Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 25, 2019 | Jun. 30, 2018 | |
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, 2018 | ||
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 Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Well-Known Seasoned Issuer | Yes | ||
Public Float | $ 1,451.6 | ||
Document Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Class A | |||
Entity Common Stock, Shares Outstanding (in shares) | 79,375,842 | ||
Class B | |||
Entity Common Stock, Shares Outstanding (in shares) | 3,190,301 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 228,320 | $ 238,433 |
Restricted cash and restricted investments | 154,718 | 62,398 |
Accounts receivable, net (amounts related to affiliates: 2018 - $8,519; 2017 - $3,358) | 80,208 | 48,947 |
Prepaid expenses and other current assets (amounts related to affiliates: 2018 - $85; 2017 - $25) | 22,618 | 8,404 |
Notes receivable | 0 | 20,000 |
Contract assets | 2,102 | 0 |
Total current assets | 487,966 | 378,182 |
Restricted cash and restricted investments | 6,105 | 3,287 |
Investments, at amortized cost | 10,010 | 0 |
Investments in and advances to equity method investees | 6,276 | 1,531 |
Property and equipment, net | 73,628 | 50,922 |
Prepaid expenses and other noncurrent assets (amounts related to affiliates: 2018 - $2,500; 2017 - $0 | 15,028 | 9,328 |
Contract assets | 961 | 0 |
Contract cost assets | 19,147 | 0 |
Intangible assets, net | 335,036 | 241,261 |
Goodwill | 768,124 | 628,186 |
Total assets | 1,722,281 | 1,312,697 |
Current liabilities: | ||
Accounts payable (amounts related to affiliates: 2018 - $1,564; 2017 - $10,284) | 146,760 | 42,930 |
Accrued liabilities (amounts related to affiliates: 2018 - $798; 2017 - $719) | 48,957 | 29,572 |
Accrued compensation and employee benefits | 25,460 | 35,390 |
Deferred revenue | 20,584 | 24,807 |
Claims reserves | 27,595 | 0 |
Total current liabilities | 269,356 | 132,699 |
Long-term debt, net of discount | 221,041 | 121,394 |
Other long-term liabilities | 17,090 | 9,861 |
Deferred tax liabilities, net | 25,438 | 2,437 |
Total liabilities | 532,925 | 266,391 |
Commitments and Contingencies (See Note 9) | ||
Shareholders' Equity (Deficit) | ||
Additional paid-in-capital | 1,093,174 | 924,153 |
Accumulated other comprehensive income (loss) | (182) | 0 |
Retained earnings (accumulated deficit) | 50,009 | 85,952 |
Total shareholders' equity (deficit) attributable to Evolent Health, Inc. | 1,143,824 | 1,010,879 |
Non-controlling interests | 45,532 | 35,427 |
Total shareholders' equity (deficit) | 1,189,356 | 1,046,306 |
Total liabilities and shareholders' equity (deficit) | 1,722,281 | 1,312,697 |
Class A | ||
Shareholders' Equity (Deficit) | ||
Common stock | 792 | 747 |
Class B | ||
Shareholders' Equity (Deficit) | ||
Common stock | $ 31 | $ 27 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts receivable, related parties | $ 8,519 | $ 3,358 |
Prepaid expenses and other current assets, related parties | 85 | 25 |
Prepaid expenses and other noncurrent assets, related parties | 2,500 | 0 |
Accounts payable, related parties | 1,564 | 10,284 |
Accrued liabilities, related parties | $ 798 | $ 719 |
Class A | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 750,000,000 | 750,000,000 |
Common stock, shares issued (in shares) | 79,172,118 | 74,723,597 |
Common stock, shares outstanding (in shares) | 79,172,118 | 74,723,597 |
Class B | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 3,190,301 | 2,653,544 |
Common stock, shares outstanding (in shares) | 3,190,301 | 2,653,544 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Revenue | ||||
Total revenue | $ 627,063 | $ 434,950 | $ 254,188 | |
Expenses | ||||
Cost of revenue (exclusive of depreciation and amortization expenses) | [1] | 327,825 | 269,352 | 155,177 |
Claims expenses | 70,889 | 0 | 0 | |
Selling, general and administrative expenses | [1] | 235,418 | 205,670 | 160,692 |
Depreciation and amortization expenses | 44,515 | 32,368 | 17,224 | |
Goodwill impairment | 0 | 0 | 160,600 | |
Change in fair value of contingent consideration and indemnification asset | (4,104) | 400 | (2,086) | |
Total operating expenses | 674,543 | 507,790 | 491,607 | |
Operating income (loss) | (47,480) | (72,840) | (237,419) | |
Interest income | 3,440 | 1,656 | 970 | |
Interest expense | (5,484) | (3,636) | (247) | |
Income (loss) from equity method investees | (4,736) | (1,755) | (841) | |
Other income (expense), net | 109 | 171 | 4 | |
Income (loss) before income taxes and non-controlling interests | (54,151) | (76,404) | (237,533) | |
Provision (benefit) for income taxes | 40 | (6,637) | (10,755) | |
Net income (loss) | (54,191) | (69,767) | (226,778) | |
Net income (loss) attributable to non-controlling interests | (1,533) | (9,102) | (67,036) | |
Net income (loss) attributable to Evolent Health, Inc. | (52,658) | (60,665) | (159,742) | |
Earnings (Loss) Available for Common Shareholders | ||||
Basic and diluted | $ (52,658) | $ (60,665) | $ (159,742) | |
Earnings (Loss) per Common Share | ||||
Basic and diluted (in dollars per share) | $ (0.68) | $ (0.94) | $ (3.55) | |
Weighted-Average Common Shares Outstanding | ||||
Basic and diluted (in shares) | 77,338 | 64,351 | 45,031 | |
Comprehensive income (loss) | ||||
Net income (loss) | $ (54,191) | $ (69,767) | $ (226,778) | |
Other comprehensive income (loss), net of taxes, related to: | ||||
Foreign currency translation adjustment | (182) | 0 | 0 | |
Total comprehensive income (loss) | (54,373) | (69,767) | (226,778) | |
Total comprehensive income (loss) attributable to non-controlling interests | (1,533) | (9,102) | (67,036) | |
Total comprehensive income (loss) attributable to Evolent Health, Inc. | (52,840) | (60,665) | (159,742) | |
Transformation services | ||||
Revenue | ||||
Total revenue | [1] | 32,916 | 29,466 | 38,320 |
Platform and operations services | ||||
Revenue | ||||
Total revenue | [1] | 500,190 | 405,484 | 215,868 |
Premiums | ||||
Revenue | ||||
Total revenue | $ 93,957 | $ 0 | $ 0 | |
[1] | (1) See Note 17 for amounts related to related parties included in these line items. |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash Flows from Operating Activities | |||
Net income (loss) | $ (54,191) | $ (69,767) | $ (226,778) |
Adjustments to reconcile net income (loss) to net cash and restricted cash provided by (used in) operating activities: | |||
Change in fair value of contingent consideration and indemnification asset | (4,104) | 400 | (2,086) |
Loss from lease abandonment | 0 | 0 | 6,456 |
(Income) loss from equity method investees | 4,736 | 1,755 | 841 |
Depreciation and amortization expenses | 44,515 | 32,368 | 17,224 |
Goodwill impairment | 0 | 0 | 160,600 |
Stock-based compensation expense | 17,609 | 20,437 | 18,604 |
Acceleration of unvested equity awards for Valence Health employees | 0 | 0 | 3,897 |
Deferred tax provision (benefit) | 44 | (7,271) | (10,755) |
Amortization of contract cost assets | 2,703 | 0 | 0 |
Amortization of deferred financing costs | 2,455 | 914 | 0 |
Other | 448 | 490 | 916 |
Changes in assets and liabilities, net of acquisitions: | |||
Accounts receivables, net and contract assets | (24,503) | (11,258) | (11,044) |
Prepaid expenses and other current and noncurrent assets | (14,746) | 2,729 | (9,968) |
Contract cost assets | (11,179) | 0 | 0 |
Accounts payable | 7,598 | 5,563 | (6,371) |
Accrued liabilities | 12,180 | (2,781) | 15,229 |
Accrued compensation and employee benefits | (14,571) | (3,303) | 6,678 |
Deferred revenue | (1,819) | 3,548 | 1,200 |
Claims reserves | 8,964 | 0 | 0 |
Other long-term liabilities | 3,210 | (1,782) | (153) |
Net cash and restricted cash provided by (used in) operating activities | (20,651) | (27,958) | (35,510) |
Cash Flows from Investing Activities | |||
Cash paid for asset acquisitions or business combinations | (130,241) | (3,694) | (82,560) |
Loan for implementation funding | 0 | (20,000) | 0 |
Principal repayment of implementation funding loan | 20,000 | 0 | 0 |
Amount received from escrow in asset acquisition | 500 | 0 | 0 |
Investments in and advances to equity method investees | (9,360) | (1,128) | (3,000) |
Purchases of investments | (10,010) | 0 | 0 |
Maturities and sales of investments | 349 | 44,210 | 9,379 |
Investments in internal-use software and purchases of property and equipment | (39,550) | (27,848) | (15,526) |
Purchase and maturities of restricted investments | 7,937 | (3,805) | (4,950) |
Net cash and restricted cash provided by (used in) investing activities | (160,375) | (12,265) | (96,657) |
Cash Flows from Financing Activities | |||
Proceeds from issuance of common stock, net of stock issuance costs | 0 | 166,947 | 0 |
Changes in working capital balances related to claims processing on behalf of partners | 96,153 | (4,200) | 28,041 |
Proceeds from stock option exercises | 11,929 | 4,082 | 1,259 |
Proceeds from issuance of convertible notes, net of issuance costs | 167,178 | 0 | 121,250 |
Taxes withheld and paid for vesting of restricted stock units | (1,236) | (1,272) | (365) |
Net cash and restricted cash provided by (used in) financing activities | 274,024 | 165,557 | 150,185 |
Effect of exchange rate on cash and cash equivalents and restricted cash | (36) | 0 | 0 |
Net increase (decrease) in cash and cash equivalents | 92,962 | 125,334 | 18,018 |
Cash and cash equivalents and restricted cash as of beginning-of-period | 295,363 | 170,029 | 152,011 |
Cash and cash equivalents and restricted cash as of end-of-period | $ 388,325 | $ 295,363 | $ 170,029 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) - USD ($) shares in Thousands, $ in Thousands | Total | Class A | Common StockClass A | Common StockClass B | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) | Non-controlling Interests |
Beginning balance (in shares) at Dec. 31, 2015 | 41,491 | 17,525 | ||||||
Beginning balance at Dec. 31, 2015 | $ 934,579 | $ 415 | $ 175 | $ 342,063 | $ 0 | $ 306,688 | $ 285,238 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative-effect adjustment from adoption of new accounting principle | 0 | 468 | (329) | (139) | ||||
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 | |||||
Exchange of Class B common stock (in shares) | 2,178 | (2,178) | ||||||
Exchange of Class B common stock | 0 | $ 22 | $ (22) | 28,220 | (28,220) | |||
Tax impact of Class B common stock exchange | 1,606 | 1,606 | ||||||
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 common stock issued for business combinations | 1,427 | 1,427 | ||||||
Foreign currency translation adjustment | 0 | |||||||
Net income (loss) | (226,778) | 0 | (159,742) | (67,036) | ||||
Reclassification of non-controlling interests | 0 | (19,745) | 0 | 19,745 | ||||
Ending balance (in shares) at Dec. 31, 2016 | 52,587 | 15,347 | ||||||
Ending balance at Dec. 31, 2016 | 912,114 | $ 506 | $ 153 | 555,250 | 0 | 146,617 | 209,588 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
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) | |||||
Shares released from Valence Health escrow (in shares) | (310) | |||||||
Shares released from Valence Health escrow | 908 | $ (3) | 911 | |||||
Issuance of common stock (in shares) | 26,600 | 8,816 | ||||||
Issuance of common stock | 166,947 | $ 88 | 166,859 | |||||
Exchange of Class B common stock (in shares) | 12,693 | (12,693) | ||||||
Exchange of Class B common stock | 0 | $ 126 | $ (126) | 168,883 | (168,883) | |||
Tax impact of 2017 Securities Offerings | 12,857 | 12,857 | ||||||
Foreign currency translation adjustment | 0 | |||||||
Net income (loss) | (69,767) | 0 | (60,665) | (9,102) | ||||
Reclassification of non-controlling interests | 0 | (3,824) | 0 | 3,824 | ||||
Ending balance (in shares) at Dec. 31, 2017 | 74,723 | 2,654 | ||||||
Ending balance at Dec. 31, 2017 | 1,046,306 | $ 747 | $ 27 | 924,153 | 0 | 85,952 | 35,427 | |
Beginning balance (in shares) at Dec. 31, 2016 | 52,587 | 15,347 | ||||||
Beginning balance at Dec. 31, 2016 | 912,114 | $ 506 | $ 153 | 555,250 | 0 | 146,617 | 209,588 | |
Ending balance (in shares) at Dec. 31, 2018 | 79,172 | 3,190 | ||||||
Ending balance at Dec. 31, 2018 | 1,189,356 | $ 792 | $ 31 | 1,093,174 | (182) | 50,009 | 45,532 | |
Beginning balance (in shares) at Dec. 31, 2017 | 74,723 | 2,654 | ||||||
Beginning balance at Dec. 31, 2017 | 1,046,306 | $ 747 | $ 27 | 924,153 | 0 | 85,952 | 35,427 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative-effect adjustment from adoption of new accounting principle | 17,309 | 0 | 16,715 | 594 | ||||
Stock-based compensation expense | 17,221 | 17,221 | ||||||
Exercise of stock options (in shares) | 1,720 | |||||||
Exercise of stock options | 11,929 | $ 16 | 11,913 | |||||
Restricted stock units vested, net of shares withheld for taxes (in shares) | 212 | |||||||
Restricted stock units vested, net of shares withheld for taxes | (1,236) | $ 2 | (1,238) | |||||
Shares released from Valence Health escrow (in shares) | (67) | |||||||
Shares released from Valence Health escrow | (1,003) | $ 0 | (1,003) | |||||
Issuance of common stock (in shares) | 20,100 | 3,120 | ||||||
Issuance of common stock | 83,173 | $ 31 | 40,355 | 42,787 | ||||
Exchange of Class B common stock (in shares) | 2,584 | (2,584) | ||||||
Exchange of Class B common stock | 0 | $ 27 | $ (27) | 34,682 | (34,682) | |||
Tax impact of Class B common stock exchange | 652 | 652 | ||||||
Equity component of 2025 Notes, net of issuance costs | 69,378 | 69,378 | ||||||
Foreign currency translation adjustment | (182) | (182) | ||||||
Net income (loss) | (54,191) | 0 | (52,658) | (1,533) | ||||
Reclassification of non-controlling interests | 0 | (2,939) | 0 | 2,939 | ||||
Ending balance (in shares) at Dec. 31, 2018 | 79,172 | 3,190 | ||||||
Ending balance at Dec. 31, 2018 | $ 1,189,356 | $ 792 | $ 31 | $ 1,093,174 | $ (182) | $ 50,009 | $ 45,532 |
Organization
Organization | 12 Months Ended |
Dec. 31, 2018 | |
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 operates through two segments. The Company’s Services segment provides our customers, who we refer to as partners, with a population management platform, integrated data and analytics capabilities, claims processing services, including pharmacy benefit management, specialty care management 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 wholly-owned subsidiary, True Health, operates as a separate segment and is a commercial health plan we operate in New Mexico that focuses on small and large businesses. The Company’s headquarters is located in Arlington, Virginia. As of December 31, 2018 , Evolent Health, Inc. owned 96.1% of Evolent Health LLC, holds 100% of the voting rights, is the sole managing member and controls its operations. Therefore, the financial results of Evolent Health LLC have been consolidated in the financial statements of Evolent Health, Inc. Since its inception, the Company has incurred losses from operations. As of December 31, 2018 , the Company had cash and cash equivalents of $228.3 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. Evolent Health LLC Governance 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. 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 exchange agreements with certain investors in connection with our IPO and our acquisition of New Century Health, pursuant to which certain holders of Evolent Health LLC Class B common units may exchange their Evolent Health LLC 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 at any time and from time to time in accordance with and subject to the terms of the exchange agreements and the third amended and restated operating agreement of Evolent Health LLC. 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 Evolent Health LLC Class B common units and our Class B common stock for our Class A common stock, our interest in Evolent Health LLC will increase. |
Basis of Presentation, Summary
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle | 12 Months Ended |
Dec. 31, 2018 | |
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. 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 (including intangibles and long lived assets), liabilities (including IBNR), consideration related to business combinations and asset acquisitions, revenue recognition including variable consideration, estimated selling prices for performance obligations in contracts with multiple performance obligations, claims reserves, 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. 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 operates through two segments: (1) Services, and (2) True Health. Our Services segment consists of our technology-enabled value-based care services, specialty care management services and comprehensive health plan administration services. Our True Health segment consists of a commercial health plan we operate in New Mexico that focuses on small and large businesses. See Note 18 for a discussion of our operating results by segment. 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, 2018 2017 Collateral for letters of credit for facility leases (1) $ 3,710 $ 3,812 Collateral with financial institutions (2) 34,142 24,725 Claims processing services (3) 122,439 26,286 Collateral for reinsurance agreement (4) — 10,000 Other 532 862 Total restricted cash and restricted investments 160,823 65,685 Current restricted investments 211 8,150 Current restricted cash 154,507 54,248 Total current restricted cash and restricted investments 154,718 62,398 Noncurrent restricted investments 607 605 Noncurrent restricted cash 5,498 2,682 Total noncurrent restricted cash and restricted investments $ 6,105 $ 3,287 (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 and other arrangements. As of December 31, 2018 and 2017 , approximately $31.2 million and $16.6 million of the collateral amount was held in a trust account and invested in money market funds related to risk-sharing arrangements. The amounts invested in money market funds are considered restricted cash and are carried at fair value, which approximates cost. 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 related to risk-sharing arrangements. 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. See Note 16 for discussion of fair value measurement and Note 9 for discussion of our risk-sharing arrangements. As of December 31, 2018, approximately $2.9 million of the collateral amount was held in a FDIC participating bank account, primarily related to a line of credit. (3) Represents cash held by Evolent related to claims processing on behalf of partners. These are pass-through amounts and can fluctuate materially from period to period depending on the timing of when the claims are processed. (4) This amount represents restricted cash required as part of our capital-only reinsurance agreement with NMHC that terminated during the fourth quarter of 2018. 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, 2018 2017 Cash and cash equivalents $ 228,320 $ 238,433 Restricted cash and restricted investments 160,823 65,685 Restricted investments included in restricted cash and restricted investments (818 ) (8,755 ) Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows $ 388,325 $ 295,363 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 helped support implementation services to assist the customer in expanding its Medicaid membership. The Implementation Loan carried a fixed interest rate of 2.5% per annum and the terms of the agreement governing the Implementation Loan required it to be repaid in ten equal monthly installments of $2.0 million , plus accrued interest, during 2018. T he Implementation Loan has been repaid in full, thus there was no outstanding notes receivable balance recorded on our Consolidated Balance Sheets as of December 31, 2018 . 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. The following summarizes the 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 and Comprehensive Income (Loss). 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 Comprehensive Income (Loss) and were $18.2 million , $17.2 million and $11.1 million for the years ended December 31, 2018 , 2017 and 2016 , respectively. Business Combinations Companies acquired during each reporting period are reflected in the results of the Company effective from their respective dates of acquisition through the end of the reporting period. The Company allocates the fair value of purchase consideration to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. Our estimates of fair value are based upon assumptions believed to be reasonable but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Critical estimates used to value certain identifiable assets include, but are not limited to, expected long-term revenues, future expected operating expenses, cost of capital, and appropriate discount rates. The excess of the fair value of purchase consideration over the fair value of the assets acquired and liabilities assumed in the acquired entity is recorded as goodwill. Goodwill is assigned to the reporting unit that benefits from the synergies arising from the business combination. If the Company obtains new information about facts and circumstances that existed as of the acquisition date during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company's Consolidated Statements of Operations and Comprehensive Income (Loss). For contingent consideration recorded as a liability, the Company initially measures the amount at fair value as of the acquisition date and adjusts the liability, if needed, to fair value each reporting period. Changes in the fair value of contingent consideration, other than measurement period adjustments, are recognized as operating income or expense. Acquisition-related expenses and post-acquisition restructuring costs are recognized separately from the business combination and are expensed as incurred. 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. We perform impairment tests of goodwill at a reporting unit level, which is consistent with the way management evaluates our business. The Company has three reporting units: Legacy Services, New Century Health and True Health. Our annual goodwill impairment review occurs during the fourth quarter of each year. 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. 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 a reporting unit is below its carrying amount. If the Company determines that it is more likely than not that the fair value of a 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 and Comprehensive Income (Loss). See Note 7 for additional discussion regarding the goodwill impairment tests conducted during 2018 and 2017 . Intangible Assets, Net 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. The Company acquired additional intangible assets in conjunction with strategic acquisitions made during 2018. Information regarding the determination and allocation of the fair value of the acquired assets and liabilities is further described within Note 4 . The following summarizes the estimated useful lives by asset classification: Corporate trade name 10-20 years Customer relationships 15-25 years Technology 5 years Provider network contracts 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. Claims Reserves Claims reserves for our Services and True Health segments reflect estimates of the ultimate cost of claims that have been incurred but not reported, including expected development on reported claims, those that have been reported but not yet paid (reported claims in process), and other medical care expenses and services payable that are primarily comprised of accruals for incentives and other amounts payable to health care professionals and facilities. Claims reserves also reflect estimated amounts owed to NMHC under a reinsurance agreement as discussed further in Note 9 . The Company uses actuarial principles and assumptions that are consistently applied each reporting period and recognizes the actuarial best estimate of the ultimate liability along with a margin for adverse deviation. This approach is consistent with actuarial standards of practice that the liabilities be adequate under moderately adverse conditions. The process of estimating reserves involves a considerable degree of judgment by the Company and, as of any given date, is inherently uncertain. The methods for making such estimates and for establishing the resulting liability are continually reviewed, and adjustments are reflected in current results of operations in the period in which they are identified as experience develops or new information becomes known. See Note 19 for additional discussion regarding our claims reserves. Long-term Debt Convertible notes are carried at cost, net of debt discounts and issuance costs, as long-term debt on the Consolidated Balance Sheets. The debt discounts and issuance costs are amortized to non-cash interest expense using the straight line method over the contractual term of the note if that method is not materially different from the effective interest rate method. Cash interest payments are due semi-annually in arrears and we accrue interest expense monthly based on the annual coupon rate. See Note 8 for further discussion regarding our convertible notes. 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 and Comprehensive Income (Loss) 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 and Comprehensive Income (Loss) over the terms of the leases. As of December 31, 2018 and 2017 , the Company had not entered into any material 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 and Comprehensive Income (Loss) 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 material impairment recorded for the years ended December 31, 2018 , 2017 and 2016 . Revenue Recognition Our Services segment derives revenue from two sources: (1) transformation services and (2) platform and operations services. See “Changes in Accounting Principles” below for our updated revenue recognition policy as a result of our adoption of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. Our True Health segment derives revenue from premiums that are earned over the terms of the related insurance policies. The portion of premiums that will be earned in the future or are received prior to the effectiveness of the policy are deferred and reported as premiums received in advance. These amounts are generally classified as short-term deferred revenue on our Consolidated Balance Sheets. 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. In certain cases, our cost of revenue also includes claims and capitation payments to providers and payments for pharmaceutical treatments through capitated arrangements. Claims Expenses Our claims expenses consist of the direct medical expenses incurred by our True Health segment. Claims expenses are recognized in the period in which services are provided and include amounts that have been paid by us through the reporting date, as well as estimated medical claims and benefits payable for costs that have been incurred but not paid by us as of the reporting date. Claims expenses include, among other items, fee-for-service claims, pharmacy benefits, various other related medical costs and expenses related to our reinsurance agreement. We use judgment to determine the appropriate assumptions for determining the required estimates. Stock-based Compensation The Company sponsors a stock-based incentive plan that provides for the issuance of stock-based awards to employees, vendors 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 and Comprehensive Income (Loss). Additionally, and if applicable, 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. 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, 2018 and 2017, our identified balance of uncertain income tax positions would not have a material impact to the consolidated financial statements. We are subject to taxation in various jurisdictions in the U.S. and India and remain subject to examination by taxing jurisdictions for the year 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. Evolent Health LLC has direct ownership in corporate subsidiaries, which are subject to U.S. and foreign taxes with respect to their own operations. 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 plus the weighted average number of Class A common shares assuming the conversion of our convertible 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. 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. Foreign Currency The Company formed a subsidiary in India during the first quarter of 2018. The functional currency of our international subsidiary is the Indian Rupee. We translate the financial statements of this subsidiary to U.S. dollars using month-end rates of exchange for assets and liabilities, and average rates of exchange for revenue and expenses. Translation gains and losses are recorded in accumulated other comprehensive income (loss) as a component of shareholders' equity. We recorded a foreign currency translation loss of $0.2 million on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the year ended December 31, 2018 , which resulted in an “Accumulated other comprehensive loss” of $0.2 million on our Consolidated Balance Sheet as of December 31, 2018 . Change in Accounting Principle Adoption of ASU 2014-09, Revenue from Contracts with Customers As discussed in Note 3 , the Company adopted ASU 2014-09, Revenue from Contracts with Customers, effective January 1, 2018. The following is our updated accounting policy with respect to revenue recognition for our Services segment. Our Services segment derives revenue from two sources: (1) transformation services and (2) platform and operations services. Revenue is recognized when control of the services is transferred to our customers. With the exception of revenues from our downside risk sharing arrangements through our insurance subsidiary, we use the following 5-Step model, outlined in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), to determine revenue recognition on our contracts with customers: • Identify the contract(s) with a customer • Identify the performance obligations in the contract • Determine the transaction price • Allocate the transaction price to performance obligations • Recognize revenue when (or as) the entity satisfies a performance obligation Transformation Services Revenue Transformation services consist of strategic assessments, or Blueprint contracts, and implementation services whereby we assist the customer in launching its population health or health plan strategy. In certain cases, transformation services can also include revenue associated with our support of certain one-time wind-down activities for clients who are exiting a line of business or population. The transformation services are usually completed within 12 months. We generally receive a fixed fee for transformation services and recognize revenue over time using an input method based on hours incurred compared to the total estimated hours required to satisfy our performance obligation. Platform and Operations Services Revenue Platform and operations services generally include multi-year arrangements with customers to provide various population health, health plan operations, specialty care management (through capitated arrangements) and claims processing services on an ongoing basis, as well as transition or run-out services to customers receiving primarily third-party administration (“TPA”) services. Our performance obligation in these arrangements is to provide an integrated suite of services, including access to our platform that is customized to meet the specialized needs of our customers and members. Generally we will apply the series guidance to the performance obligation as we have determined that each time increment is distinct. We primarily utilize a variable fee structure for these services that typically include a monthly payment that is calculated based on a specified per member per month rate, multiplied by the number of members that our partners are managing under a value-based care arrangement or a percentage of plan premiums. Our arrangements may also include other variable fees related to service level agreements, shared medical savings arrangements and other performance measures. Variable consideration is estimated using the most likely amount based on our historical experience and best judgment at the time. Due to the nature of our arrangements certain estimates may be constrained if it is probable that a significant reversal of revenue will occur when the uncertainty is resolved. We recognize revenue for platform and operations services over time using the time elapsed output method. Fixed consideration is recognized ratably over the contract term. In accordance with the series guidance, we allocate variable consideration to the period to which the fees relate. Contracts with Multiple Performance Obligations Our contracts with customers may contain multiple performance obligations, primarily when the customer has requested both transformation services and platform and operations services as these services are distinct from one another. When a contract has multiple performance obligations, we allocate the transaction price to e |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Adoption of New Accounting Standards In June 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-07, Compensation - Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting . The update expands the scope of ASC Topic 718, Compensation - Stock Compensation (“ASC 718”), to include share-based payment transactions for acquiring goods and services from nonemployees. The ASU specifies that ASC 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments in the update also clarify that ASC 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC 606. The update is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted, but no earlier than an entity’s adoption date of ASC 606. We adopted the requirements of this standard effective July 1, 2018, and the adoption did not have a material impact to our financial condition and results of operations during 2018. Going forward, we do not expect the adoption to have a material impact on our financial condition or 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. 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. The Company adopted the standard effective January 1, 2018, using the modified retrospective method for only contracts that were not completed at the date of initial application. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC Topic 605, Revenue Recognition (“ASC 605”). The adoption of this standard resulted in changes related to revenue recognition for contracts that contain certain features, such as variable consideration. These changes generally accelerate revenue recognition. In addition, certain customer setup costs, which have historically been expensed as incurred, will now be capitalized. Evolent recognized the cumulative effect of applying the new revenue standard as a $17.3 million adjustment to the opening balance of retained earnings, including non-controlling interests, in the first quarter of 2018, primarily as a result of capitalization of expenses related to contract acquisition and fulfillment costs and acceleration of revenue due to variable consideration estimation. See Note 5 for additional disclosures regarding Evolent's contracts with customers. See Note 2 for updated revenue recognition accounting policy and the impact of adopting the new revenue recognition standard on Evolent’s financial statements. Future Adoption of New Accounting Standards In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software: Customers Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Services Contract . The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The update is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We are currently evaluating the impact of adoption on our financial condition and results of operations. 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. |
