Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 23, 2018 | Jun. 30, 2017 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Evolent Health, Inc. | ||
Entity Central Index Key | 1,628,908 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Year End Date | --12-31 | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Volunteer Filers | No | ||
Entity Well-Known Seasoned Issuer | No | ||
Public Float | $ 1,191.7 | ||
Document Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Class A | |||
Entity Common Stock, Shares Outstanding (in shares) | 74,784,529 | ||
Class B | |||
Entity Common Stock, Shares Outstanding (in shares) | 2,653,544 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 238,433,000 | $ 134,563,000 |
Restricted cash and restricted investments | 62,398,000 | 34,416,000 |
Accounts receivable, net (amounts related to affiliates: 2017 - $3,358; 2016 - $8,258) | 48,947,000 | 40,635,000 |
Prepaid expenses and other current assets (amounts related to affiliates: 2017 - $25; 2016 - $4,507) | 8,404,000 | 11,011,000 |
Notes receivable | 20,000,000 | 0 |
Investments, at amortized cost | 0 | 44,341,000 |
Total current assets | 378,182,000 | 264,966,000 |
Restricted cash and restricted investments | 3,287,000 | 6,000,000 |
Investments in and advances to affiliates | 1,531,000 | 2,159,000 |
Property and equipment, net | 50,922,000 | 31,179,000 |
Prepaid expenses and other non-current assets | 9,328,000 | 10,043,000 |
Intangible assets, net | 241,261,000 | 258,923,000 |
Goodwill | 628,186,000 | 626,569,000 |
Total assets | 1,312,697,000 | 1,199,839,000 |
Current liabilities: | ||
Accounts payable (amounts related to affiliates: 2017 - $10,284; 2016 - $13,480) | 42,930,000 | 43,892,000 |
Accrued liabilities (amounts related to affiliates: 2017 - $719; 2016 - $3,211) | 29,572,000 | 29,160,000 |
Accrued compensation and employee benefits | 35,390,000 | 38,408,000 |
Deferred revenue | 24,807,000 | 20,481,000 |
Total current liabilities | 132,699,000 | 131,941,000 |
Long-term debt, net of discount | 121,394,000 | 120,283,000 |
Other long-term liabilities | 9,861,000 | 14,655,000 |
Deferred tax liabilities, net | 2,437,000 | 20,846,000 |
Total liabilities | 266,391,000 | 287,725,000 |
Commitments and Contingencies (See Note 9) | ||
Shareholders' Equity (Deficit) | ||
Additional paid-in-capital | 924,153,000 | 555,250,000 |
Retained earnings (accumulated deficit) | 85,952,000 | 146,617,000 |
Total shareholders' equity (deficit) attributable to Evolent Health, Inc. | 1,010,879,000 | 702,526,000 |
Non-controlling interests | 35,427,000 | 209,588,000 |
Total shareholders' equity (deficit) | 1,046,306,000 | 912,114,000 |
Total liabilities and shareholders' equity (deficit) | 1,312,697,000 | 1,199,839,000 |
Class A | ||
Shareholders' Equity (Deficit) | ||
Common stock | 747,000 | 506,000 |
Class B | ||
Shareholders' Equity (Deficit) | ||
Common stock | $ 27,000 | $ 153,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts receivable, related parties | $ 3,358 | $ 8,258 |
Prepaid expenses and other current assets, related parties | 25 | 4,507 |
Accounts payable, related parties | 10,284 | 13,480 |
Accrued liabilities, related parties | $ 719 | $ 3,211 |
Class A | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 750,000,000 | 750,000,000 |
Common stock, shares, issued | 74,723,597 | 52,586,899 |
Common stock, shares, outstanding | 74,723,597 | 52,589,899 |
Class B | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares, issued | 2,653,544 | 15,346,981 |
Common stock, shares, outstanding | 2,653,544 | 15,346,981 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Revenue | ||||
Transformation | [1] | $ 29,466 | $ 38,320 | $ 19,906 |
Platform and operations | [1] | 405,484 | 215,868 | 76,972 |
Total revenue | 434,950 | 254,188 | 96,878 | |
Expenses | ||||
Cost of revenue (exclusive of depreciation and amortization expenses) | [1] | 269,352 | 155,177 | 57,398 |
Selling, general and administrative expenses | [1] | 205,670 | 160,692 | 75,286 |
Depreciation and amortization expenses | 32,368 | 17,224 | 7,166 | |
Goodwill impairment | 0 | 160,600 | 0 | |
Loss (gain) on change in fair value of contingent consideration | 400 | (2,086) | 0 | |
Total operating expenses | 507,790 | 491,607 | 139,850 | |
Operating income (loss) | (72,840) | (237,419) | (42,972) | |
Interest income | 1,656 | 970 | 293 | |
Interest expense | (3,636) | (247) | 0 | |
Gain on consolidation | 0 | 0 | 414,133 | |
Income (loss) from equity affiliates | (1,755) | (841) | (28,165) | |
Other income (expense), net | 171 | 4 | 0 | |
Income (loss) before income taxes and non-controlling interests | (76,404) | (237,533) | 343,289 | |
Provision (benefit) for income taxes | (6,637) | (10,755) | 23,475 | |
Net income (loss) | (69,767) | (226,778) | 319,814 | |
Net income (loss) attributable to non-controlling interests | (9,102) | (67,036) | (12,680) | |
Net income (loss) attributable to Evolent Health, Inc. | (60,665) | (159,742) | 332,494 | |
Earnings (Loss) Available for Common Shareholders | ||||
Basic | (60,665) | (159,742) | 330,310 | |
Diluted | $ (60,665) | $ (159,742) | $ 319,814 | |
Earnings (Loss) per Common Share | ||||
Basic (in dollars per share) | $ (0.94) | $ (3.55) | $ 13.14 | |
Diluted (in dollars per share) | $ (0.94) | $ (3.55) | $ 6.93 | |
Weighted-Average Common Shares Outstanding | ||||
Basic (in shares) | 64,351 | 45,031 | 25,129 | |
Diluted (in shares) | 64,351 | 45,031 | 46,136 | |
Affiliates | ||||
Revenue | ||||
Transformation | $ 597 | $ 482 | $ 940 | |
Platform and operations | 32,335 | 34,267 | 23,642 | |
Expenses | ||||
Cost of revenue (exclusive of depreciation and amortization expenses) | 22,389 | 22,207 | 14,050 | |
Selling, general and administrative expenses | $ 1,153 | $ 2,027 | $ 1,542 | |
[1] | Amounts related to affiliates included above are as follows (see Note 15): Revenue Transformation$597 $482 $940Platform and operations32,335 34,267 23,642Expenses Cost of revenue (exclusive of depreciation and amortization expenses)22,389 22,207 14,050Selling, general and administrative expenses1,153 2,027 1,542 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash Flows from Operating Activities | |||
Net income (loss) | $ (69,767) | $ (226,778) | $ 319,814 |
Adjustments to reconcile net income (loss) to net cash and restricted cash provided by (used in) operating activities: | |||
Gain on consolidation | 0 | 0 | (414,133) |
Change in fair value of contingent liability | 400 | (2,086) | 0 |
Loss from lease abandonment | 0 | 6,456 | 0 |
(Income) loss from affiliates | 1,755 | 841 | 28,165 |
Depreciation and amortization expenses | 32,368 | 17,224 | 7,166 |
Goodwill impairment | 0 | 160,600 | 0 |
Stock-based compensation expense | 20,437 | 18,604 | 14,730 |
Acceleration of unvested equity awards for Valence Health employees | 0 | 3,897 | 0 |
Deferred tax provision (benefit) | (7,271) | (10,755) | 23,460 |
Amortization of deferred financing costs | 914 | 0 | 0 |
Other | 490 | 916 | 172 |
Changes in assets and liabilities, net of acquisitions: | |||
Accounts receivables, net | (11,258) | (11,044) | 11,756 |
Prepaid expenses and other assets | 2,729 | (9,968) | (2,036) |
Accounts payable | 5,563 | (6,371) | 2,764 |
Accrued liabilities | (2,781) | 15,229 | (3,788) |
Accrued compensation and employee benefits | (3,303) | 6,678 | 11,402 |
Deferred revenue | 3,548 | 1,200 | (17,998) |
Other liabilities | (1,782) | (153) | 58 |
Net cash and restricted cash provided by (used in) operating activities | (27,958) | (35,510) | (18,468) |
Cash Flows from Investing Activities | |||
Cash acquired upon consolidation of affiliate | 0 | 0 | 13,065 |
Cash paid for asset acquisition or business combination | (3,694) | (82,560) | 0 |
Loan for implementation funding | (20,000) | 0 | 0 |
Purchases of investments | 0 | 0 | (54,234) |
Investments in and advances to affiliates | (1,128) | (3,000) | 0 |
Maturities and sales of investments | 44,210 | 9,379 | 4,000 |
Purchases of property and equipment | (27,848) | (15,526) | (6,515) |
Purchase of restricted investments | (3,805) | (4,950) | 0 |
Net cash and restricted cash provided by (used in) investing activities | (12,265) | (96,657) | (43,684) |
Cash Flows from Financing Activities | |||
Proceeds from issuance of common stock, net of stock issuance costs | 166,947 | 0 | 209,087 |
Change in restricted cash held on behalf of partners for claims processing | (4,200) | 28,041 | 6,285 |
Proceeds from stock option exercises | 4,082 | 1,259 | 152 |
Proceeds from issuance of convertible notes, net of issuance costs | 0 | 121,250 | 0 |
Payments of deferred offering costs | 0 | 0 | (1,361) |
Taxes withheld and paid for vesting of restricted stock units | (1,272) | (365) | 0 |
Net cash and restricted cash provided by (used in) financing activities | 165,557 | 150,185 | 214,163 |
Net increase (decrease) in cash and cash equivalents | 125,334 | 18,018 | 152,011 |
Cash and cash equivalents and restricted cash as of beginning-of-period | 170,029 | 152,011 | 0 |
Cash and cash equivalents and restricted cash as of end-of-period | $ 295,363 | $ 170,029 | $ 152,011 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) AND REDEEMABLE PREFERRED STOCK - USD ($) shares in Thousands, $ in Thousands | Total | Class A | Preferred StockSeries A Redeemable | Preferred StockSeries B Redeemable | Preferred StockSeries B-1 Redeemable | Preferred StockSeries A | Common StockClass A | Common StockClass B | Additional Paid-in Capital | Additional Paid-in CapitalClass A | Retained Earnings (Accumulated Deficit) | Non-controlling Interests |
Beginning balance (in shares) at Dec. 31, 2014 | 7,900 | 6,468 | 360 | |||||||||
Beginning balance, amount at Dec. 31, 2014 | $ 12,847 | $ 24,833 | $ 1,593 | |||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||||||
Conversion of existing equity (in shares) | (7,900) | (6,468) | (360) | |||||||||
Conversion of existing equity | $ (12,847) | $ (24,833) | $ (1,593) | |||||||||
Ending balance (in shares) at Dec. 31, 2015 | 0 | 0 | 0 | |||||||||
Ending balance, amount at Dec. 31, 2015 | $ 0 | $ 0 | $ 0 | |||||||||
Beginning balance (in shares) at Dec. 31, 2014 | 7,400 | 4,048 | 0 | |||||||||
Beginning balance, amount at Dec. 31, 2014 | $ (2,070) | $ 2 | $ 1 | $ 0 | $ 23,733 | $ (25,806) | $ 0 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Non-cash issuance of common stock to Evolent Health, LLC | 21,810 | 21,810 | ||||||||||
Net loss prior to the Offering Reorganization | (28,165) | (28,165) | ||||||||||
Conversion or exchange of existing equity (in shares) | (7,400) | 22,128 | 0 | |||||||||
Conversion or exchange of existing equity | 39,273 | $ (2) | $ 261 | $ 0 | 39,014 | 0 | ||||||
Issuance of common stock (in shares) | 13,225 | 19,576 | ||||||||||
Issuance of common stock, amount | 332,793 | $ 205,933 | $ 132 | $ 196 | (196) | $ 205,801 | 332,793 | |||||
Issuance of common stock for business combination (in shares) | 2,051 | (2,051) | ||||||||||
Issuance of common stock for business combination | 0 | $ 21 | $ (21) | 34,875 | (34,875) | |||||||
Tax effect of Offering Reorganization | 2,144 | 2,144 | ||||||||||
Stock-based compensation expense | 14,730 | 14,730 | ||||||||||
Exercise of stock options (in shares) | 39 | |||||||||||
Exercise of stock options | 152 | $ 0 | 152 | |||||||||
Net income (loss) | 319,814 | |||||||||||
Ending balance (in shares) at Dec. 31, 2015 | 0 | 41,491 | 17,525 | |||||||||
Ending balance, amount at Dec. 31, 2015 | 934,579 | $ 0 | $ 415 | $ 175 | 342,063 | 306,688 | 285,238 | |||||
Ending balance (in shares) at Dec. 31, 2016 | 0 | 0 | 0 | |||||||||
Ending balance, amount at Dec. 31, 2016 | $ 0 | $ 0 | $ 0 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Cumulative-effect adjustment from adoption of new accounting principle | 0 | 468 | (329) | (139) | ||||||||
Conversion or exchange of existing equity (in shares) | 0 | 2,178 | (2,178) | |||||||||
Conversion or exchange of existing equity | 0 | $ 0 | $ 22 | $ (22) | 28,220 | (28,220) | ||||||
Issuance of common stock for business combination (in shares) | 8,451 | 0 | ||||||||||
Issuance of common stock for business combination | 177,782 | $ 67 | $ 0 | 177,715 | 0 | |||||||
Tax impact of Class A common stock issued for business combinations | 1,427 | 1,427 | ||||||||||
Stock-based compensation expense | 16,147 | 16,147 | ||||||||||
Acceleration of unvested equity awards for Valence Health employees (in shares) | 162 | |||||||||||
Acceleration of unvested equity awards for Valence Health employees | 3,899 | $ 2 | 3,897 | |||||||||
Exercise of stock options (in shares) | 221 | |||||||||||
Exercise of stock options | 1,259 | $ 0 | 1,259 | |||||||||
Restricted stock units vested, net of shares withheld for taxes (in shares) | 84 | |||||||||||
Restricted stock units vested, net of shares withheld for taxes | 2,193 | $ 0 | 2,193 | |||||||||
Tax impact of Class B common stock exchange | 1,606 | 1,606 | ||||||||||
Reclassification of non-controlling interests | 0 | (19,745) | 19,745 | |||||||||
Net income (loss) | (226,778) | (159,742) | (67,036) | |||||||||
Ending balance (in shares) at Dec. 31, 2016 | 0 | 52,587 | 15,347 | |||||||||
Ending balance, amount at Dec. 31, 2016 | 912,114 | $ 0 | $ 506 | $ 153 | 555,250 | 146,617 | 209,588 | |||||
Ending balance (in shares) at Dec. 31, 2017 | 0 | 0 | 0 | |||||||||
Ending balance, amount at Dec. 31, 2017 | $ 0 | $ 0 | $ 0 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Cumulative-effect adjustment from adoption of new accounting principle | 0 | |||||||||||
Conversion or exchange of existing equity (in shares) | 0 | 12,693 | (12,693) | |||||||||
Conversion or exchange of existing equity | 0 | $ 0 | $ 126 | $ (126) | 168,883 | (168,883) | ||||||
Issuance of common stock (in shares) | 20,100 | 8,816 | ||||||||||
Issuance of common stock, amount | 166,947 | $ 88 | 166,859 | |||||||||
Shares released from Valence Health escrow (in shares) | (310) | |||||||||||
Shares released from Valence Health escrow | 908 | $ (3) | 911 | |||||||||
Tax impact of 2017 Securities Offerings | 12,857 | 12,857 | ||||||||||
Stock-based compensation expense | 20,437 | 20,437 | ||||||||||
Exercise of stock options (in shares) | 788 | |||||||||||
Exercise of stock options | 4,082 | $ 28 | 4,054 | |||||||||
Restricted stock units vested, net of shares withheld for taxes (in shares) | 149 | |||||||||||
Restricted stock units vested, net of shares withheld for taxes | (1,272) | $ 2 | (1,274) | |||||||||
Reclassification of non-controlling interests | 0 | (3,824) | 3,824 | |||||||||
Net income (loss) | (69,767) | (60,665) | (9,102) | |||||||||
Ending balance (in shares) at Dec. 31, 2017 | 0 | 74,723 | 2,654 | |||||||||
Ending balance, amount at Dec. 31, 2017 | $ 1,046,306 | $ 0 | $ 747 | $ 27 | $ 924,153 | $ 85,952 | $ 35,427 |
Organization
Organization | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Evolent Health, Inc. was incorporated in December 2014 in the state of Delaware, and is a managed services firm that supports leading health systems and physician organizations in their migration toward value-based care and population health management. The Company’s services include providing our customers, who we refer to as partners, with a population management platform, integrated data and analytics capabilities, PBM services and comprehensive health plan administration services. Together these services enable health systems to manage patient health in a more cost-effective manner. The Company’s contracts are structured as a combination of advisory fees, monthly member service fees, percentage of plan premiums and shared medical savings arrangements. The Company’s headquarters is located in Arlington, Virginia. The Company’s predecessor, Evolent Health Holdings, Inc. (“Evolent Health Holdings”), merged with and into Evolent Health, Inc. in connection with the Offering Reorganization. As a result, the consolidated financial statements of Evolent Health, Inc. reflect the historical accounting of Evolent Health Holdings. Prior to the organizational transactions noted below, due to certain participating rights granted to our investor, TPG Global, LLC and certain of its affiliates (“TPG”), Evolent Health Holdings did not control Evolent Health LLC, our operating subsidiary company, but was able to exert significant influence and, accordingly, accounted for its investment in Evolent Health LLC using the equity method of accounting through June 3, 2015. Subsequent to the Offering Reorganization, IPO, primary and secondary offerings (as described in Note 4 ) and acquisitions (as described in Note 4 ), as of December 31, 2017 , Evolent Health, Inc. owned 96.6% of Evolent Health LLC, holds 100% of the voting rights, is the sole managing member and, therefore, controls its operations. The financial results of Evolent Health LLC have been consolidated in the financial statements of Evolent Health, Inc. subsequent to the Offering Reorganization. Initial Public Offering In June 2015, we completed an IPO of 13.2 million shares of our Class A common stock at a public offering price of $17.00 per share. We received $209.1 million in proceeds, net of underwriting discounts and commissions. Offering expenses incurred were $3.2 million which were recorded as a reduction of proceeds from the offering. We used the net proceeds to purchase newly issued Class A common units from Evolent Health LLC, our consolidated subsidiary. Evolent Health LLC will use the net proceeds for working capital and other general corporate and strategic purposes. See Note 4 for further details surrounding the IPO and related transactions. Organizational Transactions In connection with the IPO, we completed the following organizational transactions (the “Offering Reorganization”) as further described in Note 4 : • We amended and restated our certificate of incorporation to, among other things, authorize two classes of common stock - Class A common stock and Class B exchangeable common stock. Both classes of stock will vote together as a single class. • We acquired, by merger, an affiliate of a member of Evolent Health LLC, for which we issued 2.1 million shares of Class A common stock. • We issued shares of our Class B exchangeable common stock to certain existing members of Evolent Health LLC. Since its inception, the Company has incurred losses from operations. As of December 31, 2017 , the Company had cash and cash equivalents of $238.4 million . The Company believes it has sufficient liquidity for the next twelve months as of the date the financial statements were available to be issued. |
Basis of Presentation, Summary
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle | Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle Basis of Presentation The accompanying consolidated financial statements are prepared in accordance with GAAP. Certain GAAP policies that significantly affect the determination of our financial position, results of operations and cash flows, are summarized below. As discussed in Note 4 , amounts for the period January 1, 2015, through June 3, 2015, presented in our consolidated financial statements and notes to consolidated financial statements represent the historical operations of our predecessor entity, Evolent Health Holdings, which did not consolidate the operations of Evolent Health LLC for that period. The amounts for the period from June 4, 2015, through December 31, 2015, and as of dates and for periods thereafter, reflect our operations, which consolidate the operations of Evolent Health LLC. Summary of Significant Accounting Policies Accounting Estimates and Assumptions The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses for the reporting period. Those estimates are inherently subject to change and actual results could differ from those estimates. In the accompanying consolidated financial statements, estimates are used for, but not limited to, the valuation of assets, liabilities, consideration related to business combinations and asset acquisitions, revenue recognition including discounts and credits, estimated selling prices for deliverables in multiple element arrangements, contingent payments, allowance for doubtful accounts, depreciable lives of assets, impairment of long lived assets (including equity method investments), stock-based compensation, deferred income taxes and valuation allowance, contingent liabilities, valuation of intangible assets (including goodwill), purchase price allocation in taxable stock transactions and the useful lives of intangible assets. Principles of Consolidation The consolidated financial statements include the accounts of Evolent Health, Inc. and its subsidiaries. All inter-company accounts and transactions are eliminated in consolidation. Comprehensive Income No elements of comprehensive income were present for any periods presented. Fair Value Measurement Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. Our Consolidated Balance Sheets include various financial instruments (primarily cash not held in money-market funds, restricted cash, accounts receivable, accounts payable, accrued expenses and other liabilities) that are carried at cost and that approximate fair value. See Note 16 for further discussion regarding fair value measurement. Cash and Cash Equivalents We consider all highly liquid instruments with original maturities of three months or less to be cash equivalents. The Company holds materially all of our cash in bank deposits with FDIC participating banks, at cost, which approximates fair value. Cash and cash equivalents held in money market funds are carried at fair value, which approximates cost. Restricted Cash and Restricted Investments Restricted cash and restricted investments include cash and investments used to collateralize various contractual obligations (in thousands) as follows: As of December 31, 2017 2016 Collateral for letters of credit for facility leases (1) $ 3,812 $ 4,852 Collateral with financial institutions (2) 24,725 4,950 Pharmacy benefit management and claims processing services (3) 26,286 30,555 Collateral for reinsurance agreement (4) 10,000 — Other 862 59 Total restricted cash and restricted investments 65,685 40,416 Current restricted investments 8,150 — Current restricted cash 54,248 34,416 Total current restricted cash and restricted investments 62,398 34,416 Non-current restricted investments 605 4,950 Non-current restricted cash 2,682 1,050 Total non-current restricted cash and restricted investments $ 3,287 $ 6,000 (1) Represents restricted cash related to collateral for letters of credit required in conjunction with lease agreements. See Note 9 for further discussion of our lease commitments. (2) Represents collateral held with financial institutions for risk-sharing arrangements. As of December 31, 2017 , approximately $8.2 million of the collateral amount was invested in restricted certificates of deposit with remaining maturities of less than 12 months. Approximately $5.0 million of the collateral amount was invested in restricted certificates of deposit with remaining maturities of greater than 12 months as of December 31, 2016 . The restricted investments are classified as held-to-maturity and stated at amortized cost. Fair value of the certificates of deposit is determined using Level 2 inputs and approximates amortized cost as of December 31, 2017 and 2016 . As of December 31, 2017 , approximately $16.6 million of the collateral amount was in a trust account and invested in a money market fund. The amounts invested in money market funds are considered restricted cash and are carried at fair value, which approximates cost. See Note 16 for further discussion of our fair value measurement. For purposes of our risk sharing arrangements, the approximately $8.2 million invested in restricted certificates of deposit as of December 31, 2017 was no longer required beginning January 1, 2018. See Note 9 for further discussion of our risk-sharing arrangements. (3) Represents cash held by Evolent on behalf of partners to process PBM and other claims. (4) This amount represents restricted cash required as part of our capital only reinsurance agreement to provide balance sheet support to NMHC. There is no transfer of underwriting risk to Evolent and we are not at risk for any cash payments on behalf of NMHC as part of the agreement. The reinsurance agreement is further discussed in Note 9 . The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statements of cash flows. As of December 31, 2017 2016 Cash and cash equivalents $ 238,433 $ 134,563 Restricted cash and restricted investments 65,685 40,416 Restricted investments included in restricted cash and restricted investments (8,755 ) (4,950 ) Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows $ 295,363 $ 170,029 Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded when amounts are contractually billable under our customer contracts and are recorded at the invoiced amount and do not bear interest. The Company’s contracts typically include installment payments that do not necessarily correlate to the pattern of revenue recognition. In assessing the valuation of the allowance for doubtful accounts, management reviews the collectability of accounts receivable on an individual account basis. The allowance is adjusted periodically based on management’s determination of collectability, and any accounts that are determined to be uncollectible are written off against the allowance. The Company does no t have an allowance for doubtful accounts as of December 31, 2017 or 2016 , as all amounts were determined to be materially collectible. Due to the timing of invoicing, the Company had recorded unbilled receivables of $2.4 million and $1.8 million as of December 31, 2017 and 2016 , respectively. Unbilled receivables are considered short-term and generally invoiced subsequent to the month the services are provided. While terms vary by contract, payment for services is typically contractually linked to the provision of specified services, with the timing of invoicing occurring in advance or subsequent to the services period. Notes Receivable Notes receivable are carried at the face amount of each note plus respective accrued interest receivable, less received payments. The Company does not typically carry notes receivable in the course of its regular business, but contributed $20.0 million in the form of an implementation funding loan (the “Implementation Loan”) under an agreement with a current customer entered during the year ended December 31, 2017. The Implementation Loan is expected to support implementation services to assist the customer in expanding its Medicaid membership. Repayments under the loan are recorded as they are received and are immediately offset against any outstanding accrued interest before they are applied against the outstanding principal balance on the loan. The Implementation Loan carries a fixed interest rate of 2.5% per annum and the terms of the agreement governing the Implementation Loan require it to be repaid in ten equal monthly installments of $2.0 million , plus accrued interest, during 2018. As of December 31, 2017, the outstanding balance of the Implementation Loan was $20.0 million and approximately $0.1 million of accrued interest. Property and Equipment, Net Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment are computed using the straight-line method over the shorter of the estimated useful lives of the assets or the lease term. Based on the current competitive environment and constantly changing landscape for similar technology, effective September 1, 2017, the Company changed its estimate of the useful life of internal-use software from 7 years to 5 years. This change in useful life has been accounted for as a change in accounting estimate and will be applied to all new internal-use software. This change in estimate will also be applied prospectively to the remaining carrying amounts of existing internal-use software. For these existing assets the useful lives were adjusted at the individual asset level and will be amortized over a period of time such that the carrying value is fully amortized 5 years from the date the individual assets were initially placed in service. See Note 6 for additional discussion regarding the change in estimate related to our property and equipment. The following summarizes the updated estimated useful lives by asset classification: Computer hardware 3 years Furniture and equipment 3-7 years Internal-use software development costs 5 years Leasehold improvements Shorter of useful life or remaining lease term When an item is sold or retired, the cost and related accumulated depreciation or amortization is eliminated and the resulting gain or loss, if any, is recorded in our Consolidated Statements of Operations. We periodically review the carrying value of our long-lived assets, including property and equipment, for impairment whenever events or circumstances indicate that the carrying amount of such assets may not be fully recoverable. For long-lived assets to be held and used, impairments are recognized when the carrying amount of a long-lived asset group is not recoverable and exceeds fair value. The carrying amount of a long-lived asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset group. An impairment loss is measured as the amount by which the carrying amount of a long-lived asset group exceeds its fair value. Software Development Costs The Company capitalizes the cost of developing internal-use software, consisting primarily of personnel and related expenses (including stock-based compensation and employee taxes and benefits) for employees and third parties who devote time to their respective projects. Internal-use software costs are capitalized during the application development stage – when the research stage is complete and management has committed to a project to develop software that will be used for its intended purpose and any costs incurred during subsequent efforts to significantly upgrade and enhance the functionality of the software are also capitalized. Capitalized software costs are included in property and equipment, net on our Consolidated Balance Sheets. Amortization of internal-use software costs are recorded on a straight-line basis over their estimated useful life and begin once the project is substantially complete and the software is ready for its intended purpose. Research and Development Costs Research and development costs consist primarily of personnel and related expenses (including stock-based compensation) for employees engaged in research and development activities as well as third-party fees. All such costs are expensed as incurred. We focus our research and development efforts on activities that support our technology infrastructure, clinical program development, data analytics and network development capabilities. Research and development costs are recorded within “Selling, general and administrative expenses” on our Consolidated Statements of Operations and were $17.2 million , $11.1 million and $5.8 million for the years ended December 31, 2017 , 2016 and 2015 , respectively. Goodwill We recognize the excess of the purchase price, plus the fair value of any non-controlling interests in the acquiree, over the fair value of identifiable net assets acquired as goodwill. Goodwill is not amortized, but is reviewed at least annually for indications of impairment, with consideration given to financial performance and other relevant factors. Our annual goodwill impairment testing date is October 31. We perform impairment tests between annual tests if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying amount. We perform impairment tests of goodwill at our single reporting unit level, which is consistent with the way management evaluates our business. Acquisitions to date have been complementary to the Company’s core business, and therefore goodwill is assigned to our single reporting unit to reflect the synergies arising from each business combination. As discussed in Note 3 , we adopted ASU 2017-04, Intangibles-Goodwill and Other - Simplifying the Test for Goodwill Impairment, effective January 1, 2017. The adoption resulted in an update to our accounting policy for goodwill impairment. Our updated policy is described below. Our goodwill impairment analysis first assesses qualitative factors to determine whether events or circumstances existed that would lead the Company to conclude it is more likely than not that the fair value of its reporting unit is below its carrying amount. If the Company determines that it is more likely than not that the fair value of its reporting unit is below the carrying amount, a quantitative goodwill assessment is required. In the quantitative evaluation, the fair value of the relevant reporting unit is determined and compared to the carrying value. If the fair value is greater than the carrying value, then the carrying value is deemed to be recoverable and no further action is required. If the fair value estimate is less than the carrying value, goodwill is considered impaired for the amount by which the carrying amount exceeds the reporting unit’s fair value and a charge is reported in impairment of goodwill on our Consolidated Statements of Operations. See Note 7 for additional discussion regarding the goodwill impairment tests conducted during 2017 and 2016 . Intangible Assets, Net As noted above, on June 4, 2015, the Company completed the Offering Reorganization, following which we were required to remeasure the assets, liabilities and non-controlling interests of our equity-method investee, Evolent Health LLC, at fair value. The Company acquired additional intangible assets in conjunction with strategic acquisitions made during 2016 and 2017 . Information regarding the determination and allocation of the fair value of the acquired assets and liabilities are further described within Note 4 . Identified intangible assets are recorded at their estimated fair values at the date of acquisition and are amortized over their respective estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are used. Based on the current competitive environment and constantly changing landscape for similar technology, effective September 1, 2017, the Company changed its estimate of the useful life of intangible technology from a range of 5 - 7 years to 5 years. This change in useful life has been accounted for as a change in accounting estimate and will be applied to all new intangible technology, provided the facts and circumstances of the intangible technology do not suggest otherwise. This change in estimate will also be applied prospectively to the remaining carrying amounts of existing technology assets. For these existing assets the useful lives were adjusted at the individual asset level and will be amortized over a period of time such that the carrying value is fully amortized 5 years from the date the individual assets were initially capitalized. The following summarizes the updated estimated useful lives by asset classification: Corporate trade name 20 years Customer relationships 15-25 years Technology 5 years Intangible assets are reviewed for impairment if circumstances indicate the Company may not be able to recover the asset’s carrying value. The Company evaluates recoverability by determining whether the undiscounted cash flows expected to result from the use and eventual disposition of that asset or group exceed the carrying value at the evaluation date. If the undiscounted cash flows are not sufficient to cover the carrying value, the Company measures an impairment loss as the excess of the carrying amount of the long-lived asset or group over its fair value. See Note 7 for additional discussion regarding our intangible assets. Long-term Debt As discussed in Note 8 , the Company issued $125.0 million aggregate principal amount of its 2.00% Convertible Senior Notes due 2021 in a Private Placement in December 2016. The 2021 Notes are carried at cost, net of deferred financing costs, as long-term debt on the Consolidated Balance Sheets. The deferred financing costs will be amortized to non-cash interest expense using the straight line method over the contractual term of the 2021 Notes, since this method was not materially different from the effective interest rate method. Cash interest payments are due semi-annually in arrears - on June 1 and December 1 each year, starting on June 1, 2017. We will accrue interest expense monthly based on the annual coupon rate of 2.00% . The 2021 Notes have embedded conversion options and contingent interest provisions, which have not been recorded as separate financial instruments. Leases The Company leases all of its office space and enters into various other operating lease agreements in conducting its business. At the inception of each lease, the Company evaluates the lease agreement to determine whether the lease is an operating or capital lease. The operating lease agreements may contain tenant improvement allowances, rent holidays or rent escalation clauses. When such items are included in a lease agreement, the Company records a deferred rent asset or liability on our Consolidated Balance Sheets equal to the difference between the rent expense and future minimum lease payments due. The rent expense related to these items is recognized on a straight-line basis in the Consolidated Statements of Operations over the terms of the leases. In addition, the Company has entered into sublease agreements for some of its leased office space. Total rental income attributable to the subleases is offset against rent expense recorded in the Consolidated Statements of Operations over the terms of the leases. As of December 31, 2017 and 2016 , the Company had not entered into any capital leases. The Company is subject to non-cancellable leases for offices or portions of offices for which use might cease, resulting in a lease abandonment. When a lease abandonment is determined to have occurred, the present value of the future lease payments, net of estimated sublease payments, along with any unamortized tenant improvement costs, are recognized as lease abandonment expense in the Company’s Consolidated Statements of Operations with a corresponding liability in the Company’s Consolidated Balance Sheets. See No te 9 for discussion of the lease abandonment. Impairment of Equity Method Investments The Company considers potential impairment triggers for its equity method investments, and the equity method investments will be written down to fair value if there is evidence of a loss in value which is other-than-temporary. The Company may estimate the fair value of its equity method investments by considering recent investee equity transactions, discounted cash flow analyses and recent operating results. If the fair value of the investment has dropped below the carrying amount, management considers several factors when determining whether other-than-temporary impairment has occurred. The estimation of fair value and whether other-than-temporary impairment has occurred requires the application of significant judgment and future results may vary from current assumptions. There was no such impairment for the years ended December 31, 2017 , 2016 and 2015 . Deferred Revenue Deferred revenue consists of billings or payments received in advance of providing the requisite services or other instances where the revenue recognition criteria have not been met. Amounts deferred that are not anticipated to be recognized as revenue within a year of the balance sheet date are reported as long-term deferred liabilities. Revenue Recognition Revenue from the Company’s services is recognized when there is persuasive evidence of an arrangement, performance or delivery has occurred, the fee is fixed or determinable and collectability is reasonably assured. At times, the Company enters into contracts that contain multiple deliverables and we evaluate each deliverable to determine whether it represents a separate unit of accounting based on the following criteria: (i) if the delivered item has value to the customer on a standalone basis, and (ii) if the contract includes a general right of return relative to the delivered item, and delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the vendor. Revenue is then allocated to the units of accounting based on an estimate of each unit’s relative selling price. Revenue Recognition - Transformation Transformation contracts consist of strategic assessments, or Blueprint contracts, and implementation contracts. Based on the strategic assessment generated in a Blueprint contract, a customer may decide to move forward with a population health or health plan strategy; in these cases, the customer enters into an implementation contract in which the Company provides services related to the launch of this strategy. The Company recognizes revenue associated with transformation contracts based on a proportionate performance method, where revenue is recognized each period in proportion to the amount of the contract completed during that period. In the case of implementation revenues tied to certain health plan services activities, such revenue is deferred and amortized over the life of the contract. Contract completion is measured using output measures as best estimated by labor hours incurred compared to the total estimated labor hours necessary to complete our performance obligations contained in the contract. Revenue Recognition - Platform and Operations After the transformation phase, the Company often enters into a multi-year service contract with its customers where various population health, health plan operations, third-party health plan and PBM services are provided on an ongoing basis to the members of the customers’ plans typically in exchange for a monthly service fee, PMPM fee or a percentage of plan premiums. Revenue from these contracts is recognized in the month in which the services are delivered. In certain arrangements, there is a contingent portion of our service fee including meeting service level targets, sharing in rebates, shared medical savings arrangements based on financial performance and other performance measures. The Company continuously monitors its compliance with these arrangements and recognizes revenue when the amount is estimable and there is evidence to support meeting the criteria. Credits and Discounts We also provide credits and discounts to our customers often based on achieving certain volume commitments or other criteria. Credits are assessed to determine whether they reflect significant and incremental discounts. If the discounts are significant, the Company allocates them between the contract deliverables or future purchases as appropriate. If the future credit expires unused, it is recognized as revenue at that time. Cost of Revenue (exclusive of depreciation and amortization) Our cost of revenue includes direct expenses and shared resources that perform services in direct support of clients. Costs consist primarily of employee-related expenses (including compensation, benefits and stock-based compensation), expenses for TPA support and other services, as well as other professional fees. Stock-based Compensation The Company sponsors a stock-based incentive plan that provides for the issuance of stock-based awards to employees and non-employee directors of the Company or its consolidated subsidiaries. Our stock-based awards generally vest over a four year period and expire ten years from the date of grant. We expense the fair value of stock-based awards granted under our incentive compensation plans. Fair value of stock options is determined