Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 01, 2019 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 001-37415 | |
Entity Registrant Name | Evolent Health, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 32-0454912 | |
Entity Address, Address Line One | 800 N. Glebe Road | |
Entity Address, Address Line Two | Suite 500 | |
Entity Address, City or Town | Arlington | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 22203 | |
City Area Code | 571 | |
Local Phone Number | 389-6000 | |
Title of 12(b) Security | Class A Common Stock of Evolent Health, Inc., par value $0.01 per share | |
Trading Symbol | EVH | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001628908 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Class A | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding (in shares) | 83,903,860 | |
Class B | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding (in shares) | 706,273 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 96,734 | $ 228,320 |
Restricted cash and restricted investments | 101,475 | 154,718 |
Accounts receivable, net (amounts attributable to related parties: 2019 - $10,063; 2018 - $8,519) | 74,874 | 80,208 |
Prepaid expenses and other current assets (amounts attributable to related parties: 2019 - $119; 2018 - $85) | 29,749 | 22,618 |
Investments, at amortized cost | 3,815 | 0 |
Contract assets | 1,365 | 2,102 |
Total current assets | 308,012 | 487,966 |
Restricted cash and restricted investments | 8,357 | 6,105 |
Investments, at amortized cost | 15,095 | 10,010 |
Investments in and advances to equity method investees | 55,528 | 6,276 |
Property and equipment, net | 83,164 | 73,628 |
Right-of-use assets - operating | 75,768 | |
Customer advance for regulatory capital requirements | 40,000 | 0 |
Prepaid expenses and other noncurrent assets (amounts attributable to related parties: 2019 - $2,400; 2018 - $2,500) | 7,647 | 15,028 |
Contract assets | 1,245 | 961 |
Contract cost assets | 29,998 | 19,147 |
Intangible assets, net | 317,200 | 335,036 |
Goodwill | 771,887 | 768,124 |
Total assets | 1,713,901 | 1,722,281 |
Current liabilities: | ||
Accounts payable (amounts attributable to related parties: 2019 - $2,547; 2018 - $1,564) | 120,024 | 146,760 |
Accrued liabilities (amounts attributable to related parties: 2019 - $923; 2018 - $798) | 41,632 | 48,957 |
Operating lease liabilities - current | 5,390 | |
Accrued compensation and employee benefits | 27,031 | 25,460 |
Deferred revenue | 22,701 | 20,584 |
Reserves for claims and performance-based arrangements (amounts attributable to related parties: 2019 - $6,804; 2018 - $0) | 43,073 | 27,595 |
Total current liabilities | 259,851 | 269,356 |
Long-term debt, net of discount | 227,996 | 221,041 |
Other long-term liabilities | 6,553 | 17,090 |
Operating lease liabilities - noncurrent | 70,560 | |
Deferred tax liabilities, net | 24,593 | 25,438 |
Total liabilities | 589,553 | 532,925 |
Commitments and Contingencies | ||
Shareholders' Equity (Deficit) | ||
Additional paid-in capital | 1,161,696 | 1,093,174 |
Accumulated other comprehensive income (loss) | (215) | (182) |
Retained earnings (accumulated deficit) | (53,866) | 50,009 |
Total shareholders' equity (deficit) attributable to Evolent Health, Inc. | 1,108,460 | 1,143,824 |
Non-controlling interests | 15,888 | 45,532 |
Total shareholders' equity (deficit) | 1,124,348 | 1,189,356 |
Total liabilities and shareholders' equity (deficit) | 1,713,901 | 1,722,281 |
Class A | ||
Shareholders' Equity (Deficit) | ||
Common stock | 838 | 792 |
Class B | ||
Shareholders' Equity (Deficit) | ||
Common stock | $ 7 | $ 31 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Accounts receivable, related parties | $ 10,063 | $ 8,519 |
Prepaid expenses and other current assets, related parties | 119 | 85 |
Prepaid expenses and other noncurrent assets, related parties | 2,400 | 2,500 |
Accounts payable, related parties | 2,547 | 1,564 |
Accrued liabilities, related parties | 923 | 798 |
Reserve for claims and performance-based arrangements, related parties | $ 6,804 | $ 0 |
Class A | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 750,000,000 | 750,000,000 |
Common stock, issued (in shares) | 83,825,595 | 79,172,118 |
Common stock, outstanding (in shares) | 83,825,595 | 79,172,118 |
Class B | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, issued (in shares) | 706,273 | 3,190,301 |
Common stock, outstanding (in shares) | 706,273 | 3,190,301 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | ||
Revenue | |||||
Revenues | $ 220,143 | $ 149,947 | $ 609,858 | $ 433,959 | |
Expenses | |||||
Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) | [1] | 131,763 | 73,967 | 357,587 | 214,945 |
Claims expenses | 34,802 | 16,992 | 108,644 | 52,169 | |
Selling, general and administrative expenses | [1] | 58,808 | 59,566 | 200,578 | 172,495 |
Depreciation and amortization expenses | 15,408 | 10,352 | 44,966 | 29,882 | |
(Gain) loss on disposal of assets | 0 | 0 | (9,600) | 0 | |
Change in fair value of contingent consideration and indemnification asset | (500) | 100 | (300) | (1,404) | |
Total operating expenses | 240,281 | 160,977 | 701,875 | 468,087 | |
Operating income (loss) | (20,138) | (11,030) | (92,017) | (34,128) | |
Interest income | 1,124 | 968 | 3,026 | 2,918 | |
Interest expense | (3,630) | (853) | (10,812) | (2,561) | |
Income (loss) from equity method investees | (3,859) | (1,381) | (6,187) | (2,787) | |
Other income (expense), net | (84) | (124) | (244) | (64) | |
Income (loss) before income taxes and non-controlling interests | (26,587) | (12,420) | (106,234) | (36,622) | |
Provision (benefit) for income taxes | (849) | 135 | 53 | 29 | |
Net income (loss) | (25,738) | (12,555) | (106,287) | (36,651) | |
Net income (loss) attributable to non-controlling interests | (217) | (126) | (2,412) | (680) | |
Net income (loss) attributable to Evolent Health, Inc. | (25,521) | (12,429) | (103,875) | (35,971) | |
Earnings (Loss) Available for Common Shareholders | |||||
Basic and Diluted | $ (25,521) | $ (12,429) | $ (103,875) | $ (35,971) | |
Earnings (Loss) per Common Share | |||||
Basic and Diluted (in dollars per share) | $ (0.30) | $ (0.16) | $ (1.27) | $ (0.47) | |
Weighted-Average Common Shares Outstanding | |||||
Basic and Diluted (in shares) | 83,819 | 77,999 | 81,831 | 76,871 | |
Comprehensive income (loss) | |||||
Net income (loss) | $ (25,738) | $ (12,555) | $ (106,287) | $ (36,651) | |
Other comprehensive income (loss), net of taxes, related to: | |||||
Foreign currency translation adjustment | (68) | (116) | (33) | (264) | |
Total comprehensive income (loss) | (25,806) | (12,671) | (106,320) | (36,915) | |
Total comprehensive income (loss) attributable to non-controlling interests | (217) | (126) | (2,412) | (680) | |
Total comprehensive income (loss) attributable to Evolent Health, Inc. | (25,589) | (12,545) | (103,908) | (36,235) | |
Transformation services | |||||
Revenue | |||||
Revenues | [1] | 5,184 | 9,230 | 10,481 | 23,950 |
Platform and operations services | |||||
Revenue | |||||
Revenues | [1] | 171,438 | 118,094 | 463,252 | 341,258 |
Premiums | |||||
Revenue | |||||
Revenues | $ 43,521 | $ 22,623 | $ 136,125 | $ 68,751 | |
[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 | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash Flows from Operating Activities | ||
Net income (loss) | $ (106,287) | $ (36,651) |
Adjustments to reconcile net income (loss) to net cash and restricted cash provided by (used in) operating activities: | ||
(Income) loss from equity method investees | 6,187 | 2,787 |
(Gain) loss on disposal of assets | (9,600) | 0 |
Change in fair value of contingent consideration and indemnification asset | (300) | (1,404) |
Depreciation and amortization expenses | 44,966 | 29,882 |
Amortization of deferred financing costs | 6,954 | 688 |
Stock-based compensation expense | 15,045 | 12,560 |
Deferred tax provision (benefit) | (188) | 34 |
Amortization of contract cost assets | 4,132 | 1,900 |
Non-cash interest income | (650) | 0 |
Other | (25) | (111) |
Changes in assets and liabilities, net of acquisitions: | ||
Accounts receivables, net and contract assets | 6,580 | (11,001) |
Prepaid expenses and other current and noncurrent assets | (1,491) | (15,393) |
Contract cost assets | (14,982) | (4,568) |
Accounts payable | (3,993) | 6,451 |
Accrued liabilities | (20,661) | 13,946 |
Accrued compensation and employee benefits | 1,580 | (7,059) |
Deferred revenue | 2,117 | 828 |
Reserves for claims and performance-based arrangements | 15,478 | 10,338 |
ROU operating assets | (24,407) | |
Operating lease liabilities | 28,547 | |
Other long-term liabilities | (4,834) | 1,090 |
Net cash and restricted cash provided by (used in) operating activities | (55,832) | 4,317 |
Cash Flows from Investing Activities | ||
Cash paid for asset acquisitions or business combinations | (8,575) | (11,552) |
Customer advance for regulatory capital requirements | (46,400) | 0 |
Principal repayment of implementation funding loan and regulatory capital requirements | 5,400 | 14,000 |
Amount received from escrow in asset acquisition | 0 | 500 |
Purchases of investments | (8,900) | 0 |
Investments in and advances to equity method investees | (17,113) | (6,807) |
Investments in internal-use software and purchases of property and equipment | (26,377) | (29,117) |
Purchases of restricted investments | (495) | 0 |
Maturities of restricted investments | 0 | 8,043 |
Net cash and restricted cash provided by (used in) investing activities | (102,460) | (24,933) |
Cash Flows from Financing Activities | ||
Changes in working capital balances related to claims processing on behalf of partners | (22,781) | (17,344) |
Amount received from escrow in asset acquisition | 500 | 0 |
Deferred financing costs related to 2025 Notes | (607) | 0 |
Proceeds from stock option exercises | 997 | 10,588 |
Taxes withheld and paid for vesting of restricted stock units | (2,408) | (1,179) |