Transactions
Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Transactions | Transactions Business Combinations New Century Health On October 1, 2018 , the Company completed its acquisition of New Century Health, including 100% of the voting equity interests. New Century Health is a technology-enabled, specialty care management company focused primarily on cancer and cardiac care and its assets include a proprietary technology platform which brings together clinical capabilities, pharmacy management and physician engagement to assist New Century Health’s customers in managing the large and complex specialties of cancer and cardiac care. We expect that the transaction will allow Evolent to enhance its clinical capabilities and enable it to offer a more integrated set of services to its current provider partners. Total merger consideration, net of cash on hand and certain closing adjustments, was $205.1 million , based on the closing price of the Company’s Class A common stock on the NYSE on October 1, 2018 . The merger consideration consisted of $118.7 million of cash consideration, 3.1 million shares of Evolent Health LLC’s Class B common units and an equal number of the Company’s Class B common stock and an earn-out of up to $11.4 million , fair valued at $3.2 million as of October 1, 2018 . The merger agreement includes an earn-out of up to $20.0 million , $11.4 million of which is payable to the former owners of New Century Health and $8.6 million of which is payable to former employees of New Century Health that became employees of the Company. The amount payable to the former owners of New Century Health is considered merger consideration. The amount payable to the former employees of New Century Health requires continued employment with the Company and is therefore considered post-combination compensation expense. See Note 16 for additional information regarding the fair value determination of the earn-out consideration and Note 11 for additional information about the portion of the earn-out that is classified as post-combination compensation expense. The Evolent Health LLC Class B common units, together with a corresponding number of the Company’s Class B common stock, can be exchanged for an equivalent number of the Company’s Class A common stock, and were valued at $83.2 million using the closing price of the Company’s Class A common stock on the NYSE on October 1, 2018 . As a result of the Class B common stock issued for the New Century Health transaction, the Company’s ownership in Evolent Health LLC decreased from 99.0% to 95.3% , immediately following the acquisition. The Company incurred approximately $1.6 million of transaction costs related to the New Century Health transaction during 2018, which are recorded within “Selling, general and administrative expenses” on our Consolidated Statements of Operations and Comprehensive Income (Loss). The Company accounted for the transaction as a business combination using the acquisition method of accounting. The purchase price was preliminarily allocated to the assets acquired and liabilities assumed based on their estimated fair values as of October 1, 2018 , as follows (in thousands): Purchase consideration: Cash $ 124,652 Fair value of Class B common stock issued 83,173 Fair value of contingent consideration 3,200 Total consideration $ 211,025 Tangible assets acquired: Cash and cash equivalents $ 5,963 Accounts receivable 5,559 Prepaid expenses and other current assets 7,901 Property and equipment 381 Other noncurrent assets 148 Identifiable intangible assets acquired: Customer relationships 72,500 Technology 27,000 Corporate trade name 4,300 Provider network contracts 9,600 Liabilities assumed: Accounts payable 1,167 Accrued liabilities 1,494 Accrued compensation and employee benefits 3,966 Claims reserves 18,631 Deferred tax liabilities 24,041 Other long-term liabilities 6,138 Goodwill 133,110 Net assets acquired $ 211,025 The fair value of the receivables acquired, as shown in the table above, approximates the gross contractual amounts and is expected to be collectible in full. Identifiable intangible assets associated with customer relationships will be amortized on a straight-line basis over their preliminary estimated useful lives of 15 years. Identifiable intangible assets associated with technology, corporate trade name and provider network contracts will be amortized on a straight-line basis over their preliminary estimated useful lives of 5 , 10 and 5 years, respectively. The customer relationships are primarily attributable to long-term existing contracts with current customers. The technology consists of a clinical rules engine portal, data warehouse and claims system that New Century Health uses to provide services to its customers. The corporate trade name reflects the value that the New Century Health brand name carries in the market. The provider network contracts represents the established provider network that New Century Health relies on to provide services to its customers. The fair value of the intangible assets was determined using the income approach, the relief from royalty approach and the cost 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. The relief from royalty approach estimates the fair value of an asset by calculating how much an entity would have to spend to lease a similar asset. The cost approach estimates the fair value of an asset by determining the amount that would be required currently to replace the service capacity of an asset. 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 cross-selling opportunities and the acquired assembled workforce and was all allocated to the Services segment. Goodwill is considered to be 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. The goodwill is not deductible for tax purposes. The amounts above reflect management’s preliminary estimate of the fair value of the tangible and intangible assets acquired and liabilities assumed based on a valuation performed using currently available information. Any necessary adjustments will be finalized within one year from the date of acquisition. We have included the financial results of New Century Health in our consolidated financial statements from October 1, 2018 . The Consolidated Statements of Operations and Comprehensive Income (Loss) include $48.8 million of revenues and $2.5 million of net loss attributable to New Century Health for the year ended December 31, 2018. 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, small and large group 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. The Company commenced operations of the commercial health plan and began reporting the results of True Health as a new reportable segment during the first quarter of 2018. See Note 18 for further information about the Company’s segments. At the time of the acquisition, the Company also entered into a managed services agreement (“MSA”) with NMHC to support its ongoing business. During the fourth quarter of 2017, the Company also entered into a reinsurance agreement with NMHC to provide balance sheet support. See Note 9 for further discussion of the reinsurance agreement. The MSA and reinsurance agreement were considered separate transactions and accounted for outside of the business combination. Therefore, there is no allocation of purchase price to these agreements at fair value. The Company incurred approximately $1.2 million in transaction costs related to the NHMC transaction, materially all of which were recorded within “Selling, general and administrative expenses” on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the year ended December 31, 2017. The transaction was accounted for as a business combination using the acquisition method of accounting. The purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of January 2, 2018 , as follows (in thousands): Purchase consideration Cash paid to NMHC $ 10,000 Cash paid to escrow agent 252 Total consideration $ 10,252 Identifiable intangible assets acquired and liabilities assumed Customer relationships $ 2,700 Provider network contracts 2,300 Above market lease (100 ) Accrued compensation and employee benefits (474 ) Goodwill 5,826 Net assets acquired $ 10,252 Identifiable intangible assets associated with customer relationships and provider network contracts will be amortized on a straight-line basis over their estimated useful lives of 15 and 5 years, respectively. The customer relationships represent existing contracts in place to provide health plan services to a number of large and small group customers throughout the state of New Mexico. The provider network contracts represent a network of hospitals and physicians to service the health plan customers. The fair value of the customer relationship intangible asset 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. The fair value of the provider network intangible asset was primarily determined using the cost approach. The cost approach estimates the fair value for an asset based on the amount it would cost to replace the asset. 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. Goodwill associated with the acquisition of True Health is allocated entirely to the True Health segment. The goodwill is attributable primarily to the acquired workforce and expected cost synergies, none of which qualify for recognition as a separate intangible asset. All of the goodwill was allocated to the True Health segment. Goodwill is considered an indefinite-lived asset. The transaction is an asset acquisition for tax purposes, and as such the tax-basis in the acquired assets is equal to the book-basis fair value calculated and is recorded at the True Health legal entity. Therefore, no opening balance sheet deferred tax liability was recorded. The amount of goodwill determined for tax purposes is deductible. 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. The purchase price allocation for True Health was finalized during 2018. True Health is a separate segment, and its results of operations are provided in Note 18 - Segment Reporting. 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 and Comprehensive Income (Loss) for the year ended December 31, 2016. The Company accounted for the transaction as a business combination using the acquisition method of 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. All of the goodwill was allocated to the Services segment. 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 and Comprehensive Income (Loss). 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 and Comprehensive Income (Loss). The Company accounted for the transaction as a business combination using the acquisition method of 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. All of the goodwill was allocated to the Services Segment. 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. 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 and Comprehensive Income (Loss). The Company has accounted for the transactions with Passport as a business combination using the acquisition method of 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 $5.6 million and $8.7 million within “Other long-term liabilities” on our Consolidated Balance Sheets as of December 31, 2018 and 2017 , respectively. We recorded a re-measurement gain of approximately $3.1 million and a re-measurement loss of approximately $0.4 million during the years ended December 31, 2018 and 2017 , 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, and was allocated to the Services segment. 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. Pro forma financial information (unaudited) The unaudited pro forma Consolidated Statements of Operations and Comprehensive Income (Loss) presented below gives effect to (1) the New Century Health transaction as if it had occurred on January 1, 2017, (2) the True Health transaction as if it had occurred on January 1, 2017, (3) the Aldera transaction as if it had occurred on January 1, 2015, (4) the Valence Health transaction as if it had occurred on January 1, 2015, and (5) the Passport transaction as if it had occurred on January 1, 2015. The following pro forma information includes adjustments to: • Remove transaction costs related to the New Century Health transaction of $1.6 million recorded during 2018 and reclassify such amounts to 2017; • Record amortization expenses related to intangible assets beginning on January 1, 2017, for intangibles acquired as part of the New Century Health and True Health transactions; • Record revenue and expenses related to the NMHC MSA beginning January 1, 2017; • Record stock based compensation expense beginning on January 1, 2017, for equity awards granted as part of the New Cen |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition As discussed in Note 3 , we adopted ASU 2014-09, effective January 1, 2018, which introduces ASC 606. See Note 2 for the updated revenue recognition policy and the impact of adopting the new revenue recognition standard on the Company’s financial statements. The following are other relevant disclosures as required by the adoption of ASU 2014-09. Provisions within ASC 606 are only applicable to revenues derived from our Services segment. Disaggregation of Revenue The following table represents Evolent’s Services segment revenue disaggregated by revenue type for the year ended December 31, 2018 (in thousands), excluding revenues from our downside risk sharing arrangements through our captive insurance subsidiary. Revenues from our downside risk sharing arrangements through our captive insurance subsidiary, which are recorded within “Platform and operations services” on our Consolidated Statements of Operations and Comprehensive Income (Loss), and premiums revenue from our True Health segment, which are recorded within “Premiums” on our Consolidated Statements of Operations and Comprehensive Income (Loss), are accounted for under ASC 944, Financial Services-Insurance . Services Revenue Transformation services $ 32,916 Platform and operations services 492,568 Transaction Price Allocated to the Remaining Performance Obligations For contracts with a term that is greater than one year, we have allocated approximately $91.0 million of transaction price to performance obligations that are unsatisfied or partially unsatisfied as of December 31, 2018 . We do not include variable consideration that is allocated entirely to a wholly unsatisfied performance obligation accounted for under the series guidance in the calculation. As a result, the balance represents the value of the fixed consideration in our long-term contracts that will be recognized as revenue in a future period and excludes the majority of our platform and operations revenue, which is primarily derived based on variable consideration as discussed in Note 2 . We expect to recognize revenue on approximately 60% and 88% of these remaining performance obligations by December 31, 2019, and December 31, 2020, respectively, with the remaining balance to be recognized thereafter. However, because our existing contracts may be canceled or renegotiated including for reasons outside our control, the amount of this revenue that we actually receive may be less or greater than this estimate. Contract Balances Contract balances consist of accounts receivable, contract assets and deferred revenue. Contract assets are recorded when the right to consideration for services is conditional on something other than the passage of time. Contract assets relating to unbilled receivables are transferred to accounts receivable when the right to consideration becomes unconditional. We classify contract assets as current or noncurrent based on the timing of our rights to the unconditional payments. Our contract assets are generally classified as current and recorded within “Contract assets” on our consolidated balance sheets. Our current accounts receivable are classified within “Accounts receivable, net” on our consolidated balance sheets and our noncurrent accounts receivable are classified within “Prepaid expenses and other noncurrent assets” on our consolidated balance sheets. The Company does not have a material allowance for doubtful accounts as of December 31, 2018 or 2017 , as all amounts were determined to be materially collectible. 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. Deferred revenue includes advance customer payments and billings in excess of revenue recognized. We classify deferred revenue as current or noncurrent based on the timing of when we expect to recognize revenue. Our current deferred revenue is recorded within “Deferred revenue” on our consolidated balance sheets, and noncurrent deferred revenue is recorded within “Other long-term liabilities” on our consolidated balance sheets. The following table provides information about receivables, contract assets and deferred revenue from contracts with customers (in thousands): As of As of December 31, January 1, 2018 2018 Short-term receivables (1) $ 78,380 $ 47,131 Long-term receivables (1) 6,550 — Short-term contract assets 2,102 3,710 Long-term contract assets 961 1,791 Short-term deferred revenue 20,584 26,147 Long-term deferred revenue 1,502 493 (1) Excludes pharmacy claims receivable and premiums receivable During the year ended December 31, 2018 , our contract asset balance decreased by $2.4 million , primarily as the right to the consideration became unconditional and the associated balance was reclassified to accounts receivable. During the year ended December 31, 2018 , our deferred revenue balance decreased by $4.6 million , primarily as a result of the recognition of variable consideration estimate. The amount of revenue recognized during the year ended December 31, 2018 , from amounts included in deferred revenue at the beginning of the period was $19.3 million . The amount of revenue recognized during the year ended December 31, 2018 , from performance obligations satisfied (or partially satisfied) in previous periods, due primarily to net gain share as well as other estimates, was $18.0 million . Contract Costs Certain bonuses and commissions earned by our sales team are considered incremental costs of obtaining a contract with a customer that we expect to be recoverable. The capitalized contract acquisition costs are classified as noncurrent assets and recorded within “Contract cost assets” on our consolidated balance sheets. Amortization expense is recorded within “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss). As of December 31, 2018 , the Company had $1.5 million of contract acquisition cost assets, net of accumulated amortization, and amortiza tion expense of $0.3 million for the year ended December 31, 2018 . In our platforms and operations arrangements, we incur certain costs related to the implementation of our platform before we begin to satisfy our performance obligation to the customer. The costs, which we expect to recover, are considered costs to fulfill a contract. Our contract fulfillment costs primarily include our employee labor costs and third-party vendor costs. The capitalized contract fulfillment costs are classified as noncurrent and recorded within “Contract cost assets” on our consolidated balance sheets. Amortization expense is recorded within “Cost of revenue” on the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss). As of December 31, 2018 , the Company had $17.6 million of contract fulfillment cost assets, net of accumulated amortization, and amortization expense of $2.4 million for the year ended December 31, 2018 . These costs are deferred and then amortized on a straight-line basis over a period of benefit that we have determined to be five years. The period of benefit was based on our technology, the nature of our customer arrangements and other factors. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 2017 Computer hardware $ 10,421 $ 5,667 Furniture and equipment 3,187 2,448 Internal-use software development costs 81,640 48,557 Leasehold improvements 10,118 8,708 Total property and equipment 105,366 65,380 Accumulated depreciation and amortization expenses (31,738 ) (14,458 ) Total property and equipment, net $ 73,628 $ 50,922 The Company capitalized $33.1 million , $27.1 million and $15.0 million of internal-use software development costs for the years ended December 31, 2018 , 2017 and 2016 , respectively. The net book value of capitalized internal-use software development costs was $62.8 million and $42.1 million as of December 31, 2018 and 2017 , respectively. Depreciation expense related to property and equipment was $17.3 million , $9.2 million and $2.6 million for the years ended December 31, 2018 , 2017 and 2016 , respectively, of which amortization expense related to capitalized internal-use software development costs was $12.4 million , $4.9 million and $1.4 million , respectively. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2018 | |
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. The Company has three reporting units: Legacy Services, New Century Health and True Health. Our annual goodwill impairment review occurs during the fourth quarter of each fiscal year. In interim periods between annual goodwill reviews, we also evaluate qualitative factors that could cause us to believe the estimated fair value of each of our reporting units 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, revenues 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 2018 and 2017 follows below. 2018 Goodwill Impairment Test On October 31, 2018 , the Company performed its annual goodwill impairment review for fiscal year 2018 . Based on our qualitative assessment, we did not identify sufficient indicators of impairment that would suggest the fair value of any of our reporting units was below their respective carrying values. As a result, a quantitative goodwill impairment analysis was not required. 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 2017 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 2017. 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 2017 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 additional goodwill impairment assessment as of December 31, 2017 . The following table summarizes the changes in the carrying amount of goodwill, by reportable segment, for the periods presented (in thousands): Services True Health Consolidated Balance as of December 31, 2016 $ 626,569 $ — $ 626,569 (1) Measurement period adjustments (2) 1,617 — 1,617 Balance as of December 31, 2017 628,186 — 628,186 Goodwill Acquired (3) 134,343 5,826 140,169 Measurement period adjustments (2) 4 (121 ) (117 ) Foreign currency translation (4) (114 ) — (114 ) Balance as of December 31, 2018 $ 762,419 $ 5,705 $ 768,124 (1) Beginning goodwill balance is net of cumulative inception to date impairment of $160.6 million . (2) Measurement period adjustments related to transactions completed during 2017 and the first quarter of 2018. (3) Goodwill acquired primarily as a result of the New Century Health and True Health transactions, as discussed in Note 4 . (4) Foreign currency translation related to a transaction completed during the first quarter of 2018. Intangible Assets, Net Details of our intangible assets (in thousands), including their weighted-average remaining useful lives (in years), are presented below: As of December 31, 2018 Weighted- Average Gross Net Remaining Carrying Accumulated Carrying Useful Life Amount Amortization Value Corporate trade name (1) 15.2 $ 23,300 $ 3,511 $ 19,789 Customer relationships (2) 18.1 281,219 29,184 252,035 Technology (3) 3.0 82,922 31,764 51,158 Below market lease, net 4.0 4,097 3,003 1,094 Provider network contracts (4) 4.6 11,900 940 10,960 Total $ 403,438 $ 68,402 $ 335,036 (1) The increase in the gross carrying amount of the corporate trade name is attributable to a $4.3 million trade name acquired as part of the New Century Health transaction. See Note 4 for further information about the New Century Health transaction. (2) The increase in the gross carrying amount of the customer relationships intangible is attributable to $72.5 million acquired customer relationships from the New Century Health transaction, $2.7 million of acquired customer relationships from the NMHC transaction and $2.5 million related the Vestica transaction. The Company acquired certain assets from Vestica in March 2016. The transaction included additional consideration of up to $4.0 million , which was being held in escrow and was recorded within “Prepaid expenses and other noncurrent assets” on our Consolidated Balance Sheets. In February 2018, the Company and Vestica reached an agreement to settle $3.5 million of the $4.0 million in escrow. Based on the terms of the settlement agreement, the Company reclassified the unamortized portion of the additional consideration from “Prepaid expenses and other noncurrent assets” into “Customer relationships” as of the settlement date. See Note 4 for further information about the New Century Health, NMHC and Vestica transactions. (3) The increase in the gross carrying amount of the technology is attributable to $27.0 million of technology assets acquired as part of the New Century Health transaction. See Note 4 for further information about the New Century Health transaction. (4) The increase in the gross carrying amount of the provider network contracts is attributable to a $9.6 million provider network acquired as part of the New Century Health transaction and a $2.3 million provider network acquired as part of the NMHC transaction. See Note 4 for further information about the New Century Health and NMHC transactions. 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 Amortization expense related to intangible assets for the years ended December 31, 2018 , 2017 and 2016 , was $27.2 million , $22.8 million and $12.5 million , respectively. Future estimated amortization of intangible assets (in thousands) as of December 31, 2018 , is as follows: 2019 $ 36,498 2020 32,312 2021 28,143 2022 24,262 2023 21,498 Thereafter 192,323 Total $ 335,036 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. |
Long-term Debt
Long-term Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term Debt 2025 Notes In October 2018, the Company issued $172.5 million aggregate principal amount of its 1.50% Convertible Senior Notes due 2025 in a private placement to qualified institutional buyers within the meaning of Rule 144A under the Securities Act of 1933, as amended. The 2025 Notes were issued at par for net proceeds of $166.6 million . We incurred $5.9 million of debt issuance costs in connection with the 2025 Notes. The closing of the private placement of $150.0 million aggregate principal amount of the 2025 Notes occurred on October 22, 2018 , and the Company completed the offering and sale of an additional $22.5 million aggregate principal amount of the 2025 Notes on October 24, 2018 , pursuant to the initial purchasers’ exercise in full of their option to purchase additional notes. Holders of the 2025 Notes are entitled to cash interest payments, which are payable semiannually in arrears on April 15 and October 15 of each year, beginning on April 15, 2019 , at a rate equal to 1.50% per annum. The Company recorded interest expense of $0.5 million related to the 2025 Notes for the year ended December 31, 2018 . The 2025 Notes will mature on October 15, 2025 , unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Prior to the close of business on the business day immediately preceding April 15, 2025 , the 2025 Notes will be convertible at the option of the holders only upon the satisfaction of certain conditions, as described in the indenture, dated as of October 22, 2018 , between the Company and U.S. Bank National Association, as trustee. At any time on or after April 15, 2025 , until the close of business on the business day immediately preceding the maturity date, holders may convert, at their option, all or any portion of their notes at the conversion rate. The 2025 Notes will be convertible at an initial conversion rate of 29.9135 shares of Class A common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $33.43 per share of the Company’s Class A common stock. In the aggregate, the 2025 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 fundamental change or a notice of redemption as described in the governing indenture). The conversion rate may be adjusted under certain circumstances. The 2025 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, the Company will pay or deliver, as the case may be, cash or shares of the Company’s Class A common stock, or a combination of cash and shares of the Company’s Class A common stock, at the Company’s election. The option to settle the 2025 Notes in cash or shares of the Company’s Class A common stock, or a combination of cash and shares of the Company’s Class A common stock, at the Company’s election, resulted in a bifurcation of the carrying value of the 2025 Notes into a debt component and an equity component. The debt component was determined to be $100.7 million , before issuance costs, based on the fair value of a nonconvertible debt instrument with the same term. The equity component was determined to be $71.8 million , before issuance costs, and was recorded within additional paid-in capital. The equity component is the difference between the aggregate principal amount of the debt and the debt component. Issuance costs of $5.9 million are also allocated to the debt and equity components in proportion to the allocation of proceeds. Of the $5.9 million in issuance costs, $3.4 million of issuance costs is allocated to the debt component which, along with the equity component of $71.8 million , will be amortized to non-cash interest expense using the effective interest method over the contractual term of the 2025 Notes. The equity component recorded within additional paid-in capital will not be remeasured as long as it meets the conditions for equity classification. For the year ended December 31, 2018 , the Company recorded $1.5 million in non-cash interest expense related to the amortization of the debt discount and the issuance costs allocated to the debt component. Holders of the 2025 Notes may require the Company to repurchase all or part of their notes upon the occurrence of a fundamental change at a price equal to 100.0% of the principal amount of the notes being repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The Company may not redeem the 2025 Notes prior to October 20, 2022 . The Company may redeem for cash all or any portion of the 2025 Notes, at its option, on or after October 20, 2022 , if the last reported sale price of the Company’s Class A common stock has been at least 130.0% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100.0% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. 2021 Notes 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, 2018 and 2017 and 2016 , the Company recorded approximately $2.5 million , $2.5 million and $0.2 million in interest expense, respectively, and $0.9 million , $0.9 million and less than $0.1 million in non-cash interest expense related to the amortization of deferred financing costs, respectively. 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 governing indenture). The conversion rate may be adjusted under certain circumstances. 