using a Black-Scholes options valuation methodology. The fair value of the awards is expensed over the performance or service period, which generally corresponds to the vesting period, on a straight-line basis and is recognized as an increase to additional paid-in capital. Stock-based compensation expense is reflected in “Cost of revenue” and “Selling, general and administrative expenses” in our Consolidated Statements of Operations. Additionally we capitalize personnel expenses attributable to the development of internal-use software, which include stock-based compensation costs. We recognize share-based award forfeitures as they occur. Prior to the Offering Reorganization on June 3, 2015, stock-based awards were granted in the stock of the Company to employees of its equity-method investee, Evolent Health LLC. As such, the Company was required to use a “non-employee” model for recognizing stock-based compensation, which required the awards to be marked-to-market through net income at the end of each reporting period until vesting occurred. Subsequent to the Offering Reorganization described in Note 4 , stock-based awards are granted in the Company’s stock to the employees of Evolent Health LLC and compensation costs are therefore recognized using an “employee” model. Under the “employee” model, we no longer mark the awards to market at the end of each reporting period. Income Taxes Deferred income taxes are recognized, based on enacted rates, when assets and liabilities have different values for financial statement and tax reporting purposes. A valuation allowance is recorded to the extent required. Considerable judgment and the use of estimates are required in determining whether a valuation allowance is necessary and, if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance, we consider many factors, including: the nature and character of the deferred tax assets and liabilities; taxable income in prior carryback years; future reversals of temporary differences; the length of time carryovers can be utilized; and any tax planning strategies we would employ to avoid a tax benefit from expiring unused. We use a recognition threshold and a measurement attribute for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. We recognize interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense, when applicable. As of December 31, 2017 , our identified balance of uncertain income tax positions would not have a material impact to the consolidated financial statements. We did not have any such amounts accrued as of December 31, 2016 , as we had not identified any uncertain income tax positions that could have a material impact to the consolidated financial statements. We are subject to taxation in various jurisdictions in the U.S. and remain subject to examination by taxing jurisdictions for the years 2011 and all subsequent periods due to the availability of NOL carryforwards. We are a holding company and our assets consist of our direct ownership in Evolent Health LLC, for which we are the managing member. Evolent Health LLC is classified as a partnership for U.S. federal and applicable state and local income tax purposes and, as such, is not subject to U.S. federal, state and local income taxes. Taxable income or loss generated by Evolent Health LLC is allocated to holders of its units, including us, on a pro rata basis. Accordingly, we are subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of Evolent Health LLC. Earnings (Loss) per Share Basic earnings (loss) per share is computed by dividing net income (loss) available to Class A common shareholders by the weighted-average number of Class A common shares outstanding. For periods of net income, and when the effects are not anti-dilutive, we calculate diluted earnings per share by dividing net income available to Class A common shareholders by the weighted average number of Class A common shares assuming the conversion of the convertible preferred securities, which occurred on the date of the Offering Reorganization, plus the weighted average number of Class A common shares assuming the conversion of our 2021 Notes, as well as the impact of all potential dilutive common shares, consisting primarily of common stock options and unvested restricted stock awards using the treasury stock method and our exchangeable Class B common stock. For periods of net loss, shares used in the diluted earnings (loss) per share calculation represent basic shares as using potentially dilutive shares would be anti-dilutive. Prior to the Offering Reorganization, the Company issued securities other than common stock that participated in dividends (“participating securities”), and therefore, we utilized the two-class method to calculate earnings (loss) per share for the applicable periods. Participating securities include redeemable convertible preferred stock. The two-class method requires a portion of earnings to be allocated to the participating securities to determine the earnings available to common stockholders. Earnings (loss) available to the common stockholders is equal to net income (loss) less dividends paid on preferred stock, assumed periodic cumulative preferred stock dividends, repurchases of preferred stock for an amount in excess of carrying value and an allocation of any remaining earnings (loss) in accordance with the bylaws between the outstanding common and preferred stock as of the end of each applicable period. Operating Segments Operating segments are defined as components of a business that earn revenue and incur expenses for which discrete financial information is available that is evaluated, on a regular basis, by the chief operating decision maker (“CODM”) to decide how to allocate resources and assess performance. The Company’s CODM, the Chief Executive Officer, allocates resources at a consolidated level and therefore the Company views its operations and manages its business as one operating segment. All of the Company’s revenue is generated in the United States and all assets are located in the United States. Change in Accounting Principle In November 2016, the Financial Accounting Standards Board (“FASB”) issued Accountin |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Adoption of New Accounting Standards In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash . The purpose of the ASU is to reduce diversity in practice regarding the classification and presentation of changes in restricted cash on the statement of cash flows. The amendments in the ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments in this ASU should be applied using a retrospective transition method to each period presented. We adopted the requirements of this standard effective December 31, 2017, which resulted in the recast of our statement of cash flows for each period presented. The adoption of this ASU had an impact on our financial statements with respect to presentation of our statement of cash flows. See the “Change in Accounting Principle” section within Note 2 above for further information on the adoption of ASU 2016-18. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments . This ASU provides updated guidance on eight specific cash flow issues to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. We adopted the requirements of this standard, effective December 31, 2017. The adoption of this ASU may have an impact on the presentation of our statement of cash flows if we encounter specific cash receipts and cash payments in the purview of this ASU, such as cash outflows related to a contingent consideration and cash receipts from our equity method investees. There was no impact of the adoption for the years ended December 31, 2017 , 2016 or 2015. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation - Scope of Modification Accounting . The purpose of the ASU is to limit the circumstances in which an entity applies modification accounting to share-based awards by setting criteria whereby an entity would be precluded from applying modification accounting guidance in Topic 718. The ASU also removes guidance in Topic 718 stating that modification accounting is not required when an entity adds an anti-dilution provision if that modification is not made in contemplation of an equity restructuring. The amendments are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim periods. The amendments should be applied prospectively to an award modified on or after the adoption date. We adopted this standard, effective June 1, 2017. The adoption of this ASU may have an impact if we have a modification to our share-based awards at a future date. There was no impact of the adoption for the year ended December 31, 2017 . In January 2017, the FASB issued ASU 2017-01, Business Combinations - Clarifying the Definition of a Business . The purpose of the ASU is to add guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The ASU provides a screen to determine when an integrated set of assets and activities is not a business. The ASU also provides a framework to assist entities in evaluating whether both an input and a substantive process are present. The amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments should be applied prospectively on or after the effective date. Early adoption is permitted for transactions for which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. We adopted this standard during June 2017, in conjunction with the acquisition of Accordion Health, Inc. (see Note 4 ). The adoption had an impact on our financial statements with respect to the accounting for the Accordion Health, Inc. acquisition, and we anticipate it will have an impact if we engage in future business combinations or asset acquisitions. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other - Simplifying the Test for Goodwill Impairment . The purpose of the ASU is to simplify the subsequent measurement of goodwill. The ASU eliminates Step 2 from the goodwill impairment test. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. This update is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We believe this newly adopted principle is preferable as it reduces the complexity of performing a goodwill impairment test. As a result, we adopted this standard effective January 1, 2017. Our updated accounting policy for goodwill impairment is described in Note 2 . See Note 7 for a description of our 2017 goodwill impairment tests as performed under the updated standard. In March 2016, the FASB issued ASU 2016-07, Investments-Equity Method and Joint Ventures - Simplifying the Transition to the Equity Method of Accounting . The purpose of this ASU is to eliminate the requirement to retroactively adopt the equity method of accounting when an investment qualifies for the equity method as a result of an increase in the level of ownership interest or degree of influence. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The amendments in this ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. We adopted this standard effective January 1, 2017. The adoption did not have a material impact on our financial statements for the year ended December 31, 2017 . In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging - Contingent Put and Call Options in Debt Instruments . The purpose of this ASU is to clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely rated to their debt hosts. An entity performing the assessment under the amendments in the ASU is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. For public business entities, the amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. We adopted this standard effective January 1, 2017. The adoption did not have a material impact on our financial statements for the year ended December 31, 2017 . Future Adoption of New Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments . With respect to assets measured at amortized cost, such as held-to-maturity assets, the update requires presentation of the amortized cost net of a credit loss allowance. The update eliminates the probable initial recognition threshold that was previously required prior to recognizing a credit loss on financial instruments. The credit loss estimate can now reflect an entity’s current estimate of all future expected credit losses as opposed to the previous standard, when an entity only considered past events and current conditions. With respect to available for sale debt securities, the update requires that credit losses be presented as an allowance rather than as a write-down. The update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We intend to adopt the requirements of this standard effective January 1, 2020, and are currently evaluating the impact of the adoption on our financial condition and results of operations. In February 2016, the FASB issued ASU 2016-02, Leases , in order to establish the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. This update introduces a new standard on accounting for leases, including a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in ASC 606, the FASB’s new revenue recognition standard (e.g., those related to evaluating when profit can be recognized). The standard also requires lessors to increase the transparency of their exposure to changes in value of their residual assets and how they manage that exposure. The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. We intend to adopt the requirements of this standard effective January 1, 2019, and are currently evaluating the impact of the adoption on our financial condition and results of operations. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , in order to clarify the principles of recognizing revenue. This standard establishes the core principle of recognizing revenue to depict the transfer of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The FASB defines a five-step process that systematically identifies the various components of the revenue recognition process, culminating with the recognition of revenue upon satisfaction of an entity’s performance obligations. By completing all five steps of the process, the core principles of revenue recognition will be achieved. In March 2016, the FASB issued an update to the new revenue standard (ASU 2014-09) in the form of ASU 2016-08, which amended the principal-versus-agent implementation guidance and illustrations in the new revenue guidance. The update clarifies that an entity should evaluate whether it is the principal or the agent for each specified good or service promised in a contract with a customer. In April 2016, the FASB issued another update to the new revenue standard in the form of ASU 2016-10, which amended the guidance on identifying performance obligations and the implementation guidance on licensing. These ASUs were followed by two further updates issued during May 2016: ASU 2016-11, which rescinds certain SEC guidance, such as the adoption of ASUs 2014-09 and 2014-16, including accounting for consideration given by a vendor to a customer, and ASU 2016-12, which is intended to clarify the objective of the collectability criterion while identifying the contract(s) with a customer. The new revenue standard (including updates) is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted only as of annual reporting periods beginning after December 15, 2016. The guidance permits two methods of adoption: i) the full retrospective method applying the standard to each prior reporting period presented, or ii) the modified retrospective method with a cumulative effect of initially applying the guidance recognized at the date of initial application. The standard also allows entities to apply certain practical expedients at their discretion. We adopted this standard effective January 1, 2018, using the modified retrospective method with a cumulative catch up adjustment and providing additional disclosures comparing results to previous rules. We anticipate that the adoption of the standard will result in changes related to revenue recognition for certain contracts that contain features, such as variable consideration. These changes will generally accelerate revenue recognition. In addition, certain customer setup costs which have historically been expensed as incurred will be capitalized. We are making changes to our accounting policies and practices, business processes, systems and controls to support the new revenue recognition and disclosure requirements. We have also updated our internal controls related to revenue recognition and contract costs to address internal controls over financial reporting necessary to ensure compliance with ASC 606 and ASC 340-40. We have preliminarily assessed the cumulative impact of adopting the standard as of January 1, 2018, to be an increase in stockholders’ equity of approximately $15.0 million to $18.0 million , primarily as a result of deferral of expenses related to contract acquisition and fulfillment costs and acceleration of revenue due to variable consideration estimation. We have evaluated all other issued and unadopted ASUs and believe the adoption of these standards will not have a material impact on our results of operations, financial position, or cash flows. |
Transactions
Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Organizational Transactions [Abstract] | |
Transactions | Transactions Business Combinations Aldera On November 1, 2016 , the Company completed the acquisition of Aldera, including 100% of the voting equity interests. The acquisition provides control over Aldera, a key vendor and the primary software provider for the Valence Health TPA platform. The merger consideration, net of certain closing and post-closing adjustments was $34.3 million based on the closing price of the Company’s Class A common stock on the NYSE on November 1, 2016 , and consisted of approximately 0.5 million shares of the Company’s Class A common stock, $17.5 million in cash and $7.0 million related to the settlement of a prepaid software license. As a result of the Class A common stock issued for the Aldera transaction, the Company’s ownership of Evolent Health LLC increased from 77.2% to 77.4% , immediately after the acquisition, as the Company was issued Class A membership units in Evolent Health LLC in exchange for the contribution of Aldera to Evolent Health LLC post acquisition. Prior to the acquisition of Aldera, Evolent entered into a perpetual license agreement for development rights and use of Aldera proprietary software for $7.0 million . Upon closing the acquisition of Aldera, the Company concluded that the $7.0 million prepaid asset recorded by Evolent and the deferred revenue balance recorded by Aldera for the perpetual software license should be assessed as a prepayment for a software license that was effectively settled upon acquisition and was eliminated in the post-combination consolidated financial statements. No gain or loss was recognized on settlement as management determined the $7.0 million license fee to be priced at fair value and the license agreement did not include a settlement provision. The Company increased the consideration transferred for the acquisition of Aldera by $7.0 million for the effective settlement of the prepaid software license at the recorded amount, which brought the total consideration paid for the acquisition to $34.3 million . The Company incurred approximately $0.2 million in transaction costs related to the Aldera acquisition, which were recorded within “Selling, general and administrative expenses” on our Consolidated Statements of Operations for the year ended December 31, 2016. The Company accounted for the transaction as a business combination using purchase accounting. During the year ended December 31, 2017, the Company recorded net measurement period adjustments of approximately $0.4 million . The purchase price allocation, as previously determined, the measurement period adjustments and the purchase price allocation, as revised, are as follows (in thousands): Measurement As Previously Period Determined Adjustments As Revised Purchase consideration: Fair value of Class A common stock issued $ 9,864 $ — $ 9,864 Cash for settlement of software license 7,000 — 7,000 Cash 17,481 — 17,481 Total consideration $ 34,345 $ 34,345 Tangible assets acquired: Receivables $ 624 $ (194 ) $ 430 Prepaid expenses and other current assets 272 — 272 Property and equipment 1,065 — 1,065 Other non-current assets 9 — 9 Identifiable intangible assets acquired: Customer relationships 7,000 — 7,000 Technology 2,500 — 2,500 Liabilities assumed: Accounts payable 429 — 429 Accrued liabilities 1,204 205 1,409 Accrued compensation and employee benefits 605 — 605 Deferred revenue 44 — 44 Goodwill 25,157 399 25,556 Net assets acquired $ 34,345 $ 34,345 The fair value of the receivables acquired, as revised, shown in the table above, approximates the gross contractual amounts deemed receivable by management. Identifiable intangible assets associated with technology and customer relationships will be amortized on a straight-line basis over their estimated useful lives of 5 and 15 years, respectively. The technology is related to source code for licensed software used to support the third-party administration platform offered to Aldera’s clients. The fair value of the intangible assets was primarily determined using the income approach. The income approach estimates fair value for an asset based on the present value of cash flows projected to be generated by the asset. Projected cash flows are discounted at a required rate of return that reflects the relative risk of achieving the cash flows and the time value of money. Goodwill is calculated as the difference between the acquisition date fair value of the total consideration and the fair value of the net assets acquired, and represents the future economic benefits that we expect to achieve as a result of the acquisition. The goodwill is attributable primarily to the acquired assembled workforce and expected cost and revenue synergies. Goodwill is considered an indefinite lived asset. The transaction was a taxable business combination for the Company and the amount of goodwill determined for tax purposes is deductible upon the beginning of the amortization period for tax purposes. The amounts above reflect management’s estimate of the fair value of the tangible and intangible assets acquired and liabilities assumed based on a valuation performed using currently available information, inclusive of the measurement period adjustments. During the year ended December 31, 2017, the Company recorded certain measurement period adjustments that primarily impacted receivables, accrued liabilities and goodwill. These adjustments resulted in a net $0.4 million increase to goodwill, as reflected in the purchase price allocation table above. The purchase price allocation for Aldera was finalized during 2017. Valence Health On October 3, 2016 , the Company completed its acquisition of Valence Health, including 100% of the voting equity interests. Valence Health, based in Chicago, Illinois, was founded in 1996 and provides value-based administration, population health and advisory services. In its 20 year history, Valence Health developed particular expertise in the Medicaid and pediatric markets. The addition of Valence Health strengthens the Company’s operational capabilities and provides increased scale and client diversification. The merger consideration, net of certain closing and post-closing adjustments was $217.9 million based on the closing price of the Company’s Class A common stock on the NYSE on October 3, 2016 , and consisted of 6.8 million shares of the Company’s Class A common stock and $54.8 million in cash. The shares issued to Valence Health stockholders represented approximately 10.5% of the Company’s issued and outstanding Class A common stock and Class B common stock immediately following the transaction. As a result of the Class A common stock issued for the Valence Health transaction, the Company’s ownership in Evolent Health LLC increased from 74.6% to 77.2% , immediately after the acquisition, as the Company was issued Class A membership units in Evolent Health LLC in exchange for the contribution of Valence Health to Evolent Health LLC post acquisition. The transaction also included an earn-out of up to $12.4 million , fair valued at $2.6 million as of October 3, 2016 , payable by January 30, 2017, in the Company’s Class A common stock, tied to new business activity contracted on or before December 31, 2016. The fair value was determined by assigning probabilities to potential business activity in the pipeline as of the acquisition date. As of December 31, 2016, Valence Health had not contracted sufficient business to be eligible for payment of the earn-out consideration. As a result, the Company recorded a gain of $2.6 million in accordance with the release of the contingent liability for the year ended December 31, 2016, which is recorded within “(Gain) loss on change in value of contingent consideration” on our Consolidated Statements of Operations. The Company incurred approximately $2.7 million of transaction costs related to the Valence Health acquisition for the year ended December 31, 2016. Approximately $2.6 million of these transaction costs are recorded within “Selling, general and administrative expenses” and less than $0.1 million are recorded within “Cost of revenue” on our Consolidated Statements of Operations. The Company accounted for the transaction as a business combination using purchase accounting. The purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of October 3, 2016 . During the year ended December 31, 2017, the Company recorded net measurement period adjustments of approximately $1.2 million . The purchase price allocation, as previously determined, the measurement period adjustments and the purchase price allocation, as revised, are as follows (in thousands): Measurement As Previously Period Determined Adjustments As Revised Purchase consideration: Fair value of Class A common stock issued $ 159,614 $ 911 $ 160,525 Fair value of contingent consideration 2,620 — 2,620 Cash 54,799 — 54,799 Total consideration $ 217,033 $ 217,944 Tangible assets acquired: Restricted cash $ 1,829 $ — $ 1,829 Accounts Receivable 8,587 (251 ) 8,336 Prepaid expenses and other current assets 3,465 — 3,465 Property and equipment 6,241 — 6,241 Other non-current assets 313 — 313 Favorable leases assumed (net of unfavorable leases) 4,323 (126 ) 4,197 Identifiable intangible assets acquired: Customer relationships 69,000 — 69,000 Technology 18,000 — 18,000 Liabilities assumed: Accounts payable 5,703 — 5,703 Accrued liabilities 3,865 (69 ) 3,796 Accrued compensation and employee benefits 9,200 — 9,200 Deferred revenue 2,022 640 2,662 Other long-term liabilities 2,328 — 2,328 Net deferred tax liabilities 13,316 (636 ) 12,680 Goodwill 141,709 1,223 142,932 Net assets acquired $ 217,033 $ 217,944 The fair value of the receivables acquired, as revised, shown in the table above, approximates the gross contractual amounts due under contracts of $9.1 million , of which $0.8 million is expected to be uncollectible. Identifiable intangible assets associated with customer relationships and technology will be amortized on a straight-line basis over their preliminary estimated useful lives of 20 and 5 years, respectively. The customer relationships are primarily attributable to existing contracts with current customers. The technology is an existing platform Valence Health uses to provide services to customers. The fair value of the intangible assets was primarily determined using the income approach. The income approach estimates fair value for an asset based on the present value of cash flows projected to be generated by the asset. Projected cash flows are discounted at a required rate of return that reflects the relative risk of achieving the cash flows and the time value of money. Goodwill is calculated as the difference between the acquisition date fair value of the total consideration and the fair value of the net assets acquired, and represents the future economic benefits that we expect to achieve as a result of the acquisition. The goodwill is attributable primarily to the acquired assembled workforce and expected cost and revenue synergies. Goodwill is considered an indefinite lived asset. The merger was structured as a tax-free reorganization and therefore the Company received carryover basis in the assets and liabilities acquired; accordingly, the Company recognized net deferred tax liabilities associated with the difference between the book basis and the tax basis for the assets and liabilities acquired, as well as the Valence Health net operating loss tax carryforward received in the merger, in the amount of $13.3 million , resulting in additional goodwill. The purchased and additional goodwill created due to the increase in the deferred tax liability were not deductible for tax purposes. The Company contributed the acquired assets and liabilities of Valence Health to Evolent Health LLC, resulting in a taxable gain of $52.7 million for the Company, not recognized for financial reporting purposes. The amounts above reflect management’s estimate of the fair value of the tangible and intangible assets acquired and liabilities assumed based on a valuation performed using currently available information, inclusive of measurement period adjustments. The Company recorded various measurement period adjustments that resulted in a $1.2 million net increase to goodwill during the year ended December 31, 201 7, including an adjustment to increase deferred revenue and goodwill by approximately $0.6 million during 2017, all of which was recorded as revenue during the year. In a ddition, during the second quarter of 2017, the Company reached an agreement to finalize the net working capital (“NWC”) settlement related to the Valence Health transaction. Per the executed settlement agreement, the Company received 0.2 million shares of its Class A Common Stock previously held in escrow. The fair value of the NWC settlement was approximately $0.9 million less than the Company’s previously recorded estimate and, accordingly, the Company recorded a measurement period adjustment to increase purchase price and goodwill by approximately $0.9 million . The Company also recorded adjustments to accounts receivable and intangible assets, which resulted in a $0.4 million increase to goodwill. During 2017, the Company filed the 2016 pre-acquisition tax return for Valence Health, resulting in an adjustment to decrease deferred tax liabilities and goodwill by approximately $0.6 million due to updates in certain estimates that were made as of the transaction date. The purchase price allocation for Valence Health was finalized during 2017. Our results for the year ended December 31, 2016, included approximately $3.9 million in stock compensation expense related to the acceleration of unvested Valence Health equity awards that vested upon the close of the Valence Health acquisition. The expense was related to Valence Health employees that remained with the Company following the close of the acquisition. Immediately following the Valence Health acquisition, the Company decided to abandon and sublet its rented space at 540 W. Madison Street, Suite 1400, Chicago, Illinois (the “14 th Floor Space”). Therefore, our results from operations for the year ended December 31, 2016, included a lease abandonment expense of approximately $6.5 million in conjunction with a rental space acquired as part of the Valence Health acquisition, based on remaining lease payments and expected future sublease income. During the second quarter of 2017, the Company reached an agreement to terminate the lease for the 14th Floor Space, effective September 2017. The Company continued making rent payments until September 1, 2017, at which point it paid a one-time lease cancellation and related brokerage fee. Remaining cash outflows related to the 14th Floor Space were estimated to be approximately $4.8 million as of June 30, 2017, while the remaining balance of the initial $6.5 million lease abandonment liability recorded after the Valence Health acquisition was approximately $5.3 million as of June 30, 2017, prior to adjustments pertaining to the lease cancellation fees. As such, the Company recorded a one-time adjustment of $0.5 million to reduce the lease abandonment liability, from $5.3 million to $4.8 million , as of June 30, 2017. The adjustment was recorded as a reduction to our rent expense within “Selling, general and administrative expenses” on our Consolidated Statements of Operations for the year ended December 31, 2017. The Company made regular rent payments until September 1, 2017, at which point we paid a one-time lease cancellation and related brokerage fee of $4.4 million . There is no remaining lease abandonment liability related to the 14th Floor Space as of December 31, 2017. In conjunction with our acquisition of Valence Health on October 3, 2016, we also signed a Master Service Agreement (the “MSA”), as well as a Transition Service Agreement (the “TSA”) with Cicerone Health, the surviving Valence Health, Inc. state insurance cooperative business not acquired by the Company (“CHS”). The MSA and the TSA are at market rates and, therefore, there is no allocation of purchase price to these arrangements. The terms of the MSA stipulate that the Company will provide service information technology, system configuration and medical management services to CHS’s state insurance cooperative clients until December 31, 2018 . Based on management’s analysis, the terms of the MSA are at fair market value. The TSA has expired as of December 31, 2017. Under the terms of the TSA, the Company provided back office information technology support to CHS and CHS provided back office finance and human resources support to Evolent until December 31, 2017 . Additionally, employees of both entities will have mutual employee health care claims administration through a self-funded plan. Based on management’s analysis, the terms of the TSA are at fair market value. Passport On February 1, 2016 , the Company entered into a strategic alliance with Passport, a nonprofit community-based and provider-sponsored health plan administering Kentucky Medicaid and federal Medicare Advantage benefits to approximately 0.3 million Kentucky Medicaid and Medicare Advantage beneficiaries. As part of the transaction, we issued 1.1 million Class A common shares to acquire capabilities and assets from Passport to enable us to build out a Medicaid Center of Excellence based in Louisville, Kentucky. Additional equity consideration of up to $10.0 million may be earned by Passport should we obtain new third party Medicaid businesses in future periods. This transaction also includes a 10 -year arrangement under which we will provide various health plan management and managed care services to Passport. The Company incurred approximately $0.3 million in transaction costs related to the Passport acquisition for the year ended December 31, 2016. The transaction costs were recorded within “Selling, general and administrative expenses” on our Consolidated Statements of Operations. The Company has accounted for the transactions with Passport as a business combination using purchase accounting. The fair value of the total consideration transferred in connection with the close of the transaction was $18.2 million , of which the Class A common shares were valued at $10.5 million and the contingent equity consideration was initially valued at $7.8 million . The fair value of the shares issued was determined based on the closing price of the Company’s Class A common stock on the NYSE as of February 1, 2016 , and the quantity of shares issued was determined under a pricing collar set forth in the purchase agreement. The contingent equity consideration was recorded as a mark-to-market liability of $8.7 million and $8.3 million within “Other long-term liabilities” on our Consolidated Balance Sheets as of December 31, 2017 and 2016 , respectively. We recorded a re-measurement loss of approximately $0.4 million and $0.5 million during the years ended December 31, 2017 and 2016 , respectively, based on changes in the underlying assumptions of the fair value calculation. The fair value of the contingent equity consideration was estimated based on the real options approach, a form of the income approach, which estimated the probability of the Company achieving future revenues under the agreement. Key assumptions include the discount rate and the probability-adjusted recurring revenue forecast. A further discussion of the fair value measurement of the contingent consideration is provided in Note 16 . The purchase price was allocated to the assets acquired based on their fair values as of February 1, 2016 , as follows (in thousands): Purchase consideration Fair value of Class A common stock issued $ 10,450 Fair value of contingent consideration 7,750 Total consideration $ 18,200 Tangible assets acquired Prepaid asset $ 6,900 Goodwill 11,300 Net assets acquired $ 18,200 The prepaid asset is related to an acquired facility license agreement as the Company was provided with leased facilities which house the acquired Passport employees at no future cost to the Company. The fair value of the acquired facility license agreement was determined by comparing the current market value of similar lease spaces to the facilities occupied by the acquired Passport personnel to obtain a market value of the occupied space, with the present value of the determined market value of the occupied space classified as the acquired facility license agreement prepaid asset. The goodwill is attributable partially to the acquired assembled workforce. The transaction was a taxable business combination for the Company and the amount of goodwill determined for tax purposes is deductible upon the beginning of the amortization period for tax purposes. The Offering Reorganization Evolent Health, Inc. was incorporated as a Delaware corporation in December 2014 for the purpose of pursuing the Company’s IPO. Immediately prior to the completion of the IPO in June 2015, we amended and restated our certificate of incorporation to, among other things, authorize two classes of common stock, Class A common stock and Class B common stock. Each share of our Class A common stock and Class B common stock entitles its holder to one vote on all matters to be voted on by stockholders, and holders of Class A common stock and holders of Class B common stock vote together as a single class on all matters presented to stockholders for their vote or approval (except as otherwise required by law). Pursuant to the Offering Reorganization: • Evolent Health Holdings merged with and into Evolent Health, Inc. and the surviving corporation of the merger was Evolent Health, Inc.; • An affiliate of TPG merged with and into Evolent Health, Inc. and the surviving corporation of the merger was Evolent Health, Inc.; • Each of the then-existing stockholders of Evolent Health Holdings received four shares of our Class A common stock and the right to certain payments under the TRA in exchange for each share of Class A common stock held in Evolent Health Holdings; • TPG received 2.1 million shares of Class A common stock of Evolent Health, Inc., together with the right to certain payments under the TRA in exchange for 100% of the equity that it held in its affiliate that was merged with Evolent Health, Inc.; and • We issued shares of our Class B common stock and the right to certain payments under the TRA to The Advisory Board, TPG and another investor each of which was a member of Evolent Health LLC prior to the Offering Reorganization. The existing shareholders of Evolent Health Holdings held the same economic and voting interest before and after the merger of Evolent Health Holdings with and into Evolent Health, Inc., which represents a transaction among entities with a high degree of common ownership. As such, the merger is viewed as non-substantive and the consolidated financial statements of Evolent Health, Inc. reflect the historical accounting of Evolent Health Holdings except that the legal capital reflects the capital of Evolent Health, Inc. In addition, in connection with the Offering Reorganization, Evolent Health LLC amended and restated its operating agreement to establish two classes of equity (voting Class A common units and non-voting Class B common units); after the amendment, the pre-reorganization members of Evolent Health LLC (other than Evolent Health, Inc.) hold 100% of the Class B common units and Evolent Health, Inc. holds the Class A voting common units. Evolent Health LLC’s Class B common units can be exchanged (together with a corresponding number of shares of our Class B common stock) for one share of our Class A common stock. As a result of the Offering Reorganization, Evolent Health, Inc. obtained voting control over Evolent Health LLC and therefore consolidated Evolent Health LLC and recognized a gain of $414.1 million upon obtaining control. The gain represents the excess of the fair value of our interest in Evolent Health LLC’s net assets over the carrying value of our equity method investment prior to the Offering Reorganization and is included in gain on consolidation in the Consolidated Statements of Operations. We accounted for obtaining control of Evolent Health LLC as a step acquisition and, accordingly, recognized the fair value of Evolent Health LLC’s assets acquired, liabilities assumed, non-controlling interests recognized and the remeasurement gain recorded on the previously held equity interests. As the acquisition was the result of the Offering Reorganization and not the purchase of additional interest in Evolent Health LLC, there were no assets acquired or liabilities assumed, and there was no purchase price paid as a part of the transaction. The allocation of the value of the transaction (in thousands) is included below: Goodwill $ 608,903 Intangible assets 169,000 Cash and restricted cash 21,930 Other assets 49,239 Remeasurement gain on previously held equity interest (414,133 ) Liabilities and deferred revenue (71,299 ) Non-controlling interests (332,793 ) Carrying value of previously held equity interest (30,847 ) Purchase price $ — The estimated fair value of Evolent Health LLC was determined using a business enterprise valuation approach that discounted Evolent Health LLC’s projected cash flows based on an estimate of its weighted average cost of capital. Evolent Health LLC’s fair value was estimated to be $777.8 million . In addition, we determined the fair value of Evolent Health LLC’s tangible and identifiable intangible assets, deferred revenue and other liabilities, based on various income and market approaches, including the relief from royalty method for trade name and technologies, and the discounted cash flow method for customer relationships, both of which use Level 3 inputs (see Note 16 for discussion of fair value and use of Level 3 inputs). We are amortizing the acquired identifiable intangible assets over their estimated useful lives (see Note 2 for discussion of useful lives for intangible assets). The Offering Reorganization was structured as a tax-free exchange and, therefore, did not result in tax deductible goodwill. Our operations are conducted through Evolent Health LLC and subsequent to the Offering Reorganization the financial results of Evolent Health LLC are consolidated in the financial statements of Evolent Health, Inc. Evolent Health, Inc. is a holding company whose principal asset is all of the Class A common units it holds in Evolent Health LLC, and its only business is to act as sole managing member of Evolent Health LLC. Evolent Health LLC Governance The Company serves as sole managing member of Evolent Health LLC. As such, it controls Evolent Health LLC’s business and affairs and is responsible for the management of its business. Coordination of Evolent Health, Inc. and Evolent Health LLC We must, at all times, maintain a one -to-one ratio between the number of outstanding shares of our Class A common stock and the number of outstanding Class A common units of Evolent Health LLC. Issuances of Common Units Evolent Health LLC may only issue Class A common units to us, as the sole managing member of Evolent Health LLC. Class B common units may be issued only to persons or entities we permit. Such issuances of Class B common units shall be made in exchange for cash or other consideration. Class B common units may not be transferred as Class B common units except to certain permitted transferees and in accordance with the restrictions on transfer set forth in the third amended and restated operating agreement of Evolent Health LLC. Any such transfer must be accompanied by the transfer of an equal number of shares of our Class B common stock. We entered into an exchange agreement with Evolent Health LLC, The Advisory Board, TPG and another investor. Pursuant to and subject to the terms of the exchange agreement and the third amended and restated operating agreement of Evolent Health LLC, holders of Class B common units, at any time and from time to time, may exchange one or more Class B common units, together with an equal number of shares of our Class B common stock, for shares of our Class A common stock on a one-for-one basis. The amount of Class A common stock issued or conveyed will be subject to equitable adjustments for stock splits, stock dividends and reclassifications. As holders exchange their Class B common units and Class B common stock for Class A common stock, our interest in Evolent Health LLC will increase. Pro forma financial information (unaudited) The unaudited pro forma Consolidated Statements of Operations presented below gives effect to (1) the Aldera transaction as if it had occurred on January 1, 2015, (2) the Valence Health transaction as if it had occurred on January 1, 2015, (3) the Passport transaction as if it had occurred on January 1, 2015, and (4) the consolidation of Evolent Health LLC as if it had occurred on January 1, 2014. The following pro forma information includes adjustments to: • Remove transaction costs related to the Aldera, Valence Health and Passport transactions of $0.2 million , $2.7 million and $0.3 million , respectively, recorded during 2016 and reclassify said amounts to 2015; • Remove one-time items, such as the gain on the release of our contingent liability related to Valence Health of $2.6 million , stock-based compensation of $3.9 million related to the acceleration of Valence Health’s unvested equity awards and the lease abandonment charge related to the 14 th Floor Space of $6.5 million , recorded during 2016 and reclassify said amounts to 2015; • Record amortization expenses related to intangible assets beginning January 1, 2015, for intangibles related to Valence Health and Aldera; • Record revenue and expenses related to the MSA and TSA in 2016 and 2015; • Remove the tax benefit recorded associated with the Valence Health acquisition and reclassify said amounts to 2015; • Remove the gain recognized upon the consolidation of the previously held equity method investment in 2015 and reclassify said amount to 2014; • Remove transaction costs related to the Offering Reorganization of $1.2 million in 2015 and reclassify said amount to 2014; • Record amortization expenses related to intangible assets beginning January 1, 2014, for intangibles related to the Offering Reorganization; • Record rent expense related to Passport prepaid lease beginning January 1, 2015; and • Record adjustments of income taxes associated with these pro forma adjustments. This pro forma data is presented for informational purposes only and does not purport to be indicative of the results of future operations or of the results that would have occurred had the transactions described above occurred in the specified prior periods. The pro forma adjustments are based on available information and assumptions that the Company believes are reasonable to reflect the impact of these transactions on the Company’s historical financial information on a pro forma basis (in thousands, except per share data). For the Years Ended December 31, 2016 2015 Revenue $ 361,944 $ 311,639 Net income (loss) (225,091 ) (93,906 ) Net income (loss) attributable to non-controlling interests (57,433 ) (28,684 ) Net income (loss) attributable to Evolent Health, Inc. (167,658 ) (65,222 ) Net income (loss) available to common shareholders: Basic $ (3.30 ) $ (1.50 ) Diluted (3.30 ) (1.50 ) Associated with the Offering Reorganization, deferred revenue was recorded only to the extent that it represented an obligation assumed by the acquirer. As a result, existing deferred revenue was reduced by $4.9 million to account for the deferred revenue at fair value. Securities Offerings August 2017 Primary Offering In August 2017, the Company completed a primary offering of 8.8 million shares of its Class A common stock at a price to the public of $19.85 per share and a corresponding price to the underwriters of $19.01 per share (the “August 2017 Primary”). This offering resulted in net cash proceeds to the Company of approximately $166.9 million (gross proceeds of $175.0 million , net of $8.1 million in underwriting discounts and stock issuance costs). For each share of Class A common stock issued by Evolent Health, Inc., the Company received a corresponding Class A common unit from Evolent Health LLC in exchange for contributing the issuance proceeds to Evolent Health LLC. As a result of the Class A common stock and Class A common units of Evolent Health LLC issued during the August 2017 Primary, the Company’s economic interest in Evolent Health LLC increased from 96.1% to 96.6% immediately followin |
