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Evolent Health (EVH)
NYSE:EVH
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Evolent Health
(NYSE:EVH)
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Rating:46Neutral
Price Target:
$3.00
▲(12.36% Upside)
Action:ReiteratedDate:02/26/26
The score is held back primarily by weak financial performance (persistent losses and a sharp 2025 profitability deterioration) and bearish technical trends. Offsetting factors include a significantly improved leverage profile and constructive 2026 guidance pointing to strong growth and back-half EBITDA improvement, though near-term cash flow and reserving/exchange headwinds temper confidence.
Positive Factors
Balance-sheet leverage improvement
Total debt fell to roughly $19M with debt-to-equity near 0.05 in 2025, materially lowering financial risk. A stronger balance sheet and positive equity (~$415M) provide durable flexibility to fund Performance Suite rollouts, absorb restructuring costs and withstand near-term operating volatility without urgent refinancing.
Large Performance Suite scale
Management expects ~$900M of Performance Suite revenue in 2026, driving meaningful scale. Large, recurring, per-member service contracts (including Highmark) create durable revenue streams and customer stickiness; as cohorts mature this supports sustainable topline growth and improves predictability of fee-based margins.
Efficiency & AI-driven margin tailwinds
Realized AI/automation savings and a target of ~$50M in incremental efficiencies are structural cost levers. Reducing non-claims expense and improving authorization/clinical workflows can sustainably lower operating cost per member, supporting long-run margin recovery as Performance Suite revenue scales and fixed costs are absorbed.
Negative Factors
Persistent GAAP losses
GAAP profitability has been negative across years and worsened sharply in 2025 (net margin ~-30.9%, EBITDA margin ~-27.8%), signaling structural earnings challenges. Ongoing losses erode returns on equity, constrain reinvestment, and increase the risk of further impairments or capital actions if operating trends don't reverse sustainably.
Weak near-term cash generation & interest load
Projected operating cash of only $10–$20M in 2026 after ~$60M of cash interest and modest FY2025 OCF ($39M) indicate limited free cash flow. This constrained cash generation and interest burden reduce flexibility to invest, fund working capital for new cohorts, or pursue liability management without relying on outside financing.
Conservative reserving and launch headwinds
Management is conservatively reserving new cohorts at ~103% MER and expects a ~$25M EBITDA headwind from launches, creating delayed profitability. Elevated reserving and back‑half weighted EBITDA increase execution risk: margins from new contracts will take time to realize, pressuring short-to-medium term operating leverage.
Evolent Health (EVH) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$298.07M
Dividend YieldN/A
Average Volume (3M)3.25M
Price to Earnings (P/E)―
Beta (1Y)<0.01
Revenue Growth-16.65%
EPS Growth-71.92%
CountryUS
Employees4,500
SectorHealthcare
Sector Strength45
IndustryMedical - Healthcare Information Services
Share Statistics
EPS (TTM)0.08
Shares Outstanding111,638,336
10 Day Avg. Volume2,985,581
30 Day Avg. Volume3,245,499
Financial Highlights & Ratios
PEG Ratio>-0.01
Price to Book (P/B)1.10
Price to Sales (P/S)0.24
P/FCF Ratio96.07
Enterprise Value/Market Cap3.81
Enterprise Value/Revenue0.61
Enterprise Value/Gross Profit4.02
Enterprise Value/Ebitda-3.15
Forecast
1Y Price Target
$5.58Price Target Upside108.99% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering15
EPS Forecast (FY)0.14
Revenue Forecast (FY)$2.49B
Evolent Health Business Overview & Revenue Model
Company DescriptionEvolent Health, Inc., a healthcare company, through its subsidiary, Evolent Health LLC, provides clinical and administrative solutions to payers and providers in the United States. It operates in two segments, Evolent Health Services and Clinical Solutions. The Evolent Health Services segment provides an integrated administrative and clinical platform for health plan administration and population health management. It offers financial and administrative management services, such as health plan services, risk management, analytics and reporting, and leadership and management; and Identifi, a proprietary technology system that aggregates and analyzes data, manages care workflows, and engages patients, population health performance that delivers patient-centric cost-effective care. The Clinical Solutions segment offers specialty care management services support a range of specialty care delivery stakeholders during their transition from fee-for-service to value-based care, independent of their stage of maturation and specific market dynamics in oncology and cardiology; and holistic total cost of care improvement. The company was founded in 2011 and is headquartered in Arlington, Virginia.