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 2025 Notes and 2021 Notes are recorded on our accompanying Consolidated Balance Sheets at their net carrying values of $98.7 million and $122.3 million , respectively, as of December 31, 2018 , the 2025 Notes and 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 values were $158.8 million and $133.6 million , respectively, based on traded prices on December 28, 2018 and December 26, 2018, respectively, which are Level 2 inputs. As of December 31, 2017 , the estimated fair value of the 2021 Notes was $120.4 million , based on a traded price on December 29, 2017, a Level 2 input. The 2025 Notes and 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, 2018 2017 2025 Notes Carrying value $ 98,730 $ — Unamortized debt discount and issuance costs allocated to debt 73,770 — Principal amount $ 172,500 $ — Remaining amortization period (years) 6.8 2021 Notes Carrying value $ 122,311 $ 121,394 Unamortized issuance costs 2,689 3,606 Principal amount $ 125,000 $ 125,000 Remaining amortization period (years) 2.9 3.9 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Commitments Commitments to Equity-Method Investees The Company has contractual arrangements with certain equity-method investees that will require the Company to provide operating capital and reserve support in the form of debt financing of up to $11.0 million as of December 31, 2018 , in accordance with the Company’s contribution agreements with certain equity-method investees. These obligations are outside of Company’s control and payment could be requested during 2019. The Company did no t have any contingent commitments to equity-method investees as of December 31, 2017 . 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, 2018 and 2017 , there were no outstanding balances related to this letter of credit. Lease Commitments The Company leases office space and computer and other equipment under operating lease agreements expiring at various dates through 2031. Under the lease agreements, in addition to base rent, the Company is generally responsible for operating and maintenance costs and related fees. Several of these agreements include tenant improvement allowances, rent holidays or rent escalation clauses. When such items are included in a lease agreement, we record a deferred rent asset or liability on our Consolidated Balance Sheets equal to the difference between rent expense and future minimum lease payments due. The rent expense related to these items is recognized on a straight-line basis over the terms of the leases. The Company’s primary office location is in Arlington, Virginia, which has served as its corporate headquarters since 2013. The Arlington, Virginia office lease expires in December 2020. Certain leases acquired as part of the Valence Health transaction included existing sublease agreements for office locations in Chicago, Illinois. Total rental expense, net of sublease income, on operating leases for the years ended December 31, 2018 , 2017 and 2016 , was $14.2 million , $10.9 million and $5.9 million , respectively. The Company does not have any material capital leases. In connection with various lease agreements, the Company is required to maintain $3.7 million in letters of credit. As of December 31, 2018 , the Company held $3.7 million in restricted cash and restricted investments as collateral for the letters of credit. Arlington, Virginia Office Lease During 2013, the Company entered into a facility lease in Arlington, Virginia. Total future minimum lease commitments over two years is approximately $7.1 million as of December 31, 2018 . 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. Chicago, Illinois Office Leases On October 3, 2016 , the Company assumed a facility lease at 300 S. Riverside Plaza in Chicago, Illinois as part of the Valence Health transaction. Total future minimum lease commitments over 12.3 years are approximately $43.7 million as of December 31, 2018 . The future minimum lease payments associated with this 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 $0.2 million . The collateral for the letter of credit is currently recorded as restricted cash. On October 3, 2016 , the Company assumed a facility lease at 540 W. Madison Street in Chicago, Illinois as part of the Valence Health transaction. This lease includes three floors. Two of the floors are occupied by the Company and one was abandoned and subsequently terminated. Total future minimum lease commitment over nine years is approximately $16.3 million as of December 31, 2018 . The future minimum lease payments associated with this 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 $1.5 million . The collateral for the letter of credit is currently recorded as restricted cash. In connection with the 540 W. Madison 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 was approximately $0.1 million as of December 31, 2017. The sublease was terminated as of December 31, 2018 , and the Company subsequently resumed occupying this floor. Immediately following the Valence Health acquisition, the Company decided to abandon and sublet one of the floors of its rented space at 540 W. Madison Street (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 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 and Comprehensive Income (Loss) 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 year ended December 31, 2017 (in thousands): Accrual as of beginning-of-year $ 6,100 Abandonment expense — Impact of lease termination (496 ) Abandonment amortization (1,239 ) Lease cancellation fee (4,365 ) Accrual as of end-of-year $ — Future minimum rental commitments (in thousands) as of December 31, 2018 , were as follows: 2019 $ 11,470 2020 12,553 2021 8,594 2022 7,033 2023 7,451 Thereafter 40,657 Total $ 87,758 Purchase Obligations Our contractual obligations related to vendor contracts (in thousands) as of December 31, 2018 , 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 $ 6,236 $ 2,417 $ — $ — $ 8,653 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 as part of the 2017 Secondary Offerings and 8.6 million shares of the Company’s Class A common stock as part of 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 and Comprehensive Income (Loss). We did no t incur any expenses related to secondary offerings or other sales of shares by our Investor Stockholders for the year ended December 31, 2018. 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. Certain of our downside risk-sharing arrangements are executed through our wholly-owned captive insurance company. To satisfy the capital requirements of our insurance entity as well as state insurance regulators, Evolent entered into letters of credit of $34.1 million as of December 31, 2018 , to secure potential losses related to insurance services, which are recorded within “Restricted cash and restricted investments” on our Consolidated Balance Sheets. These amounts are in excess of our actuarial assessment of loss. Reinsurance Agreements During the fourth quarter of 2017, the Company had entered into a 15 -month, $10.0 million capital-only reinsurance agreement with NMHC, expiring on December 31, 2018. The purpose of the capital-only reinsurance was to provide balance sheet support to NMHC. There was no uncertainty to the outcome of the arrangement as there was no transfer of underwriting risk to Evolent or True Health, and neither Evolent nor True Health was at risk for any cash payments on behalf of NMHC. As a result, this arrangement did not qualify for reinsurance accounting. The Company recorded a quarterly fee of approximately $0.2 million as non-operating income on its Consolidated Statements of Operations and Comprehensive Income (Loss) and maintained $10.0 million in restricted cash and restricted investments on its Consolidated Balance Sheets for the duration of the reinsurance agreement. During the fourth quarter of 2018, the Company terminated its prior reinsurance agreement with NMHC and entered into a 15 -month quota-share reinsurance agreement with NMHC (“Reinsurance Agreement”). Under the terms of the Reinsurance Agreement, NMHC will cede 90% of its gross premiums to the Company and the Company will indemnify NMHC for 90% of its claims liability. The maximum amount of exposure to the Company is capped at 105% of premiums ceded to the Company by NMHC. The Reinsurance Agreement qualified for reinsurance accounting due to the deemed risk transfer and, as such, the Company recorded the full amount of the gross reinsurance premiums and claims assumed by the Company within “Premiums” and “Claims Expenses,” respectively, and recorded claims-related administrative expenses within “Selling, general and administrative expenses” on our Consolidated Statements of Operations and Comprehensive Income (Loss) from the legal effective date of the Reinsurance Agreement. Amounts owed to NMHC under the Reinsurance Agreement are recorded within “Claims Reserves” on our consolidated balance sheets. The following summarizes premiums and claims assumed under the Reinsurance Agreement for the year ended December 31, 2018 (in thousands): Reinsurance premiums assumed $ 3,242 Claims assumed 3,934 Claims-related administrative expenses 551 (Increase) decrease in claims reserves attributable to the Reinsurance Agreement (1,243 ) Claims reserves attributable to the Reinsurance Agreement at the beginning of the year — Claims reserves attributable to the Reinsurance Agreement at the end of the year $ 1,243 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. 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, 2018 and 2017 , 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. Credit and Concentration Risk The Company is subject to significant concentrations of credit risk related to cash and cash equivalents and accounts receivable. As of December 31, 2018 , approximately 88.9% of our $388.3 million of cash and cash equivalents (including restricted cash) were held in bank deposits with FDIC participating banks, approximately 11.0% were held in money market funds and less than 1.0% were held in international banks. 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 consolidated trade accounts receivable for the periods presented: As of December 31, 2018 2017 Customer B * 11.8 % Customer C 23.3 % 32.1 % Customer D * 16.5 % * 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 consolidated revenue for the periods presented: For the Years Ended December 31, 2018 2017 2016 Customer A 17.5 % 20.6 % 19.6 % Customer D * * 14.5 % Customer E * * 12.7 % * Represents less than 10.0% of the respective balance We derive a significant portion of our revenues from our largest partners. The loss, termination or renegotiation of our relationship or contract with Company A or another significant partner, or multiple partners in the aggregate, could have a material adverse effect on the Company's financial condition and results of operations. For, example, recent changes in the way the state of Kentucky distributes federal Medicaid benefits have had a significant negative impact on Customer A, our largest partner in terms of revenue as of December 31, 2018 . Customer A has stated publicly that if the rates are not changed, it could be deemed insolvent in the near term. In February 2019, Customer A filed a request for immediate and long-term relief from a reduction in reimbursement rates. We are unable to predict the outcome of this matter, the ongoing solvency of Customer A, or to reasonably estimate the amount or range of any potential impact on the Company. Receivables from Customer A represented less than 10% of our trade accounts receivable as of December 31, 2018 . As of December 31, 2018 , there were no accounts receivable balances from Customer A that were deemed uncollectable. |
Earnings (Loss) Per Common Shar
Earnings (Loss) Per Common Share | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 2017 2016 Net income (loss) $ (54,191 ) $ (69,767 ) $ (226,778 ) Less: Net income (loss) attributable to non-controlling interests (1,533 ) (9,102 ) (67,036 ) Net income (loss) available for common shareholders - Basic and diluted (1)(2) (52,658 ) (60,665 ) (159,742 ) Weighted-average common shares outstanding - Basic and diluted (2)(3) 77,338 64,351 45,031 Earnings (Loss) per Common Share Basic and diluted $ (0.68 ) $ (0.94 ) $ (3.55 ) (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, 2018 2017 2016 Exchangeable Class B common stock 1,831 7,285 16,882 RSUs 1,027 525 245 Stock options 2,517 2,829 1,973 Convertible senior notes 6,176 5,201 369 Total 11,551 15,840 19,469 |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 and 2017 , 4.8 million stock options 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. The 2015 Plan was amended on June 13, 2018, to increase the number of shares authorized to 10.5 million . Upon confirmation of the amended 2015 Plan, the 2011 was automatically terminated and no further awards may be granted under the 2011 Plan. The 2011 Plan will continue to govern awards previously granted under the 2011 Plan. As of December 31, 2018 and 2017 , 3.3 million and 2.5 million stock options and 2.1 million and 1.1 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. Following the adoption of ASU 2018-07 during 2018, we also follow the employee model for stock-based compensation for awards granted to acquire goods and services from nonemployees. See Note 3 for additional discussion about our adoption of ASU 2018-07. 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, 2018 2017 2016 Award Type Stock options $ 9,008 $ 15,487 $ 15,647 Performance-based stock options 447 447 374 RSUs 7,766 4,503 2,583 Performance-based RSUs 388 — — Acceleration of unvested equity awards — — 3,897 Total $ 17,609 $ 20,437 $ 22,501 Line Item Cost of revenue $ 1,475 $ 1,371 $ 2,670 Selling, general and administrative expenses 16,134 19,066 19,831 Total $ 17,609 $ 20,437 $ 22,501 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. No stock-based compensation in the totals above was capitalized as software development costs for the years ended December 31, 2018 , 2017 and 2016 . 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, 2018 Weighted- Average Expense Period Stock options $ 10,061 1.13 Performance-based stock options 521 1.17 RSUs 16,353 2.27 Performance-based RSUs 1,945 1.25 Total $ 28,880 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, 2018 2017 2016 Weighted-average fair value per option granted $ 6.30 $ 8.38 $ 4.69 Assumptions: Expected term (in years) 6.25 6.25 6.25 Expected volatility 38.9 % 42.8 % 45.0 % Risk-free interest rate 2.6 - 2.9% 1.9 - 2.1% 1.3 - 1.5% 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, 2017 5,951 $ 8.38 7.19 $ 23,325 Granted 1,054 14.38 Exercised (1,720 ) 6.93 Forfeited (196 ) 15.98 Outstanding as of December 31, 2018 5,089 $ 9.82 6.86 $ 51,556 Vested and expected to vest after December 31, 2018 4,959 $ 9.42 6.77 $ 48,435 Exercisable at December 31, 2018 2,640 $ 6.33 5.81 $ 35,955 The total fair value of options vested during the years ended December 31, 2018 , 2017 and 2016 , was $11.3 million , $13.0 million and $12.4 million , respectively. The total intrinsic value of options exercised during 2018 , 2017 and 2016 was $25.1 million , $14.2 million and $3.8 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, 2017 268 $ 10.27 8.17 $ 544 Outstanding as of December 31, 2018 268 10.27 7.17 2,592 Vested and expected to vest after December 31, 2018 268 $ 10.27 7.17 $ 2,592 Restricted Stock Units Other than the performance-based RSUs described below, and 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. During 2018, we also granted certain RSUs with a one year vesting period in conjunction with the New Century Health transaction. 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, 2017 816 $ 16.23 Granted 963 16.12 Forfeited (99 ) 16.26 Vested (289 ) 16.92 Outstanding as of December 31, 2018 1,391 $ 16.01 During the years ended December 31, 2018 , 2017 and 2016 , we granted RSUs with a weighted-average grant date fair value of $16.12 , $19.35 and $11.60 , respectively. The total fair value of RSUs vested during the years ended December 31, 2018 , 2017 and 2016 was $4.8 million , $2.9 million and $1.8 million , respectively. Performance-based RSUs During 2018, in conjunction with the New Century Health transaction, we issued performance-based RSU awards to certain employees of New Century Health that became Evolent Health employees following the transaction. The awards will vest based on the passage of time ( 18 -month vesting period) and the achievement of certain operating results by New Century Health in 2019. Upon completion of the vesting period, the award recipients will receive a variable number of Evolent Health Class A common shares based on the predetermined monetary value of the award. Accordingly, these performance-based RSUs are recorded as liability awards. As one of the vesting criteria is continued employment at Evolent Health, these performance-based RSUs are considered compensation expense for the Company as opposed to contingent consideration related to the acquisition of New Century Health. See Note 4 for additional discussion of the New Century Health transaction. The maximum monetary value of the performance-based award, provided New Century Health meets or exceeds the defined operating results targets, is capped at $8.6 million . As of December 31, 2018 , the fair value of the performance-based RSUs was approximately $2.3 million . The fair value of the performance-based RSUs was estimated based on the real options approach, a form of the income approach, which estimated the probability of New Century Health achieving certain operating results during 2019. The most significant unobservable inputs used in the valuation of the performance-based RSUs was the risk-neutral probability of New Century Health achieving the defined operating results target or meeting the operating results target cap. A significant increase in either of those metrics, in isolation, would result in a significantly higher fair value of the performance-based RSUs. In determining the fair value of the performance-based RSUs as of December 31, 2018 , we determined the risk-neutral probability of New Century Health achieving operating results target was approximately 39.0% and we determined the risk-neutral probability of New Century Health meeting the operating results target cap was approximately 24.0% . Information with respect to our performance-based 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, 2017 — $ — Granted 86 27.04 Outstanding as of December 31, 2018 86 $ 27.04 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Components of income tax expense (benefit) (in thousands) consist of the following: For the Years Ended December 31, 2018 2017 2016 Current Federal $ 458 $ 368 $ — State and local 9 266 — Foreign 251 — — Total current tax expense 718 634 — Deferred Federal (14,820 ) 3,202 (9,708 ) State and local (2,252 ) (3,102 ) (1,138 ) Foreign (49 ) — — Total deferred tax expense (17,121 ) 100 (10,846 ) Change in valuation allowance 16,443 (7,371 ) 91 Total tax expense (benefit) $ 40 $ (6,637 ) $ (10,755 ) A reconciliation of the U.S. statutory tax rate to our effective tax rate is presented below: For the Years Ended December 31, 2018 2017 2016 U.S. statutory tax rate 21.0 % 35.0 % 35.0 % U.S. state income taxes, net of U.S. federal tax benefit 3.6 % 3.3 % 4.0 % Foreign earnings at other than U.S. rates (0.2 )% — % — % Change in valuation allowance (30.4 )% (34.0 )% (0.1 )% Change in valuation allowance, tax reform — % 43.7 % — % Impact of tax reform — % (36.0 )% — % Goodwill impairment — % — % (18.7 )% Gain on contribution — % — % (5.0 )% Non-controlling interest (0.7 )% (4.6 )% (11.0 )% Excess tax benefits on stock-based compensation 3.9 % 3.1 % 0.1 % Federal and state R&D tax credits 4.5 % — % — % Change in uncertain tax positions (1.1 )% — % — % Other, net (0.7 )% (1.8 )% 0.2 % Effective rate (0.1 )% 8.7 % 4.5 % 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, 2018 2017 Deferred Tax Assets Start-up and organizational costs $ 160 $ 185 Internally developed software costs 3,283 3,974 Net operating loss carryforwards 76,019 51,197 Federal and state R&D tax credits 1,828 — Other 861 (69 ) Subtotal 82,151 55,287 Valuation allowance (37,037 ) (53,201 ) Total deferred tax assets 45,114 2,086 Deferred Tax Liabilities Equity-method investment 43,492 4,523 Intangible assets 26,710 — Total deferred tax liabilities 70,202 4,523 Net deferred tax assets (liabilities) $ (25,088 ) $ (2,437 ) Changes in our valuation allowance (in thousands) were as follows: For the Years Ended December 31, 2018 2017 2016 Balance at beginning-of-year $ 53,201 $ 26,376 $ 19,974 Charged to costs and expenses 16,443 (7,371 ) 91 Charged to other accounts (1) (32,607 ) 34,196 6,311 Balance at end-of-year $ 37,037 $ 53,201 $ 26,376 (1) Amounts charged to other accounts includes a decrease of $32.6 million , increase of $34.2 million and increase of $6.3 million charged to additional paid-in-capital for the years ended December 31, 2018 , 2017 and 2016 , 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, 2018 , the effective tax rate was (0.1)% , and the corresponding tax expense recorded was less than $0.1 million , 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. 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 included 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. As of December 31, 2017, the Company had recorded a provisional estimate of $5.8 million tax benefit for the financial statement impact of the Tax Act in accordance with SEC Staff Accounting Bulletin No. 118. As of December 22, 2018, the Company has completed the analysis based on legislative updates relating to the Tax Act currently available, which resulted in an additional SAB 118 tax benefit of $0.3 million . 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. As of December 31, 2018 , the Company had NOLs fully available to offset future taxable income of approximately $203.1 million that begin to expire in 2031 through 2038 , and $107.9 million of NOLs with an indefinite carryforward period, subject to a utilization limit of 80% of taxable income in any given year. 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, 2018 2017 2016 Balance at beginning-of-year $ 762 $ — $ — Gross increases - tax positions in prior period 934 1,108 — Gross decreases - tax positions in prior period (762 ) — — Gross increases - tax positions in current period — 74 — Change in tax rate — (420 ) — Balance at end-of-year $ 934 $ 762 $ — Included in the balance of unrecognized tax benefits as of December 31, 2018 , are $0.9 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 recognized $0.8 million of uncertain tax positions as of December 31, 2017 , and no ne as of December 31, 2016 . The Company and its subsidiaries are not currently subject to income tax audits in any U.S. state or local jurisdiction, or any foreign jurisdiction, 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 and Comprehensive Income (Loss) 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, 2018 | |
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 $8.6 million , $8.0 million and $4.3 million in contributions to the 401(k) plan for the years ended December 31, 2018 , 2017 and 2016 , respectively. |
Investments In and Advances to
Investments In and Advances to Equity Method Investees | 12 Months Ended |
Dec. 31, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments In and Advances to Equity Method Investees | Investments In and Advances to Equity Method Investees During the years ended December 31, 2018 and 2017 , the Company entered into joint venture agreements with various entities. As of December 31, 2018 , the Company’s economic and voting interests in these entities ranged between 4% and 40% . As of December 31, 2017 , the Company’s economic and voting interests in these entities ranged between 26% and 40% . The Company determined that it has significant influence over these entities but that it does not have control over any of the entities. Accordingly, the investments are accounted for under the equity method of accounting and the Company is 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 $4.7 million , $1.8 million and $0.8 million for the years ended December 31, 2018 , 2017 and 2016 , respectively. The Company signed services agreements with certain of the aforementioned entities to provide certain management, operational and support services to help manage elements of their service offerings. Revenue related to these services agreements for the years ended December 31, 2018 , 2017 and 2016 , was $10.7 million , $0.4 million and $0.2 million , respectively. |
Non-controlling Interests
Non-controlling Interests | 12 Months Ended |
Dec. 31, 2018 | |
Noncontrolling Interest [Abstract] | |
Non-controlling Interests | Non-controlling Interests Immediately following the Offering Reorganization and IPO, the Company owned 70.3% of Evolent Health LLC. The Company’s ownership percentage changes with the issuance of Class A or Class B common stock and Class B Exchanges. In order to account for any changes in the Company’s ownership of Evolent Health LLC, we record a reclassification of equity between non-controlling interests and shareholders’ equity attributable to Evolent Health, Inc. 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 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. During the year ended December 31, 2017 , the Company completed the 2017 Secondary Offerings discussed in Note 4. 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. 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. During the year ended December 31, 2018 , the Company completed the March 2018 Private Sale. The shares sold in the March 2018 Private Sale consisted of 1.2 million existing shares of the Company’s Class A common stock owned and held by The Advisory Board and 1.8 million newly-issued shares of the Company’s Class A common stock received by The Advisory Board pursuant to a Class B Exchange. As a result of this Class B Exchange and Evolent Health LLC’s cancellation of the Class B common units during the March 2018 Private Sale, the Company’s economic interest in Evolent Health LLC increased from 96.6% to 98.9% immediately following the March 2018 Private Sale. Also during the year ended December 31, 2018 , the Company issued 3.1 million shares of Evolent Health LLC’s Class B common units and an equal number of the Company’s Class B common shares as part of the consideration for the New Century Health transaction. The Class B common units, together with a corresponding number of shares of the Company’s Class B common stock, can be exchanged for an equivalent number of shares of the Company’s Class A common stock. As a result of the Class B common units (and corresponding Class B common shares) issued as part of the New Century Health transaction, the Company’s economic interest in Evolent Health LLC decreased from 99.0% to 95.3% , immediately following the acquisition. In addition, the Company completed the November 2018 Private Sales during 2018. The shares sold in the November 2018 Private Sales consisted of 0.1 million existing shares of the Company’s Class A common stock owned by TPG and 0.7 million newly-issued shares of the Company’s Class A common stock received by TPG pursuant to Class B Exchanges. As a result of these Class B Exchanges and Evolent Health LLC’s cancellation of the Class B common units during the November 2018 Private Sales, the Company’s economic interest in Evolent Health LLC increased from 95.3% to 96.1% immediately following the November 2018 Private Sales. As of December 31, 2018 and 2017 , we owned 96.1% and 96.6% of the economic interests in Evolent Health LLC, respectively. See Note 4 for further discussion of our business combinations and securities offerings. Changes in non-controlling interests (in thousands) for the periods presented were as follows: For the Years Ended December 31, 2018 2017 Non-controlling interests balance as of beginning-of-year $ 35,427 $ 209,588 Cumulative-effect adjustment from adoption of new accounting principle 594 — Decrease in non-controlling interests as a result of Class B Exchanges (34,682 ) (168,883 ) Issuance of Class B common stock for business combination 42,787 — Net income (loss) attributable to non-controlling interests (1,533 ) (9,102 ) Reclassification of non-controlling interests 2,939 3,824 Non-controlling interests balance as of end-of-year $ 45,532 $ 35,427 |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ 11,391 $ — $ — $ 11,391 Restricted cash and restricted investments (1) 31,226 — — 31,226 Total $ 42,617 $ — $ — $ 42,617 Liabilities Contingent consideration (2) $ — $ — $ 8,800 $ 8,800 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 (3) $ — $ — $ 8,700 $ 8,700 (1) Represents the cash and cash equivalents and restricted cash and restricted investments that were held in money market funds as of December 31, 2018 and 2017 , as presented in the tables above. (2) Represents the fair value of earn-out consideration related to the Passport and New Century Health transactions, as described in Note 4 . Out of the total $8.8 million , $5.6 million is attributable to Passport and $3.2 million is attributable to New Century Health. (3) Represents the fair value of earn-out consideration related to the Passport transaction, as described 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, 2018 and 2017 , 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 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. 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. Also as discussed in Note 4 , the acquisition of New Century Health includes an earn-out of up to $11.4 million , contingent upon New Century Health achieving certain levels of operating results during 2019. The fair value of the earn-out was estimated based on the real options approach, a form of the income approach, which estimated the probability of New Century Health achieving certain levels of operating results during 2019. The significant unobservable inputs used in the fair value measurement of the New Century Health earn-out are the risk neutral probabilities that the 2019 operating results for New Century Health meet the defined operating results target or exceed the operating results target cap. A significant increase in either one of these metrics, 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, 2018 2017 Balance as of beginning of year $ 8,700 $ 8,300 Additions (1) 3,200 — Realized and unrealized (gains) losses, net (2) (3,100 ) 400 Balance as of end of year $ 8,800 $ 8,700 (1) Additions during 2018 are attributable to the earn-out related to the New Century Health transaction. (2) Realized and unrealized gains and losses during 2018 and 2017 are attributable to the earn-out related to the Passport transaction. 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, 2018 Fair Valuation Significant Assumption or Value Technique Unobservable Inputs Input Ranges Passport contingent consideration $ 5,600 Real options approach Risk-adjusted recurring revenue CAGR 103.9 % (1) Discount rate/time value 5.5% - 6.5% New Century Health contingent consideration $ 3,200 Real options approach Risk-neutral probability exceeds threshold 39.0 % (2) Risk-neutral probability meets earn-out cap 24.0 % (2) (1) 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 revenue of $1.0 million , resulting in a higher growth rate. The risk-adjusted recurring revenue CAGR from 2019-2021 is 61.8% . (2) These amounts represent 1) the probability that New Century Health will achieve at least the minimum level of operating results in 2019 to earn any contingent consideration ( 39.0% ) and 2) the probability that New Century Health will achieve 2019 operating results in excess of the maximum amount of contingent consideration payable ( 24.0% ). The risk-neutral probability rates were determined by projecting theoretical 2019 operating results using a simulation with one million trials. As of December 31, 2017 Fair Valuation Significant Assumption or Value Technique Unobservable Inputs Input Ranges Passport contingent consideration $ 8,700 Real options approach Risk-adjusted recurring revenue CAGR 92.5 % (1) Discount rate/time value 2.7% - 4.0% (1) 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% . 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 assets and liabilities recorded in business combinations or asset acquisitions, 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 , 14 and 20 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 2025 Notes and the 2021 Notes. |
Related Parties
Related Parties | 12 Months Ended |
Dec. 31, 2018 | |