Net cash and restricted cash provided by (used in) financing activities | (24,299) | (7,935) |
Effect of exchange rate on cash and cash equivalents and restricted cash | 19 | 35 |
Net increase (decrease) in cash and cash equivalents and restricted cash | (182,572) | (28,516) |
Cash and cash equivalents and restricted cash as of beginning-of-period | 388,325 | 295,363 |
Cash and cash equivalents and restricted cash as of end-of-period | $ 205,753 | $ 266,847 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) - USD ($) shares in Thousands, $ in Thousands | Total | 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, 2017 | 74,723 | 2,654 | |||||
Beginning balance, amount at Dec. 31, 2017 | $ 1,046,306 | $ 747 | $ 27 | $ 924,153 | $ 85,952 | $ 35,427 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation expense | 12,560 | 12,560 | |||||
Exercise of stock options (in shares) | 1,574 | ||||||
Exercise of stock options | 10,588 | $ 16 | 10,572 | ||||
Restricted stock units vested, net of shares withheld for taxes (in shares) | 207 | ||||||
Restricted stock units vested, net of shares withheld for taxes | (1,179) | $ 2 | (1,181) | ||||
Exchange of Class B common stock (in shares) | 1,888 | (1,888) | |||||
Exchange of Class B common stock | 0 | $ 19 | $ (19) | 25,334 | (25,334) | ||
Tax impact of Class B Exchanges | 908 | 908 | |||||
Settlement of indemnification asset | (1,004) | (1,004) | |||||
Foreign currency translation adjustment | (264) | $ (264) | |||||
Net income (loss) | (36,651) | (35,971) | (680) | ||||
Reclassification of non-controlling interests | 0 | (1) | 1 | ||||
Ending balance (in shares) at Sep. 30, 2018 | 78,392 | 766 | |||||
Ending balance, amount at Sep. 30, 2018 | 1,048,573 | $ 784 | $ 8 | 971,341 | (264) | 66,696 | 10,008 |
Beginning balance (in shares) at Jun. 30, 2018 | 77,578 | 766 | |||||
Beginning balance, amount at Jun. 30, 2018 | 1,051,381 | $ 776 | $ 8 | 961,472 | (148) | 79,125 | 10,148 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation expense | 4,047 | 4,047 | |||||
Exercise of stock options (in shares) | 808 | ||||||
Exercise of stock options | 5,895 | $ 7 | 5,888 | ||||
Restricted stock units vested, net of shares withheld for taxes (in shares) | 6 | ||||||
Restricted stock units vested, net of shares withheld for taxes | (79) | $ 1 | (80) | ||||
Foreign currency translation adjustment | (116) | (116) | |||||
Net income (loss) | (12,555) | (12,429) | (126) | ||||
Reclassification of non-controlling interests | 0 | 14 | (14) | ||||
Ending balance (in shares) at Sep. 30, 2018 | 78,392 | 766 | |||||
Ending balance, amount at Sep. 30, 2018 | 1,048,573 | $ 784 | $ 8 | 971,341 | (264) | 66,696 | 10,008 |
Beginning balance (in shares) at Dec. 31, 2018 | 79,172 | 3,190 | |||||
Beginning balance, amount at Dec. 31, 2018 | 1,189,356 | $ 792 | $ 31 | 1,093,174 | (182) | 50,009 | 45,532 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation expense | 11,867 | 11,867 | |||||
Exercise of stock options (in shares) | 116 | ||||||
Exercise of stock options | 997 | $ 1 | 996 | ||||
Restricted stock units vested, net of shares withheld for taxes (in shares) | 284 | ||||||
Restricted stock units vested, net of shares withheld for taxes | (2,408) | $ 3 | (2,411) | ||||
Share retirement (in shares) | (5) | ||||||
Shares issued for investments (in shares) | 43 | ||||||
Shares issued for investments | 800 | 800 | |||||
Amount attributable to NCI from 2019 business combination | 6,500 | 6,500 | |||||
Shares issued for Global Health investment (in shares) | 1,732 | ||||||
Shares issued for equity-method investments and asset acquisitions | 23,556 | $ 18 | 23,538 | ||||
Exchange of Class B common stock (in shares) | 2,484 | (2,484) | |||||
Exchange of Class B common stock | 0 | $ 24 | $ (24) | 33,946 | (33,946) | ||
Foreign currency translation adjustment | (33) | (33) | |||||
Net income (loss) | (106,287) | (103,875) | (2,412) | ||||
Reclassification of non-controlling interests | 0 | (214) | 214 | ||||
Ending balance (in shares) at Sep. 30, 2019 | 83,826 | 706 | |||||
Ending balance, amount at Sep. 30, 2019 | 1,124,348 | $ 838 | $ 7 | 1,161,696 | (215) | (53,866) | 15,888 |
Beginning balance (in shares) at Jun. 30, 2019 | 83,815 | 706 | |||||
Beginning balance, amount at Jun. 30, 2019 | 1,146,756 | $ 838 | $ 7 | 1,158,325 | (147) | (28,345) | 16,078 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation expense | 3,352 | 3,352 | |||||
Exercise of stock options (in shares) | 13 | ||||||
Exercise of stock options | 49 | 49 | |||||
Restricted stock units vested, net of shares withheld for taxes (in shares) | 3 | ||||||
Restricted stock units vested, net of shares withheld for taxes | (3) | (3) | |||||
Share retirement (in shares) | (5) | ||||||
Foreign currency translation adjustment | (68) | (68) | |||||
Net income (loss) | (25,738) | (25,521) | (217) | ||||
Reclassification of non-controlling interests | (27) | 27 | |||||
Ending balance (in shares) at Sep. 30, 2019 | 83,826 | 706 | |||||
Ending balance, amount at Sep. 30, 2019 | $ 1,124,348 | $ 838 | $ 7 | $ 1,161,696 | $ (215) | $ (53,866) | $ 15,888 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2019 | |
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 care 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 (“Services”) provides our customers, who we refer to as partners, with a population health management platform, integrated data and analytics capabilities, claims processing services, 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 New Mexico, Inc. (“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 September 30, 2019 , Evolent Health, Inc. owns 99.2% 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 September 30, 2019 , the Company had cash and cash equivalents of $96.7 million . The Company believes it has sufficient liquidity for the next 12 months as of the date the financial statements were available to be issued. |
Basis of Presentation, Summary
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles | Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle Basis of Presentation In our opinion, the accompanying unaudited interim consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to fairly state our financial position, results of operations, and cash flows. The consolidated balance sheet at December 31, 2018 , has been derived from audited financial statements as of that date. The interim consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain footnote disclosures normally included in financial statements prepared in accordance with United States of America generally accepted accounting principles (“GAAP”) have been omitted pursuant to instructions, rules, and regulations prescribed by the United States Securities and Exchange Commission (“SEC”). The disclosures provided herein should be read in conjunction with the audited financial statements and notes thereto included in our 2018 Form 10-K. Summary of Significant Accounting Policies 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 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, 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, reserves for claims and performance-based arrangements, contingent payments, allowance for doubtful accounts, depreciable lives of assets, impairment of long-lived assets (including equity method investments), stock-based compensation, deferred income taxes and valuation allowance, contingent liabilities, valuation of intangible assets (including goodwill), purchase price allocation in taxable stock transactions and 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 may recognize 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. Revenue Recognition Our Services segment derives revenue from two sources: (1) transformation services and (2) platform and operations services. Transformation services consist of 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. Platform and operations services generally include multi-year arrangements with customers to provide various population health, health plan operations, specialty care management (through performance-based 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. Revenue is recognized when control of the services is transferred to our customers. 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 for our Services segment from 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 Our True Health segment derives revenue from premiums that are earned over the terms of the related insurance policies. True Health also derives revenue from reinsurance premiums assumed from NMHC under the terms of the reinsurance agreement (as defined in Note 9 ). 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. See Note 5 for further discussion of our policies related to revenue recognition. Leases As discussed in Note 3 , we adopted Accounting Standards Update (“ASU”) 2016-02 effective January 1, 2019. The following reflects our updated policy for leases. The Company enters into various office space, data center, and equipment lease agreements in conducting its normal business operations. At the inception of any contract, the Company evaluates the agreement to determine whether the contract contains a lease. If the contract contains a lease, the Company then evaluates the term and whether the lease is an operating or finance lease. Most leases include one or more options to renew or may have a termination option. The Company determines whether these options are reasonably certain to be exercised at the inception of the lease. The rent expense is recognized on a straight-line basis in the consolidated statements of operations and comprehensive income (loss) over the terms of the respective leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Further, the Company treats all lease and non-lease components as a single combined lease component for all classes of underlying assets. The Company also enters into sublease agreements for some of its leased office space. Rental income attributable to subleases is immaterial and is offset against rent expense over the terms of the respective leases. Refer to Note 10 for additional lease disclosures. 