How the Company Makes MoneyEvolent primarily makes money by selling services (often enabled by its technology platforms) to health plans and other organizations that administer or bear risk for healthcare costs. Its revenue model is largely based on fees paid by customers for administrative and clinical operations support—such as care management and utilization management—frequently structured as recurring service arrangements that may be priced on a per-member basis and/or as fixed/variable service fees tied to the scope of work. In addition, Evolent generates revenue from providing access to and support for its software/analytics capabilities when bundled with, or sold alongside, its services. The company’s earnings are driven by the scale of covered lives and program scope under customer contracts, contract renewals/expansions, and the ability to deliver outcomes (e.g., medical cost and quality improvements) that support customer retention and growth. Specific customer names, contract terms, and revenue mix details: null.
Evolent Health Earnings Call Summary
Earnings Call Date:Feb 24, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 06, 2026
Earnings Call Sentiment Neutral
The call presented a mixed but constructive picture: strong top-line growth prospects (mid-2026 revenue growth target ~30%), large new Performance Suite contracts (including a significant Highmark engagement), solid 2025 MER improvement and realized cost/AI savings support long-term margin tailwinds. However, near-term headwinds are meaningful — conservative reserving for new launches (new cohort at ~103% MER), a $40M exchange-related revenue/EBITDA hit from regulatory/market shifts, administrative churn and limited free cash flow in 2026. Management emphasized that 2026 adjusted EBITDA will be back-end weighted and articulated a clear path to improved margins and cash flow as contracts mature, supporting a balanced long-term outlook despite near-term pressure.Q4-2025 Updates
Positive Updates
Q4 2025 Revenue and EBITDA Beat
Q4 revenue of $469 million and adjusted EBITDA of $37.8 million, which exceeded the midpoint of guidance.
Full-Year 2025 Baseline Results
After adjusting for the ACO divestiture, baseline FY2025 revenue was $1.77 billion and adjusted EBITDA would have been approximately $141 million.
Ambitious 2026 Revenue Growth Outlook (~30%)
Company is forecasting approximately 30% revenue growth for 2026 with $2.4–$2.6 billion guidance (midpoint ~$2.5B).
Large New Performance Suite Cohort ($900M)
2026 Performance Suite launches expected to generate approximately $900 million of revenue (37% of 2026 revenue), an increase from a prior estimate of $550 million, driven by membership shifts and scope expansion.
Oncology as Core Growth Driver (65% of Revenue)
Evolent expects roughly 65% of company revenue from oncology in 2026, up from 36% in 2025 — signaling rapid concentration and growth in the oncology product.
High Retention and Contract Migration to Enhanced Model
Retained specialty T&S logos covering over 98% of 2025 revenue; ~90% of Performance Suite revenue now under the enhanced Performance Suite model; signed major new customers including Highmark (go-live May 1) expected to contribute >$550M in 2026 and >$800M in 2027.
MER Improvement in 2025 vs 2024
2025 medical expense ratio (MER) was 89% (excluding ECP), an improvement of just under 700 basis points versus 2024, attributed to pathway management and physician engagement.
Efficiency and AI Savings
Exceeded the previously announced $20 million annualized Q4 2025 savings; targeting ~ $50 million of efficiency savings in 2026 (including $20 million realized in 2025) and additional SG&A/AI/automation reductions; non-claims expense base expected to be ~$675M in 2026, ~ $90M lower than 2025 (includes $40M from divestiture and ~$50M efficiencies).
Balance Sheet and Net Debt Position
Ended the year with net debt of $782 million, below the expected range of $805M–$840M, and no debt maturities until late 2029.
Operational and Clinical Wins
AI-driven auto-authorization improvements (chest CT +11 points; cervical spine MRI +16 points) and a Blue Cross partner reported ~40% reduction in hospitalizations and ER visits from the new cancer navigation solution.
Negative Updates
One Big Beautiful Bill — Exchange Membership Contraction
The One Big Beautiful Bill eliminated approximately $40 million of contribution related to exchange membership disenrollment and plan closures; some customers saw exchange membership declines of up to ~60% and ~40% for another large book, materially impacting revenue and mix.