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 $10.7 million , $0.4 million and $0.2 million for the years ended December 31, 2018 , 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. The following table presents revenues and expenses attributable to our related parties (in thousands): For the Years Ended December 31, 2018 2017 2016 Revenue Transformation services $ 10,540 $ 597 $ 482 Platform and operations services 37,490 32,335 34,267 Expenses Cost of revenue (exclusive of depreciation and amortization expenses) 9,451 22,389 22,207 Selling, general and administrative expenses 917 1,153 2,027 |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting We define our reportable segments based on the way the chief operating decision maker (“CODM”), currently the chief executive officer, manages the operations for purposes of allocating resources and assessing performance. We classify our operations into two reportable segments as follows: • Services, which consists of our technology-enabled value-based care services, specialty care management services and comprehensive health plan administration services; and • True Health, which consists of a commercial health plan we operate in New Mexico that focuses on small and large businesses. In the ordinary course of business, our reportable segments enter into transactions with one another. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues and expenses recognized by the segment that is the counterparty to the transaction are eliminated in consolidation and do not affect consolidated results. The CODM uses Adjusted Revenue and Adjusted EBITDA as the relevant segment performance measures to evaluate the performance of the segments and allocate resources. Adjusted Revenue and Adjusted EBITDA are segment performance financial measures that offer a useful view of the overall operation of our businesses and may be different than similarly-titled segment performance financial measures used by other companies. Adjusted Revenue is defined as the sum of Adjusted Services Revenue and True Health premiums revenue less intersegment eliminations. Adjusted Services Revenue is defined as Services revenue adjusted to exclude the impact of purchase accounting adjustments. Adjusted Services Revenue consists of Adjusted Transformation Services Revenue and Adjusted Platform and Operations Services Revenue, which are defined as transformation services revenue and platform and operations services revenue, respectively, before the effect of intersegment eliminations and adjusted to exclude the impact of purchase accounting adjustments. The company’s Adjusted Services Revenue for the year ended December 31, 2018 , includes a $4.5 million adjustment related to revenue that was contracted for prior to 2018 and that was properly excluded from revenue in our 2017 results under the revenue recognition rules then in effect under ASC 605. On January 1, 2018, we adopted the new revenue recognition rules under ASC 606 using the modified retrospective method, which required us to include this $4.5 million as part of the cumulative transition adjustment to beginning retained earnings as of January 1, 2018. Under ASC 605, and based on proportionate performance revenue recognition, we would have recognized an additional $4.5 million in revenue during 2018, primarily within our Adjusted Transformation Services Revenue. The Company has therefore included this revenue, and related profit, in its adjusted results for the year ended December 31, 2018 , as they had not been previously reported prior to 2018 and the contracts are expected to be completed within 2018. This is a one-time adjustment and it will not reoccur in future periods. Adjusted EBITDA is the sum of Services Adjusted EBITDA and True Health Adjusted EBITDA and is defined as EBITDA (net income (loss) attributable to Evolent Health, Inc. before interest income, interest expense, (provision) benefit for income taxes, depreciation and amortization expenses), adjusted to exclude changes in fair value of contingent consideration and indemnification assets, income (loss) from equity method investees, other income (expense), net, net (income) loss attributable to non-controlling interests, purchase accounting adjustments, stock-based compensation expenses, severance costs, amortization of contract cost assets recorded as a result of a one-time ASC 606 transition adjustment, transaction costs related to acquisitions and business combinations, goodwill impairment and other one-time adjustments (which for the year ended December 31, 2018 , includes the ASC 606 transition adjustment described above). When Adjusted EBITDA is discussed in this report, the most directly comparable GAAP financial measure is net income (loss) attributable to Evolent Health, Inc. Management considers Adjusted Revenue and Adjusted EBITDA to be the appropriate metrics to evaluate and compare the ongoing operating performance of our segments on a consistent basis across reporting periods as they eliminate the effect of items which are not indicative of each segment's core operating performance. The following tables present our segment information (in thousands): Intersegment Services True Health (1) Eliminations Consolidated Adjusted Revenue For the Year Ended December 31, 2018 Services: Adjusted Transformation Services $ 36,571 $ — $ — $ 36,571 Adjusted Platform and Operations Services 516,219 — (14,325 ) 501,894 Adjusted Services Revenue 552,790 — (14,325 ) 538,465 True Health: Premiums — 94,763 (806 ) 93,957 Adjusted Revenue 552,790 94,763 (15,131 ) 632,422 ASC 606 transition adjustment (2) (4,498 ) — — (4,498 ) Purchase accounting adjustments (3) (861 ) — — (861 ) Total revenue $ 547,431 $ 94,763 $ (15,131 ) $ 627,063 For the Year Ended December 31, 2017 Services: Adjusted Transformation Services $ 29,466 $ — $ — $ 29,466 Adjusted Platform and Operations Services 406,951 — — 406,951 Adjusted Services Revenue 436,417 — — 436,417 Adjusted Revenue 436,417 — — 436,417 Purchase accounting adjustments (3) (1,467 ) — — (1,467 ) Total revenue $ 434,950 $ — $ — $ 434,950 For the Year Ended December 31, 2016 Services: Adjusted Transformation Services $ 38,434 $ — $ — $ 38,434 Adjusted Platform and Operations Services 217,844 — — 217,844 Adjusted Services Revenue 256,278 — — 256,278 Adjusted Revenue 256,278 — — 256,278 Purchase accounting adjustments (4) (2,090 ) — — (2,090 ) Total revenue $ 254,188 $ — $ — $ 254,188 Segments Services True Health (1) Total For the Year Ended December 31, 2018 Adjusted EBITDA $ 21,310 $ 1,915 $ 23,225 For the Year Ended December 31, 2017 Adjusted EBITDA $ (2,204 ) $ — $ (2,204 ) For the Year Ended December 31, 2016 Adjusted EBITDA $ (21,407 ) $ — $ (21,407 ) (1) The True Health segment was created in January 2018. (2) Adjustment to Adjusted Transformation Services Revenue was approximately $3.7 million and the adjustment to Adjusted Platform and Operations Services Revenue was approximately $0.8 million . (3) Purchase accounting adjustments pertain to Adjusted Platform and Operations Services Revenue. There were no purchase accounting adjustments in relation to Adjusted Transformation Services Revenue or True Health premiums revenue. (4) Purchase accounting adjustments of $2.1 million include an adjustment of $0.1 million to Adjusted Transformation Services Revenue and an adjustment of $2.0 million to Adjusted Platform and Operations Services Revenue. The following table presents our reconciliation of segments total Adjusted EBITDA to net income (loss) attributable to Evolent Health, Inc. (in thousands): For the Years Ended December 31, 2018 2017 2016 Net Income (Loss) Attributable to Evolent Health, Inc. $ (52,658 ) $ (60,665 ) $ (159,742 ) Less: Interest income 3,440 1,656 970 Interest expense (5,484 ) (3,636 ) (247 ) (Provision) benefit for income taxes (40 ) 6,637 10,755 Depreciation and amortization expenses (44,515 ) (32,368 ) (17,224 ) Goodwill impairment — — (160,600 ) Impact of lease abandonment — — (6,456 ) Income (loss) from equity method investees (4,736 ) (1,755 ) (841 ) Change in fair value of contingent consideration and indemnification asset 4,104 (400 ) 2,086 Other income (expense), net 109 171 4 Net (income) loss attributable to non-controlling interests 1,533 9,102 67,036 ASC 606 transition adjustments (4,498 ) — — Purchase accounting adjustments (861 ) (1,467 ) (2,090 ) Stock-based compensation expense (17,609 ) (20,437 ) (22,501 ) Severance costs (2,205 ) — — Amortization of contract cost assets (2,456 ) — — Transaction costs (2,665 ) (15,964 ) (9,227 ) Adjusted EBITDA $ 23,225 $ (2,204 ) $ (21,407 ) Asset information by segment is not a key measure of performance used by the CODM. Accordingly, we have not disclosed asset information by segment. |
Claims Reserves
Claims Reserves | 12 Months Ended |
Dec. 31, 2018 | |
Insurance [Abstract] | |
Claims Reserves | Claims Reserves The Company maintains reserves for claims incurred but not paid related its specialty care management services and its health plan, True Health, in New Mexico. Claims reserves reflect estimates of the ultimate cost of claims that have been incurred but not reported, including expected development on reported claims, those that have been reported but not yet paid (reported claims in process), and other medical care expenses and services payable that are primarily comprised of accruals for incentives and other amounts payable to health care professionals and facilities. Claims reserves also reflect estimated amounts owed to NMHC under the Reinsurance Agreement, as discussed further in Note 9. The Company uses actuarial principles and assumptions that are consistently applied each reporting period and recognizes the actuarial best estimate of the ultimate liability along with a margin for adverse deviation. This approach is consistent with actuarial standards of practice that the liabilities be adequate under moderately adverse conditions. This liability predominately consists of incurred but not reported amounts and reported claims in process including expected development on reported claims. The liability is primarily calculated using "completion factors" developed by comparing the claim incurred date to the date claims were paid. Completion factors are impacted by several key items including changes in: 1) electronic (auto-adjudication) versus manual claim processing, 2) provider claims submission rates, 3) membership and 4) the mix of products. The Company’s policy is to use historical completion factors combined with an analysis of current trends and operational factors to develop current estimates of completion factors. The Company estimates the liability for claims incurred in each month by applying the current estimates of completion factors to the current paid claims data. This approach implicitly assumes that historical completion rates will be a useful indicator for the current period. For more recent months, the Company expects to rely more heavily on medical cost trend analysis that reflects expected claim payment patterns and other relevant operational considerations, or authorization analysis. Medical cost trend is primarily impacted by medical service utilization and unit costs that are affected by changes in the level and mix of medical benefits offered, including inpatient, outpatient and pharmacy, the impact of copays and deductibles, changes in provider practices and changes in consumer demographics and consumption behavior. Authorization analysis projects costs on an authorization-level basis and also accounts for the impact of copays and deductibles, unit cost and historic discontinuation rates for treatment. For each reporting period, the Company compares key assumptions used to establish the claims reserves to actual experience. When actual experience differs from these assumptions, claims reserves are adjusted through current period shareholders' net income. Additionally, the Company evaluates expected future developments and emerging trends that may impact key assumptions. The process used to determine this liability requires the Company to make critical accounting estimates that involve considerable judgment, reflecting the variability inherent in forecasting future claim payments. These estimates are highly sensitive to changes in the Company's key assumptions, specifically completion factors and medical cost trends. Activity in claims reserves for the year ended December 31, 2018, was as follows (in thousands): Services (1) True Health Total Incurred costs related to current year $ 38,674 $ 70,889 $ 109,563 Paid costs related to current year 38,124 58,318 96,442 Change during the year 550 12,571 13,121 Other adjustments (2) (1,466 ) (2,691 ) (4,157 ) Beginning balance 18,631 — 18,631 Ending balance $ 17,715 $ 9,880 $ 27,595 (1) Costs incurred to provide specialty care management services are recorded within cost of revenue in our statement of operations. (2) Other adjustments to claims reserves for Services reflect changes in accrual for amounts payable to facilities and amounts owed to our payer partners for claims paid on our behalf. Other adjustments for True Health include reinsurance premiums assumed of $2.7 million , net of claims-related administrative expenses of $0.6 million . In connection with the Reinsurance Agreement, we assumed $3.9 million of claims expenses for the year ended December 31, 2018, which is recorded within “Claims expenses” on our Consolidated Statements of Operations and Comprehensive Income (Loss), and recorded a liability of $1.2 million as of December 31, 2018, which is recoded within “Claims reserves” on our Consolidated Balance Sheets. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2018 | |
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. The amortized cost, gross unrealized gains and losses, and fair value of our investments as measured using Level 2 inputs as of December 31, 2018 (in thousands) were as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. Treasury bills $ 7,982 $ 120 $ — $ 8,102 Corporate bonds 887 17 — 904 Other CMOs 545 6 — 551 Yankees 596 11 — 607 Total investments $ 10,010 $ 154 $ — $ 10,164 We did no t hold any material investments as of December 31, 2017. The amortized cost and fair value of our investments by contractual maturities as of December 31, 2018 (in thousands) were as follows: Amortized Fair Cost Value Due after one year through five years $ 9,666 $ 9,813 Due after five years through ten years 344 351 Total $ 10,010 $ 10,164 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, credit worthiness 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. We did not hold any securities that were in an unrealized loss position as of December 31, 2018 or 2017 . |
Quarterly Results of Operations
Quarterly Results of Operations (unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
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 2018 Total revenue $ 139,714 $ 144,298 $ 149,947 $ 193,104 Total operating expenses 153,846 153,264 160,977 206,456 Net income (loss) (14,065 ) (10,031 ) (12,555 ) (17,540 ) Net income (loss) attributable to non-controlling interests (439 ) (115 ) (126 ) (853 ) Net income (loss) attributable to Evolent Health, Inc. (13,626 ) (9,916 ) (12,429 ) (16,687 ) Earnings (loss) per common share Basic and Diluted $ (0.18 ) $ (0.13 ) $ (0.16 ) $ (0.21 ) 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 and Diluted $ (0.34 ) $ (0.28 ) $ (0.18 ) $ (0.18 ) 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. On January 2, 2018, the Company launched a health plan in New Mexico, True Health, by acquiring assets related to NMHC’s commercial business. On October 1, 2018, the Company completed the acquisition of New Century Health. Accordingly, the 2018 quarterly results include the consolidated results of True Health and the quarterly results for the fourth quarter of 2018 include the consolidated results of New Century Health. In addition, as described further in Note 8 , the Company issued its 2025 Notes during the fourth quarter of 2018, which increased interest expense by approximately $2.0 million during the fourth quarter of 2018. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 2017 2016 Supplemental Disclosure of Non-cash Investing and Financing Activities Class A and Class B common stock issued in connection with business combinations $ 83,173 $ — $ 177,795 Change in goodwill due to measurement period adjustments related to business combinations (117 ) 1,611 — Decrease in accrued financing costs related to 2021 Notes — 196 — Consideration for asset acquisitions or business combinations 500 — — Settlement of escrow related to asset acquisition 2,519 — — Settlement of indemnification asset 1,004 — — Tax benefit related to Accordion intangible technology — 2,042 — Acquisition consideration payable — — 1,148 Accrued property and equipment purchases 368 229 446 Accrued deferred financing costs 607 — 1,036 Effects of Class B Exchanges Decrease in non-controlling interests as a result of Class B Exchanges 34,682 168,883 28,220 Decrease in deferred tax liability as a result of securities offerings and exchanges 652 12,857 1,606 Supplemental Disclosures Cash paid during the period for interest 2,500 2,472 — Cash paid during the year for taxes, net 343 674 — |
Basis of Presentation, Summar_2
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
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. |
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 (including intangibles and long lived assets), liabilities (including IBNR), consideration related to business combinations and asset acquisitions, revenue recognition including variable consideration, estimated selling prices for performance obligations in contracts with multiple performance obligations, claims reserves, 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. |
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 operates through two segments: (1) Services, and (2) True Health. Our Services segment consists of our technology-enabled value-based care services, specialty care management services and comprehensive health plan administration services. Our True Health segment consists of a commercial health plan we operate in New Mexico that focuses on small and large businesses. See Note 18 for a discussion of our operating results by segment. |
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 |
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 helped support implementation services to assist the customer in expanding its Medicaid membership. |
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. The following summarizes the 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 and Comprehensive Income (Loss). 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. Research and development costs are recorded within “Selling, general and administrative expenses” on our Consolidated Statements of Operations |
Business Combinations | Business Combinations Companies acquired during each reporting period are reflected in the results of the Company effective from their respective dates of acquisition through the end of the reporting period. The Company allocates the fair value of purchase consideration to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. Our estimates of fair value are based upon assumptions believed to be reasonable but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Critical estimates used to value certain identifiable assets include, but are not limited to, expected long-term revenues, future expected operating expenses, cost of capital, and appropriate discount rates. The excess of the fair value of purchase consideration over the fair value of the assets acquired and liabilities assumed in the acquired entity is recorded as goodwill. Goodwill is assigned to the reporting unit that benefits from the synergies arising from the business combination. If the Company obtains new information about facts and circumstances that existed as of the acquisition date during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company's Consolidated Statements of Operations and Comprehensive Income (Loss). For contingent consideration recorded as a liability, the Company initially measures the amount at fair value as of the acquisition date and adjusts the liability, if needed, to fair value each reporting period. Changes in the fair value of contingent consideration, other than measurement period adjustments, are recognized as operating income or expense. Acquisition-related expenses and post-acquisition restructuring costs are recognized separately from the business combination and are expensed as incurred. |
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. We perform impairment tests of goodwill at a reporting unit level, which is consistent with the way management evaluates our business. The Company has three reporting units: Legacy Services, New Century Health and True Health. Our annual goodwill impairment review occurs during the fourth quarter of each year. 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. 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 a reporting unit is below its carrying amount. If the Company determines that it is more likely than not that the fair value of a 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 and Comprehensive Income (Loss). See Note 7 for additional discussion regarding the goodwill impairment tests conducted during 2018 and 2017 . |
Intangible assets, net | Intangible Assets, Net 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. The Company acquired additional intangible assets in conjunction with strategic acquisitions made during 2018. Information regarding the determination and allocation of the fair value of the acquired assets and liabilities is further described within Note 4 . The following summarizes the estimated useful lives by asset classification: Corporate trade name 10-20 years Customer relationships 15-25 years Technology 5 years Provider network contracts 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. |
Claims reserves | Claims Reserves Claims reserves for our Services and True Health segments reflect estimates of the ultimate cost of claims that have been incurred but not reported, including expected development on reported claims, those that have been reported but not yet paid (reported claims in process), and other medical care expenses and services payable that are primarily comprised of accruals for incentives and other amounts payable to health care professionals and facilities. Claims reserves also reflect estimated amounts owed to NMHC under a reinsurance agreement as discussed further in Note 9 . The Company uses actuarial principles and assumptions that are consistently applied each reporting period and recognizes the actuarial best estimate of the ultimate liability along with a margin for adverse deviation. This approach is consistent with actuarial standards of practice that the liabilities be adequate under moderately adverse conditions. The process of estimating reserves involves a considerable degree of judgment by the Company and, as of any given date, is inherently uncertain. The methods for making such estimates and for establishing the resulting liability are continually reviewed, and adjustments are reflected in current results of operations in the period in which they are identified as experience develops or new information becomes known. See Note 19 for additional discussion regarding our claims reserves. |
Long-term debt | Long-term Debt Convertible notes are carried at cost, net of debt discounts and issuance costs, as long-term debt on the Consolidated Balance Sheets. The debt discounts and issuance costs are amortized to non-cash interest expense using the straight line method over the contractual term of the note if that method is not materially different from the effective interest rate method. Cash interest payments are due semi-annually in arrears and we accrue interest expense monthly based on the annual coupon rate. See Note 8 for further discussion regarding our convertible notes. |
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 and Comprehensive Income (Loss) 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 and Comprehensive Income (Loss) over the terms of the leases. As of December 31, 2018 and 2017 , the Company had not entered into any material 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 and Comprehensive Income (Loss) 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. |
Revenue recognition and cost of revenue (exclusive of depreciation and amortization) | Adoption of ASU 2014-09, Revenue from Contracts with Customers As discussed in Note 3 , the Company adopted ASU 2014-09, Revenue from Contracts with Customers, effective January 1, 2018. The following is our updated accounting policy with respect to revenue recognition for our Services segment. Our Services segment derives revenue from two sources: (1) transformation services and (2) platform and operations services. Revenue is recognized when control of the services is transferred to our customers. With the exception of revenues from our downside risk sharing arrangements through our insurance subsidiary, we use the following 5-Step model, outlined in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), to determine revenue recognition on our contracts with customers: • Identify the contract(s) with a customer • Identify the performance obligations in the contract • Determine the transaction price • Allocate the transaction price to performance obligations • Recognize revenue when (or as) the entity satisfies a performance obligation Transformation Services Revenue Transformation services consist of strategic assessments, or Blueprint contracts, and implementation services whereby we assist the customer in launching its population health or health plan strategy. In certain cases, transformation services can also include revenue associated with our support of certain one-time wind-down activities for clients who are exiting a line of business or population. The transformation services are usually completed within 12 months. We generally receive a fixed fee for transformation services and recognize revenue over time using an input method based on hours incurred compared to the total estimated hours required to satisfy our performance obligation. Platform and Operations Services Revenue Platform and operations services generally include multi-year arrangements with customers to provide various population health, health plan operations, specialty care management (through capitated arrangements) and claims processing services on an ongoing basis, as well as transition or run-out services to customers receiving primarily third-party administration (“TPA”) services. Our performance obligation in these arrangements is to provide an integrated suite of services, including access to our platform that is customized to meet the specialized needs of our customers and members. Generally we will apply the series guidance to the performance obligation as we have determined that each time increment is distinct. We primarily utilize a variable fee structure for these services that typically include a monthly payment that is calculated based on a specified per member per month rate, multiplied by the number of members that our partners are managing under a value-based care arrangement or a percentage of plan premiums. Our arrangements may also include other variable fees related to service level agreements, shared medical savings arrangements and other performance measures. Variable consideration is estimated using the most likely amount based on our historical experience and best judgment at the time. Due to the nature of our arrangements certain estimates may be constrained if it is probable that a significant reversal of revenue will occur when the uncertainty is resolved. We recognize revenue for platform and operations services over time using the time elapsed output method. Fixed consideration is recognized ratably over the contract term. In accordance with the series guidance, we allocate variable consideration to the period to which the fees relate. Contracts with Multiple Performance Obligations Our contracts with customers may contain multiple performance obligations, primarily when the customer has requested both transformation services and platform and operations services as these services are distinct from one another. When a contract has multiple performance obligations, we allocate the transaction price to each performance obligation based on the relative standalone selling price using the expected cost margin approach. This approach requires estimates regarding both the level of effort it will take to satisfy the performance obligation as well as fees that will be received under the variable pricing model. We also take into consideration customer demographics, current market conditions, the scope of services and our overall pricing strategy and objectives when determining the standalone selling price. Principal vs Agent We occasionally use third parties to assist in satisfying our performance obligations. In order to determine whether we are the principal or agent in the arrangement, we review each third-party relationship on a contract by contract basis. We are an agent when our role is to arrange for another entity to provide the services to the customer. In these instances, we do not control the service before it is provided and recognize revenue on a net basis. We are the principal when we control the good or service prior to transferring control to the customer. We recognize revenue on a gross basis when we are the principal in the arrangement. Previous revenue policy Prior to the adoption of the new revenue guidance on January 1, 2018, the Company recognized revenue when persuasive evidence of an arrangement existed, the fees were fixed or determinable, the product or service had been delivered and collectability was assured. The Company considered the terms of each arrangement to determine the appropriate accounting treatment. In accordance with the requirements under ASU 2014-09, the impact of adoption to our consolidated financial statements was as follows. See Note 5 for additional disclosures regarding Evolent's contracts with customers. Revenue Recognition Our Services segment derives revenue from two sources: (1) transformation services and (2) platform and operations services. See “Changes in Accounting Principles” below for our updated revenue recognition policy as a result of our adoption of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. Our True Health segment derives revenue from premiums that are earned over the terms of the related insurance policies. The portion of premiums that will be earned in the future or are received prior to the effectiveness of the policy are deferred and reported as premiums received in advance. These amounts are generally classified as short-term deferred revenue on our Consolidated Balance Sheets. 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. In certain cases, our cost of revenue also includes claims and capitation payments to providers and payments for pharmaceutical treatments through capitated arrangements. |
Claims Expenses | Claims Expenses Our claims expenses consist of the direct medical expenses incurred by our True Health segment. Claims expenses are recognized in the period in which services are provided and include amounts that have been paid by us through the reporting date, as well as estimated medical claims and benefits payable for costs that have been incurred but not paid by us as of the reporting date. Claims expenses include, among other items, fee-for-service claims, pharmacy benefits, various other related medical costs and expenses related to our reinsurance agreement. We use judgment to determine the appropriate assumptions for determining the required estimates. |
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, vendors 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 and Comprehensive Income (Loss). Additionally, and if applicable, 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. |
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, 2018 and 2017, our identified balance of uncertain income tax positions would not have a material impact to the consolidated financial statements. We are subject to taxation in various jurisdictions in the U.S. and India and remain subject to examination by taxing jurisdictions for the year 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. Evolent Health LLC has direct ownership in corporate subsidiaries, which are subject to U.S. and foreign taxes with respect to their own operations. |
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 plus the weighted average number of Class A common shares assuming the conversion of our convertible 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. |
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. 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. 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 assets and liabilities recorded in business combinations or asset acquisitions, 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 , 14 and 20 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 2025 Notes and the 2021 Notes. |