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 As of September 30, December 31, 2019 2018 Collateral for letters of credit for facility leases (1) $ 3,610 $ 3,710 Collateral with financial institutions (2) 5,737 34,142 Claims processing services (3) 99,658 122,439 Other 827 532 Total restricted cash and restricted investments 109,832 160,823 Current restricted investments 702 211 Current restricted cash 100,773 154,507 Total current restricted cash and restricted investments 101,475 154,718 Noncurrent restricted investments 111 607 Noncurrent restricted cash 8,246 5,498 Total noncurrent restricted cash and restricted investments $ 8,357 $ 6,105 (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 September 30, 2019 , and December 31, 2018 , approximately $1.0 million and $31.2 million of the collateral amount was in a trust account and invested in a money market fund. The amounts invested in money market funds are considered restricted cash and are carried at fair value, which approximates cost. See Note 16 for discussion of our fair value measurement and Note 9 for discussion of our risk-sharing arrangements. As of September 30, 2019 , and December 31, 2018 , approximately $4.7 million and $2.9 million , respectively, of the collateral amount was held in FDIC participating bank accounts, primarily related to letters of credit. (3) Represents cash held by the Company related to claims processing services 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. 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 amounts shown in the statements of cash flows. As of September 30, 2019 2018 Cash and cash equivalents $ 96,734 $ 221,837 Restricted cash and restricted investments 109,832 45,722 Restricted investments included in restricted cash and restricted investments (813 ) (712 ) Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows $ 205,753 $ 266,847 Notes Receivable Notes receivable are carried at the face amount of each note plus accrued interest receivable, less received payments. The Company does not typically carry notes receivable in the course of its regular business, but contributed $40.0 million in the form of an advance for regulatory capital requirements (the “Passport Note”) under an agreement with Passport, a current customer, entered into during the second quarter of 2019. The Passport Note carries a fixed interest rate of 6.5% per annum and is required to be repaid, plus accrued interest, in a single payment on July 1, 2025, the maturity date, or earlier, subject to regulatory approval. The Passport Note is required to be repaid out of the surplus in excess of Passport’s obligations to its policyholders, claimant and beneficiary claims and all other creditors. As of September 30, 2019 , the outstanding principal balance of the Passport Note was $40.0 million , excluding approximately $0.7 million of accrued interest. 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 on 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 at 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 four reporting units. Our annual goodwill impairment review occurs during the fourth quarter of each year. In interim periods between annual goodwill reviews, we also evaluate qualitative factors that could cause us to believe that it is more likely than not that 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 management, strategy, partners, or litigation. 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 estimate of the relevant reporting unit is greater than its carrying value, then the goodwill of the reporting unit is considered not impaired and no further action is required. If the fair value estimate of the relevant reporting unit is less than its 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). 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. Information regarding the determination and allocation of the fair value of recently 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 10-25 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. Reserves for claims and performance-based arrangements Reserves for claims and performance-based arrangements for our Services and True Health segments reflect estimates of payments under performance-based arrangements and 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 composed of accruals for incentives and other amounts payable to health care professionals and facilities. Reserves for claims and performance-based arrangements 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 in 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 reserves for claims and performance-based arrangements. Investments in and advances to equity method investees The Company uses the equity method to account for investments in companies if the investment provides the Company with the ability to exercise significant influence over operating and financial policies of the investee. Consolidated net income includes Evolent’s proportionate share of the net income or loss of these companies. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors or similar governing body, participation in policy-making decisions and material intercompany transactions. 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 monthly 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. Foreign currency translation gains and losses did not have a material impact on our consolidated statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2019 and 2018 |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Adoption of New Accounting Standards In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases , in order to establish the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. This update introduces a new standard on accounting for leases, including a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in ASC 606. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. 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 using an effective date method rather than the earliest comparative period. The requirements of ASU 2018-11 are effective on the same date as the requirements of ASU 2016-02. We adopted ASU 2016-02 as of January 1, 2019, using the modified retrospective approach. Further, we elected the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allowed us to carry forward the historical lease classification. Adoption of the new standard resulted in the recording of additional right-of-use assets and lease liabilities of approximately $51.4 million and $47.4 million , respectively, on our consolidated balance sheet as of January 1, 2019. The standard had no impact on our results of operations. In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software: Customer’s 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 adopted the requirements of ASU 2018-15 effective January 1, 2019. There was no material impact to our consolidated balance sheets or results of operations as of or for the three and nine months ended September 30, 2019 . In July 2019, the FASB issued ASU 2019-07, Codification Updates to SEC Sections - Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization and Miscellaneous Updates (SEC Update). ASU 2019-07 clarifies or improves the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations, thereby eliminating redundancies and making the codification easier to apply. The disclosure and presentation amendments included in ASU 2019-07, which were effective upon issuance of the standard and were to be applied prospectively, did not have a material impact on our consolidated financial statements and related disclosures. Future Adoption of New Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments . With respect to assets measured at amortized cost, such as held-to-maturity assets, the update requires presentation of the amortized cost net of a credit loss allowance. The update eliminates the probable initial recognition threshold that was previously required prior to recognizing a credit loss on financial instruments. The credit loss estimate can now reflect an entity’s current estimate of all future expected credit losses as opposed to the previous standard, when an entity only considered past events and current conditions. With respect to available for sale debt securities, the update requires that credit losses be presented as an allowance rather than as a write-down. The update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We intend to adopt the requirements of this standard effective January 1, 2020 and are currently evaluating the impact of the adoption on our financial condition and results of operations. In August 2018, the FASB issued ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement . ASU 2018-13 amends Topic 820 to add, remove, and clarify disclosure requirements related to fair value measurement disclosures. This ASU is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. We are currently evaluating the impact of the adoption on our consolidated financial statements and related disclosures. |
Transactions
Transactions | 9 Months Ended |
Sep. 30, 2019 | |