Investments
Investments | 12 Months Ended |
Dec. 31, 2017 | |
Investments [Abstract] | |
Investments | Investments Our investments are classified as held-to-maturity as we have both the intent and ability to hold the investments until their individual maturities. Materially, all of our held-to-maturity investments had matured as of December 31, 2017 . The following table summarizes the amortized cost, gross unrealized gains and losses, and fair value of our investments as measured using Level 2 inputs as of December 31, 2016 (in thousands): Gross Gross Amortized Unrealized Unrealized Fair Costs Gains Losses Value U.S. Treasury bills $ 28,119 $ 116 $ 27 $ 28,208 Corporate bonds 16,222 81 8 16,295 Total investments $ 44,341 $ 197 $ 35 $ 44,503 The following table summarizes the amortized cost and fair value of our investments by contractual maturities as of December 31, 2016 (in thousands): Amortized Fair Costs Value Due in one year or less $ 44,341 $ 44,503 The following table summarizes our held-to-maturity securities that had been in a continuous unrealized loss position for less than twelve months as of December 31, 2016 (in thousands, except number of securities): Number of Fair Unrealized Securities Value Losses U.S. Treasury bills 1 $ 4,002 $ 1 We did not hold any securities in a continuous unrealized loss position for twelve months or longer as of December 31, 2016. When a held-to-maturity investment is in an unrealized loss position, we assess whether or not we expect to recover the entire cost basis of security, based on our best estimate of the present value of cash flows expected to be collected from the debt security. Factors considered in our analysis include the reasons for the unrealized loss position, the severity and duration of the unrealized loss position, creditworthiness and forecasted performance of the investee. In cases where the estimated present value of future cash flows is less than our cost basis, we recognize an other than temporary impairment and write the investment down to its fair value. The new cost basis would not be changed for subsequent recoveries in fair value. No investments were written down during the years ended December 31, 2017 and 2016 . |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, Net The following summarizes our property and equipment (in thousands): As of December 31, 2017 2016 Computer hardware $ 5,667 $ 4,474 Furniture and equipment 2,448 2,448 Internal-use software development costs 48,557 21,385 Leasehold improvements 8,708 8,108 Total property and equipment 65,380 36,415 Accumulated depreciation and amortization expenses (14,458 ) (5,236 ) Total property and equipment, net $ 50,922 $ 31,179 We had no property and equipment prior to the Offering Reorganization. The Company capitalized $27.1 million , $15.0 million and $6.4 million of internal-use software development costs for the years ended December 31, 2017 , 2016 and 2015 , respectively. The net book value of capitalized internal-use software development costs was $42.1 million and $19.9 million as of December 31, 2017 and 2016 , respectively. Depreciation expense related to property and equipment was $9.2 million , $2.6 million and $1.2 million for the years ended December 31, 2017 , 2016 and 2015 (subsequent to the date of the Offering Reorganization), respectively, of which amortization expense related to capitalized internal-use software development costs was $4.9 million , $1.4 million and less than $0.1 million , respectively. As discussed in Note 2 , the Company changed its estimate of the useful life of internal-use software from 7 years to 5 years, effective September 1, 2017. This change in useful life has been accounted for as a change in accounting estimate and will be applied to all new internal-use software. Remaining carrying amounts of existing internal-use software will be amortized prospectively over a maximum of 5 years, or the remaining useful lives if less than 5 years. This change in estimated useful life had an immaterial impact on the Company’s operations for the year ended December 31, 2017. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, Net | Goodwill and Intangible Assets, Net Goodwill Goodwill has an estimated indefinite life and is not amortized; rather it is reviewed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. In interim periods between annual goodwill reviews, we also evaluate qualitative factors that could cause us to believe our estimated fair value of our single reporting unit may be lower than the carrying value and trigger a quantitative assessment, including, but not limited to (i) macroeconomic conditions, (ii) industry and market considerations, (iii) our overall financial performance, including an analysis of our current and projected cash flows, revenue and earnings, (iv) a sustained decrease in share price and (v) other relevant entity-specific events including changes in strategy, partners, or litigation. A description of our goodwill impairment tests during 2017 and 2016 follows below. 2017 Goodwill Impairment Tests On October 31, 2017 , the Company performed its annual goodwill impairment review for fiscal year 2017 . Based on our qualitative assessment, we did not identify sufficient indicators of impairment that would suggest fair value of our single reporting unit was below the carrying value. As a result, a quantitative goodwill impairment analysis was not required. Following the date of our annual goodwill review, the price of our Class A common stock declined significantly. The average closing price per share of our Class A common stock for the month of November was approximately $12.01 , a 42.4% decrease compared to the average closing price for the period from January to October. A sustained decline in the price of our Class A common stock and the resulting impact on our market capitalization is one of several qualitative factors we consider each quarter when evaluating whether events or changes in circumstances indicate it is more likely than not that a potential goodwill impairment exists. We concluded that the decline in the price of our Class A common stock in November did represent a sustained decline and therefore was an indicator that our goodwill might be impaired. The Company proceeded to perform a quantitative goodwill impairment test as of December 14, 2017 . Quantitative Assessment Results To determine the implied fair value for our single reporting unit, we used both a market multiple valuation approach (“market approach”) and a discounted cash flow valuation approach (“income approach”). In determining the estimated fair value using the market approach, we considered the level of our Class A common stock price and assumptions that we believe market participants would make in valuing our reporting unit, including the application of a control premium. In determining the estimated fair value using the income approach, we projected future cash flows based on management’s estimates and long-term plans and applied a discount rate based on the Company’s weighted average cost of capital. This analysis required us to make judgments about revenues, expenses, fixed asset and working capital requirements, the timing of exchanges of our Class B common units, the impact of updated tax legislation, capital market assumptions and other subjective inputs. If the fair value of the reporting unit derived using one approach is significantly different from the fair value estimate using the other approach, the Company re-evaluates its assumptions used in the two models. The fair values determined by the market approach and income approach, as described above, are weighted to determine the concluded fair value for the reporting unit. For purposes of this analysis, the Company weighted the results 70% towards the market approach and 30% towards the income approach, to give greater prominence to the Level 1 inputs used in the market approach. In our December 14, 2017 , quantitative assessment, our most sensitive assumption for purposes of the market approach was our estimate of the control premium, and the most sensitive assumption related to the income approach, other than the projected cash flows, was the discount rate. A significant decrease in the control premium or a significant increase in the discount rate in isolation would result in a significantly lower fair value. The concluded fair value under the market approach exceeded carrying value by approximately $140.4 million , or 13.4% . Decreasing the selected control premium of 27.5% by 300 basis points (approximately 10% ) would result in the concluded fair value exceeding the carrying value by approximately $112.3 million , or 10.7% . The concluded fair value under the income approach exceeded carrying value by approximately $233.2 million , or 22.2% . Increasing the selected discount rate of 13.0% by 50 basis points (approximately 5% ) would result in the concluded fair value exceeding the carrying value by approximately $164.5 million , or 15.7% . As fair value was greater than carrying value under both the market and income approaches, goodwill was not impaired as of December 14, 2017 . As of December 31, 2017 , Evolent assessed whether there were events or changes in circumstances that would more likely than not reduce the fair value of its goodwill below its carrying amount and require an additional impairment test. The Company determined there had been no such indicators. Therefore, it was unnecessary to perform an interim goodwill impairment assessment as of December 31, 2017 . 2016 Goodwill Impairment Tests As discussed in Notes 2 and 3 , we adopted ASU 2017-04 effective January 1, 2017, thus changing our policy with regard to goodwill impairment testing. The discussion below of our goodwill impairment testing during 2016 was performed using a two-step method under our previous policy. Under our previous policy, Step 1 of the goodwill impairment test involved a quantitative calculation of the Company’s fair value, which was then compared to the carrying value. If the fair value estimate was less than the carrying value, it was an indicator that goodwill impairment may exist, and Step 2 was required. In Step 2, the implied fair value of goodwill was determined. The fair value as determined in Step 1 was assigned to all of the Company’s net assets (recognized and unrecognized) as if the entity was acquired in a business combination as of the date of the impairment test. If the implied fair value of goodwill was lower than its carrying amount, goodwill was impaired and written down to its fair value; and a charge was reported in impairment of goodwill on our Consolidated Statements of Operations. As a result of the Offering Reorganization described in Note 4 , we revalued our Consolidated Balance Sheets to the market value of our IPO share price of $17.00 and recorded $608.9 million in goodwill on our Consolidated Balance Sheets. Subsequent to our 2015 annual impairment testing, our common stock price declined significantly, reaching our historic low in the first quarter of 2016. During the three months ended March 31, 2016, our common stock traded between $8.48 and $12.32 , or an average common stock price of $10.33 compared to an average common stock price of $19.51 and $14.73 during the three-month periods ended September 30, 2015, and December 31, 2015, respectively. A sustained decline in our common stock price and the resulting impact on our market capitalization is one of several qualitative factors we consider each quarter when evaluating whether events or changes in circumstances indicate it is more likely than not that a potential goodwill impairment exists. We concluded that the further decline in common stock price observed during the first quarter of 2016 did represent a sustained decline and that triggering events occurred during the period requiring an interim goodwill impairment test as of March 31, 2016. As such, we performed a Step 1 impairment test of our goodwill as of March 31, 2016. Step 1 Results To determine the implied fair value for our single reporting unit, we used both a market approach and income approach, as described above. In our March 31, 2016, Step 1 test, our most sensitive assumption for purposes of the market approach was our estimate of the control premium, and the most sensitive assumption related to the income approach, other than the projected cash flows, was the discount rate. As of March 31, 2016, our single reporting unit failed the Step 1 analysis as we determined that its implied fair value was less than its carrying value based on the weighting of the fair values determined under both the market and income approaches. As fair value was less than carrying value, we performed a Step 2 test to determine the implied fair value of our goodwill. Step 2 Results In our March 31, 2016, Step 2 test, the fair value of all assets and liabilities was estimated, including our tangible assets (corporate trade name, customer relationships and technology), for the purpose of deriving an estimate of the implied fair value of goodwill. The implied fair value of goodwill was then compared to the carrying amount of goodwill, resulting in an impairment charge of $160.6 million on our Consolidated Statements of Operations. The impairment was driven primarily by the sustained decline in our share price as our estimates of our future cash flows and the control premium have remained consistent, combined with an increase in the discount rate period over period. As noted above, our determination of fair value used a weighting of the fair values determined under both the market and income approaches, with the market approach driving the significant reduction in overall firm value and related impairment of goodwill. On October 31, 2016 , the Company performed its annual goodwill impairment review for fiscal year 2016 . Based on our qualitative assessment, we did not identify sufficient indicators of impairment that would suggest fair value was below carrying value. As a result, a quantitative Step 1 goodwill impairment analysis was not required. As of December 31, 2016 , Evolent assessed whether there were events or changes in circumstances that would more likely than not reduce the fair value of its goodwill below its carrying amount and require an additional impairment test. The Company determined there had been no such indicators. Therefore, it was unnecessary to perform an interim goodwill impairment assessment as of December 31, 2016 . The following table summarizes the changes in the carrying amount of goodwill (in thousands): For the Years Ended December 31, 2017 2016 Balance as of beginning-of-year $ 626,569 $ 608,903 Goodwill Acquired (1) — 178,266 Measurement period adjustments (2) 1,617 — Goodwill Impairment — (160,600 ) Balance as of end-of-year $ 628,186 $ 626,569 (1) Represents goodwill acquired as a result of the Passport, Valence Health and Aldera transactions, as discussed in Note 4 . (2) Represents measurement period adjustments related to Valence Health and Aldera, as discussed in Note 4 . Intangible Assets, Net As part of the Offering Reorganization described in Note 4 , intangible assets of $169.0 million were recorded on our Consolidated Balance Sheets. We recorded additional intangible assets of $108.3 million related to our acquisitions in 2016, as discussed in Note 4 . Details of our intangible assets (in thousands), including their weighted-average remaining useful lives (in years), are presented below: As of December 31, 2017 Weighted- Average Gross Net Remaining Carrying Accumulated Carrying Useful Life Amount Amortization Value Corporate trade name 17.4 $ 19,000 $ 2,454 $ 16,546 Customer relationships 20.5 203,500 18,312 185,188 Technology 3.1 55,802 17,810 37,992 Below market lease, net 4.8 4,197 2,662 1,535 Total $ 282,499 $ 41,238 $ 241,261 As of December 31, 2016 Weighted- Average Gross Net Remaining Carrying Accumulated Carrying Useful Life Amount Amortization Value Corporate trade name 18.4 $ 19,000 $ 1,505 $ 17,495 Customer relationships 21.5 203,500 9,018 194,482 Technology 5.2 50,500 7,753 42,747 Below market lease, net 9.4 4,323 124 4,199 Total $ 277,323 $ 18,400 $ 258,923 Amortization expense related to intangible assets for the years ended December 31, 2017 , 2016 and 2015 (subsequent to the date of the Offering Reorganization), was $22.8 million , $12.5 million and $5.8 million , respectively. Future estimated amortization of intangible assets (in thousands) as of December 31, 2017 , is as follows: 2018 $ 23,209 2019 23,071 2020 18,801 2021 14,666 2022 10,931 Thereafter 150,583 Total $ 241,261 Intangible assets are reviewed for impairment if circumstances indicate the Company may not be able to recover the asset’s carrying value. As discussed above, we identified a triggering event and performed a quantitative analysis over the carrying value of our goodwill balance during the fourth quarter of 2017. Identification of the triggering event also triggered an impairment analysis of the carrying value of our intangible asset group. In conjunction with the impairment testing of the carrying value of our goodwill, we performed an analysis to determine whether the carrying amount of our intangible asset group was recoverable. We performed a quantitative analysis, which required management to compare the total pre-tax, undiscounted future cash flows of the intangible asset group to the current carrying amount. The total undiscounted cash flows included only the future cash flows that are directly associated with and that were expected to arise as a result of the use and eventual disposal of the asset group. Based on our quantitative analysis, we determined that the pre-tax, undiscounted cash flows exceeded the carrying value and therefore concluded that our intangible assets were recoverable. Also as discussed above, our single reporting unit failed the Step 1 test for goodwill impairment during the first quarter of 2016, thus triggering an impairment analysis of the carrying value of our intangible asset group. Based on our Step 1 test for the intangible asset group, we concluded the carrying amount of our intangible assets were recoverable given the pre-tax, undiscounted cash flows exceeded the carrying value of the intangible asset group. |
Long-term Debt
Long-term Debt | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term Debt In December 2016 , the Company issued $125.0 million aggregate principal amount of its 2.00% Convertible Senior Notes due 2021 in a Private Placement to qualified institutional buyers within the meaning of Rule 144A under the Securities Act of 1933, as amended. The 2021 Notes were issued at par for net proceeds of $120.4 million . We incurred $4.6 million of debt issuance costs in connection with the 2021 Notes, which we are amortizing to non-cash interest expense using the straight-line method over the contractual term of the 2021 Notes, since this method was not materially different from the effective interest method. The closing of the Private Placement of the 2021 Notes occurred on December 5, 2016 . Holders of the 2021 Notes are entitled to cash interest payments, which are payable semiannually in arrears on June 1 and December 1 of each year, beginning on June 1, 2017 , at a rate equal to 2.00% per annum. The 2021 Notes will mature on December 1, 2021 , unless earlier repurchased or converted in accordance with their terms prior to such date. In addition, holders of the 2021 Notes may require the Company to repurchase their 2021 Notes upon the occurrence of a fundamental change at a price equal to 100.00% of the principal amount of the 2021 Notes being repurchased, plus any accrued and unpaid interest. Upon maturity, and at the option of the holders of the 2021 Notes, the principal amount of the notes may be settled via shares of the Company’s Class A common stock. For the years ended December 31, 2017 and 2016 , the Company recorded approximately $2.5 million and $0.2 million in interest expense and $0.9 million and less than $0.1 million in non-cash interest expense related to the amortization of deferred financing costs. The Company had no indebtedness for the year ended December 31, 2015. The 2021 Notes are convertible into shares of the Company’s Class A common stock, based on an initial conversion rate of 41.6082 shares of Class A common stock per $1,000 principal amount of the 2021 Notes, which is equivalent to an initial conversion price of approximately $24.03 per share of the Company’s Class A common stock. In the aggregate, the 2021 Notes are initially convertible into 5.2 million shares of the Company’s Class A common stock (excluding any shares issuable by the Company upon a conversion in connection with a make-whole provision upon a fundamental change under the Indenture). The 2021 Notes are convertible, in multiples of $1,000 principal amount, at the option of the holders at any time prior to the close of business on the business day immediately preceding the maturity date. Upon conversion, we will deliver for each $1,000 principal amount of notes converted a number of shares of our Class A common stock equal to the applicable conversion rate (together with a cash payment in lieu of delivering any fractional share) on the third business day following the relevant conversion date. Convertible Senior Notes Carrying Value While the 2021 Notes are recorded on our accompanying unaudited interim consolidated balance sheets at their net carrying value of $121.4 million as of December 31, 2017 , the 2021 Notes are privately traded by qualified institutional buyers (within the meaning of Rule 144A under the Securities Act of 1933, as amended) and their fair value was $120.4 million , based on a traded price on December 29, 2017, a Level 2 input. As of December 31, 2016 , the estimated fair value of the 2021 Notes was $125.0 million , which approximated cost as there were no significant movements in interest rates between the issuance date and December 31, 2016. The 2021 Notes also have embedded conversion options and contingent interest provisions, which have not been recorded as separate financial instruments. The following table summarizes the carrying value of the long-term debt (in thousands): As of December 31, 2017 2016 Carrying value $ 121,394 $ 120,283 Unamortized discount 3,606 4,717 Principal amount $ 125,000 $ 125,000 Remaining amortization period (years) 3.9 4.9 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies UPMC Reseller Agreement The Company and UPMC are parties to a reseller, services and non-competition agreement, dated August 31, 2011, which was amended and restated by the parties on June 27, 2013 (as amended through the date hereof, the “UPMC Reseller Agreement”). Under the terms of the UPMC Reseller Agreement, UPMC has appointed the Company as a non-exclusive reseller of certain services, subject to certain conditions and limitations specified in the UPMC Reseller Agreement. In consideration for the Company’s obligations under the UPMC Reseller Agreement and subject to certain conditions described therein, UPMC has agreed not to sell certain products and services directly to a defined list of 20 of the Company’s customers. The Advisory Board Company Reseller Agreement The Company and The Advisory Board were parties to a services, reseller, and non-competition agreement, dated August 31, 2011, which was amended and restated by the parties on June 27, 2013, and May 1, 2015 (as so amended, “The Advisory Board Company Reseller Agreement”), which terminated on July 20, 2017. Under the terms of The Advisory Board Company Reseller Agreement, The Advisory Board provided certain services to the Company on an as-requested basis. In addition, The Advisory Board had a right of first offer to provide certain specified services during the term of the Agreement and had the right to collect certain fees for specified referrals. Pursuant to the Advisory Board Company Reseller Agreement, Evolent entered into a services agreement with The Advisory Board in October 2016 whereby The Advisory Board will provide certain services to the Company in conjunction with risk adjustment services provided to one of our customers. Contingencies Tax Receivables Agreement In connection with the Offering Reorganization, the Company entered into the TRA with certain of its investors, which provides for the payment by the Company to these investors of 85% of the amount of the tax benefits, if any, that the Company is deemed to realize as a result of increases in our tax basis related to exchanges of Class B common units as well as tax benefits attributable to the future utilization of pre-IPO NOLs. These payment obligations are obligations of the Company. For purposes of the TRA, the benefit deemed realized by the Company will be computed by comparing its actual income tax liability to the amount of such taxes that the Company would have been required to pay had there been no increase to the tax basis of the assets of the Company as a result of the exchanges or had the Company had no NOL carryforward balance. The actual amount and timing of any payments under the TRA will vary depending upon a number of factors, including: • the timing of the exchanges and the price of the Class A shares at the time of the transaction, triggering a tax basis increase in the Company’s asset and a corresponding benefit to be realized under the TRA; and • the amount and timing of our taxable income - the Company will be required to pay 85% of the tax savings as and when realized, if any. If the Company does not have taxable income, it will not be required to make payments under the TRA for that taxable year because no tax savings were actually realized. Due to the items noted above, and the fact that the Company is in a full valuation allowance position such that the deferred tax assets related to the Company’s historical pre-IPO losses and tax basis increase benefit from exchanges have not been realized, the Company has not recorded a liability pursuant to the TRA. Litigation Matters We are engaged from time to time in certain legal disputes arising in the ordinary course of business, including employment claims. When the likelihood of a loss contingency becomes probable and the amount of the loss can be reasonably estimated, we accrue a liability for the loss contingency. We continue to review accruals and adjust them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel, and other relevant information. To the extent new information is obtained, and our views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in our accrued liabilities would be recorded in the period in which such determination is made. The Company is not aware of any legal proceedings or claims as of December 31, 2017 and 2016 , that the Company believes will have, individually or in the aggregate, a material adverse effect on the Company’s financial position or result of operations. Commitments Letter of Credit During the first quarter of 2017, the Company entered into an agreement to provide a letter of credit, for up to $5.0 million , to assist a customer in demonstrating adequate reserves to the customer’s state regulatory authorities. The letter of credit is effective from September 30, 2017 through June 30, 2019, and carries a quarterly facility rental fee of 0.8% per annum on the amount of the outstanding balance. The letter of credit will terminate after June 30, 2019. The letter of credit is presented at the face amount plus accrued facility rental fee, less received payments. As of December 31, 2017 , there was no outstanding balance related to this letter of credit. Lease Commitments The Company has entered into lease agreements for its primary office locations in Arlington, Virginia, Lisle, Illinois, Riverside, Illinois and Chicago, Illinois. Certain leases acquired as part of the Valence Health transaction included existing sublease agreements for office locations in Chicago, Illinois. The Company also has several smaller leases in various locations within Texas and California. Total rental expense, net of sublease income, on operating leases for the years ended December 31, 2017 , 2016 and 2015 (subsequent to the date of the Offering Reorganization), was $10.9 million , $5.9 million and $2.3 million , respectively. In connection with various lease agreements, the Company is required to maintain $3.8 million in letters of credit. As of December 31, 2017 , the Company held $3.8 million in restricted cash and restricted investments as collateral for the letters of credit, as described below. Arlington, Virginia Office Lease During 2013, the Company entered into a facility lease in Arlington, Virginia. Total future minimum lease commitments over 3.0 years are approximately $10.5 million as of December 31, 2017 . The future minimum lease payments associated with the Arlington, Virginia lease are included in the table below. In conjunction with this lease, the Company is required to maintain a letter of credit in the amount of $1.6 million . The collateral for the letter of credit is currently recorded as restricted cash. Lisle, Illinois Office Lease On November 1, 2016 , the Company assumed a facility lease in Lisle, Illinois as part of the Aldera transaction. Total future minimum lease commitments over 7.5 years are approximately $3.7 million as of December 31, 2017 . The future minimum lease payments associated with the Lisle, Illinois lease are included in the table below. In conjunction with this lease, the Company is required to maintain a letter of credit in the amount of $0.5 million . The collateral for the letter of credit is currently recorded as restricted cash. Riverside, Illinois Office Lease On October 3, 2016 , the Company assumed a facility lease in Riverside, Illinois as part of the Valence Health transaction. Total future minimum lease commitments over 5.3 years are approximately $3.5 million as of December 31, 2017 . The future minimum lease payments associated with the Riverside, Illinois lease are included in the table below. Chicago, Illinois Office Lease On October 3, 2016 , the Company assumed a facility lease in Chicago, Illinois as part of the Valence Health transaction. This lease includes three floors. One of the floors is occupied by the Company, one is subleased to a tenant, and one was abandoned and subsequently terminated. Total future minimum lease commitments over 10.0 years are approximately $18.3 million as of December 31, 2017 . The future minimum lease payments associated with the Chicago, Illinois lease, less the payments associated with the terminated floor, are included in the table below. In conjunction with this lease, the Company is required to maintain a letter of credit in the amount of $1.7 million . The collateral for the letter of credit is currently recorded as restricted cash. In connection with the Chicago, Illinois lease, the Company acquired a sublease tenant for one of the floors (the “13 th Floor Sublease”). Total future sublease income over 11.0 years was approximately $10.1 million as of December 31, 2016. We signed an amendment to the 13 th Floor Sublease during the fourth quarter of 2017, which reduced the term of the sublease. Total future sublease income over the remaining sublease term of one year is approximately $0.1 million as of December 31, 2017. Immediately following the Valence Health acquisition, the Company decided to abandon and sublet its rented space at 540 W. Madison, Suite 1400, Chicago, Illinois. Therefore, our results from operations for the year ended December 31, 2016, included a lease abandonment expense of approximately $6.5 million in conjunction with the abandonment of the 14th Floor Space, based on remaining lease payments and expected future sublease income. During the second quarter of 2017, the Company reached an agreement to terminate the lease for the 14th Floor Space, effective September 2017. The Company continued making rent payments until September 1, 2017, at which point it paid a one-time lease cancellation and related brokerage fee. Remaining cash outflows related to the 14th Floor Space were estimated to be approximately $4.8 million as of June 30, 2017, while the remaining balance of the initial $6.5 million lease abandonment liability recorded after the Valence Health acquisition was approximately $5.3 million as of June 30, 2017, prior to adjustments pertaining to the lease cancellation fees. As such, the Company recorded a one-time adjustment of $0.5 million to reduce the lease abandonment liability, from $5.3 million to $4.8 million . The adjustment was recorded as a reduction to our rent expense within “Selling, general and administrative expenses” on our Consolidated Statements of Operations for the year ended December 31, 2017. The Company made regular rent payments until September 1, 2017, at which point it paid a one-time lease cancellation and related brokerage fee of $4.4 million . There is no remaining lease abandonment liability related to the 14th Floor Space as of December 31, 2017. The following table presents a roll forward of the lease abandonment liability for the years ended December 31, 2017 and 2016 (in thousands): For the Years Ended December 31, 2017 2016 Accrual as of beginning-of-period $ 6,100 $ — Abandonment expense — 6,460 Impact of lease termination (496 ) — Abandonment amortization (1,239 ) (360 ) Lease cancellation fee (4,365 ) — Accrual as of end-of-period $ — $ 6,100 Future minimum rental commitments (in thousands) as of December 31, 2017 , were as follows: 2018 $ 8,328 2019 7,101 2020 7,001 2021 2,870 2022 2,530 Thereafter 13,462 Total $ 41,292 Purchase Obligations Our contractual obligations related to vendor contracts (in thousands) as of December 31, 2017 , were as follows: Less More Than 1 to 3 3 to 5 Than 1 Year Years Years 5 Years Total Purchase obligations related to vendor contracts $ 6,567 $ 430 $ — $ — $ 6,997 Indemnifications The Company’s customer agreements generally include a provision by which the Company agrees to defend its partners against third-party claims (a) for death, bodily injury, or damage to personal property caused by Company negligence or willful misconduct, (b) by former or current Company employees arising from such managed service agreements, (c) for intellectual property infringement under specified conditions and (d) for Company violation of applicable laws, and to indemnify them against any damages and costs awarded in connection with such claims. To date, the Company has not incurred any material costs as a result of such indemnities and has not accrued any liabilities related to such obligations in the accompanying consolidated financial statements. Registration rights agreement We entered into a registration rights agreement with The Advisory Board, UPMC, TPG and another investor to register for sale under the Securities Act shares of our Class A common stock, including those delivered in exchange for Class B common stock and Class B common units. Subject to certain conditions and limitations, this agreement provides these investors with certain demand, piggyback and shelf registration rights. The registration rights granted under the registration rights agreement will terminate upon the date the holders of shares that are a party thereto no longer hold any such shares that are entitled to registration rights. Pursuant to our contractual obligations under this agreement, we filed a registration statement on Form S-3 with the SEC on July 28, 2016, which was declared effective on August 12, 2016. Pursuant to certain terms of the registration rights agreement, the Investor Stockholders sold 19.7 million shares of the Company’s Class A common stock during the 2017 Secondary Offerings and 8.6 million shares of the Company’s Class A common stock during the September 2016 Secondary Offering, as discussed in Note 4 . Pursuant to the terms of the registration rights agreement, we incurred $1.5 million and $1.6 million in expenses related to secondary offerings during the years ended December 31, 2017 and 2016 , respectively. These expenses are recorded within “Selling, general and administrative expenses” on our Consolidated Statements of Operations. We will continue to pay all expenses relating to any demand, piggyback or shelf registration, other than underwriting discounts and commissions and any transfer taxes, subject to specified conditions and limitations. The registration rights agreement includes customary indemnification provisions, including indemnification of the participating holders of shares of Class A common stock and their directors, officers and employees by us for any losses, claims, damages or liabilities in respect thereof and expenses to which such holders may become subject under the Securities Act, state law or otherwise. Guarantees As part of our strategy to support certain of our partners in the Next Generation Accountable Care Program (“Next Gen”), we entered into upside and downside risk-sharing arrangements. Our downside risk-sharing arrangements are limited to our fees and are executed through our wholly-owned captive insurance company. As of December 31, 2017 , Evolent had approximately $24.7 million of restricted cash and restricted investments related to risk-sharing arrangements. Approximately $8.2 million of this amount was required to satisfy the capital requirements of our captive insurance entity as well as state insurance regulators to secure potential losses related to insurance services for the year ended December 31, 2017. Approximately $16.6 million of this amount is required to satisfy the capital requirements of our captive insurance entity as well as state insurance regulators to secure potential losses related to insurance services for the year ending December 31, 2018. These amounts are in excess of our actuarial assessment of loss. Reinsurance Agreement During the fourth quarter of 2017, the Company entered into a 15 -month, $10.0 million capital-only reinsurance arrangement with NMHC, expiring on December 31, 2018. The purpose of the capital-only reinsurance is to provide balance sheet support to NMHC. There is no uncertainty to the outcome of the arrangement as there is no transfer of underwriting risk to Evolent or True Health, and neither Evolent nor True Health is at risk for any cash payments on behalf of NMHC. As a result, this arrangement does not qualify for reinsurance accounting. The Company will record a quarterly fee of approximately $0.2 million as non-operating income on its consolidated statements of operations and will maintain $10.0 million in restricted cash and restricted investments on its consolidated balance sheets for the duration of the reinsurance agreement. Credit and Concentration Risk The Company is subject to significant concentrations of credit risk related to cash and cash equivalents. As of December 31, 2017 , approximately 74% of our $295.4 million of cash and cash equivalents (including restricted cash) was held in bank deposits with FDIC participating banks and approximately 26% was held in money market funds. While the Company maintains its cash and cash equivalents with financial institutions with high credit ratings, it often maintains these deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any realized losses on cash and cash equivalents to date. The Company is also subject to significant concentration of accounts receivable risk as a substantial portion of our trade accounts receivable is derived from a small number of our partners. The following table summarizes those partners who represented at least 10.0% of our trade accounts receivable for the periods presented: As of December 31, 2017 2016 Customer G 32.1 % 14.3 % Customer B 16.5 % * Customer H 11.8 % * * Represents less than 10.0% of the respective balance In addition, the Company is subject to significant concentration of revenue risk as a substantial portion of our revenue is derived from a small number of contractual relationships with our operating partners. The following table summarizes those partners who represented at least 10.0% of our revenue for the periods presented: For the Years Ended December 31, 2017 2016 2015 Customer A 20.6 % 19.6 % * Customer B * 14.5 % 15.6 % Customer C * 12.7 % 11.2 % Customer D * * 19.6 % Customer E * * 14.1 % Customer F * * 11.8 % * Represents less than 10.0% of the respective balance At times our contracts may be amended to change the nature and price of the services and/or the time period over which they are provided. For example, in 2015, we signed two amendments to our agreement with Piedmont WellStar Health Plan, noted as customer D above, that reduced our expected revenue under that contract in 2016. In connection with the amendments, the customer also sold its 2.2% ownership interest in us to certain of our pre-IPO investors, consisting of TPG, The Advisory Board and UPMC. During the fourth quarter of 2015, we agreed to amend the terms of our contract with WakeMed Health and Hospitals, noted as customer E above, and changed our fee structure from a PMPM-based fee to a combination of a fixed-fee and a performance-based fee. The performance-based portion of our fee was tied to WakeMed’s participation in the Next Generation ACO Program. In 2016, WakeMed determined not to participate in the calendar year 2016 program; therefore, the portion of our fee and the corresponding expenses related to the performance-based arrangement were eliminated from our agreement. |