Foreign currency | Foreign Currency The Company formed a subsidiary in India during the first quarter of 2018. The functional currency of our international subsidiary is the Indian Rupee. We translate the financial statements of this subsidiary to U.S. dollars using month-end rates of exchange for assets and liabilities, and average rates of exchange for revenue and expenses. Translation gains and losses are recorded in accumulated other comprehensive income (loss) as a component of shareholders' equity. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Adoption of New Accounting Standards In June 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-07, Compensation - Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting . The update expands the scope of ASC Topic 718, Compensation - Stock Compensation (“ASC 718”), to include share-based payment transactions for acquiring goods and services from nonemployees. The ASU specifies that ASC 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments in the update also clarify that ASC 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC 606. The update is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted, but no earlier than an entity’s adoption date of ASC 606. We adopted the requirements of this standard effective July 1, 2018, and the adoption did not have a material impact to our financial condition and results of operations during 2018. Going forward, we do not expect the adoption to have a material impact on our financial condition or 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. 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. The Company adopted the standard effective January 1, 2018, using the modified retrospective method for only contracts that were not completed at the date of initial application. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC Topic 605, Revenue Recognition (“ASC 605”). The adoption of this standard resulted in changes related to revenue recognition for contracts that contain certain features, such as variable consideration. These changes generally accelerate revenue recognition. In addition, certain customer setup costs, which have historically been expensed as incurred, will now be capitalized. Evolent recognized the cumulative effect of applying the new revenue standard as a $17.3 million adjustment to the opening balance of retained earnings, including non-controlling interests, in the first quarter of 2018, primarily as a result of capitalization of expenses related to contract acquisition and fulfillment costs and acceleration of revenue due to variable consideration estimation. See Note 5 for additional disclosures regarding Evolent's contracts with customers. See Note 2 for updated revenue recognition accounting policy and the impact of adopting the new revenue recognition standard on Evolent’s financial statements. Future Adoption of New Accounting Standards In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software: Customers Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Services Contract . The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The update is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We are currently evaluating the impact of adoption on our financial condition and results of operations. 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 , which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight‑line basis over the term of the lease, respectively. A lessee is also required to record a right‑of‑use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. ASU 2016-02 (ASC Topic 842) supersedes the previous leases standard, ASC 840, Leases . The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. A modified retrospective transition approach was required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. In July 2018, the FASB issued ASU 2018-11, which is intended to make targeted improvements to ASU 2016-02. The amendments in ASU 2018-11 provide entities with an additional (and optional) transition method to adopt the new leases standard by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The requirements of ASU 2018-11 are effective on the same date as the requirements of ASU 2016-02. Pursuant to ASU 2018-11, the Company will apply the new standard at its adoption date rather than at the earliest comparative period presented in the financial statements and recognize a cumulative-effect adjustment to the opening balance of retaining earnings. We intend to adopt the requirements of the new lease accounting standard effective January 1, 2019, using a modified retrospective approach. The Company has formulated an implementation team that is currently engaged in the evaluation process. We expect to take advantage of the package of practical expedients permitted within the new standard. We anticipate that this standard will have a material impact on our Consolidated Balance Sheets. We have considerable future minimum lease commitments related to our current noncancelable facility leases that expire through 2031, and we are currently in the process of renewing our lease at our headquarters in Arlington, Virginia. Recording our facility leases as right-of-use assets and the present value of remaining lease payments for leases in place at adoption as liabilities will have a material impact on our Consolidated Balance Sheets. We do not believe, however, that the adoption will have a material impact on our results of operations. See Note 9 for a disclosure of our undiscounted future minimum lease commitments. |
Basis of Presentation, Summar_3
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 2017 Collateral for letters of credit for facility leases (1) $ 3,710 $ 3,812 Collateral with financial institutions (2) 34,142 24,725 Claims processing services (3) 122,439 26,286 Collateral for reinsurance agreement (4) — 10,000 Other 532 862 Total restricted cash and restricted investments 160,823 65,685 Current restricted investments 211 8,150 Current restricted cash 154,507 54,248 Total current restricted cash and restricted investments 154,718 62,398 Noncurrent restricted investments 607 605 Noncurrent restricted cash 5,498 2,682 Total noncurrent restricted cash and restricted investments $ 6,105 $ 3,287 (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 and other arrangements. As of December 31, 2018 and 2017 , approximately $31.2 million and $16.6 million of the collateral amount was held in a trust account and invested in money market funds related to risk-sharing arrangements. The amounts invested in money market funds are considered restricted cash and are carried at fair value, which approximates cost. 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 related to risk-sharing arrangements. 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. See Note 16 for discussion of fair value measurement and Note 9 for discussion of our risk-sharing arrangements. As of December 31, 2018, approximately $2.9 million of the collateral amount was held in a FDIC participating bank account, primarily related to a line of credit. (3) Represents cash held by Evolent related to claims processing on behalf of partners. These are pass-through amounts and can fluctuate materially from period to period depending on the timing of when the claims are processed. (4) This amount represents restricted cash required as part of our capital-only reinsurance agreement with NMHC that terminated during the fourth quarter of 2018. 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, 2018 2017 Cash and cash equivalents $ 228,320 $ 238,433 Restricted cash and restricted investments 160,823 65,685 Restricted investments included in restricted cash and restricted investments (818 ) (8,755 ) Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows $ 388,325 $ 295,363 |
Summary of property and equipment | The following summarizes the 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, 2018 2017 Computer hardware $ 10,421 $ 5,667 Furniture and equipment 3,187 2,448 Internal-use software development costs 81,640 48,557 Leasehold improvements 10,118 8,708 Total property and equipment 105,366 65,380 Accumulated depreciation and amortization expenses (31,738 ) (14,458 ) Total property and equipment, net $ 73,628 $ 50,922 |
Intangible assets estimated useful lives | The following summarizes the estimated useful lives by asset classification: Corporate trade name 10-20 years Customer relationships 15-25 years Technology 5 years Provider network contracts 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, 2018 Weighted- Average Gross Net Remaining Carrying Accumulated Carrying Useful Life Amount Amortization Value Corporate trade name (1) 15.2 $ 23,300 $ 3,511 $ 19,789 Customer relationships (2) 18.1 281,219 29,184 252,035 Technology (3) 3.0 82,922 31,764 51,158 Below market lease, net 4.0 4,097 3,003 1,094 Provider network contracts (4) 4.6 11,900 940 10,960 Total $ 403,438 $ 68,402 $ 335,036 (1) The increase in the gross carrying amount of the corporate trade name is attributable to a $4.3 million trade name acquired as part of the New Century Health transaction. See Note 4 for further information about the New Century Health transaction. (2) The increase in the gross carrying amount of the customer relationships intangible is attributable to $72.5 million acquired customer relationships from the New Century Health transaction, $2.7 million of acquired customer relationships from the NMHC transaction and $2.5 million related the Vestica transaction. The Company acquired certain assets from Vestica in March 2016. The transaction included additional consideration of up to $4.0 million , which was being held in escrow and was recorded within “Prepaid expenses and other noncurrent assets” on our Consolidated Balance Sheets. In February 2018, the Company and Vestica reached an agreement to settle $3.5 million of the $4.0 million in escrow. Based on the terms of the settlement agreement, the Company reclassified the unamortized portion of the additional consideration from “Prepaid expenses and other noncurrent assets” into “Customer relationships” as of the settlement date. See Note 4 for further information about the New Century Health, NMHC and Vestica transactions. (3) The increase in the gross carrying amount of the technology is attributable to $27.0 million of technology assets acquired as part of the New Century Health transaction. See Note 4 for further information about the New Century Health transaction. (4) The increase in the gross carrying amount of the provider network contracts is attributable to a $9.6 million provider network acquired as part of the New Century Health transaction and a $2.3 million provider network acquired as part of the NMHC transaction. See Note 4 for further information about the New Century Health and NMHC transactions. 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 |
Schedule of adoption of ASC 606 | In accordance with the requirements under ASU 2014-09, the impact of adoption to our consolidated financial statements was as follows. See Note 5 for additional disclosures regarding Evolent's contracts with customers. Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (in thousands) For the Year Ended December 31, 2018 Amounts without Impact of adoption of adoption As Reported ASC 606 Higher/(Lower) Revenue Transformation services $ 32,916 $ 35,238 $ (2,322 ) Platform and operations services 500,190 497,284 2,906 Expenses Cost of revenue (exclusive of depreciation and amortization presented separately below) 327,825 337,080 (9,255 ) Selling, general and administrative expenses 235,418 236,173 (755 ) Income (loss) before income taxes and non-controlling interests (54,151 ) (64,745 ) 10,594 Condensed Consolidated Balance Sheets (in thousands) As of December 31, 2018 Balances without Impact of adoption of adoption As Reported ASC 606 Higher/(Lower) Assets Accounts receivable, net $ 80,208 $ 77,197 $ 3,011 Contract assets (current) 2,102 — 2,102 Contract assets (noncurrent) 961 — 961 Contract cost assets 19,147 — 19,147 Liabilities and Shareholders' Equity (Deficit) Liabilities Deferred revenue $ 20,584 $ 23,391 $ (2,807 ) Other long-term liabilities 17,090 16,965 125 Shareholders' Equity (Deficit) Retained earnings (accumulated deficit) 50,009 23,111 26,898 Non-controlling interests 45,532 44,527 1,005 |
Transactions (Tables)
Transactions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [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 |
Schedule of net assets acquired | The purchase price was preliminarily allocated to the assets acquired and liabilities assumed based on their estimated fair values as of October 1, 2018 , as follows (in thousands): Purchase consideration: Cash $ 124,652 Fair value of Class B common stock issued 83,173 Fair value of contingent consideration 3,200 Total consideration $ 211,025 Tangible assets acquired: Cash and cash equivalents $ 5,963 Accounts receivable 5,559 Prepaid expenses and other current assets 7,901 Property and equipment 381 Other noncurrent assets 148 Identifiable intangible assets acquired: Customer relationships 72,500 Technology 27,000 Corporate trade name 4,300 Provider network contracts 9,600 Liabilities assumed: Accounts payable 1,167 Accrued liabilities 1,494 Accrued compensation and employee benefits 3,966 Claims reserves 18,631 Deferred tax liabilities 24,041 Other long-term liabilities 6,138 Goodwill 133,110 Net assets acquired $ 211,025 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 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 purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of January 2, 2018 , as follows (in thousands): Purchase consideration Cash paid to NMHC $ 10,000 Cash paid to escrow agent 252 Total consideration $ 10,252 Identifiable intangible assets acquired and liabilities assumed Customer relationships $ 2,700 Provider network contracts 2,300 Above market lease (100 ) Accrued compensation and employee benefits (474 ) Goodwill 5,826 Net assets acquired $ 10,252 |
Business acquisition, pro forma information | For the Years Ended December 31, 2018 2017 2016 Revenue $ 763,624 $ 679,323 $ 361,944 Net income (loss) (69,337 ) (80,990 ) (225,091 ) Net income (loss) attributable to non-controlling interests (3,554 ) (11,544 ) (57,433 ) Net income (loss) attributable to Evolent Health, Inc. (65,783 ) (69,446 ) (167,658 ) Net income (loss) per Common Share: Basic and diluted $ (0.85 ) $ (1.08 ) $ (3.30 ) |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | The following table represents Evolent’s Services segment revenue disaggregated by revenue type for the year ended December 31, 2018 (in thousands), excluding revenues from our downside risk sharing arrangements through our captive insurance subsidiary. Revenues from our downside risk sharing arrangements through our captive insurance subsidiary, which are recorded within “Platform and operations services” on our Consolidated Statements of Operations and Comprehensive Income (Loss), and premiums revenue from our True Health segment, which are recorded within “Premiums” on our Consolidated Statements of Operations and Comprehensive Income (Loss), are accounted for under ASC 944, Financial Services-Insurance . Services Revenue Transformation services $ 32,916 Platform and operations services 492,568 Transaction Price Allocated to t |
Contract with customer, asset and liability | The following table provides information about receivables, contract assets and deferred revenue from contracts with customers (in thousands): As of As of December 31, January 1, 2018 2018 Short-term receivables (1) $ 78,380 $ 47,131 Long-term receivables (1) 6,550 — Short-term contract assets 2,102 3,710 Long-term contract assets 961 1,791 Short-term deferred revenue 20,584 26,147 Long-term deferred revenue 1,502 493 (1) Excludes pharmacy claims receivable and premiums receivable |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment | The following summarizes the 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, 2018 2017 Computer hardware $ 10,421 $ 5,667 Furniture and equipment 3,187 2,448 Internal-use software development costs 81,640 48,557 Leasehold improvements 10,118 8,708 Total property and equipment 105,366 65,380 Accumulated depreciation and amortization expenses (31,738 ) (14,458 ) Total property and equipment, net $ 73,628 $ 50,922 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | The following table summarizes the changes in the carrying amount of goodwill, by reportable segment, for the periods presented (in thousands): Services True Health Consolidated Balance as of December 31, 2016 $ 626,569 $ — $ 626,569 (1) Measurement period adjustments (2) 1,617 — 1,617 Balance as of December 31, 2017 628,186 — 628,186 Goodwill Acquired (3) 134,343 5,826 140,169 Measurement period adjustments (2) 4 (121 ) (117 ) Foreign currency translation (4) (114 ) — (114 ) Balance as of December 31, 2018 $ 762,419 $ 5,705 $ 768,124 (1) Beginning goodwill balance is net of cumulative inception to date impairment of $160.6 million . (2) Measurement period adjustments related to transactions completed during 2017 and the first quarter of 2018. (3) Goodwill acquired primarily as a result of the New Century Health and True Health transactions, as discussed in Note 4 . (4) Foreign currency translation related to a transaction completed during the first quarter of 2018. |
Schedule of intangible assets details | The following summarizes the estimated useful lives by asset classification: Corporate trade name 10-20 years Customer relationships 15-25 years Technology 5 years Provider network contracts 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, 2018 Weighted- Average Gross Net Remaining Carrying Accumulated Carrying Useful Life Amount Amortization Value Corporate trade name (1) 15.2 $ 23,300 $ 3,511 $ 19,789 Customer relationships (2) 18.1 281,219 29,184 252,035 Technology (3) 3.0 82,922 31,764 51,158 Below market lease, net 4.0 4,097 3,003 1,094 Provider network contracts (4) 4.6 11,900 940 10,960 Total $ 403,438 $ 68,402 $ 335,036 (1) The increase in the gross carrying amount of the corporate trade name is attributable to a $4.3 million trade name acquired as part of the New Century Health transaction. See Note 4 for further information about the New Century Health transaction. (2) The increase in the gross carrying amount of the customer relationships intangible is attributable to $72.5 million acquired customer relationships from the New Century Health transaction, $2.7 million of acquired customer relationships from the NMHC transaction and $2.5 million related the Vestica transaction. The Company acquired certain assets from Vestica in March 2016. The transaction included additional consideration of up to $4.0 million , which was being held in escrow and was recorded within “Prepaid expenses and other noncurrent assets” on our Consolidated Balance Sheets. In February 2018, the Company and Vestica reached an agreement to settle $3.5 million of the $4.0 million in escrow. Based on the terms of the settlement agreement, the Company reclassified the unamortized portion of the additional consideration from “Prepaid expenses and other noncurrent assets” into “Customer relationships” as of the settlement date. See Note 4 for further information about the New Century Health, NMHC and Vestica transactions. (3) The increase in the gross carrying amount of the technology is attributable to $27.0 million of technology assets acquired as part of the New Century Health transaction. See Note 4 for further information about the New Century Health transaction. (4) The increase in the gross carrying amount of the provider network contracts is attributable to a $9.6 million provider network acquired as part of the New Century Health transaction and a $2.3 million provider network acquired as part of the NMHC transaction. See Note 4 for further information about the New Century Health and NMHC transactions. 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 |
Schedule of future estimated amortization of intangible assets | Future estimated amortization of intangible assets (in thousands) as of December 31, 2018 , is as follows: 2019 $ 36,498 2020 32,312 2021 28,143 2022 24,262 2023 21,498 Thereafter 192,323 Total $ 335,036 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 2017 2025 Notes Carrying value $ 98,730 $ — Unamortized debt discount and issuance costs allocated to debt 73,770 — Principal amount $ 172,500 $ — Remaining amortization period (years) 6.8 2021 Notes Carrying value $ 122,311 $ 121,394 Unamortized issuance costs 2,689 3,606 Principal amount $ 125,000 $ 125,000 Remaining amortization period (years) 2.9 3.9 |
Commitments and Contingencies
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of lease abandonment liability | The following table presents a roll forward of the lease abandonment liability for the year ended December 31, 2017 (in thousands): Accrual as of beginning-of-year $ 6,100 Abandonment expense — Impact of lease termination (496 ) Abandonment amortization (1,239 ) Lease cancellation fee (4,365 ) Accrual as of end-of-year $ — |
Future minimum rental commitments | Future minimum rental commitments (in thousands) as of December 31, 2018 , were as follows: 2019 $ 11,470 2020 12,553 2021 8,594 2022 7,033 2023 7,451 Thereafter 40,657 Total $ 87,758 |
Future contractual obligations | Our contractual obligations related to vendor contracts (in thousands) as of December 31, 2018 , 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 $ 6,236 $ 2,417 $ — $ — $ 8,653 |
Summary of premiums and claims assumed | The following summarizes premiums and claims assumed under the Reinsurance Agreement for the year ended December 31, 2018 (in thousands): Reinsurance premiums assumed $ 3,242 Claims assumed 3,934 Claims-related administrative expenses 551 (Increase) decrease in claims reserves attributable to the Reinsurance Agreement (1,243 ) Claims reserves attributable to the Reinsurance Agreement at the beginning of the year — Claims reserves attributable to the Reinsurance Agreement at the end of the year $ 1,243 |
Summary of major customers | The following table summarizes those partners who represented at least 10.0% of our consolidated trade accounts receivable for the periods presented: As of December 31, 2018 2017 Customer B * 11.8 % Customer C 23.3 % 32.1 % Customer D * 16.5 % * Represents less than 10.0% of the respective balance The following table summarizes those partners who represented at least 10.0% of our consolidated revenue for the periods presented: For the Years Ended December 31, 2018 2017 2016 Customer A 17.5 % 20.6 % 19.6 % Customer D * * 14.5 % Customer E * * 12.7 % * Represents less than 10.0% of the respective balance |
Earnings (Loss) Per Common Sh_2
Earnings (Loss) Per Common Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 2017 2016 Net income (loss) $ (54,191 ) $ (69,767 ) $ (226,778 ) Less: Net income (loss) attributable to non-controlling interests (1,533 ) (9,102 ) (67,036 ) Net income (loss) available for common shareholders - Basic and diluted (1)(2) (52,658 ) (60,665 ) (159,742 ) Weighted-average common shares outstanding - Basic and diluted (2)(3) 77,338 64,351 45,031 Earnings (Loss) per Common Share Basic and diluted $ (0.68 ) $ (0.94 ) $ (3.55 ) (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, 2018 2017 2016 Exchangeable Class B common stock 1,831 7,285 16,882 RSUs 1,027 525 245 Stock options 2,517 2,829 1,973 Convertible senior notes 6,176 5,201 369 Total 11,551 15,840 19,469 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 2017 2016 Award Type Stock options $ 9,008 $ 15,487 $ 15,647 Performance-based stock options 447 447 374 RSUs 7,766 4,503 2,583 Performance-based RSUs 388 — — Acceleration of unvested equity awards — — 3,897 Total $ 17,609 $ 20,437 $ 22,501 Line Item Cost of revenue $ 1,475 $ 1,371 $ 2,670 Selling, general and administrative expenses 16,134 19,066 19,831 Total $ 17,609 $ 20,437 $ 22,501 |
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, 2018 Weighted- Average Expense Period Stock options $ 10,061 1.13 Performance-based stock options 521 1.17 RSUs 16,353 2.27 Performance-based RSUs 1,945 1.25 Total $ 28,880 |
Option price assumptions | The option price assumptions used for our stock option awards were as follows: For the Years Ended December 31, 2018 2017 2016 Weighted-average fair value per option granted $ 6.30 $ 8.38 $ 4.69 Assumptions: Expected term (in years) 6.25 6.25 6.25 Expected volatility 38.9 % 42.8 % 45.0 % Risk-free interest rate 2.6 - 2.9% 1.9 - 2.1% 1.3 - 1.5% 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, 2017 5,951 $ 8.38 7.19 $ 23,325 Granted 1,054 14.38 Exercised (1,720 ) 6.93 Forfeited (196 ) 15.98 Outstanding as of December 31, 2018 5,089 $ 9.82 6.86 $ 51,556 Vested and expected to vest after December 31, 2018 4,959 $ 9.42 6.77 $ 48,435 Exercisable at December 31, 2018 2,640 $ 6.33 5.81 $ 35,955 |
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, 2017 268 $ 10.27 8.17 $ 544 Outstanding as of December 31, 2018 268 10.27 7.17 2,592 Vested and expected to vest after December 31, 2018 268 $ 10.27 7.17 $ 2,592 |
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, 2017 816 $ 16.23 Granted 963 16.12 Forfeited (99 ) 16.26 Vested (289 ) 16.92 Outstanding as of December 31, 2018 1,391 $ 16.01 Information with respect to our performance-based 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, 2017 — $ — Granted 86 27.04 Outstanding as of December 31, 2018 86 $ 27.04 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 2017 2016 Current Federal $ 458 $ 368 $ — State and local 9 266 — Foreign 251 — — Total current tax expense 718 634 — Deferred Federal (14,820 ) 3,202 (9,708 ) State and local (2,252 ) (3,102 ) (1,138 ) Foreign (49 ) — — Total deferred tax expense (17,121 ) 100 (10,846 ) Change in valuation allowance 16,443 (7,371 ) 91 Total tax expense (benefit) $ 40 $ (6,637 ) $ (10,755 ) |
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, 2018 2017 2016 U.S. statutory tax rate 21.0 % 35.0 % 35.0 % U.S. state income taxes, net of U.S. federal tax benefit 3.6 % 3.3 % 4.0 % Foreign earnings at other than U.S. rates (0.2 )% — % — % Change in valuation allowance (30.4 )% (34.0 )% (0.1 )% Change in valuation allowance, tax reform — % 43.7 % — % Impact of tax reform — % (36.0 )% — % Goodwill impairment — % — % (18.7 )% Gain on contribution — % — % (5.0 )% Non-controlling interest (0.7 )% (4.6 )% (11.0 )% Excess tax benefits on stock-based compensation 3.9 % 3.1 % 0.1 % Federal and state R&D tax credits 4.5 % — % — % Change in uncertain tax positions (1.1 )% — % — % Other, net (0.7 )% (1.8 )% 0.2 % Effective rate (0.1 )% 8.7 % 4.5 % |
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, 2018 2017 Deferred Tax Assets Start-up and organizational costs $ 160 $ 185 Internally developed software costs 3,283 3,974 Net operating loss carryforwards 76,019 51,197 Federal and state R&D tax credits 1,828 — Other 861 (69 ) Subtotal 82,151 55,287 Valuation allowance (37,037 ) (53,201 ) Total deferred tax assets 45,114 2,086 Deferred Tax Liabilities Equity-method investment 43,492 4,523 Intangible assets 26,710 — Total deferred tax liabilities 70,202 4,523 Net deferred tax assets (liabilities) $ (25,088 ) $ (2,437 ) |
Changes in valuation allowance | Changes in our valuation allowance (in thousands) were as follows: For the Years Ended December 31, 2018 2017 2016 Balance at beginning-of-year $ 53,201 $ 26,376 $ 19,974 Charged to costs and expenses 16,443 (7,371 ) 91 Charged to other accounts (1) (32,607 ) 34,196 6,311 Balance at end-of-year $ 37,037 $ 53,201 $ 26,376 (1) Amounts charged to other accounts includes a decrease of $32.6 million , increase of $34.2 million and increase of $6.3 million charged to additional paid-in-capital for the years ended December 31, 2018 , 2017 and 2016 , respectively. |
Changes in unrecognized tax benefits | Changes in our unrecognized tax benefits (in thousands) were as follows: For the Years Ended December 31, 2018 2017 2016 Balance at beginning-of-year $ 762 $ — $ — Gross increases - tax positions in prior period 934 1,108 — Gross decreases - tax positions in prior period (762 ) — — Gross increases - tax positions in current period — 74 — Change in tax rate — (420 ) — Balance at end-of-year $ 934 $ 762 $ — |
Non-controlling Interests (Tabl
Non-controlling Interests (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 2017 Non-controlling interests balance as of beginning-of-year $ 35,427 $ 209,588 Cumulative-effect adjustment from adoption of new accounting principle 594 — Decrease in non-controlling interests as a result of Class B Exchanges (34,682 ) (168,883 ) Issuance of Class B common stock for business combination 42,787 — Net income (loss) attributable to non-controlling interests (1,533 ) (9,102 ) Reclassification of non-controlling interests 2,939 3,824 Non-controlling interests balance as of end-of-year $ 45,532 $ 35,427 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ 11,391 $ — $ — $ 11,391 Restricted cash and restricted investments (1) 31,226 — — 31,226 Total $ 42,617 $ — $ — $ 42,617 Liabilities Contingent consideration (2) $ — $ — $ 8,800 $ 8,800 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 (3) $ — $ — $ 8,700 $ 8,700 (1) Represents the cash and cash equivalents and restricted cash and restricted investments that were held in money market funds as of December 31, 2018 and 2017 , as presented in the tables above. (2) Represents the fair value of earn-out consideration related to the Passport and New Century Health transactions, as described in Note 4 . Out of the total $8.8 million , $5.6 million is attributable to Passport and $3.2 million is attributable to New Century Health. (3) Represents the fair value of earn-out consideration related to the Passport transaction, as described 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, 2018 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ 11,391 $ — $ — $ 11,391 Restricted cash and restricted investments (1) 31,226 — — 31,226 Total $ 42,617 $ — $ — $ 42,617 Liabilities Contingent consideration (2) $ — $ — $ 8,800 $ 8,800 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 (3) $ — $ — $ 8,700 $ 8,700 (1) Represents the cash and cash equivalents and restricted cash and restricted investments that were held in money market funds as of December 31, 2018 and 2017 , as presented in the tables above. (2) Represents the fair value of earn-out consideration related to the Passport and New Century Health transactions, as described in Note 4 . Out of the total $8.8 million , $5.6 million is attributable to Passport and $3.2 million is attributable to New Century Health. (3) Represents the fair value of earn-out consideration related to the Passport transaction, as described 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, 2018 2017 Balance as of beginning of year $ 8,700 $ 8,300 Additions (1) 3,200 — Realized and unrealized (gains) losses, net (2) (3,100 ) 400 Balance as of end of year $ 8,800 $ 8,700 (1) Additions during 2018 are attributable to the earn-out related to the New Century Health transaction. (2) Realized and unrealized gains and losses during 2018 and 2017 are attributable to the earn-out related to the Passport transaction. |
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, 2018 Fair Valuation Significant Assumption or Value Technique Unobservable Inputs Input Ranges Passport contingent consideration $ 5,600 Real options approach Risk-adjusted recurring revenue CAGR 103.9 % (1) Discount rate/time value 5.5% - 6.5% New Century Health contingent consideration $ 3,200 Real options approach Risk-neutral probability exceeds threshold 39.0 % (2) Risk-neutral probability meets earn-out cap 24.0 % (2) (1) 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 revenue of $1.0 million , resulting in a higher growth rate. The risk-adjusted recurring revenue CAGR from 2019-2021 is 61.8% . (2) These amounts represent 1) the probability that New Century Health will achieve at least the minimum level of operating results in 2019 to earn any contingent consideration ( 39.0% ) and 2) the probability that New Century Health will achieve 2019 operating results in excess of the maximum amount of contingent consideration payable ( 24.0% ). The risk-neutral probability rates were determined by projecting theoretical 2019 operating results using a simulation with one million trials. As of December 31, 2017 Fair Valuation Significant Assumption or Value Technique Unobservable Inputs Input Ranges Passport contingent consideration $ 8,700 Real options approach Risk-adjusted recurring revenue CAGR 92.5 % (1) Discount rate/time value 2.7% - 4.0% (1) 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% . |
Related Parties Related Parties
Related Parties Related Parties (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Revenues and expenses related to affiliates | The following table presents revenues and expenses attributable to our related parties (in thousands): For the Years Ended December 31, 2018 2017 2016 Revenue Transformation services $ 10,540 $ 597 $ 482 Platform and operations services 37,490 32,335 34,267 Expenses Cost of revenue (exclusive of depreciation and amortization expenses) 9,451 22,389 22,207 Selling, general and administrative expenses 917 1,153 2,027 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Reconciliation of revenue from segments to consolidated | The following tables present our segment information (in thousands): Intersegment Services True Health (1) Eliminations Consolidated Adjusted Revenue For the Year Ended December 31, 2018 Services: Adjusted Transformation Services $ 36,571 $ — $ — $ 36,571 Adjusted Platform and Operations Services 516,219 — (14,325 ) 501,894 Adjusted Services Revenue 552,790 — (14,325 ) 538,465 True Health: Premiums — 94,763 (806 ) 93,957 Adjusted Revenue 552,790 94,763 (15,131 ) 632,422 ASC 606 transition adjustment (2) (4,498 ) — — (4,498 ) Purchase accounting adjustments (3) (861 ) — — (861 ) Total revenue $ 547,431 $ 94,763 $ (15,131 ) $ 627,063 For the Year Ended December 31, 2017 Services: Adjusted Transformation Services $ 29,466 $ — $ — $ 29,466 Adjusted Platform and Operations Services 406,951 — — 406,951 Adjusted Services Revenue 436,417 — — 436,417 Adjusted Revenue 436,417 — — 436,417 Purchase accounting adjustments (3) (1,467 ) — — (1,467 ) Total revenue $ 434,950 $ — $ — $ 434,950 For the Year Ended December 31, 2016 Services: Adjusted Transformation Services $ 38,434 $ — $ — $ 38,434 Adjusted Platform and Operations Services 217,844 — — 217,844 Adjusted Services Revenue 256,278 — — 256,278 Adjusted Revenue 256,278 — — 256,278 Purchase accounting adjustments (4) (2,090 ) — — (2,090 ) Total revenue $ 254,188 $ — $ — $ 254,188 Segments Services True Health (1) Total For the Year Ended December 31, 2018 Adjusted EBITDA $ 21,310 $ 1,915 $ 23,225 For the Year Ended December 31, 2017 Adjusted EBITDA $ (2,204 ) $ — $ (2,204 ) For the Year Ended December 31, 2016 Adjusted EBITDA $ (21,407 ) $ — $ (21,407 ) (1) The True Health segment was created in January 2018. (2) Adjustment to Adjusted Transformation Services Revenue was approximately $3.7 million and the adjustment to Adjusted Platform and Operations Services Revenue was approximately $0.8 million . (3) Purchase accounting adjustments pertain to Adjusted Platform and Operations Services Revenue. There were no purchase accounting adjustments in relation to Adjusted Transformation Services Revenue or True Health premiums revenue. (4) Purchase accounting adjustments of $2.1 million include an adjustment of $0.1 million to Adjusted Transformation Services Revenue and an adjustment of $2.0 million to Adjusted Platform and Operations Services Revenue. |