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. 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 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 Reserves for claims and performance-based arrangements 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 represent 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 estimate of the fair value of the tangible and intangible assets acquired and liabilities assumed. 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 Company paid cash consideration of $10.3 million in connection with the acquisition. 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 assets from NMHC 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. 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. True Health is a separate segment, and its results of operations are provided in Note 18 - Segment Reporting. Pro Forma Financial Information (Unaudited) The unaudited pro forma consolidated statements of operations presented below give effect to the New Century Health and True Health transactions as if they took place on January 1, 2017. 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 Century Health transaction; and • Record the issuance of Class B common shares as part of the New Century Health transaction as of January 1, 2017. This pro forma data is presented for informational purposes only and does not purport to be indicative of the results of future operations or of the results that would have occurred had the transactions described above occurred in the specified prior periods. The pro forma adjustments are based on available information and assumptions that the Company believes are reasonable to reflect the impact of these transactions on the Company’s historical financial information on a pro forma basis (in thousands, except per share data). For the Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Revenue $ 220,143 $ 196,317 $ 609,858 $ 570,520 Net income (loss) (25,738 ) (27,982 ) (106,287 ) (53,294 ) Net income (loss) attributable to non-controlling interests (215 ) (1,328 ) (2,114 ) (2,870 ) Net income (loss) attributable to Evolent Health, Inc. (25,523 ) (26,654 ) (104,173 ) (50,423 ) Net income (loss) per Common Share available to common shareholders Basic and Diluted $ (0.30 ) $ (0.34 ) $ (1.27 ) $ (0.66 ) Securities Offerings and Sales Under exchange agreements we entered into at the time of our IPO and as part of the New Century Health acquisition, we granted TPG, The Advisory Board Company (“The Advisory Board”) and Ptolemy Capital, LLC (“Ptolemy Capital”) (together, the “Investor Stockholders”) and certain former owners of New Century Health (the “New Century Health Class B Members”) an exchange right that allows receipt of newly-issued shares of the Company’s Class A common stock in exchange (a “Class B Exchange”) for an equal number of shares of the Company’s Class B common stock (which are subsequently canceled) and an equal number of Evolent Health LLC’s Class B common units (“Class B units”). Class B units received by the Company from relevant Investor Stockholders and New Century Health Class B Members are simultaneously exchanged for an equivalent number of Class A units of Evolent Health LLC, and Evolent Health LLC cancels the Class B units it receives in the Class B Exchange. The cancellation of the Class B units results in an increase in the Company’s economic interest in Evolent Health LLC. 2018 Private Sales In March 2018, The Advisory Board sold 3.0 million shares of the Company’s Class A common stock in a private sale (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 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 for all of its outstanding shares of the Company’s Class B common stock and Class B units. The Company did not receive any proceeds from the March 2018 Private Sale. Subsequent to this Class B Exchange, in June 2018, The Advisory Board sold all of their remaining shares of the Company’s Class A common stock and no longer owns any shares of our Class A common stock, Class B common stock or Class B units held by the Advisory Board at the time of the IPO. As a result of this Class B Exchange and Evolent Health LLC’s cancellation of the Class B 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, and, accordingly, we reclassified a portion of our non-controlling interests into shareholders’ equity attributable to Evolent Health, Inc. In November 2018, TPG sold 0.8 million shares of the Company’s Class A common stock in a number of private sales (the “November 2018 Private Sales”). 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. The Company did not receive any proceeds from the November 2018 Private Sales. These sales represented all of TPG’s remaining equity interest in the Company and TPG no longer owns any of the shares of the Company’s Class A common stock, Class B common stock or Evolent Health LLC Class B common units held by TPG at the time of the IPO. 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, and, accordingly, we reclassified a portion of our non-controlling interests into shareholders’ equity attributable to Evolent Health, Inc. The Company’s economic interest in Evolent Health LLC will increase, if further Class B Exchanges occur. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Our Services segment derives revenue from two sources: (1) transformation services and (2) platform and operations services. Transformation Services Revenue Transformation services consist of 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 performance-based arrangements) and claims processing services on an ongoing basis, as well as transition or run-out services to customers receiving primarily 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. Disaggregation of Revenue The following table represents Evolent’s Services segment revenue disaggregated by revenue type (in thousands), excluding revenues from our True Health segment and from our downside risk sharing arrangements through our insurance subsidiary, which are accounted for under ASC 944, Financial Services-Insurance . For the Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Services Revenue Transformation services $ 5,184 $ 9,230 $ 10,481 $ 23,950 Platform and operations services 170,999 116,226 461,886 335,509 Transaction Price Allocated to the Remaining Performance Obligations For contracts with a term greater than one year, we have allocated approximately $83.8 million of transaction price to performance obligations that are unsatisfied or partially unsatisfied as of September 30, 2019 . 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 we expect 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 75% and 96% of these remaining performance obligations by December 31, 2020, and December 31, 2021, 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 revenue that we actually receive may be less than this estimate and the timing of recognition may not be as expected. 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 receivables 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. 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 September 30, December 31, 2019 2018 Short-term receivables (1) $ 72,486 $ 78,380 Long-term receivables (1) 400 6,550 Short-term contract assets 1,365 2,102 Long-term contract assets 1,245 961 Short-term deferred revenue 22,701 20,584 Long-term deferred revenue 169 1,502 (1) Excludes pharmacy claims receivable and premiums receivable Changes in contract assets and deferred revenue for the nine months ended September 30, 2019 , were as follows (in thousands): Contract assets Balance as of beginning-of-period $ 3,063 Reclass to receivables, as the right to consideration becomes unconditional (1,830 ) Contract assets recognized, net of reclass to receivables 1,377 Balance as of end-of-period $ 2,610 Deferred revenue Balance as of beginning-of-period $ 22,086 Reclass to revenue, as a result of performance obligations satisfied (15,852 ) Cash received in advance of satisfaction of performance obligations 16,636 Balance as of end-of-period $ 22,870 The amount of revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods was $2.5 million and $2.4 million for the three and nine months ended September 30, 2019 , respectively, due primarily to net gain share as well as other estimates. Contract Cost Assets 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 September 30, 2019 , and December 31, 2018 , the Company had $4.3 million and $1.5 million of contract acquisition cost assets, net of accumulated amortization. The Company recorded amortiza tion expense of $0.3 million and $0.5 million for the three and nine months ended September 30, 2019 , respectively, and $0.1 million and $0.2 million for the three and nine months ended September 30, 2018 , respectively. In our platform 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 September 30, 2019 , and December 31, 2018 , the Company had $25.7 million and $17.6 million of contract fulfillment cost assets, net of accumulated amortization. The Company recorded amortization expense of $1.1 million and $3.7 million for the three and nine months ended September 30, 2019 , respectively, and $0.6 million and $1.7 million for the three and nine months ended September 30, 2018 , respectively. 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 | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, Net The following summarizes our property and equipment (in thousands): As of As of September 30, December 31, 2019 2018 Computer hardware $ 11,312 $ 10,421 Furniture and equipment 3,439 3,187 Internal-use software development costs 106,604 81,640 Leasehold improvements 10,450 10,118 Total property and equipment 131,805 105,366 Accumulated depreciation and amortization (48,641 ) (31,738 ) Total property and equipment, net $ 83,164 $ 73,628 The Company capitalized $8.1 million and $25.0 million of internal-use software development costs for the three and nine months ended September 30, 2019 , respectively, and $7.0 million and $25.1 million for the three and nine months ended September 30, 2018 , respectively. The net book value of capitalized internal-use software development costs was $74.3 million and $62.8 million as of September 30, 2019 , and December 31, 2018 , respectively. Depreciation expense related to property and equipment was $6.0 million and $16.9 million for the three and nine months ended September 30, 2019 , of which amortization expense related to capitalized internal-use software development costs was $4.9 million and $13.5 million , respectively. Depreciation expense related to property and equipment was $4.3 million and $11.8 million for the three and nine months ended September 30, 2018 , of which amortization expense related to capitalized internal-use software development costs was $3.1 million and $8.5 million , respectively. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 9 Months Ended |