Earnings (Loss) Per Common Shar
Earnings (Loss) Per Common Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Common Share | Earnings (Loss) Per Common Share The following table sets forth the computation of basic and diluted earnings per share available for common stockholders (in thousands, except per share data): For the Years Ended December 31, 2017 2016 2015 Net income (loss) $ (69,767 ) $ (226,778 ) $ 319,814 Less: Net income (loss) attributable to non-controlling interests (9,102 ) (67,036 ) (12,680 ) Undeclared cumulative preferred dividends — — 2,184 Net income (loss) available for common shareholders - Basic (60,665 ) (159,742 ) 330,310 Add: Net income (loss) attributable to non-controlling interests — — (12,680 ) Undeclared cumulative preferred dividends converted during the period — — 2,184 Net income (loss) available for common shareholders - Diluted (1)(2) (60,665 ) (159,742 ) 319,814 Weighted-average common shares outstanding - Basic 64,351 45,031 25,129 Dilutive effect of restricted stock and restricted stock units — — 17 Dilutive effect of options — — 1,510 Assumed conversion of convertible preferred stock at beginning-of-period — — 9,397 Assumed conversion of Class B common shares to Class A common shares — — 10,083 Weighted-average common shares outstanding - Diluted (2)(3) 64,351 45,031 46,136 Earnings (Loss) per Common Share Basic $ (0.94 ) $ (3.55 ) $ 13.14 Diluted (0.94 ) (3.55 ) 6.93 (1) For periods of net loss, net income (loss) available for common shareholders is the same for both basic and diluted purposes. (2) Each Class B common unit of Evolent Health LLC can be exchanged (together with a corresponding number of shares of our Class B common stock) for one share of our Class A common stock. As holders exchange their Class B common shares for Class A common shares, our interest in Evolent Health LLC will increase. Therefore, shares of our Class B common stock are not considered dilutive shares for the purposes of calculating our diluted earnings (loss) per common share as related adjustment to net income (loss) available for common shareholders would equally offset the additional shares, resulting in the same earnings (loss) per common share. (3) For periods of net loss, shares used in the earnings (loss) per common share calculation represent basic shares as using diluted shares would be anti-dilutive. Anti-dilutive shares (in thousands) excluded from the calculation of weighted-average common shares presented above are presented below: For the Years Ended December 31, 2017 2016 2015 Exchangeable Class B common stock 7,285 16,882 — Restricted stock and RSUs 525 245 — Stock options 2,829 1,973 — Convertible senior notes 5,201 369 — Total 15,840 19,469 — |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based Compensation | Stock-based Compensation 2011 and 2015 Equity Incentive Plans The Company issues awards, including stock options, performance-based stock options, restricted stock and RSUs, under the Evolent Health Holdings, Inc. 2011 Equity Incentive Plan (the “2011 Plan”) and the 2015 Evolent Health, Inc. Omnibus Incentive Compensation Plan (the “2015 Plan”). We assumed the 2011 Plan in connection with the merger of Evolent Health Holdings with and into Evolent Health, Inc. The 2011 Plan allows for the grant of an array of equity-based and cash incentive awards to our directors, employees and other service providers. The 2011 Plan was amended on September 23, 2013, to increase the number of shares authorized to 9.1 million shares of the Company’s common stock. As of December 31, 2017 and 2016 , 4.8 million and 4.9 million stock options, respectively, and 3.8 million shares of restricted stock have been issued, net of forfeitures, under the 2011 Plan. On May 1, 2015, the Board of Directors approved and authorized the 2015 Plan which provides for the issuance of up to 6.0 million shares of the Company’s Class A common stock to employees and non-employee directors of the Company and its consolidated subsidiaries. As of December 31, 2017 and 2016 , 2.5 million and 1.7 million stock options and 1.1 million and 0.7 million RSUs have been issued, net of forfeitures, under the 2015 Plan. We follow an employee model for our stock-based compensation as awards are granted in the stock of the Company to employees and non-employee directors of the Company or its consolidated subsidiaries. Prior to the Offering Reorganization, stock-based awards were granted in the stock of the Company to employees of the equity method investee, Evolent Health, LLC. As the employees of Evolent Health LLC were not providing service to the Company, we did not record stock-based compensation during that period; however, under Evolent Health LLC’s Amended and Restated Operating Agreement, Evolent Health LLC was required to issue an identical amount of common units to the Company in exchange for the underlying stock that had been awarded. As a result, the Company recorded an increase in the equity method investment and a non-cash issuance of common equity during the noted period. Additionally, as the stock-based awards were granted in the stock of a non-consolidated entity, Evolent Health LLC followed a “non-employee” model for recording stock-based compensation which required the awards to be marked-to-market through net income at the end of each reporting period until vesting occurred. Stock-based Compensation Expense Total compensation expense by award type and line item in our consolidated financial statements was as follows (in thousands): For the Years Ended December 31, 2017 2016 2015 Award Type Stock options $ 15,487 $ 15,647 $ 8,913 Performance-based stock options 447 374 — Restricted stock — — 4,875 RSUs 4,503 2,583 942 Acceleration of unvested equity awards — 3,897 — Total $ 20,437 $ 22,501 $ 14,730 Line Item Cost of revenue $ 1,371 $ 2,670 $ 1,144 Selling, general and administrative expenses 19,066 19,831 13,586 Total $ 20,437 $ 22,501 $ 14,730 We recorded $3.9 million in stock-based compensation expense during 2016 for the acceleration of Valence Health’s unvested equity awards that vested upon the close of the Valence Health acquisition. During 2015, we recorded $4.9 million in stock-based compensation for the acceleration of our unvested restricted shares which vested immediately after the Offering Reorganization and prior to the IPO. We did not recognize stock compensation expense in 2015 prior to the Offering Reorganization. No stock-based compensation in the totals above was capitalized as software development costs for the years ended December 31, 2017 and 2016 . Less than $0.1 million of stock-based compensation included in the totals above was capitalized as software development costs for the year ended December 31, 2015 . Total unrecognized compensation expense (in thousands) and expected weighted-average period (in years) by award type for all of our stock-based incentive plans were as follows: As of December 31, 2017 Weighted- Average Expense Period Stock options $ 13,745 0.96 Performance-based stock options 968 2.17 RSUs 9,906 2.18 Total $ 24,619 Stock Options Other than the performance-based stock options described below, options awarded under the incentive compensation plans are generally subject to a four -year graded service vesting period where 25% of the award vests after each year of service and have a maximum term of 10 years . Information with respect to our options is presented in the following disclosures. The option price assumptions used for our stock option awards were as follows: For the Years Ended December 31, 2017 2016 2015 Weighted-average fair value per option granted $ 8.38 $ 4.69 $ 10.41 Assumptions: Expected term (in years) 6.25 6.25 6.25 Expected volatility 42.8 % 45.0 % 45.0 % Risk-free interest rate 1.9 - 2.1% 1.3 - 1.5% 1.4 - 1.8% Dividend yield — % — % — % The fair value of options is determined using a Black-Scholes options valuation model with the assumptions disclosed in the table above. The dividend rate is based on the expected dividend rate during the expected life of the option. Expected volatility is based on the historical volatility of a peer group of public companies over the most recent period commensurate with the estimated expected term of the Company’s awards due to the limited history of our own stock price. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The expected term of the options granted represents the weighted-average period of time from the grant date to the date of exercise, expiration or cancellation based on the midpoint convention. Information with respect to our stock options (in thousands), including weighted-average remaining contractual term (in years) and aggregate intrinsic value (in thousands) was as follows: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term Value Outstanding as of December 31, 2016 6,005 $ 6.44 7.83 $ 50,193 Granted 961 18.64 Exercised (788 ) 5.18 Forfeited (227 ) 11.62 Outstanding as of December 31, 2017 5,951 $ 8.38 7.19 $ 23,325 Vested and expected to vest after December 31, 2017 5,414 $ 8.43 7.11 $ 23,379 Exercisable at December 31, 2017 3,156 $ 7.78 6.88 $ 22,678 The total fair value of options vested during the years ended December 31, 2017 , 2016 and 2015 , was $13.0 million , $12.4 million and $11.1 million , respectively. The total intrinsic value of options exercised during 2017 , 2016 and 2015 was $14.2 million , $3.8 million and $0.5 million , respectively. We issue new shares to satisfy option exercises. Performance-based stock option awards In March 2016, the Company granted approximately 0.3 million performance-based options to certain employees to create incentives for continued long-term success and to more closely align executive pay with our stockholders’ interests. Each of the grants is subject to market-based vesting, as follows: • one-third of the shares subject to the option award will vest in the event that the average closing price of the Company’s Class A common stock on the NYSE is at least $13.35 per share for a consecutive ninety day period; • one-third of the shares subject to the option award will vest in the event that the average closing price of the Company’s Class A common stock on the NYSE is at least $16.43 per share for a consecutive ninety day period; and • one-third of the shares subject to the option award will vest in the event that the average closing price of the Company’s Class A common stock on the NYSE is at least $19.51 per share for a consecutive ninety day period. In addition, the percentage of options per tranche that has satisfied the market-based performance hurdle is also subject to a service completion schedule. The aggregate percentage of options eligible to vest is based upon each of the service completions dates below: • 50% of the shares subject to the option award will vest on March 1, 2019, and • 50% of the shares subject to the option award will vest on March 1, 2020. We measured the fair value of the performance-based stock options using a Monte Carlo simulation approach with the following assumptions: risk-free interest rate of 1.83% , volatility of 65% , expected term of ten years and dividend yield of 0% . These inputs resulted in a weighted-average fair value per option granted of $6.68 . During 2016 all of the average stock price milestones were achieved and therefore the awards are now only subject to the service completion obligations. Information with respect to our performance-based stock options (shares and aggregate intrinsic value shown in thousands, weighted-average remaining contractual term shown in years) was as follows: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term Value Outstanding as of December 31, 2016 268 $ 10.27 9.17 $ 1,213 Outstanding as of December 31, 2017 268 10.27 8.17 544 Vested and expected to vest after December 31, 2017 268 $ 10.27 8.17 $ 544 Restricted stock Restricted stock awarded under the incentive compensation plans is generally subject to a graded service vesting period where 25% of the award vests after one year of service and the remaining award vests quarterly thereafter. Restricted stock awards are issued to the participants for no consideration. There were no restricted stock awards granted or forfeited during the years ended December 31, 2017 or 2016 . There were no restricted stock awards outstanding as of December 31, 2017 or 2016 . Restricted Stock Units Other than RSUs granted to our non-employee directors which have a one year vesting period, RSUs awarded under the incentive compensation plans are generally subject to a four -year graded service vesting period where 25% of the award vests after each year of service and are issued to the participants for no consideration. Information with respect to our RSUs is presented below (in thousands, except for weighted-average grant-date fair value): Weighted- Average Grant-Date Shares Fair Value Outstanding as of December 31, 2016 618 $ 13.07 Granted 468 19.35 Forfeited (64 ) 15.35 Vested (206 ) 14.09 Outstanding as of December 31, 2017 816 $ 16.23 During the years ended December 31, 2017 , 2016 and 2015 , we granted RSUs with a weighted-average grant date fair value of $19.35 , $11.60 and $16.85 , respectively. The total fair value of RSUs vested during the years ended December 31, 2017 and 2016 was $2.9 million and $1.8 million . There were no RSU vests for the year ended December 31, 2015 . |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes On December 22, 2017, the U.S. government enacted the Tax Act. The Tax Act establishes new U.S. tax laws impacting the Company which include a reduction of the U.S. corporate income tax rate from 35% to 21% effective for tax years beginning after December 31, 2017, an indefinite carryforward period and 80% taxable income limitation on NOLs arising after December 31, 2017, and the repeal of the corporate alternative minimum tax (“AMT”). In accordance with SEC Staff Accounting Bulletin No. 118, which provides SEC staff guidance for the application of ASC Topic 740, Income Taxes, in the reporting period in which the Tax Act was signed into law, the Company recorded provisional amounts representing reasonable estimates of effects of the Tax Act in its 2017 financial statements. The Company did not identify items for which the income tax effects of the Tax Act have not been completed and a reasonable estimate could not be determined as of December 31, 2017. The Company may adjust provisional estimates, which may impact our current income tax expense in the period in which the adjustments are made. The Company will continue to evaluate any adjustments necessary to our initial provisional estimates throughout 2018. The Company believes the revaluation of our deferred tax assets and liabilities as a result of the Tax Act will have the most significant impact on the Company’s income tax expense. The Company measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or settled. The Company recorded provisional expense of $27.5 million related to the decrease in net deferred tax assets, and a corresponding $30.2 million provisional benefit from the decrease in valuation allowance to reflect the reduction of the statutory corporate income tax rate. The Company also recorded a $2.8 million provisional benefit for release of valuation allowance related to indefinite-lived intangible deferred tax liabilities now considered a source of income as support for the realization of future indefinite-lived NOL deferred tax assets, and a $0.3 million provisional benefit for the refundability of existing AMT credit carryforward. The Company incurs U.S. federal, state and local income taxes on the Company’s allocable share of taxable income of Evolent Health LLC. Our income before income tax is derived exclusively from U.S. sources. Components of income tax expense (benefit) (in thousands) consist of the following: For the Years Ended December 31, 2017 2016 2015 Current Federal $ 368 $ — $ 15 State and local 266 — — Total current tax expense 634 — 15 Deferred Federal 3,202 (9,708 ) 7,092 State and local (3,102 ) (1,138 ) 1,166 Total deferred tax expense 100 (10,846 ) 8,258 Change in valuation allowance (7,371 ) 91 15,202 Total tax expense (benefit) $ (6,637 ) $ (10,755 ) $ 23,475 A reconciliation of the U.S. statutory tax rate to our effective tax rate is presented below: For the Years Ended December 31, 2017 2016 2015 U.S. statutory tax rate 35.0 % 35.0 % 35.0 % U.S. state income taxes, net of U.S. federal tax benefit 3.3 % 4.0 % 4.9 % Change in valuation allowance (34.0 )% (0.1 )% 4.4 % Change in valuation allowance, tax reform 43.7 % — % — % Impact of tax reform (36.0 )% — % — % Remeasurement gain — % — % (40.1 )% Non-deductible stock-based compensation expense — % — % 1.0 % Goodwill impairment — % (18.7 )% — % Gain on contribution — % (5.0 )% — % Non-controlling interest (4.6 )% (11.0 )% 1.4 % Stock-based compensation excess tax benefits 3.1 % 0.1 % — % Other, net (1.8 )% 0.2 % 0.2 % Effective rate 8.7 % 4.5 % 6.8 % Deferred tax balances reflect the impact of temporary differences between the carrying amount of assets and liabilities and their tax basis and are stated at the tax rates in effect when the temporary differences are expected to be recovered or settled. Significant components of the Company’s deferred tax assets and liabilities (in thousands) were as follows: As of December 31, 2017 2016 Deferred Tax Assets Start-up and organizational costs $ 185 $ 321 Internally developed software costs 3,974 7,137 Net operating loss carryforwards 51,197 60,076 Other (69 ) 509 Subtotal 55,287 68,043 Valuation allowance (53,201 ) (26,376 ) Total deferred tax assets 2,086 41,667 Deferred Tax Liabilities Equity-method investment 4,523 62,513 Total deferred tax liabilities 4,523 62,513 Net deferred tax assets (liabilities) $ (2,437 ) $ (20,846 ) Changes in our valuation allowance (in thousands) were as follows: For the Years Ended December 31, 2017 2016 2015 Balance at beginning-of-year $ 26,376 $ 19,974 $ 6,914 Charged to costs and expenses (7,371 ) 91 15,202 Charged to other accounts (1) 34,196 6,311 (2,142 ) Balance at end-of-year $ 53,201 $ 26,376 $ 19,974 (1) Amounts charged to other accounts includes an increase of $34.2 million , $6.3 million and a decrease of $2.1 million charged to additional paid-in-capital for the years ended December 31, 2017 , 2016 and 2015 , respectively. The Company continues to record a valuation allowance against the net deferred tax assets that are not more likely than not to be realized. This assessment is made without considering potentially offsetting deferred tax liabilities established with respect to certain indefinite lived components, or components of the deferred tax liability expected to reverse outside of the net operating loss carryover period, as these were appropriately not considered a source of future taxable income for realizing the deferred tax assets, with the exception of up to 80% of future indefinite-lived NOL deferred tax assets. For the year ended December 31, 2017 , the effective tax rate was 8.7% , due to the impact of the valuation allowance recorded against the Company’s net deferred tax assets, with the exception of indefinite lived components and those expected to reverse outside of the net operating loss carryover period as part of the outside basis difference in our partnership interest in Evolent Health LLC. The benefit recorded during the year primarily relates to the effects of the Tax Act, largely due to the revaluation of our deferred tax assets and liabilities for the new statutory income tax rate, and release of valuation allowance related to indefinite-lived intangible deferred tax liabilities now considered a source of income as support for the realization of future indefinite-lived NOL deferred tax assets. For the year ended December 31, 2016 , the effective tax rate was 4.5% , due to the impact of the valuation allowance recorded against the Company’s net deferred tax assets, with the exception of indefinite lived components and those expected to reverse outside of the net operating loss carryover period as part of the outside basis difference in our partnership interest in Evolent Health LLC. The benefit recorded during the year primarily relates to release of this valuation allowance as a result of the Valence Health acquisition and movement in the indefinite lived book-over-tax basis difference not considered a source of future taxable income to support realizability of the deferred tax assets. For the year ended December 31, 2015 , the effective tax rate was 6.8% , due to the impact of the valuation allowance recorded against the Company’s net deferred tax assets, with the exception of indefinite lived components and those expected to reverse outside of the net operating loss carryover period as part of the outside basis difference in our partnership interest in Evolent Health LLC. Pursuant to the Offering Reorganization, the Company recorded $23.5 million in income tax provision, due to an increase in these components of the deferred tax liability related to the book basis as compared to the tax basis in Evolent Health LLC. As of December 31, 2017 , the Company had NOLs of approximately $207.6 million available to offset future taxable income that begin to expire in 2031 through 2038 . However, as realization of such tax benefit is not more likely than not, based on our evaluation, we have established a valuation allowance. Internal Revenue Code Section 382 imposes limitations on the utilization of NOLs in the event of certain changes in ownership of the Company, which may have occurred or could occur in the future. This could impose an annual limit on the Company’s ability to utilize NOLs and could cause U.S. federal income taxes to be paid earlier than otherwise would be paid if such limitations were not in effect. Changes in our unrecognized tax benefits (in thousands) were as follows: For the Years Ended December 31, 2017 2016 2015 Balance at beginning-of-year $ — $ — $ — Gross increases - tax positions in prior period 1,108 — — Gross increases - tax positions in current period 74 — — Change in tax rate (420 ) — — Balance at end-of-year $ 762 $ — $ — Included in the balance of unrecognized tax benefits as of December 31, 2017 , are $0.8 million of tax benefits that, if recognized, would not affect the effective tax rate. The Company has not recognized interest and penalties related to uncertain tax positions due to the current NOL position. The Company had not recognized any uncertain tax positions, penalties or interest as of December 31, 2016 and 2015, as we concluded that no such positions existed. The Company is not currently subject to income tax audits in any U.S. or state jurisdictions for any tax year. Tax Receivables Agreement Pursuant to the Offering Reorganization, Class B Exchanges are expected to increase our tax basis in our share of Evolent Health LLC’s tangible and intangible assets. These increases in tax basis are expected to increase our depreciation and amortization deductions and create other tax benefits and, therefore, may reduce the amount of tax that we would otherwise be required to pay in the future. In addition, certain NOLs of Evolent Health Holdings (and of an affiliate of TPG) are available to us as a result of the Offering Reorganization. In connection with the Offering Reorganization, we entered into the TRA with the holders of Class B common units. The agreement requires us to pay to such holders 85% of the cash savings, if any, in U.S. federal, state and local and foreign income tax (as applicable) we realize as a result of any deductions attributable to future increases in tax basis following the Class B Exchanges (calculated assuming that any post-offering transfer of Class B common units had not occurred) or deductions attributable to imputed interest or future increases in tax basis following payments made under the TRA. We are accounting for these payments as contingent liabilities and will recognize them in our Consolidated Statements of Operations when their realization is probable. Additionally, pursuant to the same agreement we will pay the former stockholders of Evolent Health Holdings 85% of the amount of the cash savings, if any, in U.S. federal, state and local and foreign income tax that we realize as a result of the utilization of the NOLs of Evolent Health Holdings (and the affiliate of TPG) attributable to periods prior to the Offering Reorganization, approximately $79.3 million, as well as deductions attributable to imputed interest on any payments made under the agreement. We will benefit from the remaining 15% of any realized cash savings. The TRA was effective upon the completion of the Offering Reorganization and will remain in effect until all such tax benefits have been used or expired, or until the agreement is terminated. See Note 9 for additional discussion of the implications of the TRA. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans We sponsor a tax-qualified 401(k) retirement plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax advantaged basis. We make matching contributions to the plan in accordance with the plan documents and various limitations under Section 401(a) of the Internal Revenue Code of 1986, as amended. The Company made $8.0 million and $4.3 million in contributions to the 401(k) plan for the years ended December 31, 2017 and 2016 , respectively. After the Offering Reorganization in 2015 we contributed $2.4 million to the plan. |
Investments In and Advances to
Investments In and Advances to Affiliates | 12 Months Ended |
Dec. 31, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments In and Advances to Affiliates | Investments In and Advances to Affiliates Equity Method Investments During the years ended December 31, 2017 and 2016 , the Company entered into joint venture agreements with various entities. At the time of the transactions, our economic interests in these entities ranged from 27% to 40% and our voting interests ranged from 28% to 40% . As of December 31, 2017 , the Company’s economic interests in these affiliates ranged between 26% and 40% and voting interests ranged between 27% and 40% . As of December 31, 2016 , the Company’s economic and voting interests in its affiliates was 26% and 28% , respectively. The Company determined that it had significant influence over these affiliates but that it did not have control over any of the entities. Accordingly, the investments were accounted for under the equity method of accounting and the Company was allocated its proportional share of the entities’ earnings and losses for each reporting period. The Company’s proportional share of the losses from these investments was approximately $1.8 million and $0.8 million for the years ended December 31, 2017 and 2016 , respectively. The Company signed services agreements with certain of the aforementioned affiliates to provide certain management, operational and support services to help manage elements of their service offerings. Revenues related to the services agreements for the years ended December 31, 2017 and 2016 , was $0.4 million and $0.2 million , respectively. Evolent Health LLC Subsequent to the Offering Reorganization in 2015 described in Note 4 , the Company consolidates the results of operations of Evolent Health LLC. Prior to the Offering Reorganization, we did not control Evolent Health LLC, but were able to exert significant influence and, accordingly, accounted for our investment in Evolent Health LLC using the equity method of accounting. The allocation of profits and losses to the shareholders of Evolent Health LLC were based upon the second amended and restated operating agreement of Evolent Health LLC. As part of recording our equity portion of the losses of Evolent Health LLC, the Company applied the hypothetical liquidation at book value basis of accounting which allocates profits and losses to the members based upon the value that would accrue to each member at each period end based upon a theoretical liquidation at book value at that time. During the period January 1, 2015, through June 3, 2015, Evolent Health, Inc.’s proportional share of the losses of Evolent Health LLC was $28.2 million , which included $0.8 million related to the amortization of a basis differential. The summary of the financial position of Evolent Health LLC as of December 31, 2017 and 2016 , is not presented as the Company consolidates the results of Evolent Health LLC after the date of the Offering Reorganization. The following is a summary of the operating results of Evolent Health LLC (in thousands) for the period in which it was accounted for as an equity method investment (January 1, 2015, through June 3, 2015): Total revenue $ 61,814 Cost of revenue (exclusive of depreciation and amortization expenses) 44,839 Gross profit 16,975 Operating income (loss) (44,119 ) Net income (loss) $ (44,079 ) |
Non-controlling Interests
Non-controlling Interests | 12 Months Ended |
Dec. 31, 2017 | |
Noncontrolling Interest [Abstract] | |
Non-controlling Interests | Non-controlling Interests In connection with the closing of the IPO, we used the net proceeds of the IPO to purchase 13.2 million newly-issued Class A common units in Evolent Health LLC. Additionally we acquired 2.1 million Class A common units in Evolent Health LLC, at $17.00 per unit, as a result of the merger of the TPG affiliate with and into Evolent Health, Inc. as described in Note 4 . Immediately following the Offering Reorganization and IPO, the Company owned 70.3% of Evolent Health LLC. During the year ended December 31, 2016, the Company issued shares of its Class A common stock to acquire Passport, Valence Health and Aldera. For each share of Class A common stock issued by the Company, we received a reciprocal number of Class A common units from Evolent Health LLC in exchange for contributing the acquired entities to Evolent Health LLC. As a result, our economic interest in Evolent Health LLC increased during the year from 70.3% to 70.8% due to Class A common shares issued for the acquisition of Passport and from 74.6% to 77.4% as a result of Class A common shares issued for the acquisitions of Valence Health and Aldera. In order to account for the change in our ownership interest in Evolent Health LLC, we reclassified a portion of our non-controlling interests into shareholders’ equity attributable to Evolent Health, Inc. In addition, the Company completed a secondary offering of 8.6 million shares of its Class A common stock at a price to the underwriters of $21.54 per share in September 2016. The shares sold in the September 2016 Secondary consisted of 6.4 million existing shares of the Company’s Class A common stock owned and held by the Selling Stockholders and 2.2 million newly-issued shares of the Company’s Class A common stock received by certain Investor Stockholders pursuant to Class B Exchanges. As a result of these Class B Exchanges and Evolent Health LLC’s cancellation of its Class B common units during the September 2016 Secondary, the Company’s economic interest in Evolent Health LLC increased from 71.0% to 74.6% as of September 22, 2016, and, accordingly, we reclassified a portion of our non-controlling interests into shareholders’ equity attributable to Evolent Health, Inc. Further, the Company completed the 2017 Secondary Offerings during 2017. The shares sold in the 2017 Secondary Offerings consisted of 20.1 million shares of the Company’s Class A common stock, consisting of 7.4 million existing shares of the Company’s Class A common stock owned and held by certain Selling Stockholders, 12.6 million newly-issued shares of the Company’s Class A common stock received by certain Investor Stockholders pursuant to Class B Exchanges and 0.1 million shares issued upon the exercise of options by certain management selling stockholders. As a result of these Class B Exchanges and Evolent Health LLC’s cancellation of its Class B common units during the 2017 Secondary Offerings, the Company’s economic interest in Evolent Health LLC increased from 77.4% to 96.1% immediately following the June 2017 Secondary, and, accordingly, we reclassified a portion of our non-controlling interests into shareholders’ equity attributable to Evolent Health, Inc. In addition, the Company issued 8.8 million shares of its Class A Common Stock during the August 2017 Primary for net proceeds of $166.9 million . For each share of Class A common stock issued by Evolent Health, Inc., the Company received a corresponding Class A common unit from Evolent Health LLC in exchange for contributing the issuance proceeds to Evolent Health LLC. As a result of the Class A common stock and Class A common units issued in conjunction with the August 2017 Primary, the Company’s economic interest in Evolent Health LLC increased from 96.1% to 96.6% immediately following the August 2017 Primary, and, accordingly, we reclassified a portion of our non-controlling interests into shareholders’ equity attributable to Evolent Health, Inc. As of December 31, 2017 and 2016 , we owned 96.6% and 77.4% of the economic interests in Evolent Health LLC, respectively. See Note 4 for further discussion of our August 2017 Primary and 2017 Secondary Offerings. Changes in non-controlling interests (in thousands) for the periods presented were as follows: For the Years Ended December 31, 2017 2016 Non-controlling interests as of beginning-of-year $ 209,588 $ 285,238 Cumulative-effect adjustment from adoption of new accounting principle — (139 ) Decrease in non-controlling interests as a result of Class B Exchanges (168,883 ) (28,220 ) Reclassification of non-controlling interests 3,824 19,745 Net income (loss) attributable to non-controlling interests (9,102 ) (67,036 ) Non-controlling interests as of end-of-year $ 35,427 $ 209,588 |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurement GAAP defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) assuming an orderly transaction in the most advantageous market at the measurement date. GAAP also establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value. These tiers include: • Level 1 - inputs to the valuation methodology are quoted prices available in active markets for identical instruments as of the reporting date; • Level 2 - inputs to the valuation methodology are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date and the fair value can be determined through the use of models or other valuation methodologies; and • Level 3 - inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the particular asset or liability being measured. Recurring Fair Value Measurements In accordance with GAAP, certain assets and liabilities are required to be recorded at fair value on a recurring basis. The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis (in thousands): As of December 31, 2017 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ 60,535 $ — $ — $ 60,535 Restricted cash and restricted investments (1) 16,575 — — 16,575 Total $ 77,110 $ — $ — $ 77,110 Liabilities Contingent consideration (2) $ — $ — $ 8,700 $ 8,700 As of December 31, 2016 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ 1,128 $ — $ — $ 1,128 Liabilities Contingent consideration (2) $ — $ — $ 8,300 $ 8,300 (1) Represents the cash and cash equivalents and restricted cash and restricted investments that were held in money market funds as of December 31, 2017 and 2016 , as presented in the tables above. (2) Represents the contingent earn-out consideration related to the Passport acquisition as described further in Note 4 . The Company recognizes any transfers between levels within the hierarchy as of the beginning of the reporting period. There were no transfers between fair value levels for the years ended December 31, 2017 and 2016 , respectively. In the absence of observable market prices, the fair value is based on the best information available and involves a significant degree of judgment, taking into consideration a combination of internal and external factors, including the appropriate risk adjustments for non-performance and liquidity risks. As discussed in Note 4 , the strategic alliance with Passport includes a provision for additional equity consideration contingent upon the Company obtaining new third-party Medicaid business in future periods. The significant unobservable inputs used in the fair value measurement of the Passport contingent consideration are the five -year risk-adjusted recurring revenue compound annual growth rate (“CAGR”) and the applicable discount rate. A significant increase in the assumed five -year risk-adjusted recurring revenue CAGR projection or decrease in discount rate in isolation would result in a significantly higher fair value of the contingent consideration. The changes in our contingent consideration, measured at fair value, for which the Company uses Level 3 inputs to determine fair value are as follows (in thousands): For the Years Ended December 31, 2017 2016 Balance as of beginning of year $ 8,300 $ — Additions — 10,386 Realized and unrealized (gains) losses, net 400 (2,086 ) Balance as of end of year $ 8,700 $ 8,300 The table above includes contingent consideration related to both the Passport and Valence Health transactions. As discussed in Note 4 , there was contingent consideration related to the Valence Health transaction, tied to Valence Health contracting new business activity on or before December 31, 2016. The Company determined the fair value of the contingent consideration was approximately $2.6 million as of the acquisition date. Valence Health did not contract sufficient business activity to be eligible for any contingent consideration as of December 31, 2016. Accordingly, the Company recorded a $2.6 million realized gain associated with the release of the liability. There is no contingent consideration obligation related to the Valence Health transaction as of December 31, 2016. The realized gain was offset by a $0.5 million realized loss associated with an increase in fair value of Passport’s contingent consideration, which was initially recorded at $7.8 million . As a result, the Company recorded a net realized gain of $2.1 million in fair value of contingent consideration for the year ended December 31, 2016. All of the activity in 2017 was attributable to changes in the fair value of the Passport contingent consideration. The Company did not have any assets or liabilities with Level 3 inputs for the year ended December 31, 2015 . The following table summarizes the fair value (in thousands), valuation techniques and significant unobservable inputs of our Level 3 fair value measurements as of the periods presented: As of December 31, 2017 Fair Valuation Significant Assumption or Value Technique Unobservable Inputs Input Ranges Contingent consideration (1) $ 8,700 Real options approach Risk-adjusted recurring revenue CAGR 92.5 % (2) Discount rate/time value 2.7% - 4.0% (1) Related to additional Passport earn-out consideration as described further in Note 4 . (2) The risk-adjusted recurring revenue CAGR is calculated over the five year period 2017-2021. Given that there was no recurring revenue in 2016 and 2017, the calculation of the 2017 and 2018 growth rates is based on theoretical 2016 and 2017 recurring revenues of $1.0 million , resulting in a higher growth rate. The risk-adjusted recurring revenue CAGR over the period 2019-2021 is 19.2% . As of December 31, 2016 Fair Valuation Significant Assumption or Value Technique Unobservable Inputs Input Ranges Contingent consideration (1) $ 8,300 Real options approach Risk-adjusted recurring revenue CAGR 97.0 % (2) Discount rate/time value 2.5% - 4.5% (1) Related to additional Passport earn-out consideration as described further in Note 4 . (2) The risk-adjusted recurring revenue CAGR is calculated over the five year period 2017-2021. Given that there was no recurring revenue in 2016, the calculation of the 2017 growth rate is based on a theoretical 2016 recurring revenue of $1.0 million , resulting in a higher growth rate. The risk-adjusted recurring revenue CAGR over the period 2018-2021 is 50.8% . Nonrecurring Fair Value Measurements In addition to the assets and liabilities that are recorded at fair value on a recurring basis, the Company records certain assets and liabilities at fair value on a nonrecurring basis as required by GAAP. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges. This includes goodwill, intangible assets, property, plant and equipment, held-to-maturity investments and equity method investments. While not carried at fair value on a recurring basis, these items are continually monitored for indicators of impairment that would indicate current carrying value is greater than fair value. In those situations, the assets are considered impaired and written down to current fair value. See Notes 4 , 5 , 6 , 7 and 14 for further discussion of assets measured at fair value on a nonrecurring basis. Other Fair Value Disclosures The carrying amounts of cash and cash equivalents (those not held in a money market fund), restricted cash, receivables, prepaid expenses, accounts payable, accrued liabilities and accrued compensation approximate their fair values because of the relatively short-term maturities of these items and financial instruments. See Note 8 for information regarding the fair value of the 2021 Notes. |