Reconciliation of Adjusted EBITDA to net income (loss) | The following table presents our reconciliation of segments total Adjusted EBITDA to net income (loss) attributable to Evolent Health, Inc. (in thousands): For the Years Ended December 31, 2018 2017 2016 Net Income (Loss) Attributable to Evolent Health, Inc. $ (52,658 ) $ (60,665 ) $ (159,742 ) Less: Interest income 3,440 1,656 970 Interest expense (5,484 ) (3,636 ) (247 ) (Provision) benefit for income taxes (40 ) 6,637 10,755 Depreciation and amortization expenses (44,515 ) (32,368 ) (17,224 ) Goodwill impairment — — (160,600 ) Impact of lease abandonment — — (6,456 ) Income (loss) from equity method investees (4,736 ) (1,755 ) (841 ) Change in fair value of contingent consideration and indemnification asset 4,104 (400 ) 2,086 Other income (expense), net 109 171 4 Net (income) loss attributable to non-controlling interests 1,533 9,102 67,036 ASC 606 transition adjustments (4,498 ) — — Purchase accounting adjustments (861 ) (1,467 ) (2,090 ) Stock-based compensation expense (17,609 ) (20,437 ) (22,501 ) Severance costs (2,205 ) — — Amortization of contract cost assets (2,456 ) — — Transaction costs (2,665 ) (15,964 ) (9,227 ) Adjusted EBITDA $ 23,225 $ (2,204 ) $ (21,407 ) |
Claims Reserves (Tables)
Claims Reserves (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Insurance [Abstract] | |
Activity in claims reserves | Activity in claims reserves for the year ended December 31, 2018, was as follows (in thousands): Services (1) True Health Total Incurred costs related to current year $ 38,674 $ 70,889 $ 109,563 Paid costs related to current year 38,124 58,318 96,442 Change during the year 550 12,571 13,121 Other adjustments (2) (1,466 ) (2,691 ) (4,157 ) Beginning balance 18,631 — 18,631 Ending balance $ 17,715 $ 9,880 $ 27,595 (1) Costs incurred to provide specialty care management services are recorded within cost of revenue in our statement of operations. (2) Other adjustments to claims reserves for Services reflect changes in accrual for amounts payable to facilities and amounts owed to our payer partners for claims paid on our behalf. Other adjustments for True Health include reinsurance premiums assumed of $2.7 million , net of claims-related administrative expenses of $0.6 million . In connection with the Reinsurance Agreement, we assumed $3.9 million of claims expenses for the year ended December 31, 2018, which is recorded within “Claims expenses” on our Consolidated Statements of Operations and Comprehensive Income (Loss), and recorded a liability of $1.2 million as of December 31, 2018, which is recoded within “Claims reserves” on our Consolidated Balance Sheets. |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Investments [Abstract] | |
Summary investment holdings | The amortized cost, gross unrealized gains and losses, and fair value of our investments as measured using Level 2 inputs as of December 31, 2018 (in thousands) were as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. Treasury bills $ 7,982 $ 120 $ — $ 8,102 Corporate bonds 887 17 — 904 Other CMOs 545 6 — 551 Yankees 596 11 — 607 Total investments $ 10,010 $ 154 $ — $ 10,164 |
Investments classified by contractual maturity date | The amortized cost and fair value of our investments by contractual maturities as of December 31, 2018 (in thousands) were as follows: Amortized Fair Cost Value Due after one year through five years $ 9,666 $ 9,813 Due after five years through ten years 344 351 Total $ 10,010 $ 10,164 |
Quarterly Results of Operatio_2
Quarterly Results of Operations (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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 2018 Total revenue $ 139,714 $ 144,298 $ 149,947 $ 193,104 Total operating expenses 153,846 153,264 160,977 206,456 Net income (loss) (14,065 ) (10,031 ) (12,555 ) (17,540 ) Net income (loss) attributable to non-controlling interests (439 ) (115 ) (126 ) (853 ) Net income (loss) attributable to Evolent Health, Inc. (13,626 ) (9,916 ) (12,429 ) (16,687 ) Earnings (loss) per common share Basic and Diluted $ (0.18 ) $ (0.13 ) $ (0.16 ) $ (0.21 ) 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 and Diluted $ (0.34 ) $ (0.28 ) $ (0.18 ) $ (0.18 ) |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 2017 2016 Supplemental Disclosure of Non-cash Investing and Financing Activities Class A and Class B common stock issued in connection with business combinations $ 83,173 $ — $ 177,795 Change in goodwill due to measurement period adjustments related to business combinations (117 ) 1,611 — Decrease in accrued financing costs related to 2021 Notes — 196 — Consideration for asset acquisitions or business combinations 500 — — Settlement of escrow related to asset acquisition 2,519 — — Settlement of indemnification asset 1,004 — — Tax benefit related to Accordion intangible technology — 2,042 — Acquisition consideration payable — — 1,148 Accrued property and equipment purchases 368 229 446 Accrued deferred financing costs 607 — 1,036 Effects of Class B Exchanges Decrease in non-controlling interests as a result of Class B Exchanges 34,682 168,883 28,220 Decrease in deferred tax liability as a result of securities offerings and exchanges 652 12,857 1,606 Supplemental Disclosures Cash paid during the period for interest 2,500 2,472 — Cash paid during the year for taxes, net 343 674 — |
Organization (Details)
Organization (Details) $ / shares in Units, $ in Thousands, shares in Millions | 1 Months Ended | 12 Months Ended | ||||||||||||||||||
Aug. 31, 2017shares | Dec. 31, 2018USD ($)segmentshares | Dec. 31, 2017USD ($)shares | Dec. 31, 2016USD ($) | Nov. 30, 2018 | Oct. 31, 2018 | Oct. 01, 2018 | Sep. 30, 2018 | Mar. 31, 2018 | Feb. 28, 2018 | Oct. 31, 2017$ / shares | Jul. 31, 2017 | Jun. 30, 2017 | May 31, 2017 | May 30, 2017 | Mar. 31, 2017 | Mar. 30, 2017 | Sep. 30, 2016 | Aug. 31, 2016 | Jun. 05, 2015 | |
Organization [Line Items] | ||||||||||||||||||||
Number of reportable segments | segment | 2 | |||||||||||||||||||
Share price (in dollars per share) | $ / shares | $ 12.01 | |||||||||||||||||||
Proceeds from issuance of common stock, net of stock issuance costs | $ 0 | $ 166,947 | $ 0 | |||||||||||||||||
Cash and cash equivalents | $ 228,320 | $ 238,433 | ||||||||||||||||||
Class A | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Common shares authorized (in shares) | shares | 8.8 | 20.1 | 26.6 | |||||||||||||||||
Evolent Health LLC | Class A | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Required ratio of outstanding common shares to outstanding common units | 1 | |||||||||||||||||||
Evolent Health LLC | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Parent's ownership percentage | 96.60% | 96.10% | 96.60% | 77.40% | 96.10% | 95.30% | 95.30% | 99.00% | 98.90% | 96.60% | 96.10% | 96.10% | 90.50% | 84.90% | 83.90% | 77.40% | 74.60% | 71.00% | 70.30% | |
Evolent Health LLC | Pre-Organization Members | ||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||
Evolent Health LLC ownership interest | 100.00% |
Basis of Presentation, Summar_4
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Operating Segments (Details) | 12 Months Ended |
Dec. 31, 2018segment | |
Accounting Policies [Abstract] | |
Number of reportable segments | 2 |
Basis of Presentation, Summar_5
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Restricted Cash and Restricted Investments (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Total restricted cash and restricted investments | $ 160,823 | $ 65,685 | ||
Current restricted investments | 211 | 8,150 | ||
Current restricted cash | 154,507 | 54,248 | ||
Total current restricted cash and restricted investments | 154,718 | 62,398 | ||
Noncurrent restricted investments | 607 | 605 | ||
Noncurrent restricted cash | 5,498 | 2,682 | ||
Total non-current restricted cash and restricted investments | 6,105 | 3,287 | ||
Cash and cash equivalents | 228,320 | 238,433 | ||
Restricted investments included in restricted cash and restricted investments | (818) | (8,755) | ||
Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows | 388,325 | 295,363 | $ 170,029 | $ 152,011 |
Collateral for letters of credit for facility leases | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Total restricted cash and restricted investments | 3,710 | 3,812 | ||
Claims processing services | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Total restricted cash and restricted investments | 122,439 | 26,286 | ||
Collateral for reinsurance agreement | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Total restricted cash and restricted investments | 0 | 10,000 | ||
Other | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Total restricted cash and restricted investments | 532 | 862 | ||
Collateral with financial institutions, money market funds | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Total restricted cash and restricted investments | 31,200 | $ 16,600 | ||
Bank time deposits | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Total restricted cash and restricted investments | $ 2,900 |
Basis of Presentation, Summar_6
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Notes Receivable (Details) | 12 Months Ended | ||
Dec. 31, 2018USD ($)installment | Dec. 31, 2017USD ($) | Oct. 25, 2017USD ($) | |
Short-term Debt [Line Items] | |||
Notes receivable outstanding | $ 0 | $ 20,000,000 | |
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 outstanding | $ 0 |
Basis of Presentation, Summar_7
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Estimated Useful Life of Property, Plant and Equipment (Details) | 12 Months Ended |
Dec. 31, 2018 | |
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 |
Basis of Presentation, Summar_8
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, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | |||
Research and development costs | $ 18.2 | $ 17.2 | $ 11.1 |
Basis of Presentation, Summar_9
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Goodwill (Details) - 12 months ended Dec. 31, 2018 | reporting_unit | unit |
Accounting Policies [Abstract] | ||
Number of reporting units for goodwill testing | 3 | 3 |
Basis of Presentation, Summa_10
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Intangible Assets, Net (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Corporate trade name | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 10 years |
Corporate trade name | Maximum | |
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 |
Technology | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 5 years |
Provider network contracts | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 5 years |
Basis of Presentation, Summa_11
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, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | |||
Equity method investment, other than temporary impairment (not material - 2018, 2017, 2016) | $ 0 | $ 0 | $ 0 |
Basis of Presentation, Summa_12
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Stock-based Compensation (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Vesting period | 4 years |
Expiration period | 10 years |
Basis of Presentation, Summa_13
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Foreign Currency (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | |||
Foreign currency translation adjustment | $ (182) | $ 0 | $ 0 |
Accumulated other comprehensive loss | $ 182 | $ 0 |
Basis of Presentation, Summa_14
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Change in Accounting Principle (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2018 | ||
Revenue | |||||||||||||
Total revenue | $ 193,104 | $ 149,947 | $ 144,298 | $ 139,714 | $ 113,729 | $ 107,912 | $ 107,071 | $ 106,238 | $ 627,063 | $ 434,950 | $ 254,188 | ||
Expenses | |||||||||||||
Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) | [1] | 327,825 | 269,352 | 155,177 | |||||||||
Selling, general and administrative expenses | [1] | 235,418 | 205,670 | 160,692 | |||||||||
Income (loss) before income taxes and non-controlling interests | (54,151) | (76,404) | (237,533) | ||||||||||
ASSETS | |||||||||||||
Accounts receivable, net | 80,208 | 48,947 | 80,208 | 48,947 | |||||||||
Contract assets (current) | 2,102 | 0 | 2,102 | 0 | $ 3,710 | ||||||||
Contract assets (noncurrent) | 961 | 0 | 961 | 0 | 1,791 | ||||||||
Contract cost assets | 19,147 | 0 | 19,147 | 0 | |||||||||
Liabilities | |||||||||||||
Deferred revenue | 20,584 | 24,807 | 20,584 | 24,807 | 26,147 | ||||||||
Other long-term liabilities | 17,090 | 9,861 | 17,090 | 9,861 | |||||||||
Shareholders' Equity (Deficit) | |||||||||||||
Retained earnings (accumulated deficit) | 50,009 | 85,952 | 50,009 | 85,952 | |||||||||
Non-controlling interests | 45,532 | $ 35,427 | 45,532 | 35,427 | |||||||||
Transformation services | |||||||||||||
Revenue | |||||||||||||
Total revenue | [1] | 32,916 | 29,466 | 38,320 | |||||||||
Platform and operations services | |||||||||||||
Revenue | |||||||||||||
Total revenue | [1] | 500,190 | 405,484 | 215,868 | |||||||||
Balances without adoption of ASC 606 | |||||||||||||
Expenses | |||||||||||||
Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) | 337,080 | ||||||||||||
Selling, general and administrative expenses | 236,173 | ||||||||||||
Income (loss) before income taxes and non-controlling interests | (64,745) | ||||||||||||
ASSETS | |||||||||||||
Accounts receivable, net | 77,197 | 77,197 | |||||||||||
Contract assets (current) | 0 | 0 | |||||||||||
Contract assets (noncurrent) | 0 | 0 | |||||||||||
Contract cost assets | 0 | 0 | |||||||||||
Liabilities | |||||||||||||
Deferred revenue | 23,391 | 23,391 | |||||||||||
Other long-term liabilities | 16,965 | 16,965 | |||||||||||
Shareholders' Equity (Deficit) | |||||||||||||
Retained earnings (accumulated deficit) | 23,111 | 23,111 | |||||||||||
Non-controlling interests | 44,527 | 44,527 | |||||||||||
Balances without adoption of ASC 606 | Transformation services | |||||||||||||
Revenue | |||||||||||||
Total revenue | 35,238 | ||||||||||||
Balances without adoption of ASC 606 | Platform and operations services | |||||||||||||
Revenue | |||||||||||||
Total revenue | 497,284 | ||||||||||||
Impact of adoption Higher/(Lower) | |||||||||||||
Revenue | |||||||||||||
Total revenue | (861) | $ (1,467) | $ (2,090) | ||||||||||
Impact of adoption Higher/(Lower) | Accounting Standards Update 2014-09 | |||||||||||||
Revenue | |||||||||||||
Total revenue | (4,498) | ||||||||||||
Expenses | |||||||||||||
Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) | (9,255) | ||||||||||||
Selling, general and administrative expenses | (755) | ||||||||||||
Income (loss) before income taxes and non-controlling interests | 10,594 | ||||||||||||
ASSETS | |||||||||||||
Accounts receivable, net | 3,011 | 3,011 | |||||||||||
Contract assets (current) | 2,102 | 2,102 | |||||||||||
Contract assets (noncurrent) | 961 | 961 | |||||||||||
Contract cost assets | 19,147 | 19,147 | |||||||||||
Liabilities | |||||||||||||
Deferred revenue | (2,807) | (2,807) | |||||||||||
Other long-term liabilities | 125 | 125 | |||||||||||
Shareholders' Equity (Deficit) | |||||||||||||
Retained earnings (accumulated deficit) | 26,898 | 26,898 | $ 17,300 | ||||||||||
Non-controlling interests | $ 1,005 | 1,005 | |||||||||||
Impact of adoption Higher/(Lower) | Transformation services | Accounting Standards Update 2014-09 | |||||||||||||
Revenue | |||||||||||||
Total revenue | (2,322) | ||||||||||||
Impact of adoption Higher/(Lower) | Platform and operations services | Accounting Standards Update 2014-09 | |||||||||||||
Revenue | |||||||||||||
Total revenue | $ 2,906 | ||||||||||||
[1] | (1) See Note 17 for amounts related to related parties included in these line items. |
Recently Issued Accounting St_2
Recently Issued Accounting Standards (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Increase in stockholders’ equity | $ 50,009 | $ 85,952 | |
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Increase in stockholders’ equity | $ 26,898 | $ 17,300 |
Transactions - New Century Heal
Transactions - New Century Health (Details) - USD ($) $ in Thousands, shares in Millions | Oct. 01, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Liabilities assumed: | ||||
Goodwill | $ 768,124 | $ 628,186 | $ 626,569 | |
Revenue | 763,624 | 679,323 | 361,944 | |
Net income (loss) | $ (65,783) | $ (69,446) | $ (167,658) | |
Customer relationships | Minimum | ||||
Liabilities assumed: | ||||
Useful life | 15 years | |||
Customer relationships | Maximum | ||||
Liabilities assumed: | ||||
Useful life | 25 years | |||
Corporate trade name | Minimum | ||||
Liabilities assumed: | ||||
Useful life | 10 years | |||
Corporate trade name | Maximum | ||||
Liabilities assumed: | ||||
Useful life | 20 years | |||
Provider network contracts | ||||
Liabilities assumed: | ||||
Useful life | 5 years | |||
New Century Health | ||||
Business Acquisition [Line Items] | ||||
Percentage of voting interests acquired | 100.00% | |||
Total merger consideration, net of cash on hand and certain closing adjustments | $ 205,100 | |||
Payments to acquire businesses, net | 118,700 | |||
Contingent consideration arrangements (up to) | 20,000 | |||
Contingent consideration arrangements fair value | 3,200 | |||
Purchase consideration: | ||||
Cash | 124,652 | |||
Fair value of Class B common stock issued | 83,173 | |||
Fair value of contingent consideration | 3,200 | |||
Total consideration | 211,025 | |||
Tangible assets acquired: | ||||
Cash and restricted cash | 5,963 | |||
Accounts receivable | 5,559 | |||
Prepaid expenses and other current assets | 7,901 | |||
Property and equipment | 381 | |||
Other non-current assets | 148 | |||
Liabilities assumed: | ||||
Accounts payable | 1,167 | |||
Accrued liabilities | 1,494 | |||
Accrued compensation and employee benefits | 3,966 | |||
Claims reserves | 18,631 | |||
Deferred tax liabilities | 24,041 | |||
Other long-term liabilities | 6,138 | |||
Goodwill | 133,110 | |||
Net assets acquired | $ 211,025 | |||
Revenue | $ 48,800 | |||
Net income (loss) | (2,500) | |||
New Century Health | Class B | ||||
Business Acquisition [Line Items] | ||||
Consideration transferred, equity interests issued and issuable, shares issued (in shares) | 3.1 | |||
Contingent consideration arrangements (up to) | $ 11,400 | |||
New Century Health | Selling, general and administrative expenses | ||||
Business Acquisition [Line Items] | ||||
Transaction costs | $ 1,600 | |||
New Century Health | Customer relationships | ||||
Identifiable intangible assets acquired: | ||||
Identifiable intangible assets | $ 72,500 | |||
New Century Health | Customer relationships | Minimum | ||||
Liabilities assumed: | ||||
Useful life | 15 years | |||
New Century Health | Technology | ||||
Liabilities assumed: | ||||
Useful life | 5 years | |||
New Century Health | Corporate trade name | ||||
Identifiable intangible assets acquired: | ||||
Identifiable intangible assets | $ 4,300 | |||
Liabilities assumed: | ||||
Useful life | 10 years | |||
New Century Health | Provider network contracts | ||||
Identifiable intangible assets acquired: | ||||
Identifiable intangible assets | $ 9,600 | |||
Liabilities assumed: | ||||
Useful life | 5 years | |||
Former Owners of New Century Health | New Century Health | ||||
Business Acquisition [Line Items] | ||||
Contingent consideration arrangements (up to) | $ 11,400 | |||
Former Employees of New Century Health | New Century Health | ||||
Business Acquisition [Line Items] | ||||
Contingent consideration arrangements (up to) | $ 8,600 |
Transactions - New Mexico Healt
Transactions - New Mexico Health Connections (Details) - USD ($) $ in Thousands | Jan. 02, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Identifiable intangible assets acquired and liabilities assumed | ||||
Goodwill | $ 768,124 | $ 628,186 | $ 626,569 | |
Provider network contracts | ||||
Identifiable intangible assets acquired and liabilities assumed | ||||
Useful life | 5 years | |||
New Mexico Health Connections | ||||
Business Acquisition [Line Items] | ||||
Transaction costs | $ 1,200 | |||
Purchase consideration: | ||||
Payments to acquire businesses | $ 10,000 | |||
Contingent consideration, liability | 252 | |||
Consideration transferred | 10,252 | |||
Identifiable intangible assets acquired and liabilities assumed | ||||
Accrued compensation and employee benefits | (474) | |||
Goodwill | 5,826 | |||
Net assets acquired | 10,252 | |||
New Mexico Health Connections | Customer relationships | ||||
Identifiable intangible assets acquired and liabilities assumed | ||||
Identifiable intangible assets | $ 2,700 | |||
Useful life | 15 years | |||
New Mexico Health Connections | Provider network contracts | ||||
Identifiable intangible assets acquired and liabilities assumed | ||||
Identifiable intangible assets | $ 2,300 | |||
Useful life | 5 years | |||
New Mexico Health Connections | Above market lease | ||||
Identifiable intangible assets acquired and liabilities assumed | ||||
Identifiable intangible assets | $ (100) |
Transactions - Aldera (Details)
Transactions - Aldera (Details) - USD ($) $ in Thousands, shares in Millions | Nov. 01, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Nov. 30, 2018 | Oct. 31, 2018 | Oct. 01, 2018 | Sep. 30, 2018 | Mar. 31, 2018 | Feb. 28, 2018 | Aug. 31, 2017 | Jul. 31, 2017 | Jun. 30, 2017 | May 31, 2017 | May 30, 2017 | Mar. 31, 2017 | Mar. 30, 2017 | Dec. 31, 2016 | Oct. 31, 2016 | Sep. 30, 2016 | Aug. 31, 2016 | Jun. 05, 2015 |
Business Acquisition [Line Items] | |||||||||||||||||||||
Measurement period adjustments | $ (117) | $ 1,617 | |||||||||||||||||||
Liabilities assumed: | |||||||||||||||||||||
Goodwill | $ 768,124 | $ 628,186 | $ 626,569 | ||||||||||||||||||
Evolent Health LLC | |||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||
Parent's ownership percentage | 96.10% | 96.60% | 96.10% | 95.30% | 95.30% | 99.00% | 98.90% | 96.60% | 96.60% | 96.10% | 96.10% | 90.50% | 84.90% | 83.90% | 77.40% | 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. | 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 | ||||||||||||||||||||
As Previously Determined | Aldera Holdings, Inc. | |||||||||||||||||||||
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 | ||||||||||||||||||||
As Previously Determined | Aldera Holdings, Inc. | Customer relationships | |||||||||||||||||||||
Identifiable intangible assets acquired: | |||||||||||||||||||||
Identifiable intangible assets | 7,000 | ||||||||||||||||||||
As Previously Determined | Aldera Holdings, Inc. | Technology | |||||||||||||||||||||
Identifiable intangible assets acquired: | |||||||||||||||||||||
Identifiable intangible assets | 2,500 | ||||||||||||||||||||
Measurement Period Adjustments | Aldera Holdings, Inc. | |||||||||||||||||||||
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 | ||||||||||||||||||||
Measurement Period Adjustments | Aldera Holdings, Inc. | Customer relationships | |||||||||||||||||||||
Identifiable intangible assets acquired: | |||||||||||||||||||||
Identifiable intangible assets | 0 | ||||||||||||||||||||
Measurement Period Adjustments | Aldera Holdings, Inc. | Technology | |||||||||||||||||||||
Identifiable intangible assets acquired: | |||||||||||||||||||||
Identifiable intangible assets | $ 0 |
Transactions - Valence Health (
Transactions - Valence Health (Details) - USD ($) shares in Thousands, $ in Thousands | Oct. 03, 2016 | Nov. 30, 2018 | Mar. 31, 2018 | Aug. 31, 2017 | Jun. 30, 2017 | May 31, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Oct. 31, 2018 | Oct. 01, 2018 | Sep. 30, 2018 | Feb. 28, 2018 | Jul. 31, 2017 | May 30, 2017 | Mar. 30, 2017 | Oct. 02, 2016 | Aug. 31, 2016 | Jun. 05, 2015 |
Business Acquisition [Line Items] | ||||||||||||||||||||||
Measurement period adjustments | $ (117) | $ 1,617 | ||||||||||||||||||||
Liabilities assumed: | ||||||||||||||||||||||
Goodwill | $ 626,569 | 768,124 | 628,186 | $ 626,569 | ||||||||||||||||||
Deferred tax liability | $ 25,088 | $ 2,437 | ||||||||||||||||||||
Evolent Health LLC | ||||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||||
Parent's ownership percentage | 96.10% | 98.90% | 96.60% | 96.10% | 90.50% | 83.90% | 74.60% | 77.40% | 96.10% | 96.60% | 77.40% | 95.30% | 95.30% | 99.00% | 96.60% | 96.10% | 84.90% | 77.40% | 71.00% | 70.30% | ||
Class A Common Stock | ||||||||||||||||||||||
Liabilities assumed: | ||||||||||||||||||||||
Issuance of common stock (in shares) | 8,800 | 20,100 | 26,600 | |||||||||||||||||||
Class A Common Stock | Common Stock | ||||||||||||||||||||||
Liabilities assumed: | ||||||||||||||||||||||
Issuance of common stock (in shares) | 800 | 3,000 | 4,500 | 7,000 | 7,500 | 8,600 | 8,816 | |||||||||||||||
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 | |||||||||||||||||||||
Contingent consideration arrangements fair value | 2,600 | |||||||||||||||||||||
Transaction costs (2016 “cost of revenue” - less than) | 2,700 | |||||||||||||||||||||
Measurement period adjustments | 400 | $ 1,200 | ||||||||||||||||||||
Purchase consideration: | ||||||||||||||||||||||
Fair value of Class B common stock issued | 160,525 | |||||||||||||||||||||
Cash for settlement of software license | 2,620 | |||||||||||||||||||||
Cash | 54,799 | |||||||||||||||||||||
Total consideration | 217,944 | |||||||||||||||||||||
Tangible assets acquired: | ||||||||||||||||||||||
Restricted cash | 1,829 | |||||||||||||||||||||
Accounts Receivable | 8,336 | |||||||||||||||||||||
Prepaid expenses and other current assets | 3,465 | |||||||||||||||||||||
Property and equipment | 6,241 | |||||||||||||||||||||
Other non-current assets | 313 | |||||||||||||||||||||
Favorable leases assumed (net of unfavorable leases) | 4,197 | |||||||||||||||||||||
Liabilities assumed: | ||||||||||||||||||||||
Accounts payable | 5,703 | |||||||||||||||||||||
Accrued liabilities | 3,796 | |||||||||||||||||||||
Accrued compensation and employee benefits | 9,200 | |||||||||||||||||||||
Deferred revenue | 2,662 | |||||||||||||||||||||
Other long-term liabilities | 2,328 | |||||||||||||||||||||
Net deferred tax liabilities | 12,680 | |||||||||||||||||||||
Goodwill | 142,932 | |||||||||||||||||||||
Net assets acquired | 217,944 | |||||||||||||||||||||
Acquired receivables | 9,100 | |||||||||||||||||||||
Acquired receivables, estimated uncollectible | 800 | |||||||||||||||||||||
Deferred tax liability | 13,300 | |||||||||||||||||||||
Gain on disposition of assets | 52,700 | |||||||||||||||||||||
Accelerated share-based compensation expense | $ 3,900 | $ 3,900 | ||||||||||||||||||||
Valence Health Inc. | Customer relationships | ||||||||||||||||||||||
Identifiable intangible assets acquired: | ||||||||||||||||||||||
Identifiable intangible assets | $ 69,000 | |||||||||||||||||||||
Liabilities assumed: | ||||||||||||||||||||||
Useful life | 20 years | |||||||||||||||||||||
Valence Health Inc. | Technology | ||||||||||||||||||||||
Identifiable intangible assets acquired: | ||||||||||||||||||||||
Identifiable intangible assets | $ 18,000 | |||||||||||||||||||||
Liabilities assumed: | ||||||||||||||||||||||
Useful life | 5 years | |||||||||||||||||||||
Valence Health Inc. | Selling, general and administrative expenses | ||||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||||
Transaction costs (2016 “cost of revenue” - less than) | $ 2,600 | |||||||||||||||||||||
Valence Health Inc. | Cost of revenue | ||||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||||
Transaction costs (2016 “cost of revenue” - less than) | 100 | |||||||||||||||||||||
Valence Health Inc. | As Previously Determined | ||||||||||||||||||||||
Purchase consideration: | ||||||||||||||||||||||
Fair value of Class B common stock issued | 159,614 | |||||||||||||||||||||
Cash for settlement of software license | 2,620 | |||||||||||||||||||||
Cash | 54,799 | |||||||||||||||||||||
Total consideration | 217,033 | |||||||||||||||||||||
Tangible assets acquired: | ||||||||||||||||||||||
Restricted cash | 1,829 | |||||||||||||||||||||
Accounts Receivable | 8,587 | |||||||||||||||||||||
Prepaid expenses and other current assets | 3,465 | |||||||||||||||||||||
Property and equipment | 6,241 | |||||||||||||||||||||
Other non-current assets | 313 | |||||||||||||||||||||
Favorable leases assumed (net of unfavorable leases) | 4,323 | |||||||||||||||||||||
Liabilities assumed: | ||||||||||||||||||||||
Accounts payable | 5,703 | |||||||||||||||||||||
Accrued liabilities | 3,865 | |||||||||||||||||||||
Accrued compensation and employee benefits | 9,200 | |||||||||||||||||||||
Deferred revenue | 2,022 | |||||||||||||||||||||
Other long-term liabilities | 2,328 | |||||||||||||||||||||
Net deferred tax liabilities | 13,316 | |||||||||||||||||||||
Goodwill | 141,709 | |||||||||||||||||||||
Net assets acquired | 217,033 | |||||||||||||||||||||
Valence Health Inc. | As Previously Determined | Customer relationships | ||||||||||||||||||||||
Identifiable intangible assets acquired: | ||||||||||||||||||||||
Identifiable intangible assets | 69,000 | |||||||||||||||||||||
Valence Health Inc. | As Previously Determined | Technology | ||||||||||||||||||||||
Identifiable intangible assets acquired: | ||||||||||||||||||||||
Identifiable intangible assets | 18,000 | |||||||||||||||||||||
Valence Health Inc. | Measurement Period Adjustments | ||||||||||||||||||||||
Purchase consideration: | ||||||||||||||||||||||
Fair value of Class B common stock issued | 911 | |||||||||||||||||||||
Cash for settlement of software license | 0 | |||||||||||||||||||||
Cash | 0 | |||||||||||||||||||||
Tangible assets acquired: | ||||||||||||||||||||||
Restricted cash | 0 | |||||||||||||||||||||
Accounts Receivable | (251) | |||||||||||||||||||||
Prepaid expenses and other current assets | 0 | |||||||||||||||||||||
Property and equipment | 0 | |||||||||||||||||||||
Other non-current assets | 0 | |||||||||||||||||||||
Favorable leases assumed (net of unfavorable leases) | (126) | |||||||||||||||||||||
Liabilities assumed: | ||||||||||||||||||||||
Accounts payable | 0 | |||||||||||||||||||||
Accrued liabilities | (69) | |||||||||||||||||||||
Accrued compensation and employee benefits | 0 | |||||||||||||||||||||
Deferred revenue | 640 | |||||||||||||||||||||
Other long-term liabilities | 0 | |||||||||||||||||||||
Net deferred tax liabilities | (636) | |||||||||||||||||||||
Goodwill | 1,223 | |||||||||||||||||||||
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. | 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 ($)beneficiaryshares | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Business Acquisition [Line Items] | ||||
Increase (decrease) in contingent consideration liability | $ (4,104,000) | $ 400,000 | $ (2,086,000) | |
Tangible assets acquired: | ||||
Goodwill | 768,124,000 | 628,186,000 | $ 626,569,000 | |
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 | 5,600,000 | ||
Increase (decrease) in contingent consideration liability | $ (3,100,000) | $ 400,000 | ||
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 - 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, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||||
Revenue | $ 763,624 | $ 679,323 | $ 361,944 | |
Net income (loss) | (69,337) | (80,990) | (225,091) | |
Net income (loss) attributable to non-controlling interests | (3,554) | (11,544) | (57,433) | |
Net income (loss) attributable to Evolent Health, Inc. | $ (65,783) | $ (69,446) | $ (167,658) | |
Net income (loss) available to common shareholders, basic (in dollars per share) | $ (0.85) | $ (1.08) | $ (3.30) | |
Net income (loss) available to common shareholders, diluted (in dollars per share) | $ (3.30) | $ (3.30) | $ (1.50) | |
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 and Sales (Details) - USD ($) | 1 Months Ended | 12 Months Ended | 24 Months Ended | |||||||||||||||||||
Nov. 30, 2018 | Mar. 31, 2018 | Aug. 31, 2017 | Jun. 30, 2017 | May 31, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Oct. 31, 2018 | Oct. 01, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Feb. 28, 2018 | Oct. 31, 2017 | Jul. 31, 2017 | May 30, 2017 | Mar. 30, 2017 | Dec. 31, 2016 | Aug. 31, 2016 | Jun. 05, 2015 | |
Organization [Line Items] | ||||||||||||||||||||||
Share price (in dollars per share) | $ 12.01 | |||||||||||||||||||||
Investor Stockholders | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Offering expenses | $ 0 | |||||||||||||||||||||
Class A | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Issuance of common stock (in shares) | 8,800,000 | 20,100,000 | 26,600,000 | |||||||||||||||||||
Common stock, shares outstanding (in shares) | 79,172,118 | 74,723,597 | 79,172,118 | |||||||||||||||||||
Proceeds from issuance of common stock, net of payments of stock issuance costs | $ 166,900,000 | |||||||||||||||||||||
Proceeds from issuance of common stock | $ 175,000,000 | |||||||||||||||||||||
Class A | Evolent Health, Selling Stockholders | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Issuance of common stock (in shares) | 7,400,000 | |||||||||||||||||||||