Higher 2026 MER Guidance and Reserve Conservatism
2026 full-book MER expected to be ~93% at the midpoint (vs 89% in 2025 excluding ECP). New Performance Suite cohort is being reserved at an elevated MER of ~103% for 2026, reflecting conservative reserving and implementation timing.
New Contracts Create Near-Term EBITDA Headwind
New Performance Suite launches are creating an estimated $25 million headwind to 2026 adjusted EBITDA at the midpoint due to conservatively elevated reserves and early implementation timing; overall adjusted EBITDA guidance is $110M–$140M (midpoint $125M).
Front-Loaded EBITDA Weighting / Disappointing H1 2026
Management expects ~70% of 2026 adjusted EBITDA to be weighted to the back half of the year, signaling a weaker first half driven by reserving, new-contract ramp and exchange impacts; management acknowledged H1 EBITDA is disappointing on the surface.
Material Administrative Services Churn
Experienced notable churn in the administrative services business due to one customer being acquired and insourcing services; administrative services remain a legacy portfolio with ongoing churn risk.
Limited Near-Term Free Cash Flow and Interest Burden
Expect to generate only $10M–$20M in cash from operations in 2026 after paying approximately $60M in cash interest; FY2025 cash flow from operations was $39M and year-end cash was $152M (includes a $15M client overpayment that will reduce 2026 cash when repaid).
Goodwill Impairment
Recorded a large noncash goodwill impairment due to market valuation declines (no impact on EBITDA or cash flow, but notable on GAAP P&L and book value).
Leverage and Liability Management Constraints
Leverage will be higher earlier in 2026 due to ramp dynamics; management noted limited near-term capacity for liability-management actions (e.g., buybacks or debt buy-downs) despite convert trading at a discount.
Revenue Mix Headwinds Lower Blended PMPM
Exchange membership losses and mix shifts (toward lower PMPM membership) offset some organic growth and reduced blended PMPM and revenue despite membership increases in other lines (e.g., some MA gains).
Workforce Reduction and Restructuring
Management executed a large RIF and other targeted cost actions to achieve efficiency savings; these are near-term headwinds to operations and involve execution risk.
Company Guidance
The company guided 2026 revenue of $2.4–$2.6 billion (midpoint $2.5B, ~30% growth) with adjusted EBITDA of $110–$140 million (midpoint $125M), noting Q4 2026 run-rate EBITDA north of $150M and that ~70% of 2026 EBITDA will be weighted to H2; Performance Suite launches are expected to generate roughly $900M of 2026 revenue (≈37% of the year, up from a prior $550M estimate) and Performance Suite revenue exiting 2026 is forecasted at about $2.2B annualized. Key margin and cost metrics: 2025 MER was 89% (ex‑ECP) with Q4 MER at 95% (ex‑ECP), 2026 MER is guided to ~93% at the midpoint while new cohort MER is modeled at 103%; the long‑term Performance Suite target margin range is 7%–10% (vs ~15% under the old model), which on $2.2B could translate to $160–$220M of total margin (a $30–$100M upside versus the $125M midpoint). The company expects a $40M one‑time hit from exchange membership contraction (the “One Big Beautiful Bill”), is targeting ~$90M of cost reductions versus 2025 (≈$40M from the ECP divestiture plus ~$50M from efficiency measures, including prior $20M AI/automation savings), projects ~ $1.7B medical claims expense at a 93% MER and ~$675M non‑claims expense at the midpoint, anticipates $10–$20M of operating cash flow after ~$60M of cash interest, and plans $25–$30M of CapEx/software spend; year‑end cash was $152M and net debt was $782M.Evolent Health Financial Statement Overview
Summary
Balance sheet leverage improved sharply with debt reduction, lowering financial risk, but operating performance deteriorated materially with large 2025 losses and weak EBITDA margin. Cash flow is uneven—operating cash flow remains positive and 2025 free cash flow is slightly positive, but small relative to losses and volatile year to year.Income Statement