Related Parties
Related Parties | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Parties | Related Parties The entities described below are considered related parties and the balances and/or transactions with them are reported in our consolidated financial statements. As discussed in Note 14 , the Company has economic interests in several entities that are accounted for under the equity method of accounting. The Company is allocated its proportional share of the investees’ earnings and losses each reporting period. In addition, Evolent has entered into services agreements with certain of the entities to provide certain management, operational and support services to help the entities manage elements of their service offerings. Revenues related to the services agreements were approximately $0.4 million and $0.2 million for the years ended December 31, 2017 and 2016 , respectively. The Company also works closely with UPMC, one of its founding investors. The Company’s relationship with UPMC is a subcontractor relationship where UPMC has agreed to execute certain tasks (primarily TPA services) relating to certain customer commitments. We also conduct business with a company in which UPMC holds a significant equity interest. Additionally, prior to the Offering Reorganization, we issued shares of our stock to certain of our partners while concurrently entering into revenue contracts with those partners. Those partners are considered related parties and the balances and/or transactions with them were reported on our consolidated financial statements for the periods in which they held a significant equity interest in Evolent Health, Inc. |
Quarterly Results of Operations
Quarterly Results of Operations (unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Data [Abstract] | |
Quarterly Results of Operations (unaudited) | Quarterly Results of Operations (unaudited) The unaudited consolidated quarterly results of operations (in thousands, except per share data) were as follows: 1st 2nd 3rd 4th 2017 Total revenue $ 106,238 $ 107,071 $ 107,912 $ 113,729 Total operating expenses 127,693 126,188 121,932 131,977 Net income (loss) (23,149 ) (19,698 ) (13,129 ) (13,791 ) Net income (loss) attributable to non-controlling interests (5,137 ) (2,793 ) (541 ) (631 ) Net income (loss) attributable to Evolent Health, Inc. (18,012 ) (16,905 ) (12,588 ) (13,160 ) Earnings (loss) per common share Basic $ (0.34 ) $ (0.28 ) $ (0.18 ) $ (0.18 ) Diluted (0.34 ) (0.28 ) (0.18 ) (0.18 ) 2016 Total revenue $ 49,449 $ 56,518 $ 60,210 $ 88,011 Total operating expenses 224,527 69,147 76,049 121,884 Net income (loss) (173,811 ) (11,999 ) (15,775 ) (25,193 ) Net income (loss) attributable to non-controlling interests (51,071 ) (3,612 ) (4,567 ) (7,786 ) Net income (loss) attributable to Evolent Health, Inc. (122,740 ) (8,387 ) (11,208 ) (17,407 ) Earnings (loss) per common share Basic $ (2.91 ) $ (0.20 ) $ (0.26 ) $ (0.33 ) Diluted (2.91 ) (0.20 ) (0.26 ) (0.33 ) The unaudited consolidated quarterly results of operations include certain unusual or infrequently occurring items that were material to the results of certain quarters as described below. The Company recorded a goodwill impairment of $160.6 million during the first quarter of 2016, as described further in Note 7 . During the fourth quarter of 2016, the Company completed the acquisition of Valence Health and Aldera. Accordingly, the 2017 quarterly results include the consolidated results of Valence Health and Aldera. As described further in Note 4 , the acquisition of Valence Health resulted in a one-time lease termination benefit of approximately $0.5 million during the second quarter of 2017 and a one-time lease abandonment expense of approximately $6.5 million during the fourth quarter of 2016. Additionally, there was approximately $3.9 million in one-time stock compensation expense related to the acceleration of unvested Valence Health equity awards that vested upon the close of the Valence Health acquisition during the fourth quarter of 2016. Immaterial Correction of an Error in Previously Issued Financial Statements Subsequent to the filing of the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2017, the Company identified an error related to the classification of restricted cash and restricted investments on its Consolidated Statement of Cash Flows. Accordingly, the Company corrected this error by revising the classification of certain changes in restricted cash and restricted investments within the Consolidated Statement of Cash Flows. The following table summarizes the impact of the correction of the error to the Company’s Consolidated Statement of Cash Flows for the six months ended June 30, 2017 (in thousands): As Reported Correction As Revised* Cash Flows from Operating Activities Changes in assets and liabilities, net of acquisitions: Accounts receivables, net $ (5,247 ) $ (2,655 ) $ (7,902 ) Accounts payable, net of change in restricted cash and restricted investments (2,514 ) 9,555 7,041 Net cash provided by (used in) operating activities (44,712 ) 6,900 (37,812 ) Cash Flows from Investing Activities Change in restricted cash and restricted investments 3,200 (6,900 ) (3,700 ) Net cash provided by (used in) investing activities 7,739 (6,900 ) 839 * The table above does not reflect the impact of the adoption of ASU 2016-18. The Company adopted ASU 2016-18 effective December 31, 2017. As a result, our future filings will reflect the presentation of our statement of cash flows as required under ASU 2016-18 and not as depicted in the table above. See Note 3 for further discussion of our adoption of ASU 2016-18. The Company assessed the materiality of the misstatement both quantitatively and qualitatively and determined the correction of this error to be immaterial to all prior consolidated financial statements taken as a whole. The Company will revise its Consolidated Statements of Cash Flows for the six months ended June 30, 2017, in future filings to reflect the correction of the error. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 12 Months Ended |
Dec. 31, 2017 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information The following represents supplemental cash flow information (in thousands): For the Years Ended December 31, 2017 2016 2015 Supplemental Disclosure of Non-cash Investing and Financing Activities Non-cash contribution of common stock to Evolent Health LLC prior to the Offering Reorganization $ — $ — $ 21,810 Class A common stock issued in connection with business combinations — 177,795 — Increase to goodwill from measurement period adjustments related to business combination 1,611 — — Decrease in accrued financing costs related to 2021 Notes 196 — — Tax benefit related to Accordion intangible technology 2,042 — — Non-cash deferred financing costs payable — 1,036 — Acquisition consideration payable — 1,148 — Accrued property and equipment purchases 229 446 — Effects of the Offering Reorganization Reclassification of deferred offering costs acquired to additional paid-in capital — — 3,154 Conversion of existing equity as part of the Offering Reorganization — — 39,014 Issuance of Class B common stock — — 196 Assumption of non-controlling interest as a result of merger with TPG affiliate — — 34,875 Effects of the 2017 and 2016 Securities Offerings Decrease in non-controlling interests as a result of Class B Exchanges 168,883 28,220 — Decrease in deferred tax liability as a result of securities offerings 12,857 1,606 — Supplemental Disclosures Cash paid during the period for interest 2,472 — — Cash paid during the year for taxes, net 674 — — |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events New Mexico Health Connections On January 2, 2018, the Company, through its wholly-owned subsidiary, True Health, completed its previously announced acquisition of assets related to NMHC’s commercial business. The assets include a health plan management services organization with a leadership team and employee base with experience working locally with providers to run NMHC’s suite of preventive, disease and care management programs. The consideration paid by the Company in connection with the acquisition consisted of $10.3 million in cash (subject to certain adjustments), of which $0.3 million was deposited in an escrow account. This acquisition is expected to allow the Company to leverage its platform to support a value-based, provider-centric model of care in New Mexico. At the time of the acquisition, the Company also entered into a managed services agreement with NMHC to support its ongoing business. The acquisition will be accounted for as a business combination and, accordingly, the total purchase price will be allocated to the tangible and intangible assets acquired based on their respective fair values on January 2, 2018. Given the timing of this acquisition, the initial accounting for this business combination has not been completed. As a result, the requisite business combination disclosures cannot be made as of the issuance date of these financial statements. The Company will begin reporting the results of True Health during the first quarter of 2018, and anticipates the results will be presented as a new reportable segment. |
Basis of Presentation, Summar27
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of Presentation The accompanying consolidated financial statements are prepared in accordance with GAAP. Certain GAAP policies that significantly affect the determination of our financial position, results of operations and cash flows, are summarized below. As discussed in Note 4 , amounts for the period January 1, 2015, through June 3, 2015, presented in our consolidated financial statements and notes to consolidated financial statements represent the historical operations of our predecessor entity, Evolent Health Holdings, which did not consolidate the operations of Evolent Health LLC for that period. The amounts for the period from June 4, 2015, through December 31, 2015, and as of dates and for periods thereafter, reflect our operations, which consolidate the operations of Evolent Health LLC. |
Accounting estimates and assumptions | Accounting Estimates and Assumptions The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses for the reporting period. Those estimates are inherently subject to change and actual results could differ from those estimates. In the accompanying consolidated financial statements, estimates are used for, but not limited to, the valuation of assets, liabilities, consideration related to business combinations and asset acquisitions, revenue recognition including discounts and credits, estimated selling prices for deliverables in multiple element arrangements, contingent payments, allowance for doubtful accounts, depreciable lives of assets, impairment of long lived assets (including equity method investments), stock-based compensation, deferred income taxes and valuation allowance, contingent liabilities, valuation of intangible assets (including goodwill), purchase price allocation in taxable stock transactions and the useful lives of intangible assets. |
Principles of consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Evolent Health, Inc. and its subsidiaries. All inter-company accounts and transactions are eliminated in consolidation. |
Comprehensive Income | Comprehensive Income No elements of comprehensive income were present for any periods presented. |
Fair value measurement | Fair Value Measurement Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. Our Consolidated Balance Sheets include various financial instruments (primarily cash not held in money-market funds, restricted cash, accounts receivable, accounts payable, accrued expenses and other liabilities) that are carried at cost and that approximate fair value. See Note 16 for further discussion regarding fair value measurement. Nonrecurring Fair Value Measurements In addition to the assets and liabilities that are recorded at fair value on a recurring basis, the Company records certain assets and liabilities at fair value on a nonrecurring basis as required by GAAP. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges. This includes goodwill, intangible assets, property, plant and equipment, held-to-maturity investments and equity method investments. While not carried at fair value on a recurring basis, these items are continually monitored for indicators of impairment that would indicate current carrying value is greater than fair value. In those situations, the assets are considered impaired and written down to current fair value. See Notes 4 , 5 , 6 , 7 and 14 for further discussion of assets measured at fair value on a nonrecurring basis. Other Fair Value Disclosures The carrying amounts of cash and cash equivalents (those not held in a money market fund), restricted cash, receivables, prepaid expenses, accounts payable, accrued liabilities and accrued compensation approximate their fair values because of the relatively short-term maturities of these items and financial instruments. |
Cash and cash equivalents | Cash and Cash Equivalents We consider all highly liquid instruments with original maturities of three months or less to be cash equivalents. The Company holds materially all of our cash in bank deposits with FDIC participating banks, at cost, which approximates fair value. Cash and cash equivalents held in money market funds are carried at fair value, which approximates cost. |
Restricted cash and restricted investments | Restricted Cash and Restricted Investments Restricted cash and restricted investments include cash and investments used to collateralize various contractual obligations |
Accounts receivable and allowance for doubtful accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded when amounts are contractually billable under our customer contracts and are recorded at the invoiced amount and do not bear interest. The Company’s contracts typically include installment payments that do not necessarily correlate to the pattern of revenue recognition. In assessing the valuation of the allowance for doubtful accounts, management reviews the collectability of accounts receivable on an individual account basis. The allowance is adjusted periodically based on management’s determination of collectability, and any accounts that are determined to be uncollectible are written off against the allowance. The Company does no t have an allowance for doubtful accounts as of December 31, 2017 or 2016 , as all amounts were determined to be materially collectible. Due to the timing of invoicing, the Company had recorded unbilled receivables of $2.4 million and $1.8 million as of December 31, 2017 and 2016 , respectively. Unbilled receivables are considered short-term and generally invoiced subsequent to the month the services are provided. While terms vary by contract, payment for services is typically contractually linked to the provision of specified services, with the timing of invoicing occurring in advance or subsequent to the services period. |
Notes receivable | Notes Receivable Notes receivable are carried at the face amount of each note plus respective accrued interest receivable, less received payments. The Company does not typically carry notes receivable in the course of its regular business, but contributed $20.0 million in the form of an implementation funding loan (the “Implementation Loan”) under an agreement with a current customer entered during the year ended December 31, 2017. The Implementation Loan is expected to support implementation services to assist the customer in expanding its Medicaid membership. Repayments under the loan are recorded as they are received and are immediately offset against any outstanding accrued interest before they are applied against the outstanding principal balance on the loan. |
Property and equipment, net | Property and Equipment, Net Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment are computed using the straight-line method over the shorter of the estimated useful lives of the assets or the lease term. Based on the current competitive environment and constantly changing landscape for similar technology, effective September 1, 2017, the Company changed its estimate of the useful life of internal-use software from 7 years to 5 years. This change in useful life has been accounted for as a change in accounting estimate and will be applied to all new internal-use software. This change in estimate will also be applied prospectively to the remaining carrying amounts of existing internal-use software. For these existing assets the useful lives were adjusted at the individual asset level and will be amortized over a period of time such that the carrying value is fully amortized 5 years from the date the individual assets were initially placed in service. See Note 6 for additional discussion regarding the change in estimate related to our property and equipment. The following summarizes the updated estimated useful lives by asset classification: Computer hardware 3 years Furniture and equipment 3-7 years Internal-use software development costs 5 years Leasehold improvements Shorter of useful life or remaining lease term When an item is sold or retired, the cost and related accumulated depreciation or amortization is eliminated and the resulting gain or loss, if any, is recorded in our Consolidated Statements of Operations. We periodically review the carrying value of our long-lived assets, including property and equipment, for impairment whenever events or circumstances indicate that the carrying amount of such assets may not be fully recoverable. For long-lived assets to be held and used, impairments are recognized when the carrying amount of a long-lived asset group is not recoverable and exceeds fair value. The carrying amount of a long-lived asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset group. An impairment loss is measured as the amount by which the carrying amount of a long-lived asset group exceeds its fair value. |
Software development costs | Software Development Costs The Company capitalizes the cost of developing internal-use software, consisting primarily of personnel and related expenses (including stock-based compensation and employee taxes and benefits) for employees and third parties who devote time to their respective projects. Internal-use software costs are capitalized during the application development stage – when the research stage is complete and management has committed to a project to develop software that will be used for its intended purpose and any costs incurred during subsequent efforts to significantly upgrade and enhance the functionality of the software are also capitalized. Capitalized software costs are included in property and equipment, net on our Consolidated Balance Sheets. Amortization of internal-use software costs are recorded on a straight-line basis over their estimated useful life and begin once the project is substantially complete and the software is ready for its intended purpose. |
Research and development costs | Research and Development Costs Research and development costs consist primarily of personnel and related expenses (including stock-based compensation) for employees engaged in research and development activities as well as third-party fees. All such costs are expensed as incurred. We focus our research and development efforts on activities that support our technology infrastructure, clinical program development, data analytics and network development capabilities. |
Goodwill | Goodwill We recognize the excess of the purchase price, plus the fair value of any non-controlling interests in the acquiree, over the fair value of identifiable net assets acquired as goodwill. Goodwill is not amortized, but is reviewed at least annually for indications of impairment, with consideration given to financial performance and other relevant factors. Our annual goodwill impairment testing date is October 31. We perform impairment tests between annual tests if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying amount. We perform impairment tests of goodwill at our single reporting unit level, which is consistent with the way management evaluates our business. Acquisitions to date have been complementary to the Company’s core business, and therefore goodwill is assigned to our single reporting unit to reflect the synergies arising from each business combination. As discussed in Note 3 , we adopted ASU 2017-04, Intangibles-Goodwill and Other - Simplifying the Test for Goodwill Impairment, effective January 1, 2017. The adoption resulted in an update to our accounting policy for goodwill impairment. Our updated policy is described below. Our goodwill impairment analysis first assesses qualitative factors to determine whether events or circumstances existed that would lead the Company to conclude it is more likely than not that the fair value of its reporting unit is below its carrying amount. If the Company determines that it is more likely than not that the fair value of its reporting unit is below the carrying amount, a quantitative goodwill assessment is required. In the quantitative evaluation, the fair value of the relevant reporting unit is determined and compared to the carrying value. If the fair value is greater than the carrying value, then the carrying value is deemed to be recoverable and no further action is required. If the fair value estimate is less than the carrying value, goodwill is considered impaired for the amount by which the carrying amount exceeds the reporting unit’s fair value and a charge is reported in impairment of goodwill on our Consolidated Statements of Operations. See Note 7 for additional discussion regarding the goodwill impairment tests conducted during 2017 and 2016 . |
Intangible assets, net | Intangible Assets, Net As noted above, on June 4, 2015, the Company completed the Offering Reorganization, following which we were required to remeasure the assets, liabilities and non-controlling interests of our equity-method investee, Evolent Health LLC, at fair value. The Company acquired additional intangible assets in conjunction with strategic acquisitions made during 2016 and 2017 . Information regarding the determination and allocation of the fair value of the acquired assets and liabilities are further described within Note 4 . Identified intangible assets are recorded at their estimated fair values at the date of acquisition and are amortized over their respective estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are used. Based on the current competitive environment and constantly changing landscape for similar technology, effective September 1, 2017, the Company changed its estimate of the useful life of intangible technology from a range of 5 - 7 years to 5 years. This change in useful life has been accounted for as a change in accounting estimate and will be applied to all new intangible technology, provided the facts and circumstances of the intangible technology do not suggest otherwise. This change in estimate will also be applied prospectively to the remaining carrying amounts of existing technology assets. For these existing assets the useful lives were adjusted at the individual asset level and will be amortized over a period of time such that the carrying value is fully amortized 5 years from the date the individual assets were initially capitalized. The following summarizes the updated estimated useful lives by asset classification: Corporate trade name 20 years Customer relationships 15-25 years Technology 5 years Intangible assets are reviewed for impairment if circumstances indicate the Company may not be able to recover the asset’s carrying value. The Company evaluates recoverability by determining whether the undiscounted cash flows expected to result from the use and eventual disposition of that asset or group exceed the carrying value at the evaluation date. If the undiscounted cash flows are not sufficient to cover the carrying value, the Company measures an impairment loss as the excess of the carrying amount of the long-lived asset or group over its fair value. See Note 7 for additional discussion regarding our intangible assets. |
Long-term debt | The 2021 Notes are carried at cost, net of deferred financing costs, as long-term debt on the Consolidated Balance Sheets. The deferred financing costs will be amortized to non-cash interest expense using the straight line method over the contractual term of the 2021 Notes, since this method was not materially different from the effective interest rate method. Cash interest payments are due semi-annually in arrears - on June 1 and December 1 each year, starting on June 1, 2017. We will accrue interest expense monthly based on the annual coupon rate of 2.00% . The 2021 Notes have embedded conversion options and contingent interest provisions, which have not been recorded as separate financial instruments. |
Leases | Leases The Company leases all of its office space and enters into various other operating lease agreements in conducting its business. At the inception of each lease, the Company evaluates the lease agreement to determine whether the lease is an operating or capital lease. The operating lease agreements may contain tenant improvement allowances, rent holidays or rent escalation clauses. When such items are included in a lease agreement, the Company records a deferred rent asset or liability on our Consolidated Balance Sheets equal to the difference between the rent expense and future minimum lease payments due. The rent expense related to these items is recognized on a straight-line basis in the Consolidated Statements of Operations over the terms of the leases. In addition, the Company has entered into sublease agreements for some of its leased office space. Total rental income attributable to the subleases is offset against rent expense recorded in the Consolidated Statements of Operations over the terms of the leases. As of December 31, 2017 and 2016 , the Company had not entered into any capital leases. The Company is subject to non-cancellable leases for offices or portions of offices for which use might cease, resulting in a lease abandonment. When a lease abandonment is determined to have occurred, the present value of the future lease payments, net of estimated sublease payments, along with any unamortized tenant improvement costs, are recognized as lease abandonment expense in the Company’s Consolidated Statements of Operations with a corresponding liability in the Company’s Consolidated Balance Sheets. See No te 9 for discussion of the lease abandonment. |
Impairment of equity method investments | Impairment of Equity Method Investments The Company considers potential impairment triggers for its equity method investments, and the equity method investments will be written down to fair value if there is evidence of a loss in value which is other-than-temporary. The Company may estimate the fair value of its equity method investments by considering recent investee equity transactions, discounted cash flow analyses and recent operating results. If the fair value of the investment has dropped below the carrying amount, management considers several factors when determining whether other-than-temporary impairment has occurred. The estimation of fair value and whether other-than-temporary impairment has occurred requires the application of significant judgment and future results may vary from current assumptions. |
Deferred revenue | Deferred Revenue Deferred revenue consists of billings or payments received in advance of providing the requisite services or other instances where the revenue recognition criteria have not been met. Amounts deferred that are not anticipated to be recognized as revenue within a year of the balance sheet date are reported as long-term deferred liabilities. |
Revenue recognition | Revenue Recognition Revenue from the Company’s services is recognized when there is persuasive evidence of an arrangement, performance or delivery has occurred, the fee is fixed or determinable and collectability is reasonably assured. At times, the Company enters into contracts that contain multiple deliverables and we evaluate each deliverable to determine whether it represents a separate unit of accounting based on the following criteria: (i) if the delivered item has value to the customer on a standalone basis, and (ii) if the contract includes a general right of return relative to the delivered item, and delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the vendor. Revenue is then allocated to the units of accounting based on an estimate of each unit’s relative selling price. Revenue Recognition - Transformation Transformation contracts consist of strategic assessments, or Blueprint contracts, and implementation contracts. Based on the strategic assessment generated in a Blueprint contract, a customer may decide to move forward with a population health or health plan strategy; in these cases, the customer enters into an implementation contract in which the Company provides services related to the launch of this strategy. The Company recognizes revenue associated with transformation contracts based on a proportionate performance method, where revenue is recognized each period in proportion to the amount of the contract completed during that period. In the case of implementation revenues tied to certain health plan services activities, such revenue is deferred and amortized over the life of the contract. Contract completion is measured using output measures as best estimated by labor hours incurred compared to the total estimated labor hours necessary to complete our performance obligations contained in the contract. Revenue Recognition - Platform and Operations After the transformation phase, the Company often enters into a multi-year service contract with its customers where various population health, health plan operations, third-party health plan and PBM services are provided on an ongoing basis to the members of the customers’ plans typically in exchange for a monthly service fee, PMPM fee or a percentage of plan premiums. Revenue from these contracts is recognized in the month in which the services are delivered. In certain arrangements, there is a contingent portion of our service fee including meeting service level targets, sharing in rebates, shared medical savings arrangements based on financial performance and other performance measures. The Company continuously monitors its compliance with these arrangements and recognizes revenue when the amount is estimable and there is evidence to support meeting the criteria. Credits and Discounts We also provide credits and discounts to our customers often based on achieving certain volume commitments or other criteria. Credits are assessed to determine whether they reflect significant and incremental discounts. If the discounts are significant, the Company allocates them between the contract deliverables or future purchases as appropriate. If the future credit expires unused, it is recognized as revenue at that time. |
Cost of revenue (exclusive of depreciation and amortization) | Cost of Revenue (exclusive of depreciation and amortization) Our cost of revenue includes direct expenses and shared resources that perform services in direct support of clients. Costs consist primarily of employee-related expenses (including compensation, benefits and stock-based compensation), expenses for TPA support and other services, as well as other professional fees. |
Stock-based compensation | Stock-based Compensation The Company sponsors a stock-based incentive plan that provides for the issuance of stock-based awards to employees and non-employee directors of the Company or its consolidated subsidiaries. Our stock-based awards generally vest over a four year period and expire ten years from the date of grant. We expense the fair value of stock-based awards granted under our incentive compensation plans. Fair value of stock options is determined using a Black-Scholes options valuation methodology. The fair value of the awards is expensed over the performance or service period, which generally corresponds to the vesting period, on a straight-line basis and is recognized as an increase to additional paid-in capital. Stock-based compensation expense is reflected in “Cost of revenue” and “Selling, general and administrative expenses” in our Consolidated Statements of Operations. Additionally we capitalize personnel expenses attributable to the development of internal-use software, which include stock-based compensation costs. We recognize share-based award forfeitures as they occur. Prior to the Offering Reorganization on June 3, 2015, stock-based awards were granted in the stock of the Company to employees of its equity-method investee, Evolent Health LLC. As such, the Company was required to use a “non-employee” model for recognizing stock-based compensation, which required the awards to be marked-to-market through net income at the end of each reporting period until vesting occurred. Subsequent to the Offering Reorganization described in Note 4 , stock-based awards are granted in the Company’s stock to the employees of Evolent Health LLC and compensation costs are therefore recognized using an “employee” model. Under the “employee” model, we no longer mark the awards to market at the end of each reporting period. |
Income taxes | Income Taxes Deferred income taxes are recognized, based on enacted rates, when assets and liabilities have different values for financial statement and tax reporting purposes. A valuation allowance is recorded to the extent required. Considerable judgment and the use of estimates are required in determining whether a valuation allowance is necessary and, if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance, we consider many factors, including: the nature and character of the deferred tax assets and liabilities; taxable income in prior carryback years; future reversals of temporary differences; the length of time carryovers can be utilized; and any tax planning strategies we would employ to avoid a tax benefit from expiring unused. We use a recognition threshold and a measurement attribute for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. We recognize interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense, when applicable. As of December 31, 2017 , our identified balance of uncertain income tax positions would not have a material impact to the consolidated financial statements. We did not have any such amounts accrued as of December 31, 2016 , as we had not identified any uncertain income tax positions that could have a material impact to the consolidated financial statements. We are subject to taxation in various jurisdictions in the U.S. and remain subject to examination by taxing jurisdictions for the years 2011 and all subsequent periods due to the availability of NOL carryforwards. We are a holding company and our assets consist of our direct ownership in Evolent Health LLC, for which we are the managing member. Evolent Health LLC is classified as a partnership for U.S. federal and applicable state and local income tax purposes and, as such, is not subject to U.S. federal, state and local income taxes. Taxable income or loss generated by Evolent Health LLC is allocated to holders of its units, including us, on a pro rata basis. Accordingly, we are subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of Evolent Health LLC. |
Earnings (loss) per share | Earnings (Loss) per Share Basic earnings (loss) per share is computed by dividing net income (loss) available to Class A common shareholders by the weighted-average number of Class A common shares outstanding. For periods of net income, and when the effects are not anti-dilutive, we calculate diluted earnings per share by dividing net income available to Class A common shareholders by the weighted average number of Class A common shares assuming the conversion of the convertible preferred securities, which occurred on the date of the Offering Reorganization, plus the weighted average number of Class A common shares assuming the conversion of our 2021 Notes, as well as the impact of all potential dilutive common shares, consisting primarily of common stock options and unvested restricted stock awards using the treasury stock method and our exchangeable Class B common stock. For periods of net loss, shares used in the diluted earnings (loss) per share calculation represent basic shares as using potentially dilutive shares would be anti-dilutive. Prior to the Offering Reorganization, the Company issued securities other than common stock that participated in dividends (“participating securities”), and therefore, we utilized the two-class method to calculate earnings (loss) per share for the applicable periods. Participating securities include redeemable convertible preferred stock. The two-class method requires a portion of earnings to be allocated to the participating securities to determine the earnings available to common stockholders. Earnings (loss) available to the common stockholders is equal to net income (loss) less dividends paid on preferred stock, assumed periodic cumulative preferred stock dividends, repurchases of preferred stock for an amount in excess of carrying value and an allocation of any remaining earnings (loss) in accordance with the bylaws between the outstanding common and preferred stock as of the end of each applicable period. |
Operating segments | Operating Segments Operating segments are defined as components of a business that earn revenue and incur expenses for which discrete financial information is available that is evaluated, on a regular basis, by the chief operating decision maker (“CODM”) to decide how to allocate resources and assess performance. The Company’s CODM, the Chief Executive Officer, allocates resources at a consolidated level and therefore the Company views its operations and manages its business as one operating segment. All of the Company’s revenue is generated in the United States and all assets are located in the United States. |
