,000 | ) | ||||||
Depreciation and amortization expenses | (7,000 | ) | (27,500 | ) | ||||||
EBITDA | (7,300 | ) | (32,300 | ) | ||||||
Less: | ||||||||||
Income (loss) from affiliates | (500 | ) | (2,000 | ) | ||||||
Net (income) loss attributable to | ||||||||||
non-controlling interests | 500 | 6,700 | ||||||||
Stock-based compensation | (5,300 | ) | (21,000 | ) | ||||||
Transaction costs | (2,000 | ) | (10,000 | ) | ||||||
Adjusted EBITDA | $ | — | $ | (6,000 | ) |
• | the structural change in the market for health care in the United States; |
• | uncertainty in the health care regulatory framework; |
• | the uncertain impact the results of the 2016 presidential and congressional elections may have on health care laws and regulations; |
• | our ability to effectively manage our growth; |
• | the significant portion of revenue we derive from our largest partners, and the potential loss, termination or renegotiation of customer contracts; |
• | our ability to offer new and innovative products and services; |
• | risks related to completed and future acquisitions, investments and alliances, including the acquisitions of Valence Health, Inc., excluding Cicerone Health Solutions, Inc. (“Valence Health”) and Aldera Holdings, Inc. (“Aldera”), which may be difficult to integrate, divert management resources, result in unanticipated costs or dilute our stockholders; |
• | certain risks and uncertainties associated with the acquisition of Valence Health, including future revenues of Valence Health may be less than expected, the timing and extent of new lives expected to come onto the platform may not occur as expected and the expected results of Evolent may not be impacted as anticipated; |
• | the growth and success of our partners, which is difficult to predict and is subject to factors outside of our control, including premium pricing reductions and the ability to control and, if necessary, reduce health care costs; |
• | our ability to attract new partners; |
• | the increasing number of risk-sharing arrangements we enter into with our 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; |
• | restrictions and penalties as a result of privacy and data protection laws; |
• | adequate protection of our intellectual property, including trademarks; |
• | any alleged infringement, misappropriation or violation of third-party proprietary rights; |
• | our use of “open source” software; |
• | our ability to protect the confidentiality of our trade secrets, know-how and other proprietary information; |
• | our reliance on third parties and licensed technologies; |
• | 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; |
• | online security risks and 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 reliance on third-party vendors to host and maintain our technology platform; |
• | our dependency on our key personnel, and our ability to attract, hire, integrate and retain key personnel; |
• | the risk of potential future goodwill impairment on our results of operations; |
• | our indebtedness and our ability to obtain additional financing; |
• | our ability to achieve profitability in the future; |
• | the requirements of being a public company; |
• | our adjusted results may not be representative of our future performance; |
• | the risk of potential future litigation; |
• | our holding company structure and dependence on distributions from Evolent Health LLC; |
• | our obligations to make payments to certain of our pre-IPO investors for certain tax benefits we may claim in the future; |
• | our ability to utilize benefits under the tax receivables agreement described herein; |
• | our ability to realize all or a portion of the tax benefits that we currently expect to result from past and future exchanges of Class B common units of Evolent Health LLC for our Class A common stock, and to utilize certain tax attributes of Evolent Health Holdings and an affiliate of TPG; |
• | distributions that Evolent Health LLC will be required to make to us and to the other members of Evolent Health LLC; |
• | our obligations to make payments under the tax receivables agreement that may be accelerated or may exceed the tax benefits we realize; |
• | different interests among our pre-IPO investors, or between us and our pre-IPO investors; |
• | the terms of agreements between us and certain of our pre-IPO investors; |
• | the potential volatility of our Class A common stock price; |
• | the potential decline of our Class A common stock price if a substantial number of shares become available for sale or if a large number of Class B common units are exchanged for shares of Class A common stock; |
• | provisions in our amended and restated certificate of incorporation and amended and restated by-laws and provisions of Delaware law that discourage or prevent strategic transactions, including a takeover of us; |
• | the ability of certain of our investors to compete with us without restrictions; |
• | provisions in our amended and restated certificate of incorporation which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees; |
• | our intention not to pay cash dividends on our Class A common stock; |
• | our ability to remediate the material weakness in our internal control over financial reporting; |
• | our status as an “emerging growth company”; and |
• | our lack of public company operating experience. |