Class A | Investor Stockholders | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Issuance of common stock (in shares) | 12,600,000 | 19,700,000 | ||||||||||||||||||||
Class A | Management Selling Stockholders | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Issuance of common stock (in shares) | 100,000 | |||||||||||||||||||||
Class A | Common Stock | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Issuance of common stock (in shares) | 800,000 | 3,000,000 | 4,500,000 | 7,000,000 | 7,500,000 | 8,600,000 | 8,816,000 | |||||||||||||||
Share price (in dollars per share) | $ 19.85 | $ 25.87 | $ 24.30 | $ 19.53 | $ 21.54 | |||||||||||||||||
Offering expenses | $ 8,100,000 | |||||||||||||||||||||
Class A | Common Stock | Evolent Health, Selling Stockholders | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Issuance of common stock (in shares) | 100,000 | 1,200,000 | 700,000 | 3,100,000 | 3,100,000 | 6,400,000 | ||||||||||||||||
Class A | Common Stock | Over-Allotment Option | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Issuance of common stock (in shares) | 1,100,000 | |||||||||||||||||||||
Share price (in dollars per share) | $ 19.53 | |||||||||||||||||||||
Class A | Common Stock | Over-Allotment Option | Evolent Health, Selling Stockholders | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Issuance of common stock (in shares) | 500,000 | |||||||||||||||||||||
Class A | Common Stock | The Advisory Board | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Issuance of common stock (in shares) | 1,800,000 | |||||||||||||||||||||
Common stock, shares outstanding (in shares) | 0 | |||||||||||||||||||||
Class A | Common Stock | TPG | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Issuance of common stock (in shares) | 700,000 | |||||||||||||||||||||
Common stock, shares outstanding (in shares) | 0 | 0 | ||||||||||||||||||||
Class A | Common Stock | Underwriters | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Share price (in dollars per share) | $ 19.01 | |||||||||||||||||||||
Class A | Common Stock | Investor Stockholders | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Issuance of common stock (in shares) | 3,800,000 | 3,800,000 | 4,400,000 | 2,200,000 | ||||||||||||||||||
Class A | Common Stock | Investor Stockholders | Over-Allotment Option | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Issuance of common stock (in shares) | 600,000 | |||||||||||||||||||||
Class A | Common Stock | Management Selling Stockholders | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Issuance of common stock (in shares) | 100,000 | |||||||||||||||||||||
Class B | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Common stock, shares outstanding (in shares) | 3,190,301 | 2,653,544 | 3,190,301 | |||||||||||||||||||
Class B | Common Stock | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Issuance of common stock (in shares) | 3,120,000 | |||||||||||||||||||||
Class B | Common Stock | TPG | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Common stock, shares outstanding (in shares) | 0 | 0 | ||||||||||||||||||||
Common Class B Units | Common Stock | TPG | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Common stock, shares outstanding (in shares) | 0 | 0 | ||||||||||||||||||||
Evolent Health LLC | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Parent's ownership percentage | 96.10% | 98.90% | 96.60% | 96.10% | 90.50% | 83.90% | 74.60% | 96.10% | 96.60% | 96.10% | 95.30% | 95.30% | 99.00% | 96.60% | 96.10% | 84.90% | 77.40% | 77.40% | 71.00% | 70.30% | ||
Evolent Health LLC | Over-Allotment Option | ||||||||||||||||||||||
Organization [Line Items] | ||||||||||||||||||||||
Parent's ownership percentage | 84.90% | 83.90% |
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 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Disaggregation of Revenue [Line Items] | ||||||||||||
Total revenue | $ 193,104 | $ 149,947 | $ 144,298 | $ 139,714 | $ 113,729 | $ 107,912 | $ 107,071 | $ 106,238 | $ 627,063 | $ 434,950 | $ 254,188 | |
Transformation services | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Total revenue | [1] | 32,916 | 29,466 | 38,320 | ||||||||
Platform and operations services | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Total revenue | [1] | 500,190 | $ 405,484 | $ 215,868 | ||||||||
Services | Transformation services | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Total revenue | 32,916 | |||||||||||
Services | Platform and operations services | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Total revenue | $ 492,568 | |||||||||||
[1] | (1) See Note 17 for amounts related to related parties included in these line items. |
Revenue Recognition - Transacti
Revenue Recognition - Transaction Price Allocated to the Remaining Performance Obligations (Details) $ in Millions | Dec. 31, 2018USD ($) |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation | $ 91 |
Revenue, remaining performance obligation, percent to be recognized in current fiscal year | 60.00% |
Revenue, remaining performance obligation, percent to be recognized in next fiscal year | 88.00% |
Revenue Recognition - Contract
Revenue Recognition - Contract Balances (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Revenue from Contract with Customer [Abstract] | |||
Short-term receivables | $ 78,380 | $ 47,131 | |
Long-term receivables | 6,550 | 0 | |
Contract assets (current) | 2,102 | 3,710 | $ 0 |
Contract assets (noncurrent) | 961 | 1,791 | 0 |
Short-term deferred revenue | 20,584 | 26,147 | $ 24,807 |
Long-term deferred revenue | 1,502 | $ 493 | |
Contract asset, reclassified to receivable | (2,400) | ||
Deferred revenue increase | (4,600) | ||
Deferred revenue, revenue recognized | 19,300 | ||
Deferred revenue, adjustment due to net gain share, service-level agreement true-ups and changes in estimates | $ 18,000 |
Revenue Recognition - Contrac_2
Revenue Recognition - Contract Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Capitalized Contract Cost [Line Items] | |||
Contract cost amortization | $ 2,703 | $ 0 | $ 0 |
Capitalized contract cost, amortization period | 5 years | ||
Bonuses and Commissions | |||
Capitalized Contract Cost [Line Items] | |||
Contract cost assets | $ 1,500 | ||
Contract cost amortization | 300 | ||
Contract Fulfillment Costs | |||
Capitalized Contract Cost [Line Items] | |||
Contract cost assets | 17,600 | ||
Contract cost amortization | $ 2,400 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property and Equipment [Line Items] | |||
Total property and equipment | $ 105,366 | $ 65,380 | |
Accumulated depreciation and amortization expenses | (31,738) | (14,458) | |
Total property and equipment, net | 73,628 | 50,922 | |
Depreciation expense | 17,300 | 9,200 | $ 2,600 |
Capitalized computer software, amortization | 12,400 | 4,900 | 1,400 |
Computer hardware | |||
Property and Equipment [Line Items] | |||
Total property and equipment | 10,421 | 5,667 | |
Furniture and equipment | |||
Property and Equipment [Line Items] | |||
Total property and equipment | 3,187 | 2,448 | |
Internal-use software development costs | |||
Property and Equipment [Line Items] | |||
Total property and equipment | 81,640 | 48,557 | |
Total property and equipment, net | 62,800 | 42,100 | |
Capitalized computer software additions | 33,100 | 27,100 | $ 15,000 |
Leasehold improvements | |||
Property and Equipment [Line Items] | |||
Total property and equipment | $ 10,118 | $ 8,708 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, Net (Details) $ / shares in Units, $ in Thousands | Dec. 14, 2017USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2018USD ($)reporting_unit | Dec. 31, 2018USD ($)unit | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Oct. 31, 2017$ / shares |
Finite-Lived Intangible Assets [Line Items] | ||||||||
Number of reporting units for goodwill testing | 3 | 3 | ||||||
Share price (in dollars per share) | $ / shares | $ 12.01 | |||||||
Goodwill, impairment testing, percentage share price decrease | 42.40% | |||||||
Amortization of intangible assets | $ 27,200 | $ 22,800 | $ 12,500 | |||||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||||||||
2,019 | $ 36,498 | 36,498 | $ 36,498 | $ 36,498 | ||||
2,020 | 32,312 | 32,312 | 32,312 | 32,312 | ||||
2,021 | 28,143 | 28,143 | 28,143 | 28,143 | ||||
2,022 | 24,262 | 24,262 | 24,262 | 24,262 | ||||
2,023 | 21,498 | 21,498 | 21,498 | 21,498 | ||||
Thereafter | 192,323 | 192,323 | 192,323 | 192,323 | ||||
Net Carrying Amount | $ 335,036 | $ 335,036 | $ 335,036 | $ 335,036 | $ 241,261 | |||
Market Approach Valuation Technique | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Goodwill, impairment testing, weighted percentage applied | 70.00% | |||||||
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] | ||||||||
Goodwill, impairment testing, weighted percentage applied | 30.00% | |||||||
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 Asset_4
Goodwill and Intangible Assets, Net - Schedule of Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill [Roll Forward] | ||
Balance as of beginning of period | $ 628,186 | $ 626,569 |
Goodwill Acquired | 140,169 | |
Measurement period adjustments | (117) | 1,617 |
Balance as of end of period | 768,124 | 628,186 |
Cumulative inception to date impairment | 160,600 | |
Services | ||
Goodwill [Roll Forward] | ||
Balance as of beginning of period | 628,186 | 626,569 |
Goodwill Acquired | 134,343 | |
Measurement period adjustments | 4 | 1,617 |
Foreign currency translation | (114) | |
Balance as of end of period | 762,419 | 628,186 |
True Health | ||
Goodwill [Roll Forward] | ||
Balance as of beginning of period | 0 | 0 |
Goodwill Acquired | 5,826 | |
Measurement period adjustments | (121) | 0 |
Foreign currency translation | 0 | |
Balance as of end of period | $ 5,705 | $ 0 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets, Net - Intangible Assets, Net (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Feb. 28, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Oct. 01, 2018 | Jan. 02, 2018 | Mar. 01, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||||||
Gross Carrying Amount | $ 403,438 | $ 282,499 | ||||
Accumulated Amortization | 68,402 | 41,238 | ||||
Net Carrying Amount | $ 335,036 | $ 241,261 | ||||
Corporate trade name | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Weighted Average Remaining Useful Life | 15 years 2 months 15 days | 17 years 5 months | ||||
Gross Carrying Amount | $ 23,300 | $ 19,000 | ||||
Accumulated Amortization | 3,511 | 2,454 | ||||
Net Carrying Amount | $ 19,789 | $ 16,546 | ||||
Customer relationships | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Weighted Average Remaining Useful Life | 18 years 1 month 10 days | 20 years 6 months | ||||
Gross Carrying Amount | $ 281,219 | $ 203,500 | ||||
Accumulated Amortization | 29,184 | 18,312 | ||||
Net Carrying Amount | $ 252,035 | $ 185,188 | ||||
Technology | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Weighted Average Remaining Useful Life | 3 years | 3 years 1 month 15 days | ||||
Gross Carrying Amount | $ 82,922 | $ 55,802 | ||||
Accumulated Amortization | 31,764 | 17,810 | ||||
Net Carrying Amount | $ 51,158 | $ 37,992 | ||||
Below market lease, net | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Weighted Average Remaining Useful Life | 4 years | 4 years 10 months | ||||
Gross Carrying Amount | $ 4,097 | $ 4,197 | ||||
Accumulated Amortization | 3,003 | 2,662 | ||||
Net Carrying Amount | $ 1,094 | $ 1,535 | ||||
Provider network contracts | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Weighted Average Remaining Useful Life | 4 years 7 months 12 days | |||||
Gross Carrying Amount | $ 11,900 | |||||
Accumulated Amortization | 940 | |||||
Net Carrying Amount | $ 10,960 | |||||
New Century Health | Corporate trade name | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Identifiable intangible assets | $ 4,300 | |||||
New Century Health | Customer relationships | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Identifiable intangible assets | 72,500 | |||||
New Century Health | Technology | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Identifiable intangible assets | 27,000 | |||||
New Century Health | Provider network contracts | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Identifiable intangible assets | $ 9,600 | |||||
New Mexico Health Connections | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Contingent consideration, liability | $ 252 | |||||
New Mexico Health Connections | Customer relationships | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Identifiable intangible assets | 2,700 | |||||
New Mexico Health Connections | Provider network contracts | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Identifiable intangible assets | 2,300 | |||||
Vestica | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Contingent consideration, liability | $ 4,000 | |||||
Contingent consideration settled | $ 3,500 | |||||
Vestica | Customer relationships | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Identifiable intangible assets | $ 2,500 |
Long-term Debt - 2025 Notes (De
Long-term Debt - 2025 Notes (Details) $ / shares in Units, shares in Millions | 1 Months Ended | 12 Months Ended | |||
Oct. 31, 2018USD ($)shares$ / shares | Dec. 31, 2018USD ($) | Oct. 24, 2018USD ($) | Oct. 22, 2018USD ($) | Dec. 31, 2017USD ($) | |
Debt Instrument [Line Items] | |||||
Carrying amount | $ 221,041,000 | $ 121,394,000 | |||
Senior Convertible Notes Due 2025 | |||||
Debt Instrument [Line Items] | |||||
Debt issuance costs | $ 5,900,000 | ||||
Senior Notes | Senior Convertible Notes Due 2025 | |||||
Debt Instrument [Line Items] | |||||
Face amount | $ 172,500,000 | 172,500,000 | $ 22,500,000 | $ 150,000,000 | $ 0 |
Interest rate | 1.50% | ||||
Proceeds from issuance of debt | $ 166,600,000 | ||||
Debt issuance costs | 3,400,000 | ||||
Interest expense | 500,000 | ||||
Debt conversion denominator shares per principal amount | $ 1,000 | ||||
Conversion price (in dollars per share) | $ / shares | $ 33.43 | ||||
Initial conversion amount (in shares) | shares | 5.2 | ||||
Carrying amount | $ 100,700,000 | ||||
Non-cash amortization of debt discount and debt issuance costs | $ 1,500,000 | ||||
Repurchase covenant, repurchase price due to fundamental change as percentage of principal amount | 100.00% | ||||
Repurchase covenant, sale price as a percentage of conversion price | 130.00% | ||||
Repurchase covenant, trading days, minimum | 20 days | ||||
Repurchase covenant, consecutive trading days, minimum | 30 days | ||||
Repurchase covenant, repurchase price due to change in sale price as percentage of conversion price | 100.00% | ||||
Senior Notes | Senior Convertible Notes Due 2025 | Common Stock | |||||
Debt Instrument [Line Items] | |||||
Proceeds from issuance of debt | $ 71,800,000 | ||||
Senior Notes | Senior Convertible Notes Due 2025 | Class A Common Stock | Common Stock | |||||
Debt Instrument [Line Items] | |||||
Initial conversion rate per $1000 principal amount | 0.0299135 |
Long-term Debt - 2021 Notes (De
Long-term Debt - 2021 Notes (Details) $ / shares in Units, shares in Millions | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2016USD ($)shares$ / shares | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($)$ / shares | |
Debt Instrument [Line Items] | ||||
Amortization of deferred financing costs (2016 - less than) | $ 2,455,000 | $ 914,000 | $ 0 | |
Senior Notes | Convertible Senior Notes due 2021 | ||||
Debt Instrument [Line Items] | ||||
Face amount | $ 125,000,000 | 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 covenant, repurchase price due to fundamental change as percentage of principal amount | 100.00% | |||
Interest expense | 2,500,000 | 2,500,000 | 200,000 | |
Amortization of deferred financing costs (2016 - less than) | $ 900,000 | $ 900,000 | $ 100,000 | |
Debt conversion denominator shares per principal amount | $ 1,000 | |||
Class A Common Stock | Common Stock | Senior Notes | Convertible Senior Notes due 2021 | ||||
Debt Instrument [Line Items] | ||||
Initial conversion rate per $1000 principal amount | 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 (Details) - Senior Notes - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Oct. 31, 2018 | Oct. 24, 2018 | Oct. 22, 2018 | Dec. 31, 2016 |
Senior Convertible Notes Due 2025 | ||||||
Debt Instrument [Line Items] | ||||||
Carrying value | $ 98,730,000 | $ 0 | ||||
Unamortized debt discount and issuance costs allocated to debt | 73,770,000 | 0 | ||||
Principal amount | $ 172,500,000 | 0 | $ 172,500,000 | $ 22,500,000 | $ 150,000,000 | |
Remaining amortization period | 6 years 10 months | |||||
Senior Convertible Notes Due 2025 | Level 2 | ||||||
Debt Instrument [Line Items] | ||||||
Fair value | $ 158,800,000 | |||||
Convertible Senior Notes due 2021 | ||||||
Debt Instrument [Line Items] | ||||||
Carrying value | 122,311,000 | 121,394,000 | ||||
Unamortized debt discount and issuance costs allocated to debt | 2,689,000 | 3,606,000 | ||||
Principal amount | $ 125,000,000 | $ 125,000,000 | $ 125,000,000 | |||
Remaining amortization period | 2 years 10 months 25 days | 3 years 10 months 25 days | ||||
Convertible Senior Notes due 2021 | Level 2 | ||||||
Debt Instrument [Line Items] | ||||||
Fair value | $ 133,600,000 | $ 120,400,000 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) shares in Thousands | Sep. 01, 2017 | Jun. 30, 2017 | Oct. 03, 2016 | Nov. 30, 2018 | Mar. 31, 2018 | Aug. 31, 2017 | Jun. 30, 2017 | May 31, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2018 | Jun. 29, 2017 | Dec. 31, 2013 |
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Equity method investment, operating capital support commitment, maximum amount | $ 11,000,000 | $ 0 | $ 11,000,000 | $ 0 | $ 11,000,000 | ||||||||||||||
Carrying amount | 221,041,000 | 121,394,000 | 221,041,000 | 121,394,000 | 221,041,000 | ||||||||||||||
Rent expense | 14,200,000 | 10,900,000 | $ 5,900,000 | ||||||||||||||||
Restricted funds | 160,823,000 | 65,685,000 | 160,823,000 | 65,685,000 | 160,823,000 | ||||||||||||||
Remaining lease payments | $ 87,758,000 | $ 87,758,000 | $ 87,758,000 | ||||||||||||||||
Reduction in lease abandonment liability | $ 500,000 | 496,000 | |||||||||||||||||
Lease cancellation fee | 4,365,000 | ||||||||||||||||||
Percent of tax savings to be paid | 85.00% | 85.00% | 85.00% | ||||||||||||||||
Investor Stockholders | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Offering expenses | $ 0 | ||||||||||||||||||
New Mexico Health Connections | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Restricted funds | $ 10,000,000 | 10,000,000 | |||||||||||||||||
Reinsurance arrangement, term | 15 months | 15 months | |||||||||||||||||
Reinsurance arrangement, capital amount | $ 10,000,000 | ||||||||||||||||||
Reinsurance arrangement, quarterly fee | $ 200,000 | ||||||||||||||||||
Reinsurance arrangement, percentage of gross premiums ceded | 90.00% | 90.00% | 90.00% | ||||||||||||||||
Reinsurance arrangement, percentage of claims liability indemnified | 90.00% | 90.00% | 90.00% | ||||||||||||||||
Reinsurance arrangement, maximum amount of insurance risk as a percentage of premiums ceded | 105.00% | 105.00% | 105.00% | ||||||||||||||||
Selling, general and administrative expenses | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Offering expenses | $ 1,500,000 | $ 1,600,000 | |||||||||||||||||
Class A Common Stock | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Issuance of common stock (in shares) | 8,800 | 20,100 | 26,600 | ||||||||||||||||
Class A Common Stock | Investor Stockholders | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Issuance of common stock (in shares) | 12,600 | 19,700 | |||||||||||||||||
Arlington, Virginia Office | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Remaining lease term | 2 years | ||||||||||||||||||
Contractual obligation | $ 7,100,000 | $ 7,100,000 | $ 7,100,000 | ||||||||||||||||
Arlington, Virginia Office | Minimum | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Letters of credit outstanding | 1,600,000 | 1,600,000 | 1,600,000 | ||||||||||||||||
300 S. Riverside Plaza In Chicago, Illinois | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Remaining lease term | 12 years 3 months 18 days | ||||||||||||||||||
Contractual obligation | 43,700,000 | 43,700,000 | 43,700,000 | ||||||||||||||||
300 S. Riverside Plaza In Chicago, Illinois | Minimum | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Letters of credit outstanding | 200,000 | 200,000 | 200,000 | ||||||||||||||||
540 W. Madison Street | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Remaining lease term | 9 years | ||||||||||||||||||
Contractual obligation | 16,300,000 | 16,300,000 | 16,300,000 | ||||||||||||||||
Sublease term | 11 years | 1 year | 1 year | ||||||||||||||||
Estimated sublease value | $ 100,000 | $ 100,000 | 10,100,000 | ||||||||||||||||
540 W. Madison Street | Valence Health Inc. | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Loss from lease abandonment | 5,300,000 | $ 6,500,000 | |||||||||||||||||
Remaining lease payments | $ 4,800,000 | $ 4,800,000 | 0 | 0 | 0 | $ 5,300,000 | |||||||||||||
Lease cancellation fee | $ 4,400,000 | ||||||||||||||||||
540 W. Madison Street | Minimum | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Letters of credit outstanding | 1,500,000 | 1,500,000 | 1,500,000 | ||||||||||||||||
Letters of credit for facility leases | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Restricted funds | 3,710,000 | 3,812,000 | 3,710,000 | 3,812,000 | 3,710,000 | ||||||||||||||
Collateral with financial institutions | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Restricted funds | 34,142,000 | 24,725,000 | 34,142,000 | 24,725,000 | 34,142,000 | ||||||||||||||
Restricted cash and investments | 34,100,000 | 34,100,000 | 34,100,000 | ||||||||||||||||
Collateral for reinsurance agreement | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Restricted funds | 0 | 10,000,000 | 0 | 10,000,000 | 0 | ||||||||||||||
Letter of Credit | Line of Credit | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Maximum borrowing capacity (up to) | $ 5,000,000 | $ 5,000,000 | |||||||||||||||||
Quarterly rental fee percentage | 0.80% | ||||||||||||||||||
Carrying amount | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | ||||||||||||||
Common Stock | Class A Common Stock | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Issuance of common stock (in shares) | 800 | 3,000 | 4,500 | 7,000 | 7,500 | 8,600 | 8,816 | ||||||||||||
Offering expenses | $ 8,100,000 | ||||||||||||||||||
Common Stock | Class A Common Stock | Investor Stockholders | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Issuance of common stock (in shares) | 3,800 | 3,800 | 4,400 | 2,200 | |||||||||||||||
Common Stock | Valence Health Inc. | Class A Common Stock | |||||||||||||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||||||||||||||||
Issuance of common stock (in shares) | 200 |
Commitments and Contingencies_2
Commitments and Contingencies - Lease Abandonment Liability (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2017 |
Liabilities Subject to Compromise, Period Increase (Decrease) [Roll Forward] | ||
Accrual as of beginning-of-year | $ 6,100 | |
Abandonment expense | 0 | |
Impact of lease termination | $ (500) | (496) |
Abandonment amortization | (1,239) | |
Lease cancellation fee | (4,365) | |
Accrual as of end-of-year | $ 0 |
Commitments and Contingencies_3
Commitments and Contingencies - Future Minimum Rental Commitments/Receivables (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Future Minimum Rental Commitments | |
2,019 | $ 11,470 |
2,020 | 12,553 |
2,021 | 8,594 |
2,022 | 7,033 |
2,023 | 7,451 |
Thereafter | 40,657 |
Total | $ 87,758 |
Commitments and Contingencies_4
Commitments and Contingencies - Purchase Obligations (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase obligations related to vendor contracts, Less Than 1 Year | $ 6,236 |
Purchase obligations related to vendor contracts, 1 to 3 Years | 2,417 |
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 | $ 8,653 |
Commitments and Contingencies_5
Commitments and Contingencies - Reinsurance Agreements (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Insurance Loss Reserves [Roll Forward] | |
Claims reserves attributable to the Reinsurance Agreement at the beginning of the year | $ 0 |
Reinsurance premiums assumed | 3,242 |
Claims assumed | 3,934 |
Claims-related administrative expenses | 551 |
(Increase) decrease in claims reserves attributable to the Reinsurance Agreement | (1,243) |
Claims reserves attributable to the Reinsurance Agreement at the end of the year | $ 1,243 |
Commitments and Contingencies_6
Commitments and Contingencies - Concentration Risk (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Concentration Risk [Line Items] | ||||
Cash, FDIC insured amount, percentage | 88.90% | |||
Cash and cash equivalents and restricted cash | $ 388,325,000 | $ 295,363,000 | $ 170,029,000 | $ 152,011,000 |
Cash, held In money market funds, percentage | 11.00% | |||
Cash, held in international banks, percentage (less than) | 1.00% | |||
Customer B | Customer Concentration Risk | Accounts Receivable | Customer Receivable | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 11.80% | |||
Customer C | Customer Concentration Risk | Accounts Receivable | Customer Receivable | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 23.30% | 32.10% | ||
Customer D | Customer Concentration Risk | Accounts Receivable | Customer Receivable | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 16.50% | |||
Customer D | Customer Concentration Risk | Revenues | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 14.50% | |||
Customer A | ||||
Concentration Risk [Line Items] | ||||
Uncollectible accounts receivable | $ 0 | |||
Customer A | Customer Concentration Risk | Revenues | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 17.50% | 20.60% | 19.60% | |
Customer E | Customer Concentration Risk | Revenues | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 12.70% |
Earnings (Loss) Per Common Sh_3
Earnings (Loss) Per Common Share - Computation of Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Class of Stock [Line Items] | |||||||||||
Net income (loss) | $ (17,540) | $ (12,555) | $ (10,031) | $ (14,065) | $ (13,791) | $ (13,129) | $ (19,698) | $ (23,149) | $ (54,191) | $ (69,767) | $ (226,778) |
Less: | |||||||||||
Net income (loss) attributable to non-controlling interests | (853) | (126) | (115) | (439) | (631) | (541) | (2,793) | (5,137) | (1,533) | (9,102) | (67,036) |
Net income (loss) attributable to Evolent Health, Inc. | $ (16,687) | $ (12,429) | $ (9,916) | $ (13,626) | $ (13,160) | $ (12,588) | $ (16,905) | $ (18,012) | $ (52,658) | $ (60,665) | $ (159,742) |
Weighted-average common shares outstanding - Basic and diluted (in shares) | 77,338,000 | 64,351,000 | 45,031,000 | ||||||||
Earnings (Loss) per Common Share | |||||||||||
Basic and diluted (in dollars per share) | $ (0.21) | $ (0.16) | $ (0.13) | $ (0.18) | $ (0.18) | $ (0.18) | $ (0.28) | $ (0.34) | $ (0.68) | $ (0.94) | $ (3.55) |
Class A | |||||||||||
Earnings (Loss) per Common Share | |||||||||||
Convertible preferred stock, shares issued upon conversion (in shares) | 1 | 1 |
Earnings (Loss) Per Common Sh_4
Earnings (Loss) Per Common Share - Antidilutive Securities (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
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) | 11,551 | 15,840 | 19,469 |
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) | 1,831 | 7,285 | 16,882 |
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) | 1,027 | 525 | 245 |
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) | 2,517 | 2,829 | 1,973 |
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) | 6,176 | 5,201 | 369 |
Stock-based Compensation - 2011
Stock-based Compensation - 2011 and 2015 Equity Incentive Plans (Details) - shares shares in Thousands | Dec. 31, 2018 | Jun. 13, 2018 | Dec. 31, 2017 | May 01, 2015 | Sep. 23, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options issued (in shares) | 5,089 | 5,951 | |||
RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of RSUs and shares of restricted stock issued (in shares) | 1,391 | 816 | |||
2011 Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options issued (in shares) | 4,800 | ||||
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 | 3,800 | |||
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 | ||||
2015 Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options issued (in shares) | 3,300 | 2,500 | |||
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) | 2,100 | 1,100 | |||
2015 Plan | Class A Common Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares authorized (in shares) | 10,500 | 6,000 |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock-based Compensation Expense (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | $ 17,609,000 | $ 20,437,000 | $ 22,501,000 |
Stock-based compensation capitalized as software development costs (2016 - less than) | 0 | 0 | 0 |
Cost of revenue | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 1,475,000 | 1,371,000 | 2,670,000 |
Selling, general and administrative expenses | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 16,134,000 | 19,066,000 | 19,831,000 |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 9,008,000 | 15,487,000 | 15,647,000 |
Performance-based stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 447,000 | 447,000 | 374,000 |
RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 7,766,000 | 4,503,000 | 2,583,000 |
Performance-based RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 388,000 | 0 | 0 |
Acceleration of unvested equity awards | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | $ 0 | $ 0 | $ 3,897,000 |
Stock-based Compensation - Unre
Stock-based Compensation - Unrecognized Compensation Expense (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Expense, Total | $ 28,880 |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Expense | $ 10,061 |
Weighted Average Period | 1 year 1 month 18 days |
Performance-based stock options | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Expense | $ 521 |
Weighted Average Period | 1 year 2 months 2 days |
RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Expense | $ 16,353 |
Weighted Average Period | 2 years 3 months 8 days |
Performance-based RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Expense | $ 1,945 |
Weighted Average Period | 1 year 3 months |
Stock-based Compensation - St_2
Stock-based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
Expiration period | 10 years | ||
Weighted-average fair value per option granted (in dollars per share) | $ 6.30 | $ 8.38 | $ 4.69 |
Assumptions: | |||
Expected life | 6 years 3 months | 6 years 3 months | 6 years 3 months |
Expected volatility | 38.90% | 42.80% | 45.00% |
Risk-free interest rate, minimum | 2.60% | 1.90% | 1.30% |
Risk-free interest rate, maximum | 2.90% | 2.10% | 1.50% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Fair value of options vested | $ 11.3 | $ 13 | $ 12.4 |
Intrinsic value of options exercised | $ 25.1 | $ 14.2 | $ 3.8 |
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 |
Stock-based Compensation - St_3
Stock-based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Shares | ||
Outstanding at the beginning of the period (in shares) | 5,951 | |
Granted (in shares) | 1,054 | |
Exercised (in shares) | (1,720) | |
Forfeited (in shares) | (196) | |
Outstanding at the end of the period (in shares) | 5,089 | 5,951 |
Vested and expected to vest at the end of the period (in shares) | 4,959 | |
Exercisable at the end of the period (in shares) | 2,640 | |
Weighted-Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 8.38 | |
Granted (in dollars per share) | 14.38 | |
Exercised (in dollars per share) | 6.93 | |
Forfeited (in dollars per share) | 15.98 | |
Outstanding at the end of the period (in dollars per share) | 9.82 | $ 8.38 |
Vested and expected to vest at the end of the period (in dollars per share) | 9.42 | |
Exercisable at the end of the period (in dollars per share) | $ 6.33 | |
Weighted-Average Remaining Contractual Term | ||
Outstanding | 6 years 10 months 11 days | 7 years 2 months 10 days |
Vested and expected to vest | 6 years 9 months 8 days | |
Exercisable | 5 years 9 months 22 days | |
Aggregate Intrinsic Value | ||
Outstanding | $ 51,556 | $ 23,325 |
Vested and expected to vest | 48,435 | |
Exercisable | $ 35,955 |
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, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 1,054 | |||
Expected volatility | 38.90% | 42.80% | 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) | $ 6.30 | $ 8.38 | $ 4.69 | |
Outstanding at the end of the period (in shares) | 5,089 | 5,951 | ||
Vested and expected to vest at the end of the period (in shares) | 4,959 | |||
Weighted Average Exercise Price, outstanding at the end of the period (in dollars per share) | $ 9.82 | $ 8.38 | ||
Weighted Average Exercise Price, vested and expected to vest at the end of the period (in dollars per share) | $ 9.42 | |||
Weighted-Average Remaining Contractual Term | ||||
Outstanding | 6 years 10 months 11 days | 7 years 2 months 10 days | ||
Vested and expected to vest | 6 years 9 months 8 days | |||
Aggregate Intrinsic Value | ||||
Outstanding | $ 51,556 | $ 23,325 | ||
Vested and expected to vest | $ 48,435 | |||
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 | 7 years 2 months 2 days | 8 years 2 months 2 days | ||
Vested and expected to vest | 7 years 2 months 2 days | |||
Aggregate Intrinsic Value | ||||