Recently issued accounting standards | Recently Issued Accounting Standards Adoption of New Accounting Standards In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash . The purpose of the ASU is to reduce diversity in practice regarding the classification and presentation of changes in restricted cash on the statement of cash flows. The amendments in the ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments in this ASU should be applied using a retrospective transition method to each period presented. We adopted the requirements of this standard effective December 31, 2017, which resulted in the recast of our statement of cash flows for each period presented. The adoption of this ASU had an impact on our financial statements with respect to presentation of our statement of cash flows. See the “Change in Accounting Principle” section within Note 2 above for further information on the adoption of ASU 2016-18. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments . This ASU provides updated guidance on eight specific cash flow issues to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. We adopted the requirements of this standard, effective December 31, 2017. The adoption of this ASU may have an impact on the presentation of our statement of cash flows if we encounter specific cash receipts and cash payments in the purview of this ASU, such as cash outflows related to a contingent consideration and cash receipts from our equity method investees. There was no impact of the adoption for the years ended December 31, 2017 , 2016 or 2015. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation - Scope of Modification Accounting . The purpose of the ASU is to limit the circumstances in which an entity applies modification accounting to share-based awards by setting criteria whereby an entity would be precluded from applying modification accounting guidance in Topic 718. The ASU also removes guidance in Topic 718 stating that modification accounting is not required when an entity adds an anti-dilution provision if that modification is not made in contemplation of an equity restructuring. The amendments are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim periods. The amendments should be applied prospectively to an award modified on or after the adoption date. We adopted this standard, effective June 1, 2017. The adoption of this ASU may have an impact if we have a modification to our share-based awards at a future date. There was no impact of the adoption for the year ended December 31, 2017 . In January 2017, the FASB issued ASU 2017-01, Business Combinations - Clarifying the Definition of a Business . The purpose of the ASU is to add guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The ASU provides a screen to determine when an integrated set of assets and activities is not a business. The ASU also provides a framework to assist entities in evaluating whether both an input and a substantive process are present. The amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments should be applied prospectively on or after the effective date. Early adoption is permitted for transactions for which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. We adopted this standard during June 2017, in conjunction with the acquisition of Accordion Health, Inc. (see Note 4 ). The adoption had an impact on our financial statements with respect to the accounting for the Accordion Health, Inc. acquisition, and we anticipate it will have an impact if we engage in future business combinations or asset acquisitions. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other - Simplifying the Test for Goodwill Impairment . The purpose of the ASU is to simplify the subsequent measurement of goodwill. The ASU eliminates Step 2 from the goodwill impairment test. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. This update is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We believe this newly adopted principle is preferable as it reduces the complexity of performing a goodwill impairment test. As a result, we adopted this standard effective January 1, 2017. Our updated accounting policy for goodwill impairment is described in Note 2 . See Note 7 for a description of our 2017 goodwill impairment tests as performed under the updated standard. In March 2016, the FASB issued ASU 2016-07, Investments-Equity Method and Joint Ventures - Simplifying the Transition to the Equity Method of Accounting . The purpose of this ASU is to eliminate the requirement to retroactively adopt the equity method of accounting when an investment qualifies for the equity method as a result of an increase in the level of ownership interest or degree of influence. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The amendments in this ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. We adopted this standard effective January 1, 2017. The adoption did not have a material impact on our financial statements for the year ended December 31, 2017 . In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging - Contingent Put and Call Options in Debt Instruments . The purpose of this ASU is to clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely rated to their debt hosts. An entity performing the assessment under the amendments in the ASU is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. For public business entities, the amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. We adopted this standard effective January 1, 2017. The adoption did not have a material impact on our financial statements for the year ended December 31, 2017 . Future Adoption of New Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments . With respect to assets measured at amortized cost, such as held-to-maturity assets, the update requires presentation of the amortized cost net of a credit loss allowance. The update eliminates the probable initial recognition threshold that was previously required prior to recognizing a credit loss on financial instruments. The credit loss estimate can now reflect an entity’s current estimate of all future expected credit losses as opposed to the previous standard, when an entity only considered past events and current conditions. With respect to available for sale debt securities, the update requires that credit losses be presented as an allowance rather than as a write-down. The update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We intend to adopt the requirements of this standard effective January 1, 2020, and are currently evaluating the impact of the adoption on our financial condition and results of operations. In February 2016, the FASB issued ASU 2016-02, Leases , in order to establish the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. This update introduces a new standard on accounting for leases, including a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in ASC 606, the FASB’s new revenue recognition standard (e.g., those related to evaluating when profit can be recognized). The standard also requires lessors to increase the transparency of their exposure to changes in value of their residual assets and how they manage that exposure. The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. We intend to adopt the requirements of this standard effective January 1, 2019, and are currently evaluating the impact of the adoption on our financial condition and results of operations. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , in order to clarify the principles of recognizing revenue. This standard establishes the core principle of recognizing revenue to depict the transfer of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The FASB defines a five-step process that systematically identifies the various components of the revenue recognition process, culminating with the recognition of revenue upon satisfaction of an entity’s performance obligations. By completing all five steps of the process, the core principles of revenue recognition will be achieved. In March 2016, the FASB issued an update to the new revenue standard (ASU 2014-09) in the form of ASU 2016-08, which amended the principal-versus-agent implementation guidance and illustrations in the new revenue guidance. The update clarifies that an entity should evaluate whether it is the principal or the agent for each specified good or service promised in a contract with a customer. In April 2016, the FASB issued another update to the new revenue standard in the form of ASU 2016-10, which amended the guidance on identifying performance obligations and the implementation guidance on licensing. These ASUs were followed by two further updates issued during May 2016: ASU 2016-11, which rescinds certain SEC guidance, such as the adoption of ASUs 2014-09 and 2014-16, including accounting for consideration given by a vendor to a customer, and ASU 2016-12, which is intended to clarify the objective of the collectability criterion while identifying the contract(s) with a customer. The new revenue standard (including updates) is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted only as of annual reporting periods beginning after December 15, 2016. The guidance permits two methods of adoption: i) the full retrospective method applying the standard to each prior reporting period presented, or ii) the modified retrospective method with a cumulative effect of initially applying the guidance recognized at the date of initial application. The standard also allows entities to apply certain practical expedients at their discretion. We adopted this standard effective January 1, 2018, using the modified retrospective method with a cumulative catch up adjustment and providing additional disclosures comparing results to previous rules. We anticipate that the adoption of the standard will result in changes related to revenue recognition for certain contracts that contain features, such as variable consideration. These changes will generally accelerate revenue recognition. In addition, certain customer setup costs which have historically been expensed as incurred will be capitalized. We are making changes to our accounting policies and practices, business processes, systems and controls to support the new revenue recognition and disclosure requirements. We have also updated our internal controls related to revenue recognition and contract costs to address internal controls over financial reporting necessary to ensure compliance with ASC 606 and ASC 340-40. |
Basis of Presentation, Summar28
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of restricted cash and cash equivalents | Restricted cash and restricted investments include cash and investments used to collateralize various contractual obligations (in thousands) as follows: As of December 31, 2017 2016 Collateral for letters of credit for facility leases (1) $ 3,812 $ 4,852 Collateral with financial institutions (2) 24,725 4,950 Pharmacy benefit management and claims processing services (3) 26,286 30,555 Collateral for reinsurance agreement (4) 10,000 — Other 862 59 Total restricted cash and restricted investments 65,685 40,416 Current restricted investments 8,150 — Current restricted cash 54,248 34,416 Total current restricted cash and restricted investments 62,398 34,416 Non-current restricted investments 605 4,950 Non-current restricted cash 2,682 1,050 Total non-current restricted cash and restricted investments $ 3,287 $ 6,000 (1) Represents restricted cash related to collateral for letters of credit required in conjunction with lease agreements. See Note 9 for further discussion of our lease commitments. (2) Represents collateral held with financial institutions for risk-sharing arrangements. As of December 31, 2017 , approximately $8.2 million of the collateral amount was invested in restricted certificates of deposit with remaining maturities of less than 12 months. Approximately $5.0 million of the collateral amount was invested in restricted certificates of deposit with remaining maturities of greater than 12 months as of December 31, 2016 . The restricted investments are classified as held-to-maturity and stated at amortized cost. Fair value of the certificates of deposit is determined using Level 2 inputs and approximates amortized cost as of December 31, 2017 and 2016 . As of December 31, 2017 , approximately $16.6 million of the collateral amount was in a trust account and invested in a money market fund. The amounts invested in money market funds are considered restricted cash and are carried at fair value, which approximates cost. See Note 16 for further discussion of our fair value measurement. For purposes of our risk sharing arrangements, the approximately $8.2 million invested in restricted certificates of deposit as of December 31, 2017 was no longer required beginning January 1, 2018. See Note 9 for further discussion of our risk-sharing arrangements. (3) Represents cash held by Evolent on behalf of partners to process PBM and other claims. (4) This amount represents restricted cash required as part of our capital only reinsurance agreement to provide balance sheet support to NMHC. There is no transfer of underwriting risk to Evolent and we are not at risk for any cash payments on behalf of NMHC as part of the agreement. The reinsurance agreement is further discussed in Note 9 . |
Reconciliation of cash and cash equivalents and restricted cash | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statements of cash flows. As of December 31, 2017 2016 Cash and cash equivalents $ 238,433 $ 134,563 Restricted cash and restricted investments 65,685 40,416 Restricted investments included in restricted cash and restricted investments (8,755 ) (4,950 ) Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows $ 295,363 $ 170,029 |
Summary of property and equipment | The following summarizes the updated estimated useful lives by asset classification: Computer hardware 3 years Furniture and equipment 3-7 years Internal-use software development costs 5 years Leasehold improvements Shorter of useful life or remaining lease term The following summarizes our property and equipment (in thousands): As of December 31, 2017 2016 Computer hardware $ 5,667 $ 4,474 Furniture and equipment 2,448 2,448 Internal-use software development costs 48,557 21,385 Leasehold improvements 8,708 8,108 Total property and equipment 65,380 36,415 Accumulated depreciation and amortization expenses (14,458 ) (5,236 ) Total property and equipment, net $ 50,922 $ 31,179 |
Intangible assets estimated useful lives | The following summarizes the updated estimated useful lives by asset classification: Corporate trade name 20 years Customer relationships 15-25 years Technology 5 years Details of our intangible assets (in thousands), including their weighted-average remaining useful lives (in years), are presented below: As of December 31, 2017 Weighted- Average Gross Net Remaining Carrying Accumulated Carrying Useful Life Amount Amortization Value Corporate trade name 17.4 $ 19,000 $ 2,454 $ 16,546 Customer relationships 20.5 203,500 18,312 185,188 Technology 3.1 55,802 17,810 37,992 Below market lease, net 4.8 4,197 2,662 1,535 Total $ 282,499 $ 41,238 $ 241,261 As of December 31, 2016 Weighted- Average Gross Net Remaining Carrying Accumulated Carrying Useful Life Amount Amortization Value Corporate trade name 18.4 $ 19,000 $ 1,505 $ 17,495 Customer relationships 21.5 203,500 9,018 194,482 Technology 5.2 50,500 7,753 42,747 Below market lease, net 9.4 4,323 124 4,199 Total $ 277,323 $ 18,400 $ 258,923 |
Schedule of the impact of the change in accounting principle | The following table summarizes the impact of the change in accounting principle to the Company’s Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015 (in thousands): Prior to Adoption Adoption Adjustments As Reported For the year ended December 31, 2017 Cash Flows from Investing Activities Change in restricted cash and restricted investments $ (29,471 ) $ 29,471 $ — Purchase of restricted investments — (3,805 ) (3,805 ) Net cash and restricted cash provided by (used in) investing activities (37,931 ) 25,666 (12,265 ) Cash Flows from Financing Activities Change in restricted cash held on behalf of partners for claims processing — (4,200 ) (4,200 ) Net cash and restricted cash provided by (used in) financing activities 169,758 (4,200 ) 165,558 Net increase (decrease) in cash and cash equivalents and restricted cash 103,868 21,466 125,334 Cash and cash equivalents and restricted cash as of beginning-of-period 134,563 35,466 170,029 Cash and cash equivalents and restricted cash as of end-of-period $ 238,431 $ 56,932 $ 295,363 As Originally Reported Adjustments As Adjusted For the year ended December 31, 2016 Cash Flows from Investing Activities Change in restricted cash and restricted investments $ (6,090 ) $ 6,090 $ — Purchase of restricted investments — (4,950 ) (4,950 ) Net cash and restricted cash provided by (used in) investing activities (97,797 ) 1,140 (96,657 ) Cash Flows from Financing Activities Change in restricted cash held on behalf of partners for claims processing — 28,041 28,041 Net cash and restricted cash provided by (used in) financing activities 122,144 28,041 150,185 Net increase (decrease) in cash and cash equivalents and restricted cash (11,163 ) 29,181 18,018 Cash and cash equivalents and restricted cash as of beginning-of-period 145,726 6,285 152,011 Cash and cash equivalents and restricted cash as of end-of-period $ 134,563 $ 35,466 $ 170,029 As Originally Reported Adjustments As Adjusted For the year ended December 31, 2015 Cash Flows from Financing Activities Change in restricted cash held on behalf of partners for claims processing $ — $ 6,285 $ 6,285 Net cash and restricted cash provided by (used in) financing activities 207,878 6,285 214,163 Net increase (decrease) in cash and cash equivalents and restricted cash 145,726 6,285 152,011 Cash and cash equivalents and restricted cash as of beginning-of-period — — — Cash and cash equivalents and restricted cash as of end-of-period $ 145,726 $ 6,285 $ 152,011 |
Summary of the impact of the correction of the error | The following table summarizes the impact of the correction of the error to the Company’s Consolidated Statement of Cash Flows for the six months ended June 30, 2017 (in thousands): As Reported Correction As Revised* Cash Flows from Operating Activities Changes in assets and liabilities, net of acquisitions: Accounts receivables, net $ (5,247 ) $ (2,655 ) $ (7,902 ) Accounts payable, net of change in restricted cash and restricted investments (2,514 ) 9,555 7,041 Net cash provided by (used in) operating activities (44,712 ) 6,900 (37,812 ) Cash Flows from Investing Activities Change in restricted cash and restricted investments 3,200 (6,900 ) (3,700 ) Net cash provided by (used in) investing activities 7,739 (6,900 ) 839 * The table above does not reflect the impact of the adoption of ASU 2016-18. The Company adopted ASU 2016-18 effective December 31, 2017. As a result, our future filings will reflect the presentation of our statement of cash flows as required under ASU 2016-18 and not as depicted in the table above. See Note 3 for further discussion of our adoption of ASU 2016-18. |
Transactions (Tables)
Transactions (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Organizational Transactions [Abstract] | |
Schedule of allocation of purchase price | The purchase price allocation, as previously determined, the measurement period adjustments and the purchase price allocation, as revised, are as follows (in thousands): Measurement As Previously Period Determined Adjustments As Revised Purchase consideration: Fair value of Class A common stock issued $ 9,864 $ — $ 9,864 Cash for settlement of software license 7,000 — 7,000 Cash 17,481 — 17,481 Total consideration $ 34,345 $ 34,345 Tangible assets acquired: Receivables $ 624 $ (194 ) $ 430 Prepaid expenses and other current assets 272 — 272 Property and equipment 1,065 — 1,065 Other non-current assets 9 — 9 Identifiable intangible assets acquired: Customer relationships 7,000 — 7,000 Technology 2,500 — 2,500 Liabilities assumed: Accounts payable 429 — 429 Accrued liabilities 1,204 205 1,409 Accrued compensation and employee benefits 605 — 605 Deferred revenue 44 — 44 Goodwill 25,157 399 25,556 Net assets acquired $ 34,345 $ 34,345 The purchase price was allocated to the assets acquired based on their fair values as of February 1, 2016 , as follows (in thousands): Purchase consideration Fair value of Class A common stock issued $ 10,450 Fair value of contingent consideration 7,750 Total consideration $ 18,200 Tangible assets acquired Prepaid asset $ 6,900 Goodwill 11,300 Net assets acquired $ 18,200 |
Schedule of net assets acquired | The purchase price allocation, as previously determined, the measurement period adjustments and the purchase price allocation, as revised, are as follows (in thousands): Measurement As Previously Period Determined Adjustments As Revised Purchase consideration: Fair value of Class A common stock issued $ 159,614 $ 911 $ 160,525 Fair value of contingent consideration 2,620 — 2,620 Cash 54,799 — 54,799 Total consideration $ 217,033 $ 217,944 Tangible assets acquired: Restricted cash $ 1,829 $ — $ 1,829 Accounts Receivable 8,587 (251 ) 8,336 Prepaid expenses and other current assets 3,465 — 3,465 Property and equipment 6,241 — 6,241 Other non-current assets 313 — 313 Favorable leases assumed (net of unfavorable leases) 4,323 (126 ) 4,197 Identifiable intangible assets acquired: Customer relationships 69,000 — 69,000 Technology 18,000 — 18,000 Liabilities assumed: Accounts payable 5,703 — 5,703 Accrued liabilities 3,865 (69 ) 3,796 Accrued compensation and employee benefits 9,200 — 9,200 Deferred revenue 2,022 640 2,662 Other long-term liabilities 2,328 — 2,328 Net deferred tax liabilities 13,316 (636 ) 12,680 Goodwill 141,709 1,223 142,932 Net assets acquired $ 217,033 $ 217,944 The allocation of the value of the transaction (in thousands) is included below: Goodwill $ 608,903 Intangible assets 169,000 Cash and restricted cash 21,930 Other assets 49,239 Remeasurement gain on previously held equity interest (414,133 ) Liabilities and deferred revenue (71,299 ) Non-controlling interests (332,793 ) Carrying value of previously held equity interest (30,847 ) Purchase price $ — |
Business acquisition, pro forma information | For the Years Ended December 31, 2016 2015 Revenue $ 361,944 $ 311,639 Net income (loss) (225,091 ) (93,906 ) Net income (loss) attributable to non-controlling interests (57,433 ) (28,684 ) Net income (loss) attributable to Evolent Health, Inc. (167,658 ) (65,222 ) Net income (loss) available to common shareholders: Basic $ (3.30 ) $ (1.50 ) Diluted (3.30 ) (1.50 ) |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investments [Abstract] | |
Summary investment holdings | The following table summarizes the amortized cost, gross unrealized gains and losses, and fair value of our investments as measured using Level 2 inputs as of December 31, 2016 (in thousands): Gross Gross Amortized Unrealized Unrealized Fair Costs Gains Losses Value U.S. Treasury bills $ 28,119 $ 116 $ 27 $ 28,208 Corporate bonds 16,222 81 8 16,295 Total investments $ 44,341 $ 197 $ 35 $ 44,503 |
Investments classified by contractual maturity date | The following table summarizes the amortized cost and fair value of our investments by contractual maturities as of December 31, 2016 (in thousands): Amortized Fair Costs Value Due in one year or less $ 44,341 $ 44,503 |
Schedule of unrealized loss on held-to-maturity securities | The following table summarizes our held-to-maturity securities that had been in a continuous unrealized loss position for less than twelve months as of December 31, 2016 (in thousands, except number of securities): Number of Fair Unrealized Securities Value Losses U.S. Treasury bills 1 $ 4,002 $ 1 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment | The following summarizes the updated estimated useful lives by asset classification: Computer hardware 3 years Furniture and equipment 3-7 years Internal-use software development costs 5 years Leasehold improvements Shorter of useful life or remaining lease term The following summarizes our property and equipment (in thousands): As of December 31, 2017 2016 Computer hardware $ 5,667 $ 4,474 Furniture and equipment 2,448 2,448 Internal-use software development costs 48,557 21,385 Leasehold improvements 8,708 8,108 Total property and equipment 65,380 36,415 Accumulated depreciation and amortization expenses (14,458 ) (5,236 ) Total property and equipment, net $ 50,922 $ 31,179 |
Goodwill and Intangible Asset32
Goodwill and Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | The following table summarizes the changes in the carrying amount of goodwill (in thousands): For the Years Ended December 31, 2017 2016 Balance as of beginning-of-year $ 626,569 $ 608,903 Goodwill Acquired (1) — 178,266 Measurement period adjustments (2) 1,617 — Goodwill Impairment — (160,600 ) Balance as of end-of-year $ 628,186 $ 626,569 (1) Represents goodwill acquired as a result of the Passport, Valence Health and Aldera transactions, as discussed in Note 4 . (2) Represents measurement period adjustments related to Valence Health and Aldera, as discussed in Note 4 . |
Schedule of intangible assets details | The following summarizes the updated estimated useful lives by asset classification: Corporate trade name 20 years Customer relationships 15-25 years Technology 5 years Details of our intangible assets (in thousands), including their weighted-average remaining useful lives (in years), are presented below: As of December 31, 2017 Weighted- Average Gross Net Remaining Carrying Accumulated Carrying Useful Life Amount Amortization Value Corporate trade name 17.4 $ 19,000 $ 2,454 $ 16,546 Customer relationships 20.5 203,500 18,312 185,188 Technology 3.1 55,802 17,810 37,992 Below market lease, net 4.8 4,197 2,662 1,535 Total $ 282,499 $ 41,238 $ 241,261 As of December 31, 2016 Weighted- Average Gross Net Remaining Carrying Accumulated Carrying Useful Life Amount Amortization Value Corporate trade name 18.4 $ 19,000 $ 1,505 $ 17,495 Customer relationships 21.5 203,500 9,018 194,482 Technology 5.2 50,500 7,753 42,747 Below market lease, net 9.4 4,323 124 4,199 Total $ 277,323 $ 18,400 $ 258,923 |
Schedule of future estimated amortization of intangible assets | Future estimated amortization of intangible assets (in thousands) as of December 31, 2017 , is as follows: 2018 $ 23,209 2019 23,071 2020 18,801 2021 14,666 2022 10,931 Thereafter 150,583 Total $ 241,261 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of convertible debt | The following table summarizes the carrying value of the long-term debt (in thousands): As of December 31, 2017 2016 Carrying value $ 121,394 $ 120,283 Unamortized discount 3,606 4,717 Principal amount $ 125,000 $ 125,000 Remaining amortization period (years) 3.9 4.9 |
Commitments and Contingencies
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future contractual obligations | Our contractual obligations related to vendor contracts (in thousands) as of December 31, 2017 , were as follows: Less More Than 1 to 3 3 to 5 Than 1 Year Years Years 5 Years Total Purchase obligations related to vendor contracts $ 6,567 $ 430 $ — $ — $ 6,997 |
Schedule of lease abandonment liability | The following table presents a roll forward of the lease abandonment liability for the years ended December 31, 2017 and 2016 (in thousands): For the Years Ended December 31, 2017 2016 Accrual as of beginning-of-period $ 6,100 $ — Abandonment expense — 6,460 Impact of lease termination (496 ) — Abandonment amortization (1,239 ) (360 ) Lease cancellation fee (4,365 ) — Accrual as of end-of-period $ — $ 6,100 |
Future minimum rental commitments | Future minimum rental commitments (in thousands) as of December 31, 2017 , were as follows: 2018 $ 8,328 2019 7,101 2020 7,001 2021 2,870 2022 2,530 Thereafter 13,462 Total $ 41,292 |
Summary of major customers | The following table summarizes those partners who represented at least 10.0% of our revenue for the periods presented: For the Years Ended December 31, 2017 2016 2015 Customer A 20.6 % 19.6 % * Customer B * 14.5 % 15.6 % Customer C * 12.7 % 11.2 % Customer D * * 19.6 % Customer E * * 14.1 % Customer F * * 11.8 % * Represents less than 10.0% of the respective balance The following table summarizes those partners who represented at least 10.0% of our trade accounts receivable for the periods presented: As of December 31, 2017 2016 Customer G 32.1 % 14.3 % Customer B 16.5 % * Customer H 11.8 % * * Represents less than 10.0% of the respective balance |
Earnings (Loss) Per Common Sh35
Earnings (Loss) Per Common Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Computation of basic and diluted earnings per share | The following table sets forth the computation of basic and diluted earnings per share available for common stockholders (in thousands, except per share data): For the Years Ended December 31, 2017 2016 2015 Net income (loss) $ (69,767 ) $ (226,778 ) $ 319,814 Less: Net income (loss) attributable to non-controlling interests (9,102 ) (67,036 ) (12,680 ) Undeclared cumulative preferred dividends — — 2,184 Net income (loss) available for common shareholders - Basic (60,665 ) (159,742 ) 330,310 Add: Net income (loss) attributable to non-controlling interests — — (12,680 ) Undeclared cumulative preferred dividends converted during the period — — 2,184 Net income (loss) available for common shareholders - Diluted (1)(2) (60,665 ) (159,742 ) 319,814 Weighted-average common shares outstanding - Basic 64,351 45,031 25,129 Dilutive effect of restricted stock and restricted stock units — — 17 Dilutive effect of options — — 1,510 Assumed conversion of convertible preferred stock at beginning-of-period — — 9,397 Assumed conversion of Class B common shares to Class A common shares — — 10,083 Weighted-average common shares outstanding - Diluted (2)(3) 64,351 45,031 46,136 Earnings (Loss) per Common Share Basic $ (0.94 ) $ (3.55 ) $ 13.14 Diluted (0.94 ) (3.55 ) 6.93 (1) For periods of net loss, net income (loss) available for common shareholders is the same for both basic and diluted purposes. (2) Each Class B common unit of Evolent Health LLC can be exchanged (together with a corresponding number of shares of our Class B common stock) for one share of our Class A common stock. As holders exchange their Class B common shares for Class A common shares, our interest in Evolent Health LLC will increase. Therefore, shares of our Class B common stock are not considered dilutive shares for the purposes of calculating our diluted earnings (loss) per common share as related adjustment to net income (loss) available for common shareholders would equally offset the additional shares, resulting in the same earnings (loss) per common share. (3) For periods of net loss, shares used in the earnings (loss) per common share calculation represent basic shares as using diluted shares would be anti-dilutive. |
Schedule of antidilutive securities excluded from computation of earnings per share | Anti-dilutive shares (in thousands) excluded from the calculation of weighted-average common shares presented above are presented below: For the Years Ended December 31, 2017 2016 2015 Exchangeable Class B common stock 7,285 16,882 — Restricted stock and RSUs 525 245 — Stock options 2,829 1,973 — Convertible senior notes 5,201 369 — Total 15,840 19,469 — |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based compensation expense | Total compensation expense by award type and line item in our consolidated financial statements was as follows (in thousands): For the Years Ended December 31, 2017 2016 2015 Award Type Stock options $ 15,487 $ 15,647 $ 8,913 Performance-based stock options 447 374 — Restricted stock — — 4,875 RSUs 4,503 2,583 942 Acceleration of unvested equity awards — 3,897 — Total $ 20,437 $ 22,501 $ 14,730 Line Item Cost of revenue $ 1,371 $ 2,670 $ 1,144 Selling, general and administrative expenses 19,066 19,831 13,586 Total $ 20,437 $ 22,501 $ 14,730 |
Schedule of unrecognized compensation expense | Total unrecognized compensation expense (in thousands) and expected weighted-average period (in years) by award type for all of our stock-based incentive plans were as follows: As of December 31, 2017 Weighted- Average Expense Period Stock options $ 13,745 0.96 Performance-based stock options 968 2.17 RSUs 9,906 2.18 Total $ 24,619 |
Option price assumptions | The option price assumptions used for our stock option awards were as follows: For the Years Ended December 31, 2017 2016 2015 Weighted-average fair value per option granted $ 8.38 $ 4.69 $ 10.41 Assumptions: Expected term (in years) 6.25 6.25 6.25 Expected volatility 42.8 % 45.0 % 45.0 % Risk-free interest rate 1.9 - 2.1% 1.3 - 1.5% 1.4 - 1.8% Dividend yield — % — % — % |
Stock option information | Information with respect to our stock options (in thousands), including weighted-average remaining contractual term (in years) and aggregate intrinsic value (in thousands) was as follows: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term Value Outstanding as of December 31, 2016 6,005 $ 6.44 7.83 $ 50,193 Granted 961 18.64 Exercised (788 ) 5.18 Forfeited (227 ) 11.62 Outstanding as of December 31, 2017 5,951 $ 8.38 7.19 $ 23,325 Vested and expected to vest after December 31, 2017 5,414 $ 8.43 7.11 $ 23,379 Exercisable at December 31, 2017 3,156 $ 7.78 6.88 $ 22,678 |
Performance-based stock option awards activity | Information with respect to our performance-based stock options (shares and aggregate intrinsic value shown in thousands, weighted-average remaining contractual term shown in years) was as follows: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term Value Outstanding as of December 31, 2016 268 $ 10.27 9.17 $ 1,213 Outstanding as of December 31, 2017 268 10.27 8.17 544 Vested and expected to vest after December 31, 2017 268 $ 10.27 8.17 $ 544 |
Restricted stock units information | Information with respect to our RSUs is presented below (in thousands, except for weighted-average grant-date fair value): Weighted- Average Grant-Date Shares Fair Value Outstanding as of December 31, 2016 618 $ 13.07 Granted 468 19.35 Forfeited (64 ) 15.35 Vested (206 ) 14.09 Outstanding as of December 31, 2017 816 $ 16.23 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Components of income tax expense (benefit) | Components of income tax expense (benefit) (in thousands) consist of the following: For the Years Ended December 31, 2017 2016 2015 Current Federal $ 368 $ — $ 15 State and local 266 — — Total current tax expense 634 — 15 Deferred Federal 3,202 (9,708 ) 7,092 State and local (3,102 ) (1,138 ) 1,166 Total deferred tax expense 100 (10,846 ) 8,258 Change in valuation allowance (7,371 ) 91 15,202 Total tax expense (benefit) $ (6,637 ) $ (10,755 ) $ 23,475 |
Schedule of reconciliation of the U.S. statutory tax rate to our effective tax rate | A reconciliation of the U.S. statutory tax rate to our effective tax rate is presented below: For the Years Ended December 31, 2017 2016 2015 U.S. statutory tax rate 35.0 % 35.0 % 35.0 % U.S. state income taxes, net of U.S. federal tax benefit 3.3 % 4.0 % 4.9 % Change in valuation allowance (34.0 )% (0.1 )% 4.4 % Change in valuation allowance, tax reform 43.7 % — % — % Impact of tax reform (36.0 )% — % — % Remeasurement gain — % — % (40.1 )% Non-deductible stock-based compensation expense — % — % 1.0 % Goodwill impairment — % (18.7 )% — % Gain on contribution — % (5.0 )% — % Non-controlling interest (4.6 )% (11.0 )% 1.4 % Stock-based compensation excess tax benefits 3.1 % 0.1 % — % Other, net (1.8 )% 0.2 % 0.2 % Effective rate 8.7 % 4.5 % 6.8 % |
Schedule of deferred tax assets and liabilities | Significant components of the Company’s deferred tax assets and liabilities (in thousands) were as follows: As of December 31, 2017 2016 Deferred Tax Assets Start-up and organizational costs $ 185 $ 321 Internally developed software costs 3,974 7,137 Net operating loss carryforwards 51,197 60,076 Other (69 ) 509 Subtotal 55,287 68,043 Valuation allowance (53,201 ) (26,376 ) Total deferred tax assets 2,086 41,667 Deferred Tax Liabilities Equity-method investment 4,523 62,513 Total deferred tax liabilities 4,523 62,513 Net deferred tax assets (liabilities) $ (2,437 ) $ (20,846 ) |
Changes in valuation allowance | Changes in our valuation allowance (in thousands) were as follows: For the Years Ended December 31, 2017 2016 2015 Balance at beginning-of-year $ 26,376 $ 19,974 $ 6,914 Charged to costs and expenses (7,371 ) 91 15,202 Charged to other accounts (1) 34,196 6,311 (2,142 ) Balance at end-of-year $ 53,201 $ 26,376 $ 19,974 (1) Amounts charged to other accounts includes an increase of $34.2 million , $6.3 million and a decrease of $2.1 million charged to additional paid-in-capital for the years ended December 31, 2017 , 2016 and 2015 , respectively. |
Changes in unrecognized tax benefits | Changes in our unrecognized tax benefits (in thousands) were as follows: For the Years Ended December 31, 2017 2016 2015 Balance at beginning-of-year $ — $ — $ — Gross increases - tax positions in prior period 1,108 — — Gross increases - tax positions in current period 74 — — Change in tax rate (420 ) — — Balance at end-of-year $ 762 $ — $ — |
Investments In and Advances t38
Investments In and Advances to Affiliates (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity method investments | The following is a summary of the operating results of Evolent Health LLC (in thousands) for the period in which it was accounted for as an equity method investment (January 1, 2015, through June 3, 2015): Total revenue $ 61,814 Cost of revenue (exclusive of depreciation and amortization expenses) 44,839 Gross profit 16,975 Operating income (loss) (44,119 ) Net income (loss) $ (44,079 ) |
Non-controlling Interests (Tabl
Non-controlling Interests (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Noncontrolling Interest [Abstract] | |
Schedule of changes in non-controlling interests | Changes in non-controlling interests (in thousands) for the periods presented were as follows: For the Years Ended December 31, 2017 2016 Non-controlling interests as of beginning-of-year $ 209,588 $ 285,238 Cumulative-effect adjustment from adoption of new accounting principle — (139 ) Decrease in non-controlling interests as a result of Class B Exchanges (168,883 ) (28,220 ) Reclassification of non-controlling interests 3,824 19,745 Net income (loss) attributable to non-controlling interests (9,102 ) (67,036 ) Non-controlling interests as of end-of-year $ 35,427 $ 209,588 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Summary of assets at fair value on recurring basis | The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis (in thousands): As of December 31, 2017 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ 60,535 $ — $ — $ 60,535 Restricted cash and restricted investments (1) 16,575 — — 16,575 Total $ 77,110 $ — $ — $ 77,110 Liabilities Contingent consideration (2) $ — $ — $ 8,700 $ 8,700 As of December 31, 2016 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ 1,128 $ — $ — $ 1,128 Liabilities Contingent consideration (2) $ — $ — $ 8,300 $ 8,300 (1) Represents the cash and cash equivalents and restricted cash and restricted investments that were held in money market funds as of December 31, 2017 and 2016 , as presented in the tables above. (2) Represents the contingent earn-out consideration related to the Passport acquisition as described further in Note 4 . |
Summary of liabilities at fair value on recurring basis | The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis (in thousands): As of December 31, 2017 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ 60,535 $ — $ — $ 60,535 Restricted cash and restricted investments (1) 16,575 — — 16,575 Total $ 77,110 $ — $ — $ 77,110 Liabilities Contingent consideration (2) $ — $ — $ 8,700 $ 8,700 As of December 31, 2016 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ 1,128 $ — $ — $ 1,128 Liabilities Contingent consideration (2) $ — $ — $ 8,300 $ 8,300 (1) Represents the cash and cash equivalents and restricted cash and restricted investments that were held in money market funds as of December 31, 2017 and 2016 , as presented in the tables above. (2) Represents the contingent earn-out consideration related to the Passport acquisition as described further in Note 4 . |
Changes in contingent consideration measured at fair value | The changes in our contingent consideration, measured at fair value, for which the Company uses Level 3 inputs to determine fair value are as follows (in thousands): For the Years Ended December 31, 2017 2016 Balance as of beginning of year $ 8,300 $ — Additions — 10,386 Realized and unrealized (gains) losses, net 400 (2,086 ) Balance as of end of year $ 8,700 $ 8,300 |
Valuation techniques and significant unobservable inputs of Level 3 fair value measurements | The following table summarizes the fair value (in thousands), valuation techniques and significant unobservable inputs of our Level 3 fair value measurements as of the periods presented: As of December 31, 2017 Fair Valuation Significant Assumption or Value Technique Unobservable Inputs Input Ranges Contingent consideration (1) $ 8,700 Real options approach Risk-adjusted recurring revenue CAGR 92.5 % (2) Discount rate/time value 2.7% - 4.0% (1) Related to additional Passport earn-out consideration as described further in Note 4 . (2) The risk-adjusted recurring revenue CAGR is calculated over the five year period 2017-2021. Given that there was no recurring revenue in 2016 and 2017, the calculation of the 2017 and 2018 growth rates is based on theoretical 2016 and 2017 recurring revenues of $1.0 million , resulting in a higher growth rate. The risk-adjusted recurring revenue CAGR over the period 2019-2021 is 19.2% . As of December 31, 2016 Fair Valuation Significant Assumption or Value Technique Unobservable Inputs Input Ranges Contingent consideration (1) $ 8,300 Real options approach Risk-adjusted recurring revenue CAGR 97.0 % (2) Discount rate/time value 2.5% - 4.5% (1) Related to additional Passport earn-out consideration as described further in Note 4 . (2) The risk-adjusted recurring revenue CAGR is calculated over the five year period 2017-2021. Given that there was no recurring revenue in 2016, the calculation of the 2017 growth rate is based on a theoretical 2016 recurring revenue of $1.0 million , resulting in a higher growth rate. The risk-adjusted recurring revenue CAGR over the period 2018-2021 is 50.8% . |
Quarterly Results of Operatio41
Quarterly Results of Operations (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Data [Abstract] | |
Unaudited consolidated quarterly results of operations | The unaudited consolidated quarterly results of operations (in thousands, except per share data) were as follows: 1st 2nd 3rd 4th 2017 Total revenue $ 106,238 $ 107,071 $ 107,912 $ 113,729 Total operating expenses 127,693 126,188 121,932 131,977 Net income (loss) (23,149 ) (19,698 ) (13,129 ) (13,791 ) Net income (loss) attributable to non-controlling interests (5,137 ) (2,793 ) (541 ) (631 ) Net income (loss) attributable to Evolent Health, Inc. (18,012 ) (16,905 ) (12,588 ) (13,160 ) Earnings (loss) per common share Basic $ (0.34 ) $ (0.28 ) $ (0.18 ) $ (0.18 ) Diluted (0.34 ) (0.28 ) (0.18 ) (0.18 ) 2016 Total revenue $ 49,449 $ 56,518 $ 60,210 $ 88,011 Total operating expenses 224,527 69,147 76,049 121,884 Net income (loss) (173,811 ) (11,999 ) (15,775 ) (25,193 ) Net income (loss) attributable to non-controlling interests (51,071 ) (3,612 ) (4,567 ) (7,786 ) Net income (loss) attributable to Evolent Health, Inc. (122,740 ) (8,387 ) (11,208 ) (17,407 ) Earnings (loss) per common share Basic $ (2.91 ) $ (0.20 ) $ (0.26 ) $ (0.33 ) Diluted (2.91 ) (0.20 ) (0.26 ) (0.33 ) |
Summary of the impact of the correction of the error | The following table summarizes the impact of the correction of the error to the Company’s Consolidated Statement of Cash Flows for the six months ended June 30, 2017 (in thousands): As Reported Correction As Revised* Cash Flows from Operating Activities Changes in assets and liabilities, net of acquisitions: Accounts receivables, net $ (5,247 ) $ (2,655 ) $ (7,902 ) Accounts payable, net of change in restricted cash and restricted investments (2,514 ) 9,555 7,041 Net cash provided by (used in) operating activities (44,712 ) 6,900 (37,812 ) Cash Flows from Investing Activities Change in restricted cash and restricted investments 3,200 (6,900 ) (3,700 ) Net cash provided by (used in) investing activities 7,739 (6,900 ) 839 * The table above does not reflect the impact of the adoption of ASU 2016-18. The Company adopted ASU 2016-18 effective December 31, 2017. As a result, our future filings will reflect the presentation of our statement of cash flows as required under ASU 2016-18 and not as depicted in the table above. See Note 3 for further discussion of our adoption of ASU 2016-18. |
Supplemental Cash Flow Inform42
Supplemental Cash Flow Information (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of cash flow, supplemental disclosures | The following represents supplemental cash flow information (in thousands): For the Years Ended December 31, 2017 2016 2015 Supplemental Disclosure of Non-cash Investing and Financing Activities Non-cash contribution of common stock to Evolent Health LLC prior to the Offering Reorganization $ — $ — $ 21,810 Class A common stock issued in connection with business combinations — 177,795 — Increase to goodwill from measurement period adjustments related to business combination 1,611 — — Decrease in accrued financing costs related to 2021 Notes 196 — — Tax benefit related to Accordion intangible technology 2,042 — — Non-cash deferred financing costs payable — 1,036 — Acquisition consideration payable — 1,148 — Accrued property and equipment purchases 229 446 — Effects of the Offering Reorganization Reclassification of deferred offering costs acquired to additional paid-in capital — — 3,154 Conversion of existing equity as part of the Offering Reorganization — — 39,014 Issuance of Class B common stock — — 196 Assumption of non-controlling interest as a result of merger with TPG affiliate — — 34,875 Effects of the 2017 and 2016 Securities Offerings Decrease in non-controlling interests as a result of Class B Exchanges 168,883 28,220 — Decrease in deferred tax liability as a result of securities offerings 12,857 1,606 — Supplemental Disclosures Cash paid during the period for interest 2,472 — — Cash paid during the year for taxes, net 674 — — |
Organization (Details)
Organization (Details) $ / shares in Units, shares in Thousands, $ in Thousands | Jun. 05, 2015class$ / sharesshares | Aug. 31, 2017USD ($)$ / sharesshares | Jun. 30, 2017$ / sharesshares | May 31, 2017$ / sharesshares | Mar. 31, 2017$ / sharesshares | Sep. 30, 2016$ / sharesshares | Jun. 30, 2015USD ($)$ / sharesshares | Aug. 31, 2017$ / sharesshares | Dec. 31, 2017USD ($)shares | Dec. 31, 2016USD ($)shares | Dec. 31, 2015USD ($)$ / sharesshares | Nov. 30, 2017$ / shares | Jul. 31, 2017 | Jun. 29, 2017 | May 30, 2017 | Mar. 30, 2017 | Sep. 22, 2016 | Sep. 21, 2016 | Mar. 31, 2016$ / shares | Sep. 30, 2015$ / shares |