Sep. 30, 2019 | |
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 four reporting units. 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 management, strategy, partners, or litigation. During the second and third quarters of 2019, the price of our Class A common stock declined significantly. The average closing price per share of our Class A common stock for the period from May to September decreased by 42.0% compared to the average closing price for the period from January to April. We considered whether the stock price decline represented a triggering event for interim goodwill impairment testing and determined that the decline in our stock price does not impact the medium-term and long-term projections of our cash flow generation and, accordingly, our estimates of the fair value of our reporting units. Therefore, we did not perform a quantitative goodwill assessment and no impairment was noted as of September 30, 2019. However, any long-term decline in stock price could result in future goodwill impairment charges. In the event that Passport is not awarded a contract under the RFP, our medium-term or long-term cash flow projections will be reduced and the decline in our stock price will be further prolonged, resulting in an impairment material to our results of operations. The following tables summarize the changes in the carrying amount of goodwill, by reportable segment, for the periods presented (in thousands): For the Nine Months Ended September 30, 2019 Services True Health Consolidated Balance as of beginning-of-period (1) $ 762,419 $ 5,705 $ 768,124 Goodwill Acquired 3,429 — 3,429 Measurement period adjustments (2) 350 — 350 Foreign currency translation (16 ) — (16 ) Balance as of end-of-period $ 766,182 $ 5,705 $ 771,887 (1) Net of cumulative inception to date impairment of $160.6 million . (2) Measurement period adjustments related to transactions completed during the fourth quarter of 2018. For the Year Ended December 31, 2018 Services True Health Consolidated Balance as of beginning-of-period (1) $ 628,186 $ — $ 628,186 Goodwill Acquired (2) 134,343 5,826 140,169 Measurement period adjustments (3) 4 (121 ) (117 ) Foreign currency translation (4) (114 ) — (114 ) Balance as of end-of-period $ 762,419 $ 5,705 $ 768,124 (1) Net of cumulative inception to date impairment of $160.6 million . (2) Goodwill acquired primarily as a result of the New Century Health and True Health transactions, as discussed in Note 4 . (3) Measurement period adjustments related to transactions completed during the first quarter of 2018. (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) are presented below: As of September 30, 2019 Weighted- Average Gross Net Remaining Carrying Accumulated Carrying Useful Life Amount Amortization Value Corporate trade name 14.4 $ 23,300 $ 4,546 $ 18,754 Customer relationships 17.1 291,519 40,859 250,660 Technology 2.2 82,922 45,260 37,662 Below market lease, net 3.4 4,097 3,148 949 Provider network contracts 3.9 11,900 2,725 9,175 Total $ 413,738 $ 96,538 $ 317,200 As of December 31, 2018 Weighted- Average Gross Net Remaining Carrying Accumulated Carrying Useful Life Amount Amortization Value Corporate trade name 15.2 $ 23,300 $ 3,511 $ 19,789 Customer relationships 18.1 281,219 29,184 252,035 Technology 3.0 82,922 31,764 51,158 Below market lease, net 4.0 4,097 3,003 1,094 Provider network contracts 4.6 11,900 940 10,960 Total $ 403,438 $ 68,402 $ 335,036 Amortization expense related to intangible assets was $9.4 million and $28.1 million for the three and nine months ended September 30, 2019 , respectively, and $6.1 million and $18.0 million for the three and nine months ended September 30, 2018 , respectively. Future estimated amortization of intangible assets (in thousands) as of September 30, 2019 , is as follows: 2019 $ 9,388 2020 33,309 2021 29,173 2022 25,292 2023 22,528 Thereafter 197,510 Total $ 317,200 Intangible assets are reviewed for impairment if circumstances indicate the Company may not be able to recover the assets’ carrying value. We did not identify any circumstances during the nine months ended September 30, 2019 , that would require an impairment test for our intangible assets. |
Long-term Debt
Long-term Debt | 9 Months Ended |
Sep. 30, 2019 | |
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 $0.6 million and $1.9 million related to the 2025 Notes for the three and nine months ended September 30, 2019 , respectively. 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 three and nine months ended September 30, 2019 , the Company recorded $2.1 million and $6.2 million , respectively, 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 (the “2021 Notes”) 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 100.0% 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 three and nine months ended September 30, 2019 , and 2018 , the Company recorded approximately $0.6 million and $1.9 million , of interest expense, respectively. For the three and nine months ended September 30, 2019 , and September 30, 2018 , the Company recorded $0.2 million and $0.7 million of 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 indenture between Evolent Health, Inc. and U.S. Bank National Association, as trustee, related to the 2.00% convertible senior notes due 2021, dated as of December 5, 2016). 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 The 2025 Notes and 2021 Notes are recorded on our accompanying unaudited interim consolidated balance sheets at their net carrying values of $105.0 million and $123.0 million , respectively, as of September 30, 2019 . However, 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 as of September 30, 2019 , were $111.7 million and $110.1 million , respectively, based on traded prices on September 27, 2019 , and September 25, 2019 , respectively, which are Level 2 inputs. The fair values of the 2025 Notes and 2021 Notes as of December 31, 2018 , were $158.8 million and $133.6 million , respectively, based on traded prices on December 28, 2018 , and December 26, 2018 , respectively, which are Leve l 2 inputs. The 2025 Notes and 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 As of September 30, December 31, 2019 2018 2025 Notes Carrying value $ 104,989 $ 98,730 Unamortized debt discount and issuance costs allocated to debt 67,511 73,770 Principal amount $ 172,500 $ 172,500 Remaining amortization period (years) 6.0 6.8 2021 Notes Carrying value $ 123,007 $ 122,311 Unamortized issuance costs 1,993 2,689 Principal amount $ 125,000 $ 125,000 Remaining amortization period (years) 2.2 2.9 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
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 $4.0 million and $11.0 million as of September 30, 2019 , and December 31, 2018 , respectively, in accordance with the Company’s contribution and other agreements with certain equity-method investees. These obligations are outside of the Company’s control and payment could be requested during 2019. Letter of Credit During the third quarter of 2019, the Company established an irrevocable standby letter of credit with a bank for $1.8 million for the benefit of a regulatory authority and, as such, held $1.8 million in restricted cash and restricted investments as collateral as of September 30, 2019 . The letter of credit expires on December 31, 2020 and is automatically extended without amendment for additional one-year periods from the expiry date, unless the bank elects not to extend beyond the initial or any extended expiry date. 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 was effective from September 30, 2017, through June 30, 2019, and carried a quarterly facility rental fee of 0.8% per annum on the amount of the outstanding balance. The letter of credit terminated on June 30, 2019. The letter of credit was presented at the face amount plus accrued facility rental fee, less received payments. There was no outstanding balance related to this letter of credit as of December 31, 2018 . Lease Commitments The Company enters into various office space, data center, and equipment lease agreements in conducting its normal business operations. In connection with certain office space lease agreements, the Company is required to maintain $3.6 million in letters of credit and, as such, held $3.6 million in restricted cash and restricted investments as collateral for the letters of credit as of September 30, 2019 . Refer to Note 10 for additional discussion regarding leases. 