Outstanding | $ 2,592 | $ 544 | ||
Vested and expected to vest | $ 2,592 | |||
Performance-based stock options | Tranche One | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.33% | |||
Performance-based stock options | Tranche Two | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 33.33% | |||
Performance-based stock options | 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 | 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 | 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 | 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 Units (Details) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Requisite service period for vesting | 4 years | ||
Vesting percentage | 25.00% | ||
Shares | |||
Outstanding at the beginning of the period (in shares) | shares | 816 | ||
Granted (in shares) | shares | 963 | ||
Forfeited (in shares) | shares | (99) | ||
Vested (in shares) | shares | (289) | ||
Outstanding at the end of the period (in shares) | shares | 1,391 | 816 | |
Weighted-Average Grant-Date Fair Value | |||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 16.23 | ||
Granted (in dollars per share) | $ / shares | 16.12 | $ 19.35 | $ 11.60 |
Forfeited (in dollars per share) | $ / shares | 16.26 | ||
Vested (in dollars per share) | $ / shares | 16.92 | ||
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 16.01 | $ 16.23 | |
Aggregate intrinsic value, vested | $ | $ 4.8 | $ 2.9 | $ 1.8 |
RSUs | Non-Employee Directors | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 1 year | ||
Performance-based RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 18 months | ||
Authorized amount | $ | $ 8.6 | ||
Shares | |||
Outstanding at the beginning of the period (in shares) | shares | 0 | ||
Granted (in shares) | shares | 86 | ||
Outstanding at the end of the period (in shares) | shares | 86 | 0 | |
Weighted-Average Grant-Date Fair Value | |||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 0 | ||
Granted (in dollars per share) | $ / shares | 27.04 | ||
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 27.04 | $ 0 | |
Grants in period, fair value | $ | $ 2.3 | ||
Performance-based RSUs | New Century Health | Level 3 | Risk-neutral probability exceeds threshold | Real Options Approach Valuation Technique | Contingent Consideration Liability | |||
Weighted-Average Grant-Date Fair Value | |||
Measurement input | 0.390 | ||
Performance-based RSUs | New Century Health | Level 3 | Risk-neutral probability meets earn-out cap | Real Options Approach Valuation Technique | Contingent Consideration Liability | |||
Weighted-Average Grant-Date Fair Value | |||
Measurement input | 0.240 |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current | |||
Federal | $ 458 | $ 368 | $ 0 |
State and local | 9 | 266 | 0 |
Foreign | 251 | 0 | 0 |
Total current tax expense | 718 | 634 | 0 |
Deferred | |||
Federal | (14,820) | 3,202 | (9,708) |
State and local | (2,252) | (3,102) | (1,138) |
Foreign | (49) | 0 | 0 |
Total deferred tax expense | (17,121) | 100 | (10,846) |
Change in valuation allowance | 16,443 | (7,371) | 91 |
Total tax expense | $ 40 | $ (6,637) | $ (10,755) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Statutory Rate to Effective Tax Rate (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
U.S. statutory tax rate | 21.00% | 35.00% | 35.00% |
U.S. state income taxes, net of U.S. federal tax benefit | 3.60% | 3.30% | 4.00% |
Foreign earnings at other than U.S. rates | (0.20%) | 0.00% | 0.00% |
Change in valuation allowance | (30.40%) | (34.00%) | (0.10%) |
Change in valuation allowance, tax reform | 0.00% | 43.70% | 0.00% |
Impact of tax reform | 0.00% | (36.00%) | 0.00% |
Goodwill impairment | 0.00% | 0.00% | (18.70%) |
Gain on contribution | 0.00% | 0.00% | (5.00%) |
Non-controlling interest | (0.70%) | (4.60%) | (11.00%) |
Excess tax benefits on stock-based compensation | 3.90% | 3.10% | 0.10% |
Federal and state R&D tax credits | 4.50% | 0.00% | 0.00% |
Change in uncertain tax positions | (1.10%) | 0.00% | 0.00% |
Other, net | (0.70%) | (1.80%) | 0.20% |
Effective rate | (0.10%) | 8.70% | 4.50% |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred Tax Assets | ||
Start-up and organizational costs | $ 160 | $ 185 |
Internally developed software costs | 3,283 | 3,974 |
Net operating loss carryforwards | 76,019 | 51,197 |
Federal and state R&D tax credits | 1,828 | 0 |
Other | 861 | (69) |
Subtotal | 82,151 | 55,287 |
Valuation allowance | (37,037) | (53,201) |
Total deferred tax assets | 45,114 | 2,086 |
Deferred Tax Liabilities | ||
Equity-method investment | 43,492 | 4,523 |
Intangible assets | 26,710 | 0 |
Total deferred tax liabilities | 70,202 | 4,523 |
Net deferred tax assets (liabilities) | $ (25,088) | $ (2,437) |
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, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at beginning-of-year | $ 53,201 | $ 26,376 | $ 19,974 |
Charged to costs and expenses | 16,443 | (7,371) | 91 |
Charged to other accounts | (32,607) | 34,196 | 6,311 |
Balance at end-of-year | 37,037 | 53,201 | 26,376 |
Valuation allowance increase (decrease) charged to additional paid-in capital | $ 32,600 | $ 34,200 | $ (6,300) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Dec. 22, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Income Tax Contingency [Line Items] | ||||||
Effective rate | (0.10%) | 8.70% | 4.50% | |||
Tax Cuts and Jobs Act, incomplete accounting, provisional income tax expense | $ 5,800,000 | |||||
Tax Cuts and Jobs Act, measurement period adjustment, income tax expense (benefit) | $ (300,000) | |||||
Net operating loss carryforwards | $ 107,900,000 | |||||
Unrecognized tax benefits that would not impact effective tax rate | 900,000 | |||||
Unrecognized tax benefits | $ 762,000 | $ 934,000 | $ 762,000 | $ 0 | $ 0 | |
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% | |||||
Tax Years 2031 to 2038 | ||||||
Income Tax Contingency [Line Items] | ||||||
Net operating loss carryforwards | $ 203,100,000 | |||||
Periods Prior to June 2015 | ||||||
Income Tax Contingency [Line Items] | ||||||
Net operating loss carryforwards | $ 79,300,000 |
Income Taxes - Changes In Unrec
Income Taxes - Changes In Unrecognized Tax Benefits (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance at beginning-of-year | $ 762,000 | $ 0 | $ 0 |
Gross increases - tax positions in prior period | 934,000 | 1,108,000 | 0 |
Gross decreases - tax positions in prior period | (762,000) | 0 | 0 |
Gross increases - tax positions in current period | 0 | 74,000 | 0 |
Change in tax rate | 0 | (420,000) | 0 |
Balance at end-of-year | $ 934,000 | $ 762,000 | $ 0 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Retirement Benefits [Abstract] | |||
Employer discretionary contribution amount | $ 8.6 | $ 8 | $ 4.3 |
Investments In and Advances t_2
Investments In and Advances to Equity Method Investees (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Schedule of Equity Method Investments [Line Items] | |||
Proportionate share of losses | $ 4,736 | $ 1,755 | $ 841 |
Equity Method Investee | Services Agreements | |||
Schedule of Equity Method Investments [Line Items] | |||
Income from long-term services agreement | $ 10,700 | $ 400 | $ 200 |
Minimum | |||
Schedule of Equity Method Investments [Line Items] | |||
Economic interest percentage | 4.00% | 26.00% | |
Maximum | |||
Schedule of Equity Method Investments [Line Items] | |||
Economic interest percentage | 40.00% | 40.00% |
Non-controlling Interests (Deta
Non-controlling Interests (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Oct. 01, 2018 | Nov. 30, 2018 | Mar. 31, 2018 | Aug. 31, 2017 | Jun. 30, 2017 | May 31, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2018 | Oct. 31, 2018 | Feb. 28, 2018 | Oct. 31, 2017 | Jul. 31, 2017 | May 30, 2017 | Mar. 30, 2017 | Dec. 30, 2016 | Aug. 31, 2016 | Jun. 05, 2015 |
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||||||
Share price (in dollars per share) | $ 12.01 | ||||||||||||||||||||||||||||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | |||||||||||||||||||||||||||||
Non-controlling interests balance as of beginning-of-year | $ 35,427 | $ 35,427 | |||||||||||||||||||||||||||
Net income (loss) attributable to non-controlling interests | $ (853) | $ (126) | $ (115) | $ (439) | $ (631) | $ (541) | $ (2,793) | $ (5,137) | (1,533) | $ (9,102) | $ (67,036) | ||||||||||||||||||
Reclassification of non-controlling interests | 0 | 0 | $ 0 | ||||||||||||||||||||||||||
Non-controlling interests balance as of end-of-year | $ 45,532 | $ 35,427 | $ 45,532 | $ 35,427 | $ 45,532 | ||||||||||||||||||||||||
Evolent Health LLC | |||||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||||||
Parent's ownership percentage | 95.30% | 96.10% | 98.90% | 96.60% | 96.10% | 90.50% | 83.90% | 74.60% | 96.10% | 99.00% | 98.90% | 96.60% | 96.10% | 83.90% | 96.10% | 96.60% | 77.40% | 96.10% | 95.30% | 96.60% | 96.10% | 84.90% | 77.40% | 71.00% | 70.30% | ||||
Non-controlling Interests | |||||||||||||||||||||||||||||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | |||||||||||||||||||||||||||||
Non-controlling interests balance as of beginning-of-year | $ 35,427 | $ 209,588 | $ 35,427 | $ 209,588 | $ 209,588 | ||||||||||||||||||||||||
Cumulative-effect adjustment from adoption of new accounting principle | 594 | 0 | |||||||||||||||||||||||||||
Decrease in non-controlling interests as a result of Class B Exchanges | (34,682) | (168,883) | |||||||||||||||||||||||||||
Issuance of Class B common stock for business combination | 42,787 | 0 | |||||||||||||||||||||||||||
Net income (loss) attributable to non-controlling interests | (1,533) | (9,102) | |||||||||||||||||||||||||||
Reclassification of non-controlling interests | 2,939 | 3,824 | $ 19,745 | ||||||||||||||||||||||||||
Non-controlling interests balance as of end-of-year | $ 45,532 | $ 35,427 | $ 45,532 | $ 35,427 | $ 209,588 | $ 45,532 | |||||||||||||||||||||||
Class A | |||||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||||||
Issuance of common stock (in shares) | 8,800 | 20,100 | 26,600 | ||||||||||||||||||||||||||
Proceeds from issuance of common stock, net of payments of stock issuance costs | $ 166,900 | ||||||||||||||||||||||||||||
Class A | Common Stock | |||||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||||||
Issuance of common stock (in shares) | 800 | 3,000 | 4,500 | 7,000 | 7,500 | 8,600 | 8,816 | ||||||||||||||||||||||
Share price (in dollars per share) | $ 19.85 | $ 25.87 | $ 24.30 | $ 19.53 | $ 21.54 | $ 25.87 | $ 19.53 | ||||||||||||||||||||||
Class A | Investor Stockholders | |||||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||||||
Issuance of common stock (in shares) | 12,600 | 19,700 | |||||||||||||||||||||||||||
Class A | Investor Stockholders | Common Stock | |||||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||||||
Issuance of common stock (in shares) | 3,800 | 3,800 | 4,400 | 2,200 | |||||||||||||||||||||||||
Class A | Management Selling Stockholders | |||||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||||||
Issuance of common stock (in shares) | 100 | ||||||||||||||||||||||||||||
Class A | Management Selling Stockholders | Common Stock | |||||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||||||
Issuance of common stock (in shares) | 100 | ||||||||||||||||||||||||||||
Class A | The Advisory Board | Common Stock | |||||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||||||
Issuance of common stock (in shares) | 1,800 | ||||||||||||||||||||||||||||
Class A | TPG | Common Stock | |||||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||||||
Issuance of common stock (in shares) | 700 | ||||||||||||||||||||||||||||
Class B | Common Stock | |||||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||||||
Issuance of common stock (in shares) | 3,120 | ||||||||||||||||||||||||||||
Evolent Health, Selling Stockholders | Class A | |||||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||||||
Issuance of common stock (in shares) | 7,400 | ||||||||||||||||||||||||||||
Evolent Health, Selling Stockholders | Class A | Common Stock | |||||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||||||
Issuance of common stock (in shares) | 100 | 1,200 | 700 | 3,100 | 3,100 | 6,400 | |||||||||||||||||||||||
Passport | Evolent Health LLC | |||||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||||||
Parent's ownership percentage | 70.80% | 70.30% | |||||||||||||||||||||||||||
Valence Health and Aldera | Evolent Health LLC | |||||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||||||
Parent's ownership percentage | 77.40% | 74.60% | |||||||||||||||||||||||||||
New Century Health | Class B | |||||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | |||||||||||||||||||||||||||||
Consideration transferred, equity interests issued and issuable, shares issued (in shares) | 3,100 |
Fair Value Measurement - Assets
Fair Value Measurement - Assets and Liabilities on Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Feb. 01, 2016 |
Fair Value, Measurements, Recurring | |||
Assets | |||
Cash and cash equivalents | $ 11,391 | $ 60,535 | |
Restricted cash and restricted investments | 31,226 | 16,575 | |
Total | 42,617 | 77,110 | |
Liabilities | |||
Contingent consideration, liability | 8,800 | 8,700 | |
Level 1 | Fair Value, Measurements, Recurring | |||
Assets | |||
Cash and cash equivalents | 11,391 | 60,535 | |
Restricted cash and restricted investments | 31,226 | 16,575 | |
Total | 42,617 | 77,110 | |
Liabilities | |||
Contingent consideration, liability | 0 | 0 | |
Level 2 | Fair Value, Measurements, Recurring | |||
Assets | |||
Cash and cash equivalents | 0 | 0 | |
Restricted cash and restricted investments | 0 | 0 | |
Total | 0 | 0 | |
Liabilities | |||
Contingent consideration, liability | 0 | 0 | |
Level 3 | Fair Value, Measurements, Recurring | |||
Assets | |||
Cash and cash equivalents | 0 | 0 | |
Restricted cash and restricted investments | 0 | 0 | |
Total | 0 | 0 | |
Liabilities | |||
Contingent consideration, liability | 8,800 | $ 8,700 | |
Passport | |||
Liabilities | |||
Contingent consideration, liability | 5,600 | $ 7,800 | |
Passport | Fair Value, Measurements, Recurring | |||
Liabilities | |||
Contingent consideration, liability | 5,600 | ||
New Century Health | Fair Value, Measurements, Recurring | |||
Liabilities | |||
Contingent consideration, liability | $ 3,200 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Millions | Feb. 01, 2016 | Oct. 01, 2018 |
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 | |
New Century Health | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration arrangements (up to) | $ 20 | |
Class B | New Century Health | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration arrangements (up to) | $ 11.4 |
Fair Value Measurement - Change
Fair Value Measurement - Changes in Contingent Consideration and Other (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance as of beginning of year | $ 8,700 | $ 8,300 |
Additions | 3,200 | 0 |
Realized and unrealized (gains) losses, net | (3,100) | 400 |
Balance as of end of year | $ 8,800 | $ 8,700 |
Fair Value Measurement - Valuat
Fair Value Measurement - Valuation Techniques and Significant Unobservable Inputs (Details) $ in Thousands | Feb. 01, 2016USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Level 3 | Contingent Consideration Liability | Real Options Approach Valuation Technique 2017-2021 | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Risk-adjusted recurring revenue compound annual growth rate, number of years | 5 years | ||
Level 3 | Contingent Consideration Liability | Real Options Approach Valuation Technique 2017-2021 | Risk-adjusted recurring revenue CAGR | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value inputs, long-term revenue growth rate, theoretical recurring revenue | $ 1,000 | ||
Level 3 | Contingent Consideration Liability | Real Options Approach Valuation Technique 2019-2021 | Risk-adjusted recurring revenue CAGR | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input | 0.192 | ||
Passport | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Contingent consideration, Fair Value | $ 7,800 | $ 5,600 | |
Risk-adjusted recurring revenue compound annual growth rate, number of years | 5 years | ||
Passport | Level 3 | Contingent Consideration Liability | Real Options Approach Valuation Technique | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Contingent consideration, Fair Value | $ 8,700 | ||
Passport | Level 3 | Contingent Consideration Liability | Real Options Approach Valuation Technique | Risk-adjusted recurring revenue CAGR | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input | 1.039 | 0.925 | |
Passport | Level 3 | Contingent Consideration Liability | Real Options Approach Valuation Technique | Discount rate/time value | Minimum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input | 0.055 | 0.027 | |
Passport | Level 3 | Contingent Consideration Liability | Real Options Approach Valuation Technique | Discount rate/time value | Maximum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input | 0.065 | 0.040 | |
Passport | Level 3 | Contingent Consideration Liability | Real Options Approach Valuation Technique 2017-2021 | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Risk-adjusted recurring revenue compound annual growth rate, number of years | 5 years | ||
Passport | Level 3 | Contingent Consideration Liability | Real Options Approach Valuation Technique 2017-2021 | Risk-adjusted recurring revenue CAGR | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value inputs, long-term revenue growth rate, theoretical recurring revenue | $ 1,000 | ||
Passport | Level 3 | Contingent Consideration Liability | Real Options Approach Valuation Technique 2019-2021 | Risk-adjusted recurring revenue CAGR | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input | 0.618 |
Related Parties (Details)
Related Parties (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Equity Method Investee | Services Agreements | |||
Related Party Transaction [Line Items] | |||
Income from long-term services agreement | $ 10.7 | $ 0.4 | $ 0.2 |
Related Parties - Revenues and
Related Parties - Revenues and Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Revenue | ||||||||||||
Total revenue | $ 193,104 | $ 149,947 | $ 144,298 | $ 139,714 | $ 113,729 | $ 107,912 | $ 107,071 | $ 106,238 | $ 627,063 | $ 434,950 | $ 254,188 | |
Expenses | ||||||||||||
Cost of revenue (exclusive of depreciation and amortization expenses) | [1] | 327,825 | 269,352 | 155,177 | ||||||||
Selling, general and administrative expenses | [1] | 235,418 | 205,670 | 160,692 | ||||||||
Affiliates | ||||||||||||
Expenses | ||||||||||||
Cost of revenue (exclusive of depreciation and amortization expenses) | 9,451 | 22,389 | 22,207 | |||||||||
Selling, general and administrative expenses | 917 | 1,153 | 2,027 | |||||||||
Transformation services | ||||||||||||
Revenue | ||||||||||||
Total revenue | [1] | 32,916 | 29,466 | 38,320 | ||||||||
Transformation services | Affiliates | ||||||||||||
Revenue | ||||||||||||
Total revenue | 10,540 | 597 | 482 | |||||||||
Platform and operations services | ||||||||||||
Revenue | ||||||||||||
Total revenue | [1] | 500,190 | 405,484 | 215,868 | ||||||||
Platform and operations services | Affiliates | ||||||||||||
Revenue | ||||||||||||
Total revenue | $ 37,490 | $ 32,335 | $ 34,267 | |||||||||
[1] | (1) See Note 17 for amounts related to related parties included in these line items. |
Segment Reporting (Details)
Segment Reporting (Details) | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | ||
Segment Reporting [Abstract] | ||||||||||||
Number of reportable segments | segment | 2 | |||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | $ 193,104,000 | $ 149,947,000 | $ 144,298,000 | $ 139,714,000 | $ 113,729,000 | $ 107,912,000 | $ 107,071,000 | $ 106,238,000 | $ 627,063,000 | $ 434,950,000 | $ 254,188,000 | |
Adjusted EBITDA | 23,225,000 | (2,204,000) | (21,407,000) | |||||||||
Operating segments | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | 547,431,000 | 434,950,000 | 254,188,000 | |||||||||
Adjusted EBITDA | 21,310,000 | (2,204,000) | (21,407,000) | |||||||||
Operating segments | True Health | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | 94,763,000 | 0 | 0 | |||||||||
Adjusted EBITDA | 1,915,000 | 0 | 0 | |||||||||
Intersegment eliminations | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | (15,131,000) | 0 | 0 | |||||||||
Adjusted EBITDA | 23,225,000 | (2,204,000) | (21,407,000) | |||||||||
Transformation services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | 36,571,000 | 29,466,000 | 38,434,000 | |||||||||
Total revenue | [1] | 32,916,000 | 29,466,000 | 38,320,000 | ||||||||
Transformation services | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | 32,916,000 | |||||||||||
Transformation services | Operating segments | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | 36,571,000 | 29,466,000 | 38,434,000 | |||||||||
Transformation services | Operating segments | True Health | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | 0 | 0 | 0 | |||||||||
Transformation services | Intersegment eliminations | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | 0 | 0 | 0 | |||||||||
Platform and operations services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | 501,894,000 | 406,951,000 | 217,844,000 | |||||||||
Total revenue | [1] | 500,190,000 | 405,484,000 | 215,868,000 | ||||||||
Platform and operations services | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | 492,568,000 | |||||||||||
Platform and operations services | Operating segments | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | 516,219,000 | 406,951,000 | 217,844,000 | |||||||||
Platform and operations services | Operating segments | True Health | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | 0 | 0 | 0 | |||||||||
Platform and operations services | Intersegment eliminations | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | (14,325,000) | 0 | 0 | |||||||||
Services Revenue | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | 538,465,000 | 436,417,000 | 256,278,000 | |||||||||
Services Revenue | Operating segments | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | 552,790,000 | 436,417,000 | 256,278,000 | |||||||||
Services Revenue | Operating segments | True Health | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | 0 | 0 | 0 | |||||||||
Services Revenue | Intersegment eliminations | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | (14,325,000) | 0 | 0 | |||||||||
Premiums | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | 93,957,000 | 0 | 0 | |||||||||
Balances without adoption of ASC 606 | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | 632,422,000 | 436,417,000 | 256,278,000 | |||||||||
Balances without adoption of ASC 606 | Operating segments | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | 552,790,000 | 436,417,000 | 256,278,000 | |||||||||
Balances without adoption of ASC 606 | Operating segments | True Health | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | 94,763,000 | 0 | 0 | |||||||||
Balances without adoption of ASC 606 | Intersegment eliminations | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | (15,131,000) | 0 | 0 | |||||||||
Balances without adoption of ASC 606 | Transformation services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | 35,238,000 | |||||||||||
Balances without adoption of ASC 606 | Platform and operations services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | 497,284,000 | |||||||||||
Balances without adoption of ASC 606 | Premiums | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | 93,957,000 | |||||||||||
Balances without adoption of ASC 606 | Premiums | Operating segments | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | 0 | |||||||||||
Balances without adoption of ASC 606 | Premiums | Operating segments | True Health | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | 94,763,000 | |||||||||||
Balances without adoption of ASC 606 | Premiums | Intersegment eliminations | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Adjusted Revenue | (806,000) | |||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | (861,000) | (1,467,000) | (2,090,000) | |||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Operating segments | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | (861,000) | (1,467,000) | (2,090,000) | |||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Operating segments | True Health | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | 0 | 0 | 0 | |||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Intersegment eliminations | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | 0 | $ 0 | 0 | |||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Transformation services | Operating segments | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | 0 | 100,000 | ||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Platform and operations services | Operating segments | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | $ 2,000,000 | |||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Premiums | Operating segments | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | 0 | |||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | (4,498,000) | |||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | Operating segments | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | (4,498,000) | |||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | Operating segments | True Health | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | 0 | |||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | Intersegment eliminations | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | 0 | |||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | Transformation services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | (2,322,000) | |||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | Transformation services | Operating segments | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | 3,700,000 | |||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | Platform and operations services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | 2,906,000 | |||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | Platform and operations services | Operating segments | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Total revenue | $ 800,000 | |||||||||||
[1] | (1) See Note 17 for amounts related to related parties included in these line items. |
Segment Reporting - Reconciliat
Segment Reporting - Reconciliation of Adjusted EBITDA (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Reporting [Abstract] | |||||||||||
Net Income (Loss) Attributable to Evolent Health, Inc. | $ (52,658) | $ (60,665) | $ (159,742) | ||||||||
Interest income | 3,440 | 1,656 | 970 | ||||||||
Interest expense | (5,484) | (3,636) | (247) | ||||||||
(Provision) benefit for income taxes | (40) | 6,637 | 10,755 | ||||||||
Depreciation and amortization expenses | (44,515) | (32,368) | (17,224) | ||||||||
Goodwill impairment | 0 | 0 | (160,600) | ||||||||
Loss from lease abandonment | 0 | 0 | (6,456) | ||||||||
Income (loss) from equity method investees | (4,736) | (1,755) | (841) | ||||||||
Change in fair value of contingent consideration and indemnification asset | 4,104 | (400) | 2,086 | ||||||||
Other income (expense), net | 109 | 171 | 4 | ||||||||
Net income (loss) attributable to non-controlling interests | $ 853 | $ 126 | $ 115 | $ 439 | $ 631 | $ 541 | $ 2,793 | $ 5,137 | 1,533 | 9,102 | 67,036 |
ASC 606 transition adjustments | 4,498 | 0 | 0 | ||||||||
Purchase accounting adjustments | (861) | (1,467) | (2,090) | ||||||||
Stock-based compensation expense | (17,609) | (20,437) | (22,501) | ||||||||
Severance costs | 2,205 | 0 | 0 | ||||||||
Amortization of contract cost assets | 2,456 | 0 | 0 | ||||||||
Transaction costs | (2,665) | (15,964) | (9,227) | ||||||||
Adjusted EBITDA | $ 23,225 | $ (2,204) | $ (21,407) |
Claims Reserves (Details)
Claims Reserves (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Liability for Unpaid Claims and Claims Adjustment Expense, Period Increase (Decrease) [Abstract] | |||
Beginning balance | $ 18,631 | ||
Incurred costs related to current year | 109,563 | ||
Paid costs related to current year | 96,442 | ||
Change during the year | 13,121 | ||
Other adjustments | $ (4,157) | ||
Ending balance | 27,595 | 18,631 | |
Claims expenses | 70,889 | 0 | $ 0 |
Claims reserves | 27,595 | 0 | |
Services | |||
Liability for Unpaid Claims and Claims Adjustment Expense, Period Increase (Decrease) [Abstract] | |||
Beginning balance | 18,631 | ||
Incurred costs related to current year | 38,674 | ||
Paid costs related to current year | 38,124 | ||
Change during the year | 550 | ||
Other adjustments | (1,466) | ||
Ending balance | 17,715 | 18,631 | |
True Health | |||
Liability for Unpaid Claims and Claims Adjustment Expense, Period Increase (Decrease) [Abstract] | |||
Beginning balance | 0 | ||
Incurred costs related to current year | 70,889 | ||
Paid costs related to current year | 58,318 | ||
Change during the year | 12,571 | ||
Other adjustments | (2,691) | ||
Ending balance | 9,880 | 0 | |
Reinsurance premiums assumed | $ (2,691) | ||
Claims-related administrative expenses | 551 | ||
Claims expenses | 3,934 | ||
Claims reserves | $ 1,243 |
Investments - Investment Summar
Investments - Investment Summary (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Costs | $ 10,010,000 | $ 0 |
Level 2 | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Costs | 10,010,000 | |
Gross Unrealized Gains | 154,000 | |
Gross Unrealized Losses | 0 | |
Fair Value | 10,164,000 | $ 0 |
Level 2 | U.S. Treasury bills | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Costs | 7,982,000 | |
Gross Unrealized Gains | 120,000 | |
Gross Unrealized Losses | 0 | |
Fair Value | 8,102,000 | |
Level 2 | Corporate bonds | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Costs | 887,000 | |
Gross Unrealized Gains | 17,000 | |
Gross Unrealized Losses | 0 | |
Fair Value | 904,000 | |
Level 2 | Other CMOs | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Costs | 545,000 | |
Gross Unrealized Gains | 6,000 | |
Gross Unrealized Losses | 0 | |
Fair Value | 551,000 | |
Level 2 | Yankees | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Costs | 596,000 | |
Gross Unrealized Gains | 11,000 | |
Gross Unrealized Losses | 0 | |
Fair Value | $ 607,000 |
Investments - Contractual Matur
Investments - Contractual Maturity (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Amortized Cost | |
Due after one year through five years | $ 9,666 |
Due after five years through ten years | 344 |
Total | 10,010 |
Fair Value | |
Due after one year through five years | 9,813 |
Due after five years through ten years | 351 |
Total | $ 10,164 |
Quarterly Results of Operatio_3
Quarterly Results of Operations (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Data [Abstract] | |||||||||||
Total revenue | $ 193,104 | $ 149,947 | $ 144,298 | $ 139,714 | $ 113,729 | $ 107,912 | $ 107,071 | $ 106,238 | $ 627,063 | $ 434,950 | $ 254,188 |
Total operating expenses | 206,456 | 160,977 | 153,264 | 153,846 | 131,977 | 121,932 | 126,188 | 127,693 | 674,543 | 507,790 | 491,607 |
Net income (loss) | (17,540) | (12,555) | (10,031) | (14,065) | (13,791) | (13,129) | (19,698) | (23,149) | (54,191) | (69,767) | (226,778) |
Net income (loss) attributable to non-controlling interests | (853) | (126) | (115) | (439) | (631) | (541) | (2,793) | (5,137) | (1,533) | (9,102) | (67,036) |
Net income (loss) attributable to Evolent Health, Inc. | $ (16,687) | $ (12,429) | $ (9,916) | $ (13,626) | $ (13,160) | $ (12,588) | $ (16,905) | $ (18,012) | $ (52,658) | $ (60,665) | $ (159,742) |
Earnings (Loss) per Common Share | |||||||||||
Basic and diluted (in dollars per share) | $ (0.21) | $ (0.16) | $ (0.13) | $ (0.18) | $ (0.18) | $ (0.18) | $ (0.28) | $ (0.34) | $ (0.68) | $ (0.94) | $ (3.55) |
Quarterly Results of Operatio_4
Quarterly Results of Operations (unaudited) - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Interest expense | $ 5,484 | $ 3,636 | $ 247 | |
Senior Notes | Senior Convertible Notes Due 2025 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Interest expense | $ 2,000 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Supplemental Disclosure of Non-cash Investing and Financing Activities | |||
Change in goodwill due to measurement period adjustments related to business combinations | $ (117) | $ 1,611 | $ 0 |
Decrease in accrued financing costs related to 2021 Notes | 0 | 196 | 0 |
Consideration for asset acquisitions or business combinations | 500 | 0 | 0 |
Settlement of escrow related to asset acquisition | 2,519 | 0 | 0 |
Settlement of indemnification asset | 1,004 | 0 | 0 |
Tax benefit related to Accordion intangible technology | 0 | 2,042 | 0 |
Acquisition consideration payable | 0 | 0 | 1,148 |
Accrued property and equipment purchases | 368 | 229 | 446 |
Decrease in accrued financing costs related to 2021 Notes | 607 | 0 | 1,036 |
Effects of Class B Exchanges | |||
Decrease in deferred tax liability as a result of securities offerings and exchanges | 652 | 12,857 | 1,606 |
Supplemental Disclosures | |||
Cash paid during the period for interest | 2,500 | 2,472 | 0 |
Cash paid during the year for taxes, net | 343 | 674 | 0 |
Class A | |||
Supplemental Disclosure of Non-cash Investing and Financing Activities | |||
Class A and Class B common stock issued in connection with business combinations | 83,173 | 0 | 177,795 |
Class B | |||
Effects of Class B Exchanges | |||
Decrease in non-controlling interests as a result of Class B Exchanges | $ 34,682 | $ 168,883 | $ 28,220 |