Organization [Line Items] | ||||||||||||||||||||
Share price (in dollars per share) | $ / shares | $ 14.73 | $ 12.01 | $ 10.33 | $ 19.51 | ||||||||||||||||
Proceeds from issuance of common stock, net of stock issuance costs | $ | $ 209,100 | $ 166,947 | $ 0 | $ 209,087 | ||||||||||||||||
Offering expenses | $ | $ 3,200 | 0 | 0 | $ 1,361 | ||||||||||||||||
Number of classes of common stock | class | 2 | |||||||||||||||||||
Cash and cash equivalents | $ | $ 238,433 | $ 134,563 | ||||||||||||||||||
Class A | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Common shares authorized (in shares) | shares | 13,200 | 8,800 | 8,600 | 19,700 | 20,100 | |||||||||||||||
Share price (in dollars per share) | $ / shares | $ 17 | $ 21.54 | ||||||||||||||||||
Shares issued in acquisition (in shares) | shares | 2,100 | |||||||||||||||||||
Class A | Common Stock | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Common shares authorized (in shares) | shares | 4,500 | 7,000 | 7,500 | 13,200 | 8,816 | 13,225 | ||||||||||||||
Share price (in dollars per share) | $ / shares | $ 19.85 | $ 25.87 | $ 24.30 | $ 19.53 | $ 17 | $ 19.85 | ||||||||||||||
Offering expenses | $ | $ 8,100 | |||||||||||||||||||
Shares issued in acquisition (in shares) | shares | 2,100 | 8,451 | 2,051 | |||||||||||||||||
Evolent Health LLC | Pre-Organization Members | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Evolent Health LLC ownership interest | 100.00% | |||||||||||||||||||
Evolent Health LLC | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Parent's ownership percentage | 70.30% | 96.60% | 96.10% | 90.50% | 83.90% | 96.60% | 96.60% | 77.40% | 96.10% | 90.50% | 84.90% | 77.40% | 74.60% | 71.00% |
Basis of Presentation, Summar44
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Restricted Cash and Restricted Investments (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Total restricted cash and restricted investments | $ 65,685 | $ 40,416 | ||
Current restricted investments | 8,150 | 0 | ||
Current restricted cash | 54,248 | 34,416 | ||
Total current restricted cash and restricted investments | 62,398 | 34,416 | ||
Non-current restricted investments | 605 | 4,950 | ||
Non-current restricted cash | 2,682 | 1,050 | ||
Total non-current restricted cash and restricted investments | 3,287 | 6,000 | ||
Cash and cash equivalents | 238,433 | 134,563 | ||
Restricted investments included in restricted cash and restricted investments | (8,755) | (4,950) | ||
Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows | 295,363 | 170,029 | $ 152,011 | $ 0 |
Collateral for letters of credit for facility leases | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Restricted cash | 3,812 | 4,852 | ||
Collateral with financial institutions | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Restricted cash | 24,725 | 4,950 | ||
Total restricted cash and restricted investments | 24,725 | |||
Pharmacy benefit management and claims processing services | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Restricted cash | 26,286 | 30,555 | ||
Collateral for reinsurance agreement | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Restricted cash | 10,000 | 0 | ||
Other | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Total restricted cash and restricted investments | $ 862 | $ 59 |
Basis of Presentation, Summar45
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Accounts Receivable and Allowance for Doubtful Accounts (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Accounting Policies [Abstract] | ||
Allowance for doubtful accounts receivable | $ 0 | $ 0 |
Unbilled receivables | $ 2,400,000 | $ 1,800,000 |
Basis of Presentation, Summar46
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Notes Receivable (Details) | Oct. 25, 2017USD ($)installment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Short-term Debt [Line Items] | |||
Notes receivable | $ 20,000,000 | $ 0 | |
Current Customer | Implementation Fund Loan | Loans Payable | |||
Short-term Debt [Line Items] | |||
Face amount | $ 20,000,000 | ||
Interest rate | 2.50% | ||
Number of equal monthly installments | installment | 10 | ||
Monthly payment | $ 2,000,000 | ||
Notes receivable | 20,000,000 | ||
Accrued receivable | $ 100,000 |
Basis of Presentation, Summar47
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Estimated Useful Life of Property, Plant and Equipment (Details) | 4 Months Ended | 8 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2017 | |
Computer hardware | |||
Property and Equipment [Line Items] | |||
Useful life | 3 years | ||
Furniture and equipment | Minimum | |||
Property and Equipment [Line Items] | |||
Useful life | 3 years | ||
Furniture and equipment | Maximum | |||
Property and Equipment [Line Items] | |||
Useful life | 7 years | ||
Internal-use software development costs | |||
Property and Equipment [Line Items] | |||
Useful life | 5 years | 7 years |
Basis of Presentation, Summar48
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Research and Development Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | |||
Research and development costs | $ 17.2 | $ 11.1 | $ 5.8 |
Basis of Presentation, Summar49
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Intangible Assets, Net (Details) | 4 Months Ended | 8 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Aug. 31, 2017 | Dec. 31, 2017 | |
Technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life | 5 years | ||
Remaining amortization period | 5 years | ||
Technology | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life | 5 years | ||
Technology | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life | 7 years | ||
Corporate trade name | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life | 20 years | ||
Customer relationships | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life | 15 years | ||
Customer relationships | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life | 25 years |
Basis of Presentation, Summar50
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Long-term Debt (Details) - Convertible Senior Notes due 2021 - Senior Notes - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Face amount | $ 125,000,000 | $ 125,000,000 |
Interest rate | 2.00% |
Basis of Presentation, Summar51
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Impairment of Equity Method Investments (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | |||
Equity method investment, other than temporary impairment | $ 0 | $ 0 | $ 0 |
Basis of Presentation, Summar52
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Stock-based Compensation (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Vesting period | 4 years |
Expiration period | 10 years |
Basis of Presentation, Summar53
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Change in Accounting Principle (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash Flows from Investing Activities | |||
Purchase of restricted investments | $ (3,805) | $ (4,950) | $ 0 |
Net cash and restricted cash provided by (used in) investing activities | (12,265) | (96,657) | (43,684) |
Cash Flows from Financing Activities | |||
Change in restricted cash held on behalf of partners for claims processing | (4,200) | 28,041 | 6,285 |
Net cash and restricted cash provided by (used in) financing activities | 165,557 | 150,185 | 214,163 |
Net increase (decrease) in cash and cash equivalents and restricted cash | 125,334 | 18,018 | 152,011 |
Cash and cash equivalents and restricted cash as of beginning-of-period | 170,029 | 152,011 | 0 |
Cash and cash equivalents and restricted cash as of end-of-period | 295,363 | 170,029 | 152,011 |
ASU 2016-18 | |||
Cash Flows from Investing Activities | |||
Change in restricted cash and restricted investments | 0 | 0 | |
Purchase of restricted investments | (3,805) | (4,950) | |
Net cash and restricted cash provided by (used in) investing activities | (12,265) | (96,657) | |
Cash Flows from Financing Activities | |||
Change in restricted cash held on behalf of partners for claims processing | (4,200) | 28,041 | 6,285 |
Net cash and restricted cash provided by (used in) financing activities | 165,558 | 150,185 | 214,163 |
Net increase (decrease) in cash and cash equivalents and restricted cash | 125,334 | 18,018 | 152,011 |
Cash and cash equivalents and restricted cash as of beginning-of-period | 170,029 | 152,011 | 0 |
Cash and cash equivalents and restricted cash as of end-of-period | 295,363 | 170,029 | 152,011 |
Adoption | ASU 2016-18 | |||
Cash Flows from Investing Activities | |||
Change in restricted cash and restricted investments | (29,471) | (6,090) | |
Purchase of restricted investments | 0 | 0 | |
Net cash and restricted cash provided by (used in) investing activities | (37,931) | (97,797) | |
Cash Flows from Financing Activities | |||
Change in restricted cash held on behalf of partners for claims processing | 0 | 0 | 0 |
Net cash and restricted cash provided by (used in) financing activities | 169,758 | 122,144 | 207,878 |
Net increase (decrease) in cash and cash equivalents and restricted cash | 103,868 | (11,163) | 145,726 |
Cash and cash equivalents and restricted cash as of beginning-of-period | 134,563 | 145,726 | 0 |
Cash and cash equivalents and restricted cash as of end-of-period | 238,431 | 134,563 | 145,726 |
Adjustments | ASU 2016-18 | |||
Cash Flows from Investing Activities | |||
Change in restricted cash and restricted investments | 29,471 | 6,090 | |
Purchase of restricted investments | (3,805) | (4,950) | |
Net cash and restricted cash provided by (used in) investing activities | 25,666 | 1,140 | |
Cash Flows from Financing Activities | |||
Change in restricted cash held on behalf of partners for claims processing | (4,200) | 28,041 | 6,285 |
Net cash and restricted cash provided by (used in) financing activities | (4,200) | 28,041 | 6,285 |
Net increase (decrease) in cash and cash equivalents and restricted cash | 21,466 | 29,181 | 6,285 |
Cash and cash equivalents and restricted cash as of beginning-of-period | 35,466 | 6,285 | 0 |
Cash and cash equivalents and restricted cash as of end-of-period | $ 56,932 | $ 35,466 | $ 6,285 |
Recently Issued Accounting St54
Recently Issued Accounting Standards (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Increase in stockholders’ equity | $ 85,952 | $ 146,617 |
Pro Forma | Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | Minimum | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Increase in stockholders’ equity | 15,000 | |
Pro Forma | Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | Maximum | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Increase in stockholders’ equity | $ 18,000 |
Transactions - Aldera (Details)
Transactions - Aldera (Details) - USD ($) $ in Thousands, shares in Millions | Nov. 01, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Aug. 31, 2017 | Jul. 31, 2017 | Jun. 30, 2017 | Jun. 29, 2017 | May 31, 2017 | May 30, 2017 | Mar. 31, 2017 | Mar. 30, 2017 | Oct. 31, 2016 | Sep. 22, 2016 | Sep. 21, 2016 | Dec. 31, 2015 | Jun. 05, 2015 |
Business Acquisition [Line Items] | ||||||||||||||||
Measurement period adjustments | $ 1,617 | $ 0 | ||||||||||||||
Liabilities assumed: | ||||||||||||||||
Goodwill | $ 628,186 | $ 626,569 | $ 608,903 | $ 608,900 | ||||||||||||
Evolent Health LLC | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Parent's ownership percentage | 96.60% | 77.40% | 96.60% | 96.10% | 96.10% | 90.50% | 90.50% | 84.90% | 83.90% | 77.40% | 74.60% | 71.00% | 70.30% | |||
Aldera Holdings, Inc. | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Percentage of voting interests acquired | 100.00% | |||||||||||||||
Transaction costs | $ 200 | |||||||||||||||
Measurement period adjustments | $ 400 | |||||||||||||||
Purchase consideration: | ||||||||||||||||
Fair value of Class A common stock issued | $ 9,864 | |||||||||||||||
Cash for settlement of software license | 7,000 | |||||||||||||||
Cash | 17,481 | |||||||||||||||
Total consideration | 34,345 | |||||||||||||||
Tangible assets acquired: | ||||||||||||||||
Accounts Receivable | 430 | |||||||||||||||
Prepaid expenses and other current assets | 272 | |||||||||||||||
Property and equipment | 1,065 | |||||||||||||||
Other non-current assets | 9 | |||||||||||||||
Liabilities assumed: | ||||||||||||||||
Accounts payable | 429 | |||||||||||||||
Accrued liabilities | 1,409 | |||||||||||||||
Accrued compensation and employee benefits | 605 | |||||||||||||||
Deferred revenue | 44 | |||||||||||||||
Goodwill | 25,556 | |||||||||||||||
Net assets acquired | 34,345 | |||||||||||||||
Aldera Holdings, Inc. | Customer relationships | ||||||||||||||||
Identifiable intangible assets acquired: | ||||||||||||||||
Identifiable intangible assets | $ 7,000 | |||||||||||||||
Liabilities assumed: | ||||||||||||||||
Useful life | 15 years | |||||||||||||||
Aldera Holdings, Inc. | Technology | ||||||||||||||||
Identifiable intangible assets acquired: | ||||||||||||||||
Identifiable intangible assets | $ 2,500 | |||||||||||||||
Liabilities assumed: | ||||||||||||||||
Useful life | 5 years | |||||||||||||||
Aldera Holdings, Inc. | Adoption | ||||||||||||||||
Purchase consideration: | ||||||||||||||||
Fair value of Class A common stock issued | $ 9,864 | |||||||||||||||
Cash for settlement of software license | 7,000 | |||||||||||||||
Cash | 17,481 | |||||||||||||||
Total consideration | 34,345 | |||||||||||||||
Tangible assets acquired: | ||||||||||||||||
Accounts Receivable | 624 | |||||||||||||||
Prepaid expenses and other current assets | 272 | |||||||||||||||
Property and equipment | 1,065 | |||||||||||||||
Other non-current assets | 9 | |||||||||||||||
Liabilities assumed: | ||||||||||||||||
Accounts payable | 429 | |||||||||||||||
Accrued liabilities | 1,204 | |||||||||||||||
Accrued compensation and employee benefits | 605 | |||||||||||||||
Deferred revenue | 44 | |||||||||||||||
Goodwill | 25,157 | |||||||||||||||
Net assets acquired | 34,345 | |||||||||||||||
Aldera Holdings, Inc. | Adoption | Customer relationships | ||||||||||||||||
Identifiable intangible assets acquired: | ||||||||||||||||
Identifiable intangible assets | 7,000 | |||||||||||||||
Aldera Holdings, Inc. | Adoption | Technology | ||||||||||||||||
Identifiable intangible assets acquired: | ||||||||||||||||
Identifiable intangible assets | 2,500 | |||||||||||||||
Aldera Holdings, Inc. | Measurement Period Adjustments | ||||||||||||||||
Purchase consideration: | ||||||||||||||||
Fair value of Class A common stock issued | 0 | |||||||||||||||
Cash for settlement of software license | 0 | |||||||||||||||
Cash | 0 | |||||||||||||||
Tangible assets acquired: | ||||||||||||||||
Accounts Receivable | (194) | |||||||||||||||
Prepaid expenses and other current assets | 0 | |||||||||||||||
Property and equipment | 0 | |||||||||||||||
Other non-current assets | 0 | |||||||||||||||
Liabilities assumed: | ||||||||||||||||
Accounts payable | 0 | |||||||||||||||
Accrued liabilities | 205 | |||||||||||||||
Accrued compensation and employee benefits | 0 | |||||||||||||||
Deferred revenue | 0 | |||||||||||||||
Goodwill | 399 | |||||||||||||||
Aldera Holdings, Inc. | Measurement Period Adjustments | Customer relationships | ||||||||||||||||
Identifiable intangible assets acquired: | ||||||||||||||||
Identifiable intangible assets | 0 | |||||||||||||||
Aldera Holdings, Inc. | Measurement Period Adjustments | Technology | ||||||||||||||||
Identifiable intangible assets acquired: | ||||||||||||||||
Identifiable intangible assets | $ 0 | |||||||||||||||
Aldera Holdings, Inc. | Evolent Health LLC | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Parent's ownership percentage | 77.40% | 77.20% | ||||||||||||||
Aldera Holdings, Inc. | Class A Common Stock | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Equity interest issued or issuable (in shares) | 0.5 |
Transactions - Valence Health (
Transactions - Valence Health (Details) - USD ($) shares in Thousands | Sep. 01, 2017 | Jun. 30, 2017 | Oct. 03, 2016 | Jun. 05, 2015 | Aug. 31, 2017 | Jun. 30, 2017 | May 31, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2017 | Dec. 31, 2016 | Aug. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Jul. 31, 2017 | Jun. 29, 2017 | May 30, 2017 | Mar. 30, 2017 | Oct. 02, 2016 | Sep. 22, 2016 | Sep. 21, 2016 |
Business Acquisition [Line Items] | |||||||||||||||||||||||
Measurement period adjustments | $ 1,617,000 | $ 0 | |||||||||||||||||||||
Liabilities assumed: | |||||||||||||||||||||||
Goodwill | $ 608,900,000 | $ 626,569,000 | 628,186,000 | 626,569,000 | $ 608,903,000 | ||||||||||||||||||
Deferred tax liability | $ 20,846,000 | 2,437,000 | $ 20,846,000 | ||||||||||||||||||||
Remaining lease payments | 41,292,000 | ||||||||||||||||||||||
Reduction in lease abandonment liability | $ (500,000) | $ (496,000) | |||||||||||||||||||||
Evolent Health LLC | |||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||
Parent's ownership percentage | 96.10% | 70.30% | 96.60% | 96.10% | 90.50% | 83.90% | 96.10% | 77.40% | 96.60% | 96.60% | 77.40% | 96.10% | 90.50% | 84.90% | 77.40% | 74.60% | 71.00% | ||||||
Class A Common Stock | |||||||||||||||||||||||
Liabilities assumed: | |||||||||||||||||||||||
Issuance of common stock (in shares) | 13,200 | 8,800 | 8,600 | 19,700 | 20,100 | ||||||||||||||||||
Class A Common Stock | Common Stock | |||||||||||||||||||||||
Liabilities assumed: | |||||||||||||||||||||||
Issuance of common stock (in shares) | 4,500 | 7,000 | 7,500 | 13,200 | 8,816 | 13,225 | |||||||||||||||||
Valence Health Inc. | |||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||
Percentage of voting interests acquired | 100.00% | ||||||||||||||||||||||
Percentage of issued and outstanding common stock | 10.50% | ||||||||||||||||||||||
Contingent consideration arrangements (up to) | $ 12,400,000 | ||||||||||||||||||||||
Contingent consideration arrangements fair value | 2,600,000 | ||||||||||||||||||||||
Transaction costs (2016 “cost of revenue” - less than) | 2,700,000 | ||||||||||||||||||||||
Measurement period adjustments | 400,000 | $ 1,200,000 | |||||||||||||||||||||
Purchase consideration: | |||||||||||||||||||||||
Fair value of Class A common stock issued in connection with acquisition | 160,525,000 | ||||||||||||||||||||||
Cash for settlement of software license | 2,620,000 | ||||||||||||||||||||||
Cash | 54,799,000 | ||||||||||||||||||||||
Total consideration | 217,944,000 | ||||||||||||||||||||||
Tangible assets acquired: | |||||||||||||||||||||||
Restricted cash | 1,829,000 | ||||||||||||||||||||||
Accounts Receivable | 8,336,000 | ||||||||||||||||||||||
Prepaid expenses and other current assets | 3,465,000 | ||||||||||||||||||||||
Property and equipment | 6,241,000 | ||||||||||||||||||||||
Other non-current assets | 313,000 | ||||||||||||||||||||||
Favorable leases assumed (net of unfavorable leases) | 4,197,000 | ||||||||||||||||||||||
Liabilities assumed: | |||||||||||||||||||||||
Accounts payable | 5,703,000 | ||||||||||||||||||||||
Accrued liabilities | 3,796,000 | ||||||||||||||||||||||
Accrued compensation and employee benefits | 9,200,000 | ||||||||||||||||||||||
Deferred revenue | 2,662,000 | ||||||||||||||||||||||
Other long-term liabilities | 2,328,000 | ||||||||||||||||||||||
Net deferred tax liabilities | 12,680,000 | ||||||||||||||||||||||
Goodwill | 142,932,000 | ||||||||||||||||||||||
Net assets acquired | 217,944,000 | ||||||||||||||||||||||
Acquired receivables | 9,100,000 | ||||||||||||||||||||||
Acquired receivables, estimated uncollectible | 800,000 | ||||||||||||||||||||||
Deferred tax liability | 13,300,000 | ||||||||||||||||||||||
Gain on disposition of assets | 52,700,000 | ||||||||||||||||||||||
Accelerated share-based compensation expense | $ 3,900,000 | $ 3,900,000 | |||||||||||||||||||||
Loss from lease abandonment | $ (6,500,000) | ||||||||||||||||||||||
Reduction in lease abandonment liability | $ (500,000) | ||||||||||||||||||||||
Valence Health Inc. | 540 W. Madison Street, Suite 1400 | |||||||||||||||||||||||
Liabilities assumed: | |||||||||||||||||||||||
Loss from lease abandonment | $ 5,300,000 | 6,500,000 | |||||||||||||||||||||
Remaining lease payments | $ 4,800,000 | $ 4,800,000 | $ 4,800,000 | 0 | $ 5,300,000 | ||||||||||||||||||
Reduction in lease abandonment liability | 0 | ||||||||||||||||||||||
Lease cancellation fee | $ 4,400,000 | $ 4,365,000 | $ 0 | ||||||||||||||||||||
Valence Health Inc. | Customer relationships | |||||||||||||||||||||||
Identifiable intangible assets acquired: | |||||||||||||||||||||||
Identifiable intangible assets | $ 69,000,000 | ||||||||||||||||||||||
Liabilities assumed: | |||||||||||||||||||||||
Useful life | 20 years | ||||||||||||||||||||||
Valence Health Inc. | Technology | |||||||||||||||||||||||
Identifiable intangible assets acquired: | |||||||||||||||||||||||
Identifiable intangible assets | $ 18,000,000 | ||||||||||||||||||||||
Liabilities assumed: | |||||||||||||||||||||||
Useful life | 5 years | ||||||||||||||||||||||
Valence Health Inc. | Adoption | |||||||||||||||||||||||
Purchase consideration: | |||||||||||||||||||||||
Fair value of Class A common stock issued in connection with acquisition | $ 159,614,000 | ||||||||||||||||||||||
Cash for settlement of software license | 2,620,000 | ||||||||||||||||||||||
Cash | 54,799,000 | ||||||||||||||||||||||
Total consideration | 217,033,000 | ||||||||||||||||||||||
Tangible assets acquired: | |||||||||||||||||||||||
Restricted cash | 1,829,000 | ||||||||||||||||||||||
Accounts Receivable | 8,587,000 | ||||||||||||||||||||||
Prepaid expenses and other current assets | 3,465,000 | ||||||||||||||||||||||
Property and equipment | 6,241,000 | ||||||||||||||||||||||
Other non-current assets | 313,000 | ||||||||||||||||||||||
Favorable leases assumed (net of unfavorable leases) | 4,323,000 | ||||||||||||||||||||||
Liabilities assumed: | |||||||||||||||||||||||
Accounts payable | 5,703,000 | ||||||||||||||||||||||
Accrued liabilities | 3,865,000 | ||||||||||||||||||||||
Accrued compensation and employee benefits | 9,200,000 | ||||||||||||||||||||||
Deferred revenue | 2,022,000 | ||||||||||||||||||||||
Other long-term liabilities | 2,328,000 | ||||||||||||||||||||||
Net deferred tax liabilities | 13,316,000 | ||||||||||||||||||||||
Goodwill | 141,709,000 | ||||||||||||||||||||||
Net assets acquired | 217,033,000 | ||||||||||||||||||||||
Valence Health Inc. | Adoption | Customer relationships | |||||||||||||||||||||||
Identifiable intangible assets acquired: | |||||||||||||||||||||||
Identifiable intangible assets | 69,000,000 | ||||||||||||||||||||||
Valence Health Inc. | Adoption | Technology | |||||||||||||||||||||||
Identifiable intangible assets acquired: | |||||||||||||||||||||||
Identifiable intangible assets | 18,000,000 | ||||||||||||||||||||||
Valence Health Inc. | Measurement Period Adjustments | |||||||||||||||||||||||
Purchase consideration: | |||||||||||||||||||||||
Fair value of Class A common stock issued in connection with acquisition | 911,000 | ||||||||||||||||||||||
Cash for settlement of software license | 0 | ||||||||||||||||||||||
Cash | 0 | ||||||||||||||||||||||
Tangible assets acquired: | |||||||||||||||||||||||
Restricted cash | 0 | ||||||||||||||||||||||
Accounts Receivable | (251,000) | ||||||||||||||||||||||
Prepaid expenses and other current assets | 0 | ||||||||||||||||||||||
Property and equipment | 0 | ||||||||||||||||||||||
Other non-current assets | 0 | ||||||||||||||||||||||
Favorable leases assumed (net of unfavorable leases) | (126,000) | ||||||||||||||||||||||
Liabilities assumed: | |||||||||||||||||||||||
Accounts payable | 0 | ||||||||||||||||||||||
Accrued liabilities | (69,000) | ||||||||||||||||||||||
Accrued compensation and employee benefits | 0 | ||||||||||||||||||||||
Deferred revenue | 640,000 | ||||||||||||||||||||||
Other long-term liabilities | 0 | ||||||||||||||||||||||
Net deferred tax liabilities | (636,000) | ||||||||||||||||||||||
Goodwill | 1,223,000 | ||||||||||||||||||||||
Valence Health Inc. | Measurement Period Adjustments | Customer relationships | |||||||||||||||||||||||
Identifiable intangible assets acquired: | |||||||||||||||||||||||
Identifiable intangible assets | 0 | ||||||||||||||||||||||
Valence Health Inc. | Measurement Period Adjustments | Technology | |||||||||||||||||||||||
Identifiable intangible assets acquired: | |||||||||||||||||||||||
Identifiable intangible assets | 0 | ||||||||||||||||||||||
Valence Health Inc. | Selling, general and administrative expenses | |||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||
Transaction costs (2016 “cost of revenue” - less than) | 2,600,000 | ||||||||||||||||||||||
Valence Health Inc. | Cost of revenue | |||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||
Transaction costs (2016 “cost of revenue” - less than) | $ 100,000 | ||||||||||||||||||||||
Valence Health Inc. | Evolent Health LLC | |||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||
Parent's ownership percentage | 77.20% | 74.60% | |||||||||||||||||||||
Valence Health Inc. | Class A Common Stock | |||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||
Equity interest issued or issuable (in shares) | 6,800 | ||||||||||||||||||||||
Valence Health Inc. | Class A Common Stock | Common Stock | |||||||||||||||||||||||
Liabilities assumed: | |||||||||||||||||||||||
Issuance of common stock (in shares) | 200 |
Transactions - Passport (Detail
Transactions - Passport (Details) shares in Millions, beneficiary in Millions | Feb. 01, 2016USD ($)beneficiaryshares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Jun. 05, 2015USD ($) |
Business Acquisition [Line Items] | |||||
Increase (decrease) in contingent consideration liability | $ 400,000 | $ (2,086,000) | $ 0 | ||
Tangible assets acquired: | |||||
Goodwill | 628,186,000 | 626,569,000 | $ 608,903,000 | $ 608,900,000 | |
Passport | |||||
Business Acquisition [Line Items] | |||||
Number of medicaid and medicare advantage beneficiaries | beneficiary | 0.3 | ||||
Additional equity consideration (up to) | $ 10,000,000 | ||||
Term of health plan management and managed care services arrangement | 10 years | ||||
Transaction costs | $ 300,000 | ||||
Contingent consideration, liability | 7,800,000 | 8,700,000 | 8,300,000 | ||
Increase (decrease) in contingent consideration liability | $ 400,000 | $ 500,000 | |||
Purchase consideration: | |||||
Fair value of Class A common stock issued | 10,450,000 | ||||
Fair value of contingent consideration | 7,750,000 | ||||
Total consideration | 18,200,000 | ||||
Tangible assets acquired: | |||||
Prepaid asset | 6,900,000 | ||||
Goodwill | 11,300,000 | ||||
Net assets acquired | $ 18,200,000 | ||||
Passport | Class A | Common Stock | |||||
Business Acquisition [Line Items] | |||||
Issuance of common stock (in shares) | shares | 1.1 |
Transactions - Additional Infor
Transactions - Additional Information (Details) $ in Millions | Jun. 05, 2015USD ($)classvoteshares | Dec. 31, 2017 | Dec. 31, 2016shares | Dec. 31, 2015shares | Aug. 31, 2017 | Jul. 31, 2017 | Jun. 30, 2017 | Jun. 29, 2017 | May 31, 2017 | May 30, 2017 | Mar. 31, 2017 | Mar. 30, 2017 | Sep. 22, 2016 | Sep. 21, 2016 |
Class of Stock [Line Items] | ||||||||||||||
Number of classes of common stock | class | 2 | |||||||||||||
Evolent Health LLC | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Parent's ownership percentage | 70.30% | 96.60% | 77.40% | 96.60% | 96.10% | 96.10% | 90.50% | 90.50% | 84.90% | 83.90% | 77.40% | 74.60% | 71.00% | |
Voting interest percentage by parent | 1 | 1 | ||||||||||||
Evolent Health LLC | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Number of classes of common stock | class | 2 | |||||||||||||
Pre-Organization Members | Evolent Health LLC | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Evolent Health LLC ownership interest | 100.00% | |||||||||||||
Evolent Health LLC | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Estimated fair value of Evolent Health LLC | $ | $ 777.8 | |||||||||||||
Class A | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Number of votes per share of commons stock | vote | 1 | |||||||||||||
Shares issued in acquisition (in shares) | 2,100,000 | |||||||||||||
Class A | Evolent Health LLC | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Required ratio of outstanding common shares to outstanding common units | 1 | |||||||||||||
Class A | Common Stock | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Shares issued in acquisition (in shares) | 2,100,000 | 8,451,000 | 2,051,000 | |||||||||||
Class A | Evolent Health Holdings, Inc. Merger | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Shares of Class A common stock receivable in exchange for each share of Class A common stock held in Evolent Health Holdings (in shares) | 4 | |||||||||||||
Class A | Affiliate of TPG Merger | Texas Pacific Group | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Percent of common stock held in affiliate exchanged for shares of Class A common stock and the right to certain payments under the TRA | 100.00% | |||||||||||||
Class B | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Number of votes per share of commons stock | vote | 1 | |||||||||||||
Class B | Common Stock | ||||||||||||||
Class of Stock [Line Items] | ||||||||||||||
Shares issued in acquisition (in shares) | 0 | (2,051,000) |
Transactions - Net Assets Acqui
Transactions - Net Assets Acquired (Details) - USD ($) $ in Thousands | Jun. 05, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 608,900 | $ 628,186 | $ 626,569 | $ 608,903 |
Evolent Health LLC | ||||
Business Acquisition [Line Items] | ||||
Goodwill | 608,903 | |||
Intangible assets | 169,000 | |||
Cash and restricted cash | 21,930 | |||
Other assets | 49,239 | |||
Remeasurement gain on previously held equity interest | (414,133) | |||
Liabilities and deferred revenue | (71,299) | |||
Non-controlling interests | (332,793) | |||
Carrying value of previously held equity interest | (30,847) | |||
Purchase price | $ 0 |
Transactions - Pro Forma Inform
Transactions - Pro Forma Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 05, 2015 | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||||
Adjustment for removal of transaction costs | $ 1,200 | |||
Revenue | $ 361,944 | 311,639 | ||
Net income (loss) | (225,091) | (93,906) | ||
Net income (loss) attributable to non-controlling interests | (57,433) | (28,684) | ||
Net income (loss) attributable to Evolent Health, Inc. | $ (167,658) | $ (65,222) | ||
Net income (loss) available to common shareholders, basic (in dollars per share) | $ (3.30) | $ (1.50) | ||
Net income (loss) available to common shareholders, diluted (in dollars per share) | $ (3.30) | $ (1.50) | ||
Deferred revenue | $ 4,900 | |||
Aldera Holdings, Inc. | ||||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||||
Adjustment for removal of transaction costs | $ 200 | |||
Valence Health Inc. | ||||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||||
Adjustment for removal of transaction costs | 2,700 | |||
Adjustment for removal of contingent liability | 2,600 | |||
Accelerated share-based compensation expense | $ 3,900 | 3,900 | ||
Adjustment for removal of lease abandonment charge | 6,500 | |||
Passport | ||||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||||
Adjustment for removal of transaction costs | $ 300 |
Transactions - Securities Offer
Transactions - Securities Offerings (Details) $ / shares in Units, shares in Thousands, $ in Thousands | Jun. 05, 2015$ / sharesshares | Aug. 31, 2017USD ($)$ / sharesshares | Jun. 30, 2017$ / sharesshares | May 31, 2017$ / sharesshares | Mar. 31, 2017$ / sharesshares | Sep. 30, 2016$ / sharesshares | Jun. 30, 2015USD ($)$ / sharesshares | Aug. 31, 2017$ / sharesshares | Dec. 31, 2017USD ($)shares | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($)$ / sharesshares | Nov. 30, 2017$ / shares | Jul. 31, 2017 | Jun. 29, 2017 | May 30, 2017 | Mar. 30, 2017 | Sep. 22, 2016 | Sep. 21, 2016 | Mar. 31, 2016$ / shares | Sep. 30, 2015$ / shares |
Organization [Line Items] | ||||||||||||||||||||
Share price (in dollars per share) | $ / shares | $ 14.73 | $ 12.01 | $ 10.33 | $ 19.51 | ||||||||||||||||
Offering expenses | $ | $ 3,200 | $ 0 | $ 0 | $ 1,361 | ||||||||||||||||
Evolent Health LLC | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Parent's ownership percentage | 70.30% | 96.60% | 96.10% | 90.50% | 83.90% | 96.60% | 96.60% | 77.40% | 96.10% | 90.50% | 84.90% | 77.40% | 74.60% | 71.00% | ||||||
Voting interest percentage by parent | 1 | 1 | ||||||||||||||||||
Evolent Health LLC | Over-Allotment Option | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Parent's ownership percentage | 84.90% | 83.90% | ||||||||||||||||||
Class A | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Issuance of common stock (in shares) | 13,200 | 8,800 | 8,600 | 19,700 | 20,100 | |||||||||||||||
Share price (in dollars per share) | $ / shares | $ 17 | $ 21.54 | ||||||||||||||||||
Proceeds from issuance of common stock, net of payments of stock issuance costs | $ | $ 166,900 | |||||||||||||||||||
Proceeds from issuance of common stock | $ | $ 175,000 | |||||||||||||||||||
Class A | Evolent Health, Selling Stockholders | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Issuance of common stock (in shares) | 6,400 | 7,400 | ||||||||||||||||||
Class A | Investor Stockholders | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Issuance of common stock (in shares) | 2,200 | 12,600 | ||||||||||||||||||
Class A | Management Selling Stockholders | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Issuance of common stock (in shares) | 100 | |||||||||||||||||||
Class A | Common Stock | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Issuance of common stock (in shares) | 4,500 | 7,000 | 7,500 | 13,200 | 8,816 | 13,225 | ||||||||||||||
Share price (in dollars per share) | $ / shares | $ 19.85 | $ 25.87 | $ 24.30 | $ 19.53 | $ 17 | $ 19.85 | ||||||||||||||
Offering expenses | $ | $ 8,100 | |||||||||||||||||||
Class A | Common Stock | Evolent Health, Selling Stockholders | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Issuance of common stock (in shares) | 700 | 3,100 | 3,100 | |||||||||||||||||
Class A | Common Stock | Over-Allotment Option | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Issuance of common stock (in shares) | 1,100 | |||||||||||||||||||
Share price (in dollars per share) | $ / shares | $ 19.53 | |||||||||||||||||||
Class A | Common Stock | Over-Allotment Option | Evolent Health, Selling Stockholders | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Issuance of common stock (in shares) | 500 | |||||||||||||||||||
Class A | Common Stock | Underwriters | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Share price (in dollars per share) | $ / shares | $ 19.01 | $ 19.01 | ||||||||||||||||||
Class A | Common Stock | Investor Stockholders | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Issuance of common stock (in shares) | 3,800 | 3,800 | 4,400 | |||||||||||||||||
Class A | Common Stock | Investor Stockholders | Over-Allotment Option | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Issuance of common stock (in shares) | 600 | |||||||||||||||||||
Class A | Common Stock | Management Selling Stockholders | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Issuance of common stock (in shares) | 100 |
Transactions - Asset Acquisitio
Transactions - Asset Acquisitions (Details) - USD ($) $ in Millions | Jun. 08, 2017 | Mar. 01, 2016 |
Vestica | ||
Business Acquisition [Line Items] | ||
Payments to acquire businesses | $ 7.5 | |
Contingent consideration, liability | $ 4 | |
Customer relationships | Vestica | ||
Business Acquisition [Line Items] | ||
Useful life | 13 years | |
Total consideration | $ 7.5 | |
Accordion Health, Inc. | ||
Business Acquisition [Line Items] | ||
Accordion purchase agreement, amount | $ 3.2 | |
Accordion purchase agreement, contingent earn-out | 0.8 | |
Accordion purchase agreement, deferred tax liabilities | 2 | |
Accordion Health, Inc. | Technology Assets | ||
Business Acquisition [Line Items] | ||
Accordion purchase agreement, intangible assets acquired | 3.3 | |
Accordion purchase agreement, capitalized transaction costs | $ 0.1 | |
Useful life | 5 years |
Investments - Investment Summar
Investments - Investment Summary (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Schedule of Held-to-maturity Securities [Line Items] | |
Amortized Costs | $ 44,341 |
Gross Unrealized Gains | 197 |
Gross Unrealized Losses | 35 |
Fair Value | 44,503 |
U.S. Treasury bills | |
Schedule of Held-to-maturity Securities [Line Items] | |
Amortized Costs | 28,119 |
Gross Unrealized Gains | 116 |
Gross Unrealized Losses | 27 |
Fair Value | 28,208 |
Corporate bonds | |
Schedule of Held-to-maturity Securities [Line Items] | |
Amortized Costs | 16,222 |
Gross Unrealized Gains | 81 |
Gross Unrealized Losses | 8 |
Fair Value | $ 16,295 |
Investments - Contractual Matur
Investments - Contractual Maturity (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Investments [Abstract] | |
Due in one year or less, Amortized Cost | $ 44,341 |
Due in one year or less, Fair Value | $ 44,503 |
Investments - Unrealized Losses
Investments - Unrealized Losses (Details) - U.S. Treasury bills - Level 2 $ in Thousands | Dec. 31, 2016USD ($)security |
Schedule of Held-to-maturity Securities [Line Items] | |
Unrealized loss for less than twelve months, Number of Securities | security | 1 |
Unrealized loss for less than twelve months, Fair Value | $ 4,002 |
Unrealized loss for less than twelve months, Unrealized Losses | $ 1 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | 3 Months Ended | 4 Months Ended | 7 Months Ended | 8 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2015 | Aug. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 04, 2015 | |
Property and Equipment [Line Items] | |||||||||||||||
Total property and equipment | $ 65,380,000 | $ 36,415,000 | $ 65,380,000 | $ 65,380,000 | $ 36,415,000 | ||||||||||
Accumulated depreciation and amortization expenses | (14,458,000) | (5,236,000) | (14,458,000) | (14,458,000) | (5,236,000) | ||||||||||
Total property and equipment, net | 50,922,000 | 31,179,000 | 50,922,000 | 50,922,000 | 31,179,000 | $ 0 | |||||||||
Depreciation expense | 9,200,000 | 2,600,000 | $ 1,200,000 | ||||||||||||
Capitalized computer software, amortization (2015 - less than) | 4,900,000 | 1,400,000 | 100,000 | ||||||||||||
Increase in net loss | 13,791,000 | $ 13,129,000 | $ 19,698,000 | $ 23,149,000 | 25,193,000 | $ 15,775,000 | $ 11,999,000 | $ 173,811,000 | $ (347,979,000) | 69,767,000 | 226,778,000 | (319,814,000) | |||
Computer hardware | |||||||||||||||
Property and Equipment [Line Items] | |||||||||||||||
Total property and equipment | 5,667,000 | 4,474,000 | 5,667,000 | $ 5,667,000 | 4,474,000 | ||||||||||
Useful life | 3 years | ||||||||||||||
Furniture and equipment | |||||||||||||||
Property and Equipment [Line Items] | |||||||||||||||
Total property and equipment | 2,448,000 | 2,448,000 | 2,448,000 | $ 2,448,000 | 2,448,000 | ||||||||||
Internal-use software development costs | |||||||||||||||
Property and Equipment [Line Items] | |||||||||||||||
Total property and equipment | 48,557,000 | 21,385,000 | 48,557,000 | 48,557,000 | 21,385,000 | ||||||||||
Total property and equipment, net | 42,100,000 | 19,900,000 | $ 42,100,000 | 42,100,000 | 19,900,000 | ||||||||||
Capitalized computer software additions | 27,100,000 | 15,000,000 | $ 6,400,000 | ||||||||||||
Useful life | 5 years | 7 years | |||||||||||||
Leasehold improvements | |||||||||||||||
Property and Equipment [Line Items] | |||||||||||||||
Total property and equipment | $ 8,708,000 | $ 8,108,000 | $ 8,708,000 | $ 8,708,000 | $ 8,108,000 |
Goodwill and Intangible Asset67
Goodwill and Intangible Assets, Net (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 14, 2017 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Nov. 30, 2017 | Aug. 31, 2017 | Jun. 30, 2017 | May 31, 2017 | Mar. 31, 2017 | Nov. 01, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Jun. 30, 2015 | Jun. 05, 2015 |
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||
Share price (in dollars per share) | $ 10.33 | $ 14.73 | $ 12.01 | $ 19.51 | |||||||||||
Goodwill, impairment testing, percentage share price decrease | 42.40% | ||||||||||||||
Goodwill | $ 628,186 | $ 626,569 | $ 608,903 | $ 608,900 | |||||||||||
Goodwill impairment | $ 160,600 | 0 | 160,600 | 0 | |||||||||||
Goodwill acquired | 0 | 178,266 | |||||||||||||
Intangible assets, net | 241,261 | 258,923 | $ 169,000 | ||||||||||||
Gross Carrying Amount | 282,499 | 277,323 | |||||||||||||
Accumulated Amortization | 41,238 | 18,400 | |||||||||||||
Amortization of intangible assets | 22,800 | 12,500 | $ 5,800 | ||||||||||||
2,018 | 23,209 | ||||||||||||||
2,019 | 23,071 | ||||||||||||||
2,020 | 18,801 | ||||||||||||||
2,021 | 14,666 | ||||||||||||||
2,022 | 10,931 | ||||||||||||||
Thereafter | 150,583 | ||||||||||||||
Total | $ 241,261 | $ 258,923 | |||||||||||||
Customer relationships | |||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||
Weighted Average Remaining Useful Life | 20 years 6 months | 21 years 6 months | |||||||||||||
Gross Carrying Amount | $ 203,500 | $ 203,500 | |||||||||||||
Accumulated Amortization | 18,312 | 9,018 | |||||||||||||
Total | $ 185,188 | $ 194,482 | |||||||||||||
Corporate trade name | |||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||
Weighted Average Remaining Useful Life | 17 years 5 months | 18 years 5 months | |||||||||||||
Gross Carrying Amount | $ 19,000 | $ 19,000 | |||||||||||||
Accumulated Amortization | 2,454 | 1,505 | |||||||||||||
Total | $ 16,546 | $ 17,495 | |||||||||||||
Technology | |||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||
Weighted Average Remaining Useful Life | 3 years 1 month 10 days | 5 years 2 months 18 days | |||||||||||||
Gross Carrying Amount | $ 55,802 | $ 50,500 | |||||||||||||
Accumulated Amortization | 17,810 | 7,753 | |||||||||||||
Total | $ 37,992 | $ 42,747 | |||||||||||||
Below market lease, net | |||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||
Weighted Average Remaining Useful Life | 4 years 10 months | 9 years 4 months 20 days | |||||||||||||
Gross Carrying Amount | $ 4,197 | $ 4,323 | |||||||||||||
Accumulated Amortization | 2,662 | 124 | |||||||||||||
Total | $ 1,535 | $ 4,199 | |||||||||||||
Vestica | |||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||
Intangible assets acquired | $ 108,300 | ||||||||||||||
Minimum | |||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||
Share price (in dollars per share) | $ 8.48 | ||||||||||||||
Maximum | |||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||
Share price (in dollars per share) | $ 12.32 | ||||||||||||||
Class A | |||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||
Share price (in dollars per share) | $ 21.54 | $ 17 | |||||||||||||
Common Stock | Class A | |||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||
Share price (in dollars per share) | $ 19.85 | $ 25.87 | $ 24.30 | $ 19.53 | $ 17 | ||||||||||
Market Approach Valuation Technique | |||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||
Amount of fair value in excess of carrying amount | $ 140,400 | ||||||||||||||
Percentage of fair value in excess of carrying amount | 13.40% | ||||||||||||||
Goodwill, impaired, control premium, percentage | 27.50% | ||||||||||||||
Goodwill, impaired, increase (decrease) in control premium, basis points | (300.00%) | ||||||||||||||
Goodwill, impaired, increase (decrease) in control premium, percentage | (10.00%) | ||||||||||||||
Amount of fair value in excess of carrying amount, adjusted control premium | $ 112,300 | ||||||||||||||