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. During the second quarter of 2019, the Company and Passport, a current customer (collectively the “Indemnitors”), pursuant to a state requirement of all participating Medicaid Managed Care Organizations, entered into an Indemnity Agreement (the “Indemnity Agreement”), with an insurance company (the “Surety”). The Surety issued a performance bond in the amount of $25.0 million to secure the customer’s performance under a contract to provide Medicaid Managed Care Services for the benefit of a third party (the “Beneficiary”). Pursuant to the Indemnity Agreement, the Indemnitors are jointly and severally liable to the Surety in the maximum amount of the bond, plus certain costs of the Surety, in the event of losses arising under the bond. The bond’s effective date is July 1, 2019, and expiry date is June 30, 2020. To date, the Company has not incurred any material costs as a result of the Indemnity Agreement and has not accrued any liabilities related to it in the accompanying consolidated financial statements. Pre-IPO Investor Registration Rights Agreement We entered into a registration rights agreement with The Advisory Board, the University of Pittsburgh Medical Center (“UPMC”), TPG and another investor to register for sale under the Securities Act of 1933, as amended, 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. We will 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 of 1933, as amended, state law or otherwise. We did not incur any expenses related to secondary offerings or other sales of shares by our Investor Stockholders for the three and nine months ended September 30, 2019 and 2018. Momentum Registration Rights Agreement On May 24, 2019, in connection with the GlobalHealth transaction, the Company entered into a registration rights agreement with Momentum Health Holdings, LLC (“MHG”), which granted certain registration rights to MHG as a holder of shares of the Company’s Class A common stock. Pursuant to our contractual obligations under this agreement, we filed a resale prospectus supplement in respect of the registrable shares on May 28, 2019. The Company will pay certain costs and expenses, other than any underwriting discounts and commissions, in connection with the relevant resale registration statement. We did not incur any material expenses related to the resale registration statement during the three and nine months ended September 30, 2019 . Guarantees As part of our strategy to support certain of our partners in the Next Generation Accountable Care Program, we entered into upside and downside risk sharing arrangements. Our downside risk-sharing arrangements are limited to our fees and are executed through our wholly-owned captive insurance company. To satisfy the capital requirements of our captive insurance entity as well as state insurance regulators, Evolent maintained letters of credit of $1.0 million and $34.1 million as of September 30, 2019 and December 31, 2018 , respectively, to secure potential losses related to insurance services. 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 agreement 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 agreement 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 within “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 will record the full amount of the gross reinsurance premiums and claims assumed by the Company within “Premiums” and “Claims Expenses,” respectively, and record 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 “Reserves for claims and performance-based arrangements” on our consolidated balance sheets. Amounts owed by NMHC under the reinsurance agreement are recorded within “Accounts receivable, net” on our consolidated balance sheets. The following table summarizes premiums and claims assumed under the reinsurance agreement for the nine months ended September 30, 2019 (in thousands): Reinsurance premiums assumed $ 71,698 Claims assumed 61,655 Claims-related administrative expenses 12,069 Increase (decrease) in reserves for claims and performance-based arrangements attributable to the Reinsurance Agreement 2,026 Reserves for claims and performance-based arrangements attributable to the Reinsurance Agreement at the beginning of the period 1,243 Reinsurance payments 2,057 (Receivables) Payables for claims and performance-based arrangements attributable to the Reinsurance Agreement at the end of the period $ 1,212 During the third quarter of 2019, the Company terminated the reinsurance agreement with NMHC effective in the fourth quarter of 2019, approximately one and a half months prior to its scheduled end. During 2020, True Health plans to launch a product on the individual exchange. 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 at the time of our initial public offering, the Company entered into the Tax Receivables Agreement (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 Evolent Health, Inc. 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. On August 8, 2019, a shareholder of the Company filed a putative class action complaint against the Company, Frank Williams and Nicholas McGrane. The case, captioned Plymouth County Retirement System v. Evolent Health, Inc., Frank Williams, and Nicholas McGrane, was filed in the United States District Court, Eastern District of Virginia, Alexandria Division. The complaint seeks unspecified remedies under the Securities Exchange Act of 1934. Based on our preliminary review, the Company believes the case is without merit and intends to vigorously defend against these claim s. The Company expects that the court will soon appoint a lead plaintiff and set a schedule for the filing of the consolidated complaint and the Company’s response to that complaint. The outcome of any litigation is uncertain, and at this early stage, the Compan y is currently unable to assess the probability of loss or estimate a range of potential loss, if any, associated with this lawsuit. The Company is not aware of any other legal proceedings or claims as of September 30, 2019 , 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 September 30, 2019 , approximately 98.0% of our $205.8 million of cash and cash equivalents (including restricted cash) were held in bank deposits with FDIC participating banks, approximately 1.5% were held in money market funds and 0.5% 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 trade accounts receivable for the periods presented: As of As of September 30, December 31, 2019 2018 Customer C 31.9 % 23.3 % In addition, the Company is subject to significant concentration of revenue risk as a substantial portion of our revenue is derived from a small number of contractual relationships with our operating partners. The following table summarizes those partners who represented at least 10.0% of our revenue for the periods presented: For the Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Customer A 11.4 % * 12.8 % * Customer B 22.2 % 18.8 % 16.4 % 18.9 % * Represents less than 10.0% of the respective balance. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases The Company enters into various office space, data center, and equipment lease agreements in conducting its normal business operations. At the inception of any contract, the Company evaluates the agreement to determine whether the contract contains a lease. If the contract contains a lease, the Company then evaluates the term and whether the lease is an operating or finance lease. Most leases include one or more options to renew or may have a termination option. The Company determines whether these options are reasonably certain to be exercised or not at the inception of the lease. The rent expense is recognized on a straight-line basis in the consolidated statements of operations and comprehensive income (loss) over the term of the lease. Leases with an initial term or 12 months or less are not recorded on our consolidated balance sheets. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Further, the Company treats all lease and non-lease components as a single combined lease component for all classes of underlying assets. The Company also enters into sublease agreements for some of its leased office space. Rental income attributable to subleases is offset against rent expense over the terms of the respective leases. The following table summarizes the components of our lease expense (in thousands): For the Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2019 Operating lease cost $ 3,288 $ 10,407 Variable lease cost 929 3,505 Total lease cost $ 4,217 $ 13,912 As discussed in Note 3 , the Company adopted ASU 2016-02 effective January 1, 2019, which resulted in accounting for leases under ASC 842. Prior to the adoption, we accounted for leases under ASC 840. In accordance with ASC 840, rent expense, net of sublease income, on operating leases was $3.3 million and $10.1 million for the three and nine months ended September 30, 2018 , respectively. Maturity of lease liabilities (in thousands) as of September 30, 2019 , is as follows: Operating lease expense (1) 2019 $ 2,240 2020 10,638 2021 10,825 2022 9,702 2023 9,617 2024 and thereafter 61,630 Total lease payments 104,652 Less: Interest 28,702 Present value of lease liabilities 75,950 (1) We have additional operating lease agreements for office space that have not yet commenced as of September 30, 2019 . The minimum lease payments for those leases are $8.6 million and the leases will commence throughout the remainder of 2019. Our weighted-average discount rate and our weighted remaining lease terms (in years) are as follows: As of September 30, 2019 Weighted average discount rate 6.25 % Weighted average remaining lease term 9.8 |
Earnings (Loss) Per Common Shar
Earnings (Loss) Per Common Share | 9 Months Ended |
Sep. 30, 2019 | |