Revenue growth has been volatile: strong expansion through 2022–2024 (peaking in 2022–2023), followed by a notable decline in 2025 (annual revenue down ~8.7%). Profitability is the key weakness—net income is negative in every year provided, with a sharp deterioration in 2025 (net margin ~-30.9% vs ~-2.4% in 2024). Gross margin improved meaningfully in 2025 (~21.3% vs ~14.4% in 2024), but operating profitability collapsed (2025 EBITDA margin ~-27.8%), indicating cost pressure and/or charges outweighing the margin recovery.34
Negative
Balance Sheet
Leverage improved dramatically in 2025, with total debt falling to ~19M and debt-to-equity dropping to ~0.05 (from ~0.71 in 2024), which materially reduces financial risk. Equity remains positive (~415M in 2025), supporting balance-sheet stability despite losses. The main concern is ongoing negative returns to shareholders (return on equity deeply negative in 2025), suggesting the capital base is not currently generating profits and could be pressured if losses persist.63
Positive
Cash Flow
Cash generation is mixed. Operating cash flow is positive in most years (including 2025), but it is relatively modest versus the scale of losses (2025 operating cash flow to net income is ~0.10), implying earnings losses are not being offset by strong cash conversion. Free cash flow is positive in 2025 but small (~4.8M) and down sharply versus prior periods (free cash flow growth ~-106.9%); results have also been volatile (very strong free cash flow in 2023, negative in 2022 and 2024).46
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.88B | 2.55B | 1.96B | 1.35B | 907.96M |
| Gross Profit | 283.03M | 367.35M | 460.47M | 316.58M | 250.41M |
| EBITDA | -361.31M | 84.85M | -24.79M | 43.75M | 55.66M |
| Net Income | -534.51M | -61.62M | -113.04M | -19.16M | -37.60M |
Balance Sheet | |||||
| Total Assets | 1.90B | 2.54B | 2.68B | 1.82B | 1.42B |
| Cash, Cash Equivalents and Short-Term Investments | 151.86M | 163.50M | 192.82M | 188.20M | 266.28M |
| Total Debt | 989.70M | 713.67M | 644.80M | 476.12M | 280.47M |
| Total Liabilities | 1.48B | 1.54B | 1.61B | 957.88M | 725.83M |
| Stockholders Equity | 415.19M | 1.00B | 1.07B | 859.42M | 693.63M |
Cash Flow | |||||
| Free Cash Flow | 4.75M | -6.13M | 113.84M | -49.91M | 13.76M |
| Operating Cash Flow | 38.84M | 18.77M | 142.58M | -11.55M | 38.75M |
| Investing Cash Flow | -233.00K | -62.93M | -415.54M | -259.12M | -15.79M |
| Financing Cash Flow | -35.92M | -565.00K | 281.34M | 131.54M | -29.55M |
Evolent Health Technical Analysis
Negative
2.67
Price Trends
3.29
Negative
4.01
Negative
6.66
Negative
Market Momentum
-0.09
Positive
35.70
Neutral
6.33
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EVH, the sentiment is Negative. The current price of 2.67 is below the 20-day moving average (MA) of 3.08, below the 50-day MA of 3.29, and below the 200-day MA of 6.66, indicating a bearish trend. The MACD of -0.09 indicates Positive momentum. The RSI at 35.70 is Neutral, neither overbought nor oversold. The STOCH value of 6.33 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EVH.
Evolent Health Risk Analysis
Evolent Health disclosed 60 risk factors in its most recent earnings report. Evolent Health reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Evolent Health Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | $605.03M | 37.76 | 5.87% | 0.52% | 3.68% | 5.62% | |
67 Neutral | $831.44M | -72.16 | -7.10% | ― | 50.51% | 50.92% | |
60 Neutral | $675.21M | 78.87 | -1.85% | ― | 14.33% | 93.62% | |
53 Neutral | $966.91M | -6.16 | -14.24% | ― | -2.37% | 77.85% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
47 Neutral | $152.81M | -2.20 | -47.69% | ― | -5.30% | 46.01% | |
46 Neutral | $298.07M | -0.85 | -69.22% | ― | -16.65% | -71.92% |
* Healthcare Sector Average
EVH
Evolent Health
2.67
-7.42
-73.54%
HSTM
HealthStream
20.61
-10.79
-34.36%
TDOC
Teladoc
5.42
-3.07
-36.16%
PHR
Phreesia
11.20
-17.80
-61.38%
DH
Definitive Healthcare Corp
1.07
-1.75
-62.06%
OMDA
Omada Health, Inc.
14.11
-8.49
-37.57%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.