Percentage of fair value in excess of carrying amount, adjusted control premium | 10.70% | ||||||||||||||
Income Approach Valuation Technique | |||||||||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||||||||
Amount of fair value in excess of carrying amount | $ 233,200 | ||||||||||||||
Percentage of fair value in excess of carrying amount | 22.20% | ||||||||||||||
Goodwill, impaired, control premium, percentage | 13.00% | ||||||||||||||
Goodwill, impaired, increase (decrease) in control premium, basis points | 50.00% | ||||||||||||||
Goodwill, impaired, increase (decrease) in control premium, percentage | 5.00% | ||||||||||||||
Amount of fair value in excess of carrying amount, adjusted control premium | $ 164,500 | ||||||||||||||
Percentage of fair value in excess of carrying amount, adjusted control premium | 15.70% |
Goodwill and Intangible Asset68
Goodwill and Intangible Assets, Net - Schedule of Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | $ 608,903 | $ 626,569 | $ 608,903 | |
Goodwill Acquired | 0 | 178,266 | ||
Measurement period adjustments | 1,617 | 0 | ||
Goodwill Impairment | $ (160,600) | 0 | (160,600) | $ 0 |
Goodwill, ending balance | $ 628,186 | $ 626,569 | $ 608,903 |
Long-term Debt (Details)
Long-term Debt (Details) $ / shares in Units, shares in Millions | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2016USD ($)shares$ / shares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($)$ / shares | Dec. 31, 2015USD ($) | |
Debt Instrument [Line Items] | ||||
Amortization of deferred financing costs (2016 - less than) | $ 914,000 | $ 0 | $ 0 | |
Senior Notes | Convertible Senior Notes due 2021 | ||||
Debt Instrument [Line Items] | ||||
Face amount | $ 125,000,000 | 125,000,000 | $ 125,000,000 | |
Interest rate | 2.00% | 2.00% | ||
Proceeds from issuance of debt | $ 120,400,000 | |||
Debt issuance costs | $ 4,600,000 | $ 4,600,000 | ||
Repurchase price due to fundamental change as percentage of principal amount | 100.00% | |||
Interest expense | 2,500,000 | 200,000 | ||
Amortization of deferred financing costs (2016 - less than) | 900,000 | 100,000 | ||
Debt conversion denominator shares per principal amount | $ 1,000 | |||
Carrying value | 120,283,000 | 121,394,000 | 120,283,000 | |
Long-term debt, fair value | $ 125,000,000 | $ 120,400,000 | $ 125,000,000 | |
Senior Notes | Convertible Senior Notes due 2021 | Class A | Common Stock | ||||
Debt Instrument [Line Items] | ||||
Initial conversion rate | 0.0416082 | |||
Conversion price (in dollars per share) | $ / shares | $ 24.03 | $ 24.03 | ||
Initial conversion amount (in shares) | shares | 5.2 |
Long-term Debt - Convertible Se
Long-term Debt - Convertible Senior Notes Carrying Value and Interest Expense (Details) - Senior Notes - Convertible Senior Notes due 2021 - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Carrying value | $ 121,394,000 | $ 120,283,000 |
Unamortized discount | 3,606,000 | 4,717,000 |
Principal amount | $ 125,000,000 | $ 125,000,000 |
Remaining amortization period | 3 years 10 months 25 days | 4 years 10 months 25 days |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) shares in Millions | Sep. 01, 2017USD ($) | Jun. 30, 2017USD ($) | Nov. 01, 2016 | Oct. 03, 2016 | Jun. 05, 2015shares | Aug. 31, 2017shares | Oct. 31, 2016customer | Sep. 30, 2016shares | Jun. 30, 2015USD ($) | Dec. 31, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2016USD ($) | Aug. 31, 2017shares | Dec. 31, 2015USD ($) | Dec. 31, 2017USD ($)shares | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2013 | Jun. 29, 2017USD ($) |
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Number of customers provided risk adjustment services | customer | 1 | ||||||||||||||||||||
Percent of tax savings to be paid | 85.00% | 85.00% | |||||||||||||||||||
Rent expense | $ 2,300,000 | $ 10,900,000 | $ 5,900,000 | ||||||||||||||||||
Remaining lease payments | $ 41,292,000 | 41,292,000 | |||||||||||||||||||
Reduction in lease abandonment liability | $ 500,000 | 496,000 | |||||||||||||||||||
Offering expenses | $ 3,200,000 | 0 | 0 | $ 1,361,000 | |||||||||||||||||
Restricted cash and investments | $ 65,685,000 | $ 40,416,000 | $ 40,416,000 | 65,685,000 | 40,416,000 | ||||||||||||||||
Line of Credit | Letter of Credit | |||||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Maximum borrowing capacity (up to) | $ 5,000,000 | ||||||||||||||||||||
Quarterly rental fee percentage | 0.80% | ||||||||||||||||||||
New Mexico Health Connections | |||||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Reinsurance arrangement, term | 15 months | ||||||||||||||||||||
Reinsurance arrangement, capital amount | $ 10,000,000 | ||||||||||||||||||||
Reinsurance arrangement, quarterly fee | 200,000 | ||||||||||||||||||||
Selling, general and administrative expenses | |||||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Offering expenses | 1,600,000 | $ 1,500,000 | |||||||||||||||||||
Class A Common Stock | |||||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Issuance of common stock (in shares) | shares | 13.2 | 8.8 | 8.6 | 19.7 | 20.1 | ||||||||||||||||
Valence Health Inc. | |||||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Gain (loss) from lease abandonment | 6,500,000 | ||||||||||||||||||||
Reduction in lease abandonment liability | $ 500,000 | ||||||||||||||||||||
Arlington, Virginia Office | |||||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Remaining lease term | 3 years | ||||||||||||||||||||
Contractual obligation | 10,500,000 | $ 10,500,000 | |||||||||||||||||||
Arlington, Virginia Office | Minimum | |||||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Letters of credit outstanding | 1,600,000 | 1,600,000 | |||||||||||||||||||
Lisle, Illinois Office | |||||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Remaining lease term | 7 years 6 months | ||||||||||||||||||||
Contractual obligation | 3,700,000 | 3,700,000 | |||||||||||||||||||
Lisle, Illinois Office | Minimum | |||||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Letters of credit outstanding | 500,000 | 500,000 | |||||||||||||||||||
Riverside, Illinois | |||||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Remaining lease term | 5 years 3 months 22 days | ||||||||||||||||||||
Contractual obligation | 3,500,000 | 3,500,000 | |||||||||||||||||||
Chicago, Illinois Office | |||||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Remaining lease term | 10 years | ||||||||||||||||||||
Contractual obligation | $ 18,300,000 | 18,300,000 | |||||||||||||||||||
Sublease term | 11 years | 1 year | |||||||||||||||||||
Estimated sublease value | $ 100,000 | 10,100,000 | 10,100,000 | 100,000 | 10,100,000 | ||||||||||||||||
Chicago, Illinois Office | Minimum | |||||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Letters of credit outstanding | 1,700,000 | 1,700,000 | |||||||||||||||||||
540 W. Madison Street, Suite 1400 | Valence Health Inc. | |||||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Gain (loss) from lease abandonment | (5,300,000) | (6,500,000) | |||||||||||||||||||
Remaining lease payments | $ 4,800,000 | 0 | $ 4,800,000 | 0 | $ 5,300,000 | ||||||||||||||||
Reduction in lease abandonment liability | 0 | ||||||||||||||||||||
Lease cancellation fee | $ 4,400,000 | 4,365,000 | 0 | ||||||||||||||||||
Letters of credit for facility leases | |||||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Restricted funds | 3,812,000 | 4,852,000 | 4,852,000 | 3,812,000 | 4,852,000 | ||||||||||||||||
Collateral with financial institutions | |||||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Restricted funds | 24,725,000 | 4,950,000 | 4,950,000 | 24,725,000 | 4,950,000 | ||||||||||||||||
Restricted cash and investments | 24,725,000 | 24,725,000 | |||||||||||||||||||
Collateral With Financial Institutions, Fiscal Year 2017 Services [Member] | |||||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Restricted funds | 8,200,000 | 8,200,000 | |||||||||||||||||||
Collateral With Financial Institutions, Fiscal Year 2018 Services [Member] | |||||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Restricted funds | 16,600,000 | 16,600,000 | |||||||||||||||||||
Collateral for reinsurance agreement | |||||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||||
Restricted funds | $ 10,000,000 | $ 0 | $ 0 | $ 10,000,000 | $ 0 |
Commitments and Contingencies72
Commitments and Contingencies - Lease Abandonment Liability (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Liabilities Subject to Compromise, Period Increase (Decrease) [Roll Forward] | |||
Accrual as of beginning-of-period | $ 6,100 | $ 0 | |
Abandonment expense | 0 | 6,460 | |
Impact of lease termination | $ (500) | (496) | |
Abandonment amortization | (1,239) | (360) | |
Accrual as of end-of-period | $ 0 | $ 6,100 |
Commitments and Contingencies73
Commitments and Contingencies - Future Minimum Rental Commitments/Receivables (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Future Minimum Rental Commitments | |
2,018 | $ 8,328 |
2,019 | 7,101 |
2,020 | 7,001 |
2,021 | 2,870 |
2,022 | 2,530 |
Thereafter | 13,462 |
Total | $ 41,292 |
Commitments and Contingencies74
Commitments and Contingencies - Purchase Obligations (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase obligations related to vendor contracts, Less Than 1 Year | $ 6,567 |
Purchase obligations related to vendor contracts, 1 to 3 Years | 430 |
Purchase obligations related to vendor contracts, 3 to 5 years | 0 |
Purchase obligations related to vendor contracts, More Than 5 Years | 0 |
Purchase obligations related to vendor contracts | $ 6,997 |
Commitments and Contingencies75
Commitments and Contingencies - Concentration Risk (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($)amendment | Dec. 31, 2014USD ($) | |
Concentration Risk [Line Items] | ||||
Cash, FDIC Insured Amount, Percentage | 74.00% | |||
Cash and cash equivalents and restricted cash | $ | $ 295,363 | $ 170,029 | $ 152,011 | $ 0 |
Cash, held In money market funds, percentage | 26.00% | |||
Customer G | Customer Concentration Risk | Accounts Receivable | Customer Receivable | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 32.10% | 14.30% | ||
Customer B | Customer Concentration Risk | Accounts Receivable | Customer Receivable | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 16.50% | |||
Customer B | Customer Concentration Risk | Revenues | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 14.50% | 15.60% | ||
Customer H | Customer Concentration Risk | Accounts Receivable | Customer Receivable | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 11.80% | |||
Customer A | Customer Concentration Risk | Revenues | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 20.60% | 19.60% | ||
Customer C | Customer Concentration Risk | Revenues | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 12.70% | 11.20% | ||
Customer D | ||||
Concentration Risk [Line Items] | ||||
Number of contract amendments | amendment | 2 | |||
Ownership interest, noncontrolling interest | 2.20% | |||
Customer D | Customer Concentration Risk | Revenues | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 19.60% | |||
Customer E | Customer Concentration Risk | Revenues | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 14.10% | |||
Customer F | Customer Concentration Risk | Revenues | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 11.80% |
Earnings (Loss) Per Common Sh76
Earnings (Loss) Per Common Share - Computation of Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 7 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Class of Stock [Line Items] | ||||||||||||
Net income (loss) | $ (13,791) | $ (13,129) | $ (19,698) | $ (23,149) | $ (25,193) | $ (15,775) | $ (11,999) | $ (173,811) | $ 347,979 | $ (69,767) | $ (226,778) | $ 319,814 |
Less: | ||||||||||||
Net income (loss) attributable to non-controlling interests | $ (631) | $ (541) | $ (2,793) | $ (5,137) | $ (7,786) | $ (4,567) | $ (3,612) | $ (51,071) | (9,102) | (67,036) | (12,680) | |
Undeclared cumulative preferred dividends | 0 | 0 | 2,184 | |||||||||
Net income (loss) available for common shareholders - Basic | (60,665) | (159,742) | 330,310 | |||||||||
Add: | ||||||||||||
Net income (loss) attributable to non-controlling interests | 0 | 0 | (12,680) | |||||||||
Undeclared cumulative preferred dividends converted during the period | 0 | 0 | 2,184 | |||||||||
Net income (loss) available for common shareholders - Diluted | $ (60,665) | $ (159,742) | $ 319,814 | |||||||||
Weighted-average common shares outstanding - Basic (in shares) | 64,351,000 | 45,031,000 | 25,129,000 | |||||||||
Assumed conversion of convertible preferred stock at beginning-of-period (in shares) | 0 | 0 | 9,397,000 | |||||||||
Assumed conversion of Class B common shares to Class A common shares (in shares) | 0 | 0 | 10,083,000 | |||||||||
Weighted-average common shares outstanding - Diluted (in shares) | 64,351,000 | 45,031,000 | 46,136,000 | |||||||||
Earnings (Loss) per Common Share | ||||||||||||
Basic (in dollars per share) | $ (0.18) | $ (0.18) | $ (0.28) | $ (0.34) | $ (0.33) | $ (0.26) | $ (0.20) | $ (2.91) | $ (0.94) | $ (3.55) | $ 13.14 | |
Diluted (in dollars per share) | $ (0.18) | $ (0.18) | $ (0.28) | $ (0.34) | $ (0.33) | $ (0.26) | $ (0.20) | $ (2.91) | $ (0.94) | $ (3.55) | $ 6.93 | |
Class A | ||||||||||||
Earnings (Loss) per Common Share | ||||||||||||
Convertible preferred stock, shares issued upon conversion | 1 | 1 | ||||||||||
Restricted stock and RSUs | ||||||||||||
Add: | ||||||||||||
Dilutive effect of share-based payment arrangements (in shares) | 0 | 0 | 17,000 | |||||||||
Stock options | ||||||||||||
Add: | ||||||||||||
Dilutive effect of share-based payment arrangements (in shares) | 0 | 0 | 1,510,000 |
Earnings (Loss) Per Common Sh77
Earnings (Loss) Per Common Share - Antidilutive Securities (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of antidilutive securities excluded from the calculation of earning per share (in shares) | 15,840 | 19,469 | 0 |
Exchangeable Class B common stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of antidilutive securities excluded from the calculation of earning per share (in shares) | 7,285 | 16,882 | 0 |
Restricted stock and RSUs | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of antidilutive securities excluded from the calculation of earning per share (in shares) | 525 | 245 | 0 |
Stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of antidilutive securities excluded from the calculation of earning per share (in shares) | 2,829 | 1,973 | 0 |
Convertible senior notes | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of antidilutive securities excluded from the calculation of earning per share (in shares) | 5,201 | 369 | 0 |
Stock-based Compensation - Addi
Stock-based Compensation - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | May 01, 2015 | Sep. 23, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options issued (in shares) | 5,951,000 | 6,005,000 | |||
Vesting period | 4 years | ||||
Expiration period | 10 years | ||||
Fair value of options vested | $ 13 | $ 12.4 | $ 11.1 | ||
Intrinsic value of options exercised | $ 14.2 | $ 3.8 | $ 0.5 | ||
Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period | 4 years | ||||
Vesting percentage | 25.00% | ||||
Expiration period | 10 years | ||||
Restricted stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Requisite service period for vesting | 1 year | ||||
Restricted stock | One year | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting percentage | 25.00% | ||||
RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of RSUs and shares of restricted stock issued (in shares) | 816,000 | 618,000 | |||
Vesting percentage | 25.00% | ||||
Requisite service period for vesting | 4 years | ||||
2011 Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options issued (in shares) | 4,800,000 | 4,900,000 | |||
2011 Plan | Restricted stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of RSUs and shares of restricted stock issued (in shares) | 3,800,000 | 3,800,000 | |||
2011 Plan | Class A Common Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares authorized (in shares) | 9,100,000 | ||||
2015 Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options issued (in shares) | 2,500,000 | 1,700,000 | |||
2015 Plan | RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of RSUs and shares of restricted stock issued (in shares) | 1,100,000 | 700,000 | |||
2015 Plan | Class A Common Stock | Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares authorized (in shares) | 6,000,000 |
Stock-based Compensation - Comp
Stock-based Compensation - Compensation Expense (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | $ 20,437,000 | $ 22,501,000 | $ 14,730,000 |
Stock-based compensation capitalized as software development costs (2015 - less than) | 0 | 0 | 100,000 |
Cost of revenue | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 1,371,000 | 2,670,000 | 1,144,000 |
Selling, general and administrative expenses | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 19,066,000 | 19,831,000 | 13,586,000 |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 15,487,000 | 15,647,000 | 8,913,000 |
Performance-based stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 447,000 | 374,000 | 0 |
Restricted stock | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 0 | 0 | 4,875,000 |
Accelerated share-based compensation expense | 4,900,000 | ||
RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 4,503,000 | 2,583,000 | 942,000 |
Acceleration of unvested equity awards | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | $ 0 | $ 3,897,000 | $ 0 |
Stock-based Compensation - Unre
Stock-based Compensation - Unrecognized Compensation Expense (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Expense, Total | $ 24,619 |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Expense | $ 13,745 |
Weighted Average Period | 11 months 15 days |
Performance-based stock options | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Expense | $ 968 |
Weighted Average Period | 2 years 2 months 2 days |
RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Expense | $ 9,906 |
Weighted Average Period | 2 years 2 months 5 days |
Stock-based Compensation - Fair
Stock-based Compensation - Fair Value Assumptions (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Weighted-average fair value per option granted (in dollars per share) | $ 8.38 | $ 4.69 | $ 10.41 |
Assumptions: | |||
Expected life | 6 years 3 months | 6 years 3 months | 6 years 3 months |
Expected volatility | 42.80% | 45.00% | 45.00% |
Risk-free interest rate, minimum | 1.90% | 1.30% | 1.40% |
Risk-free interest rate, maximum | 2.10% | 1.50% | 1.80% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Shares | ||
Outstanding at the beginning of the period (in shares) | 6,005 | |
Granted (in shares) | 961 | |
Exercised (in shares) | (788) | |
Forfeited (in shares) | (227) | |
Outstanding at the end of the period (in shares) | 5,951 | 6,005 |
Vested and expected to vest at the end of the period (in shares) | 5,414 | |
Exercisable at the end of the period (in shares) | 3,156 | |
Weighted-Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 6.44 | |
Granted (in dollars per share) | 18.64 | |
Exercised (in dollars per share) | 5.18 | |
Forfeited (in dollars per share) | 11.62 | |
Outstanding at the end of the period (in dollars per share) | 8.38 | $ 6.44 |
Vested and expected to vest at the end of the period (in dollars per share) | 8.43 | |
Exercisable at the end of the period (in dollars per share) | $ 7.78 | |
Weighted-Average Remaining Contractual Term | ||
Outstanding | 7 years 2 months 10 days | 7 years 10 months |
Vested and expected to vest | 7 years 1 month 11 days | |
Exercisable | 6 years 10 months 18 days | |
Aggregate Intrinsic Value | ||
Outstanding | $ 23,325 | $ 50,193 |
Vested and expected to vest | 23,379 | |
Exercisable | $ 22,678 |
Stock-based Compensation - Perf
Stock-based Compensation - Performance-based Stock Option Awards (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 961 | |||
Expected volatility | 42.80% | 45.00% | 45.00% | |
Expected life | 6 years 3 months | 6 years 3 months | 6 years 3 months | |
Dividend yield | 0.00% | 0.00% | 0.00% | |
Weighted-average fair value per option granted (in dollars per share) | $ 8.38 | $ 4.69 | $ 10.41 | |
Outstanding at the end of the period (in shares) | 5,951 | 6,005 | ||
Vested and expected to vest at the end of the period (in shares) | 5,414 | |||
Weighted Average Exercise Price, outstanding at the end of the period (in dollars per share) | $ 8.38 | $ 6.44 | ||
Weighted Average Exercise Price, vested and expected to vest at the end of the period (in dollars per share) | $ 8.43 | |||
Weighted-Average Remaining Contractual Term | ||||
Outstanding | 7 years 2 months 10 days | 7 years 10 months | ||
Vested and expected to vest | 7 years 1 month 11 days | |||
Aggregate Intrinsic Value | ||||
Outstanding | $ 23,325 | $ 50,193 | ||
Vested and expected to vest | $ 23,379 | |||
Performance-based stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 300 | |||
Risk free interest rate | 1.83% | |||
Expected volatility | 65.00% | |||
Expected life | 10 years | |||
Dividend yield | 0.00% | |||
Weighted-average fair value per option granted (in dollars per share) | $ 6.68 | |||
Outstanding at the end of the period (in shares) | 268 | 268 | ||
Vested and expected to vest at the end of the period (in shares) | 268 | |||
Weighted Average Exercise Price, outstanding at the end of the period (in dollars per share) | $ 10.27 | $ 10.27 | ||
Weighted Average Exercise Price, vested and expected to vest at the end of the period (in dollars per share) | $ 10.27 | |||
Weighted-Average Remaining Contractual Term | ||||
Outstanding | 8 years 2 months 2 days | 9 years 2 months 2 days | ||
Vested and expected to vest | 8 years 2 months 2 days | |||
Aggregate Intrinsic Value | ||||
Outstanding | $ 544 | $ 1,213 | ||
Vested and expected to vest | $ 544 | |||
Performance-based stock options | Share-based Compensation Award, Tranche One | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.33% | |||
Performance-based stock options | Share-based Compensation Award, Tranche Two | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.33% | |||
Performance-based stock options | Share-based Compensation Award, Tranche Three | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.33% | |||
Performance-based stock options | Vest on March 1, 2019 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 50.00% | |||
Performance-based stock options | Vest on March 1, 2020 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 50.00% | |||
Performance-based stock options | Class A Common Stock | Share-based Compensation Award, Tranche One | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting rights, share price threshold (in dollars per share) | $ 13.35 | |||
Performance-based stock options | Class A Common Stock | Share-based Compensation Award, Tranche Two | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting rights, share price threshold (in dollars per share) | 16.43 | |||
Performance-based stock options | Class A Common Stock | Share-based Compensation Award, Tranche Three | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting rights, share price threshold (in dollars per share) | $ 19.51 |
Stock-based Compensation - Rest
Stock-based Compensation - Restricted Stock and Restricted Stock Units (Details) - RSUs - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Shares | |||
Outstanding at the beginning of the period (in shares) | 618,000 | ||
Granted (in shares) | 468,000 | ||
Forfeited (in shares) | (64,000) | ||
Vested (in shares) | (206,000) | 0 | |
Outstanding at the end of the period (in shares) | 816,000 | 618,000 | |
Weighted-Average Grant-Date Fair Value | |||
Outstanding at the beginning of the period (in dollars per share) | $ 13.07 | ||
Granted (in dollars per share) | 19.35 | $ 11.60 | $ 16.85 |
Forfeited (in dollars per share) | 15.35 | ||
Vested (in dollars per share) | 14.09 | ||
Outstanding at the end of the period (in dollars per share) | $ 16.23 | $ 13.07 | |
Aggregate Intrinsic value, vested | $ 2.9 | $ 1.8 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Income Tax Contingency [Line Items] | |||||
Tax Cuts and Jobs Act of 2017, incomplete accounting, change in tax rate, deferred tax asset, provisional income tax expense | $ 27,500 | ||||
Tax Cuts and Jobs Act of 2017, incomplete accounting, valuation allowance, deferred tax asset, decrease, amount | 30,200 | ||||
Tax Cuts and Jobs Act of 2017, incomplete accounting, change in tax rate, deferred tax liability, provisional income tax benefit | 2,800 | ||||
Tax Cuts and Jobs Act of 2017, incomplete accounting, transition tax for AMT, provisional income tax benefit | 300 | ||||
Effective rate | 8.70% | 4.50% | 6.80% | 6.80% | |
Provision for income taxes | $ (6,637) | $ (10,755) | $ 23,475 | ||
Net operating loss carryforwards | 207,600 | 207,600 | |||
Unrecognized tax benefits that would not impact effective tax rate | 800 | $ 800 | |||
Tax receivable agreement, percent of cash savings paid to shareholders | 85.00% | ||||
Tax receivable agreement, percent of cash savings not paid to shareholders | 15.00% | ||||
Periods Prior to June 2015 | |||||
Income Tax Contingency [Line Items] | |||||
Net operating loss carryforwards | $ 79,300 | $ 79,300 |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current | |||
Federal | $ 368 | $ 0 | $ 15 |
State and local | 266 | 0 | 0 |
Total current tax expense | 634 | 0 | 15 |
Deferred | |||
Federal | 3,202 | (9,708) | 7,092 |
State and local | (3,102) | (1,138) | 1,166 |
Total deferred tax expense | 100 | (10,846) | 8,258 |
Change in valuation allowance | (7,371) | 91 | 15,202 |
Total tax expense | $ (6,637) | $ (10,755) | $ 23,475 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Statutory Rate to Effective Tax Rate (Details) | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||||
U.S. statutory tax rate | 35.00% | 35.00% | 35.00% | |
U.S. state income taxes, net of U.S. federal tax benefit | 3.30% | 4.00% | 4.90% | |
Change in valuation allowance | (34.00%) | (0.10%) | 4.40% | |
Change in valuation allowance, tax reform | 43.70% | 0.00% | 0.00% | |
Impact of tax reform | (36.00%) | 0.00% | 0.00% | |
Remeasurement gain | 0.00% | 0.00% | (40.10%) | |
Non-deductible stock-based compensation expense | 0.00% | 0.00% | 1.00% | |
Goodwill impairment | 0.00% | (18.70%) | 0.00% | |
Gain on contribution | 0.00% | (5.00%) | 0.00% | |
Non-controlling interest | (4.60%) | (11.00%) | 1.40% | |
Stock-based compensation excess tax benefits | 3.10% | 0.10% | 0.00% | |
Other, net | (1.80%) | 0.20% | 0.20% | |
Effective rate | 8.70% | 4.50% | 6.80% | 6.80% |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred Tax Assets | ||
Start-up and organizational costs | $ 185 | $ 321 |
Internally developed software costs | 3,974 | 7,137 |
Net operating loss carryforwards | 51,197 | 60,076 |
Other | (69) | 509 |
Subtotal | 55,287 | 68,043 |
Valuation allowance | (53,201) | (26,376) |
Total deferred tax assets | 2,086 | 41,667 |
Deferred Tax Liabilities | ||
Equity-method investment | 4,523 | 62,513 |
Total deferred tax liabilities | 4,523 | 62,513 |
Net deferred tax assets (liabilities) | $ (2,437) | $ (20,846) |
Income Taxes - Changes in Valua
Income Taxes - Changes in Valuation Allowance (Details) - Valuation Allowance of Deferred Tax Assets - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at beginning-of-year | $ 26,376 | $ 19,974 | $ 6,914 |
Charged to costs and expenses | (7,371) | 91 | 15,202 |
Charged to other accounts | 34,196 | 6,311 | (2,142) |
Balance at end-of-year | 53,201 | 26,376 | 19,974 |
Valuation allowance increase (decrease) charged to additional paid-in capital | $ 34,200 | $ 6,300 | $ (2,100) |
Income Taxes - Changes In Unrec
Income Taxes - Changes In Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance at beginning-of-year | $ 0 | $ 0 | $ 0 |
Gross increases - tax positions in prior period | 1,108 | 0 | 0 |
Gross increases - tax positions in current period | 74 | 0 | 0 |
Change in tax rate | (420) | 0 | 0 |
Balance at end-of-year | $ 762 | $ 0 | $ 0 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 7 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | |
Retirement Benefits [Abstract] | |||
Employer discretionary contribution amount | $ 2.4 | $ 8 | $ 4.3 |
Investments In and Advances t92
Investments In and Advances to Affiliates (Details) - USD ($) $ in Thousands | 5 Months Ended | 12 Months Ended | |||
Jun. 03, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Oct. 28, 2017 | |
Schedule of Equity Method Investments [Line Items] | |||||
Proportionate share of losses | $ 1,755 | $ 841 | $ 28,165 | ||
Evolent Health LLC | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Proportionate share of losses | $ 28,200 | ||||
Amortization of basis differential | $ 800 | ||||
Minimum | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Economic interest percentage | 26.00% | 26.00% | 27.00% | ||
Ownership interest | 27.00% | 28.00% | |||
Maximum | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Economic interest percentage | 40.00% | 28.00% | 40.00% | ||
Ownership interest | 40.00% | 40.00% |
Investments In and Advances t93
Investments In and Advances to Affiliates - Summarized Financial Information (Details) - Evolent Health LLC $ in Thousands | 5 Months Ended |
Jun. 03, 2015USD ($) | |
Schedule of Equity Method Investments [Line Items] | |
Total revenue | $ 61,814 |
Cost of revenue (exclusive of depreciation and amortization expenses) | 44,839 |
Gross profit | 16,975 |
Operating income (loss) | (44,119) |
Net income (loss) | $ (44,079) |
Non-controlling Interests (Deta
Non-controlling Interests (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | Jun. 05, 2015 | Aug. 31, 2017 | Sep. 30, 2016 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Aug. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Nov. 30, 2017 | Jul. 31, 2017 | Jun. 29, 2017 | May 31, 2017 | May 30, 2017 | Mar. 30, 2017 | Dec. 30, 2016 | Sep. 22, 2016 | Sep. 21, 2016 | Sep. 30, 2015 |
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||
Share price (in dollars per share) | $ 10.33 | $ 14.73 | $ 12.01 | $ 19.51 | |||||||||||||||||||||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | |||||||||||||||||||||||||
Non-controlling interests as of beginning-of-year | $ 209,588 | $ 209,588 | |||||||||||||||||||||||
Cumulative-effect adjustment from adoption of new accounting principle | $ 0 | ||||||||||||||||||||||||
Decrease in non-controlling interests as a result of Class B Exchanges | (168,883) | (28,220) | $ 0 | ||||||||||||||||||||||
Reclassification of non-controlling interests | 0 | 0 | |||||||||||||||||||||||
Net income (loss) attributable to non-controlling interests | $ (631) | $ (541) | $ (2,793) | (5,137) | $ (7,786) | $ (4,567) | $ (3,612) | $ (51,071) | (9,102) | (67,036) | (12,680) | ||||||||||||||
Non-controlling interests as of end-of-year | 35,427 | 209,588 | 35,427 | 209,588 | |||||||||||||||||||||
Non-controlling Interests | |||||||||||||||||||||||||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | |||||||||||||||||||||||||
Non-controlling interests as of beginning-of-year | $ 209,588 | $ 285,238 | 209,588 | 285,238 | |||||||||||||||||||||
Cumulative-effect adjustment from adoption of new accounting principle | 0 | (139) | |||||||||||||||||||||||
Decrease in non-controlling interests as a result of Class B Exchanges | (168,883) | (28,220) | |||||||||||||||||||||||
Reclassification of non-controlling interests | 3,824 | 19,745 | |||||||||||||||||||||||
Net income (loss) attributable to non-controlling interests | (9,102) | (67,036) | |||||||||||||||||||||||
Non-controlling interests as of end-of-year | $ 35,427 | $ 209,588 | $ 35,427 | $ 209,588 | $ 285,238 | ||||||||||||||||||||
Passport | |||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||
Parent's ownership percentage | 70.80% | 70.80% | 70.30% | ||||||||||||||||||||||
Valence Health and Aldera | |||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||
Parent's ownership percentage | 77.40% | 77.40% | 74.60% | ||||||||||||||||||||||
Evolent Health LLC | |||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||
Parent's ownership percentage | 70.30% | 96.60% | 96.60% | 96.10% | 83.90% | 77.40% | 96.60% | 96.60% | 77.40% | 96.10% | 90.50% | 90.50% | 84.90% | 77.40% | 74.60% | 71.00% | |||||||||
Class A | |||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||
Issuance of common stock (in shares) | 13.2 | 8.8 | 8.6 | 19.7 | 20.1 | ||||||||||||||||||||
Issuance of common stock for business combination (in shares) | 2.1 | ||||||||||||||||||||||||
Share price (in dollars per share) | $ 17 | $ 21.54 | $ 21.54 | ||||||||||||||||||||||
Proceeds from issuance of common stock, net of payments of stock issuance costs | $ 166,900 | ||||||||||||||||||||||||
Class A | Investor Stockholders | |||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||
Issuance of common stock (in shares) | 2.2 | 12.6 | |||||||||||||||||||||||
Class A | Management Selling Stockholders | |||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||
Issuance of common stock (in shares) | 0.1 | ||||||||||||||||||||||||
Class A | Evolent Health, Selling Stockholders | |||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||
Issuance of common stock (in shares) | 6.4 | 7.4 |
Fair Value Measurement - Assets
Fair Value Measurement - Assets and Liabilities on Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Assets | ||
Cash and cash equivalents | $ 60,535 | $ 1,128 |
Restricted cash and restricted investments | 16,575 | |
Total | 77,110 | |
Level 1 | ||
Assets | ||
Cash and cash equivalents | 60,535 | 1,128 |
Restricted cash and restricted investments | 16,575 | |
Total | 77,110 | |
Liabilities | ||
Contingent consideration | 0 | 0 |
Level 2 | ||
Assets | ||
Cash and cash equivalents | 0 | 0 |
Restricted cash and restricted investments | 0 | |
Total | 0 | |
Liabilities | ||
Contingent consideration | 0 | 0 |
Level 3 | ||
Assets | ||
Cash and cash equivalents | 0 | 0 |
Restricted cash and restricted investments | 0 | |
Total | 0 | |
Liabilities | ||
Contingent consideration | $ 8,700 | $ 8,300 |
Fair Value Measurement - Change
Fair Value Measurement - Changes in Contingent Consideration and Other (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance as of beginning of year | $ 8,300 | $ 0 |
Additions | 0 | 10,386 |
Realized and unrealized (gains) losses, net | 400 | (2,086) |
Balance as of end of year | $ 8,700 | $ 8,300 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Thousands | Feb. 01, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Oct. 03, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Loss (gain) on change in fair value of contingent consideration | $ 400 | $ (2,086) | $ 0 | ||
Realized gain in fair value of contingent consideration | (400) | 2,086 | |||
Passport | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Risk-adjusted recurring revenue compound annual growth rate, number of years | 5 years | ||||
Loss (gain) on change in fair value of contingent consideration | 400 | 500 | |||
Contingent consideration, liability | $ 7,800 | $ 8,700 | $ 8,300 | ||
Valence Health Inc. | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Contingent consideration arrangements fair value | $ 2,600 |
Fair Value Measurement - Valuat
Fair Value Measurement - Valuation Techniques and Significant Unobservable Inputs (Details) - Level 3 - Contingent Consideration Liability - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Real Options Approach Valuation Technique | |||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |||
Contingent consideration | $ 8,700 | $ 8,700 | $ 8,300 |
Risk-adjusted recurring revenue CAGR | 92.50% | 97.00% | |
Risk-adjusted recurring revenue compound annual growth rate, number of years | 5 years | 5 years | |
Fair value inputs, long-term revenue growth rate, theoretical recurring revenue | $ 1,000 | ||
Fair value inputs, theoretical recurring revenue | $ 1,000 | ||
Real Options Approach Valuation Technique | Minimum | |||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |||
Discount rate/time value | 2.70% | 2.50% | |
Real Options Approach Valuation Technique | Maximum | |||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |||
Discount rate/time value | 4.00% | 4.50% | |
Real Options Approach Valuation Technique 2019-2021 | Minimum | |||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |||
Risk-adjusted recurring revenue CAGR | 19.20% | ||
Real Options Approach Valuation Technique 2018-2021 | Minimum | |||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |||
Risk-adjusted recurring revenue CAGR | 50.80% |
Related Parties (Details)
Related Parties (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Equity Method Investee | Services Agreements | ||
Related Party Transaction [Line Items] | ||
Income from long-term services agreement | $ 0.4 | $ 0.2 |
Quarterly Results of Operati100
Quarterly Results of Operations (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 7 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Data [Abstract] | ||||||||||||
Total revenue | $ 113,729 | $ 107,912 | $ 107,071 | $ 106,238 | $ 88,011 | $ 60,210 | $ 56,518 | $ 49,449 | $ 434,950 | $ 254,188 | $ 96,878 | |
Total operating expenses | 131,977 | 121,932 | 126,188 | 127,693 | 121,884 | 76,049 | 69,147 | 224,527 | 507,790 | 491,607 | 139,850 | |
Net income (loss) | (13,791) | (13,129) | (19,698) | (23,149) | (25,193) | (15,775) | (11,999) | (173,811) | $ 347,979 | (69,767) | (226,778) | 319,814 |
Net income (loss) attributable to non-controlling interests | (631) | (541) | (2,793) | (5,137) | (7,786) | (4,567) | (3,612) | (51,071) | (9,102) | (67,036) | (12,680) | |
Net income (loss) attributable to Evolent Health, Inc. | $ (13,160) | $ (12,588) | $ (16,905) | $ (18,012) | $ (17,407) | $ (11,208) | $ (8,387) | $ (122,740) | $ (60,665) | $ (159,742) | $ 332,494 | |
Earnings (Loss) per Common Share | ||||||||||||
Basic (in dollars per share) | $ (0.18) | $ (0.18) | $ (0.28) | $ (0.34) | $ (0.33) | $ (0.26) | $ (0.20) | $ (2.91) | $ (0.94) | $ (3.55) | $ 13.14 | |
Diluted (in dollars per share) | $ (0.18) | $ (0.18) | $ (0.28) | $ (0.34) | $ (0.33) | $ (0.26) | $ (0.20) | $ (2.91) | $ (0.94) | $ (3.55) | $ 6.93 |
Quarterly Results of Operati101
Quarterly Results of Operations (unaudited) - Additional Information (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Goodwill impairment | $ 160,600 | $ 0 | $ 160,600 | $ 0 | |||
One-time lease termination benefit | $ 500 | $ 496 | |||||
Valence Health Inc. | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
One-time lease termination benefit | $ 500 | ||||||
One-time lease abandonment expense | $ 6,500 | ||||||
Accelerated share-based compensation expense | $ 3,900 | $ 3,900 |
Quarterly Results of Operati102
Quarterly Results of Operations (unaudited) - Immaterial Correction of an Error in Previously Issued Financial Statements (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Changes in assets and liabilities, net of acquisitions: | ||||
Accounts receivables, net | $ (11,258) | $ (11,044) | $ 11,756 | |
Accounts payable, net of change in restricted cash and restricted investments | 5,563 | (6,371) | 2,764 | |
Net cash provided by (used in) operating activities | (27,958) | (35,510) | (18,468) | |
Cash Flows from Investing Activities | ||||
Net cash provided by (used in) investing activities | $ (12,265) | $ (96,657) | $ (43,684) | |
Classification Of Restricted Cash And Restricted Investments | ||||
Changes in assets and liabilities, net of acquisitions: | ||||
Accounts receivables, net | $ (7,902) | |||
Accounts payable, net of change in restricted cash and restricted investments | 7,041 | |||
Net cash provided by (used in) operating activities | (37,812) | |||
Cash Flows from Investing Activities | ||||
Change in restricted cash and restricted investments | (3,700) | |||
Net cash provided by (used in) investing activities | 839 | |||
As Reported | Classification Of Restricted Cash And Restricted Investments | ||||
Changes in assets and liabilities, net of acquisitions: | ||||
Accounts receivables, net | (5,247) | |||
Accounts payable, net of change in restricted cash and restricted investments | (2,514) | |||
Net cash provided by (used in) operating activities | (44,712) | |||
Cash Flows from Investing Activities | ||||
Change in restricted cash and restricted investments | 3,200 | |||
Net cash provided by (used in) investing activities | 7,739 | |||
Correction | Classification Of Restricted Cash And Restricted Investments | ||||
Changes in assets and liabilities, net of acquisitions: | ||||
Accounts receivables, net | (2,655) | |||
Accounts payable, net of change in restricted cash and restricted investments | 9,555 | |||
Net cash provided by (used in) operating activities | 6,900 | |||
Cash Flows from Investing Activities | ||||
Change in restricted cash and restricted investments | (6,900) | |||
Net cash provided by (used in) investing activities | $ (6,900) |
Supplemental Cash Flow Infor103
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Supplemental Disclosure of Non-cash Investing and Financing Activities | |||
Non-cash contribution of common stock to Evolent Health LLC prior to the Offering Reorganization | $ 0 | $ 0 | $ 21,810 |
Increase to goodwill from measurement period adjustments related to business combination | 1,611 | 0 | 0 |
Decrease in accrued financing costs related to 2021 Notes | 196 | 0 | 0 |
Tax benefit related to Accordion intangible technology | 2,042 | 0 | 0 |
Non-cash deferred financing costs payable | 0 | 1,036 | 0 |
Acquisition consideration payable | 0 | 1,148 | 0 |
Accrued property and equipment purchases | 229 | 446 | 0 |
Effects of the Offering Reorganization | |||
Reclassification of deferred offering costs acquired to additional paid-in capital | 0 | 0 | 3,154 |
Conversion of existing equity as part of the Offering Reorganization | 0 | 0 | 39,014 |
Assumption of non-controlling interest as a result of merger with TPG affiliate | 0 | 0 | 34,875 |
Effects of the 2017 and 2016 Securities Offerings | |||
Decrease in non-controlling interests as a result of Class B Exchanges | 168,883 | 28,220 | 0 |
Decrease in deferred tax liability as a result of securities offerings | 12,857 | 1,606 | 0 |
Supplemental Disclosures | |||
Cash paid during the period for interest | 2,472 | 0 | 0 |
Cash paid during the year for taxes, net | 674 | 0 | 0 |
Class A | |||
Supplemental Disclosure of Non-cash Investing and Financing Activities | |||
Class A common stock issued in connection with business combinations | 0 | 177,795 | 0 |
Effects of the Offering Reorganization | |||
Issuance of Class B common stock | 0 | 177,795 | 0 |
Class B | |||
Supplemental Disclosure of Non-cash Investing and Financing Activities | |||
Class A common stock issued in connection with business combinations | 0 | 0 | 196 |
Effects of the Offering Reorganization | |||
Issuance of Class B common stock | $ 0 | $ 0 | $ 196 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent event - New Mexico Health Connections $ in Millions | Jan. 02, 2018USD ($) |
Subsequent Event [Line Items] | |
Payments to acquire businesses | $ 10.3 |
Contingent consideration | $ 0.3 |
Uncategorized Items - evh-20171
Label | Element | Value |
Retained Earnings [Member] | ||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | us-gaap_ProfitLoss | $ 360,659,000 |
Noncontrolling Interest [Member] | ||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | us-gaap_ProfitLoss | $ (12,680,000) |