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 Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Net income (loss) $ (25,738 ) $ (12,555 ) $ (106,287 ) $ (36,651 ) Less: Net income (loss) attributable to non-controlling interests (217 ) (126 ) (2,412 ) (680 ) Net income (loss) available for common shareholders (1) (2) $ (25,521 ) $ (12,429 ) $ (103,875 ) $ (35,971 ) Weighted-average common shares outstanding (2) (3) 83,819 77,999 81,831 76,871 Earnings (Loss) per Common Share Basic $ (0.30 ) $ (0.16 ) $ (1.27 ) $ (0.47 ) Diluted (0.30 ) (0.16 ) (1.27 ) (0.47 ) (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 Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Exchangeable Class B common stock 706 766 1,650 1,251 Restricted stock units ("RSUs"), performance-based RSUs and leveraged stock units ("LSUs") 548 1,197 857 923 Stock options and performance-based stock options 834 2,698 1,427 2,486 Convertible senior notes 10,361 5,201 10,361 5,201 Total 12,449 9,862 14,295 9,861 |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation | Stock-based Compensation Total compensation expense by award type and line item in our consolidated financial statements was as follows (in thousands): For the Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Award Type Stock options $ 223 $ 2,139 $ 2,486 $ 7,009 Performance-based stock options 112 113 334 334 RSUs 2,280 1,795 7,340 5,217 Performance-based RSUs 2,406 — 3,178 — LSUs 737 — 1,707 — Total $ 5,758 $ 4,047 $ 15,045 $ 12,560 Line Item Cost of revenue $ 1,597 $ 376 $ 3,279 $ 1,130 Selling, general and administrative expenses 4,161 3,671 11,766 11,430 Total $ 5,758 $ 4,047 $ 15,045 $ 12,560 No stock-based compensation in the totals above was capitalized as software development costs for the three and nine months ended September 30, 2019 and 2018 , respectively. Stock-based awards were granted as follows (in thousands): For the Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Stock options 38 3 437 1,054 RSUs 212 18 730 857 Performance-based RSUs 903 — 903 — LSUs — — 720 — In August 2019, in connection with the settlement of the earn-out payable to the former employees of New Century Health, the Company canceled outstanding restricted stock units held by the former employees of New Century Health and issued new restricted stock units with modified performance conditions. No other changes to the original grant terms were made. In accordance with ASC Topic 718, Share Based Payments, canceled equity award accompanied by the concurrent grant of a replacement award shall be accounted for as a modification of the terms of the canceled award. The modification was treated as a Type 1 modification , as the awards were expected to vest under the original terms. Incremental compensation cost of $4.7 million was measured as the excess of the fair value of the modified award over the fair value of the original award immediately before the terms were modified and will be recorded over the remaining requisite service period. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For interim periods, we recognize an income tax provision (benefit) based on our estimated annual effective tax rate expected for the full year. Provision (benefit) for income tax (in thousands) and effective tax rates for the three and nine months ended September 30, 2019 and September 30, 2018 , were as follows: For the Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Provision (benefit) for income taxes $ (849 ) $ 135 $ 53 $ 29 Effective tax rate 3.2 % (0.9 )% (0.1 )% (0.1 )% The Company recorded a provision for income taxes of less than $0.1 million on a pre-tax loss from continuing operations of approximately $106.2 million for the nine months ended September 30, 2019 , which resulted in a tax rate of approximately (0.1)% . This tax rate is based on an estimated annual effective tax rate of 1.7% . Comparatively, the Company recorded a tax expense for income taxes of less than $0.1 million on a pre-tax loss from continuing operations of approximately $36.6 million for the nine months ended September 30, 2018 , which resulted in a tax rate of approximately (0.1)% . The difference between our effective tax rate and our statutory rate is primarily due to the $2.0 million income tax expense recorded as a discrete item in the second quarter of 2019 in connection with the non-cash gain on disposal of assets related to True Health Indiana, as well as certain permanent items which include, but are not limited to, income attributable to the non-controlling interest, the impact of certain tax deduction limits related to meals and entertainment, employee compensation and other permanent nondeductible expenses. Furthermore, as of September 30, 2019 , with the exception of our corporate subsidiaries, the Company maintained a full valuation allowance recorded against its net deferred tax assets, except for certain indefinite-lived components as part of the outside basis difference in our partnership interest in Evolent Health LLC. As of December 31, 2018 , the Company had unrecognized tax benefits of $0.9 million that, if recognized, would not affect the effective tax rate. As of September 30, 2019 , there are no changes to the unrecognized tax benefits. The Company is not currently subject to income tax audits in any U.S., state, or foreign jurisdictions for any tax year. 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. See Note 9 above for discussion of our TRA. |
Investments In and Advances to
Investments In and Advances to Equity Method Investees | 9 Months Ended |
Sep. 30, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments In and Advances to Equity Method Investees | Investments in and Advances to Equity Method Investees The Company has entered into joint venture agreements with various entities. On May 24, 2019, we completed the acquisition of approximately a 43% ownership interest in Momentum Health Group, LLC (“MHG”), the sole owner of Momentum Health Acquisition, Inc. (“MHA”), which is the sole owner of GlobalHealth Holdings, LLC (“GHH”), which is the sole owner of GlobalHealth, Inc., a health maintenance organization based in the State of Oklahoma that offers, among other things, Medicare Advantage products in the State of Oklahoma. At closing, we contributed approximately $15.0 million in cash and 1,577,841 shares of our Class A common stock to MHG, together with certain of our other assets in the form of True Health Indiana, Inc., the Company’s Medicare Advantage line of business, including the provider contracts, to GlobalHealth. The Company recognized $9.6 million non-cash gain on disposal of assets upon the contribution. We also recognized a short-term contingent consideration liability fair valued at $5.9 million at the time of the transaction. At the time of the transaction, our economic interest in GlobalHealth was approximately 43% and our voting interest was approximately 29% . As of September 30, 2019 , the Company’s economic and voting interests in its joint venture arrangements ranged between 4% and 43% . As of December 31, 2018 , the Company’s economic and voting interests in these entities ranged between 4% 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 $3.9 million and $6.2 million for the three and nine months ended September 30, 2019 , respectively, and $1.4 million and $2.8 million for the three and nine months ended September 30, 2018 , 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 was $11.8 million and $29.9 million for the three and nine months ended September 30, 2019 , respectively, and $5.1 million and $5.9 million for the three and nine months ended September 30, 2018 , respectively. |
Non-controlling Interests
Non-controlling Interests | 9 Months Ended |
Sep. 30, 2019 | |
Noncontrolling Interest [Abstract] | |
Non-controlling Interests | Non-controlling Interests As discussed in Note 1 , Evolent Health, Inc. does not own 100% of the economic interests of Evolent Health LLC. The Company’s ownership percentage changes with the issuance of Class A common stock and Class B Exchanges. Following is a description of events that resulted in changes to the Company’s ownership percentage during the nine months ended September 30, 2019 and the year ended December 31, 2018 . 2019 During the second quarter of 2019, certain holders of Class B units executed Class B Exchanges. These Class B Exchanges resulted in the issuance of 2.5 million shares of the Company’s Class A common stock. As a result of these Class B Exchanges and Evolent Health LLC’s cancellation of the related Class B units, the Company’s economic interest in Evolent Health LLC increased from 96.1% to 99.1% immediately following the final Class B Exchange during the quarter, and, accordingly, we reclassified a portion of our non-controlling interests into shareholders’ equity attributable to Evolent Health, Inc. In May 2019, the Company issued 1.6 million Class A common shares as part of the consideration for the GlobalHealth transaction. 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. As a result of the Class A common units (and corresponding Class A common shares) issued as part of the GlobalHealth transaction, the Company’s economic interest in Evolent Health LLC increased from 99.1% to 99.2% , immediately following the transaction. 2018 The Company completed the March 2018 Private Sale during March 2018. 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 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, and, accordingly, we reclassified a portion of our non-controlling interests into shareholders’ equity attributable to Evolent Health, Inc. 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 September 30, 2019 , and December 31, 2018 , we owned 99.2% and 96.1% , respectively, of the economic interests in Evolent Health LLC. 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 Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Non-controlling interests as of beginning-of-period $ 16,078 $ 10,148 $ 45,532 $ 35,427 Cumulative-effect adjustment from adoption of new accounting principle — — — 594 Decrease in non-controlling interests as a result of Class B Exchanges — — (33,946 ) (25,334 ) Amount attributable to NCI from 2019 business combination — — 6,500 — Net income (loss) attributable to non-controlling interests (217 ) (126 ) (2,412 ) (680 ) Reclassification of non-controlling interests 27 (14 ) 214 1 Non-controlling interests as of end-of-period $ 15,888 $ 10,008 $ 15,888 $ 10,008 |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2019 | |
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 September 30, 2019 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ 3,175 $ — $ — $ 3,175 Restricted cash and restricted investments (1) 2 — — 2 Total $ 3,177 $ — $ — $ 3,177 Liabilities Contingent consideration (2) — — 13,600 13,600 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 (1) Represents the cash and cash equivalents and restricted cash and restricted investments that were held in money market funds as of September 30, 2019 , and December 31, 2018 , as presented in the tables above. (2) Represents the contingent earn-out consideration related to the University Health Care, Inc. d/b/a Passport Health Plan (“Passport”) and the New Century Health acquisitions, as well as contingent consideration for the GlobalHealth transaction, as described below. As of September 30, 2019 , $3.7 million was attributable to Passport, $3.2 million was attributable to New Century Health, and $6.7 million was attributable to GlobalHealth. As of December 31, 2018 , $5.6 million was attributable to Passport and $3.2 million was attributable to New Century Health. 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 three and nine month periods ended September 30, 2019 and 2018 , 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. 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. T he 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. 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 are sufficient to either exceed the minimum earn-out threshold or meet the earn-out 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. Refer to Note 4 for additional discussion of the New Century Health transaction. The GlobalHealth transaction includes a provision for additional consideration contingent upon the Company’s future share price. The fair value of the contingent consideration was estimated based on the closing market price of the common stock for a one -year look-back. The significant unobservable input used in the fair value measurement of GlobalHealth contingent consideration is the stock price volatility. A significant decrease in the stock price, 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 Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Balance as of beginning-of-period $ 14,100 $ 8,200 $ 8,800 $ 8,700 Additions (1) — — 5,900 — Settlements — — (800 ) — Realized and unrealized (gains) losses, net (500 ) 100 (300 ) (400 ) Balance as of end-of-period $ 13,600 $ 8,300 $ 13,600 $ 8,300 (1) Addition is related to the GlobalHealth 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 September 30, 2019 Fair Valuation Significant Assumption or Value Technique Unobservable Inputs Input Ranges Passport contingent consideration $ 3,700 Real options approach Risk-adjusted recurring revenue CAGR 93.9 % (1) Discount rate 4.8% - 5.3% 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) GlobalHealth contingent consideration $ 6,700 Monte Carlo simulation Stock price volatility 60 % (3) 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 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. (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. (3) Equity volatility based on Evolent’s daily stock price returns for a one -year look-back period. The large one-day stock price drop on May 29, 2019, was excluded from the volatility calculation. 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 | 9 Months Ended |
Sep. 30, 2019 | |
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 has 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. Revenue related to these services agreements was $11.8 million and $29.9 million for the three and nine months ended September 30, 2019 , respectively, and $5.1 million and $5.9 million for the three and nine months ended September 30, 2018 , 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 Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Revenue Transformation services $ 2,100 $ 5,332 $ 3,300 $ 6,112 Platform and operations services 15,143 12,180 44,961 27,072 Expenses Cost of revenue (exclusive of depreciation and amortization expenses) 8,467 2,390 22,954 6,842 Selling, general and administrative expenses 229 241 772 620 |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2019 | |
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 EBITDA as the relevant segment performance measure to evaluate the performance of the segments and allocate resources. Adjusted EBITDA is a segment performance financial measure that offers 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 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 income (loss) from equity method investees, gain (loss) on disposal of assets, changes in fair value of contingent consideration and indemnification asset, other income (expense), net, net (income) loss attributable to non-controlling interests, ASC 606 transition adjustments, 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, and other one-time adjustments. 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 EBITDA to be the appropriate metric to evaluate and compare the ongoing operating performance of our segments on a consistent basis across reporting periods as it eliminates 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 Eliminations Consolidated Revenue Three Months Ended September 30, 2019 Services: Transformation services $ 5,184 $ — $ — $ 5,184 Platform and operations 174,688 — (3,250 ) 171,438 Services revenue 179,872 — (3,250 ) 176,622 True Health: Premiums — 43,765 (244 ) 43,521 Total revenue $ 179,872 $ 43,765 $ (3,494 ) $ 220,143 Three Months Ended September 30, 2018 Services: Transformation services $ 9,230 $ — $ — $ 9,230 Platform and operations 121,631 — (3,537 ) 118,094 Services revenue 130,861 — (3,537 ) 127,324 True Health: Premiums — 22,829 (206 ) 22,623 Total revenue $ 130,861 $ 22,829 $ (3,743 ) $ 149,947 Segments Services True Health Total Three Months Ended September 30, 2019 Adjusted EBITDA $ 3,139 $ 194 $ 3,333 Three Months Ended September 30, 2018 Adjusted EBITDA $ 4,065 $ 732 $ 4,797 Intersegment Services True Health Eliminations Consolidated Revenue Nine Months Ended September 30, 2019 Services: Transformation services $ 10,481 $ — $ — $ 10,481 Platform and operations 472,638 — (9,386 ) 463,252 Services revenue 483,119 — (9,386 ) 473,733 True Health: Premiums — 136,905 (780 ) 136,125 Total revenue $ 483,119 $ 136,905 $ (10,166 ) $ 609,858 Nine Months Ended September 30, 2018 Services: Transformation services $ 23,950 $ — $ — $ 23,950 Platform and operations 352,207 — (10,949 ) 341,258 Services revenue 376,157 — (10,949 ) 365,208 True Health: Premiums — 69,353 (602 ) 68,751 Total revenue $ 376,157 $ 69,353 $ (11,551 ) $ 433,959 Segments Services True Health Total Nine Months Ended September 30, 2019 Adjusted EBITDA $ (21,157 ) $ 2,038 $ (19,119 ) Nine Months Ended September 30, 2018 Adjusted EBITDA $ 16,674 $ 921 $ 17,595 The following table presents our reconciliation of segments total Adjusted EBITDA to net income (loss) attributable to Evolent Health, Inc. (in thousands): For the Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Net Income (Loss) Attributable to Evolent Health, Inc. $ (25,521 ) $ (12,429 ) $ (103,875 ) $ (35,971 ) Less: Interest income 1,124 968 3,026 2,918 Interest expense (3,630 ) (853 ) (10,812 ) (2,561 ) (Provision) benefit for income taxes 849 (135 ) (53 ) (29 ) Depreciation and amortization expenses (15,408 ) (10,352 ) (44,966 ) (29,882 ) Income (loss) from equity method investees (3,859 ) (1,381 ) (6,187 ) (2,787 ) Gain (loss) on disposal of assets — — 9,600 — Change in fair value of contingent consideration and indemnification asset 500 (100 ) 300 1,404 Other income (expense), net (84 ) (124 ) (244 ) (64 ) Net (income) loss attributable to non-controlling interests 217 126 2,412 680 ASC 606 transition adjustments — — — (4,498 ) Purchase accounting adjustments (165 ) (214 ) (926 ) (647 ) Stock-based compensation expense (5,758 ) (4,047 ) (15,045 ) (12,560 ) Severance costs (307 ) — (14,790 ) (1,489 ) Amortization of contract cost assets (1,061 ) (658 ) (2,613 ) (1,797 ) Transaction costs (1,272 ) (456 ) (4,458 ) (2,254 ) Adjusted EBITDA $ 3,333 $ 4,797 $ (19,119 ) $ 17,595 Asset information by segment is not a key measure of performance used by the CODM. Accordingly, we have not disclosed asset information by segment. |
Reserves for Claims and Perform
Reserves for Claims and Performance-Based Arrangements | 9 Months Ended |
Sep. 30, 2019 | |
Insurance [Abstract] | |
Reserves for Claims and Performance-Based Arrangements | Reserves for Claims and Performance-Based Arrangements The Company maintains reserves for its liabilities related to payments to providers and pharmacies under performance-based arrangements related to its specialty care management services. The Company also maintains reserves for claims incurred but not paid related to its capitation arrangement and for its health plan, True Health, in New Mexico. Reserves for claims and performance-based arrangements 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. Reserves for claims and performance-based arrangements 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, for reserves related to its specialty care management services and True Health, 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 for reserves related to its specialty care management services and True Health 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 reserves for claims and performance-based arrangements to actual experience. When actual experience differs from these assumptions, reserves for claims and performance-based arrangements are adjusted through current period 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. For reserves related to the Company’s capitation arrangement, the liability is calculated based on the budgeted medical loss ratio as historical data and completion patterns are not credible. Activity in reserves for claims and performance-based arrangements was as follows (in thousands): For the Nine Months Ended September 30, 2019 2018 Services (1) True Health Consolidated Services (1) True Health Consolidated Beginning balance $ 17,715 $ 9,880 $ 27,595 $ — $ — $ — Incurred costs related to: Current year 165,581 108,881 274,462 — 52,169 52,169 Prior years (335 ) (237 ) (572 ) — — — Total incurred 165,246 108,644 273,890 — 52,169 52,169 Paid costs related to: Current year 138,491 43,191 181,682 — 41,831 41,831 Prior years 8,131 8,217 16,348 — — — Total paid 146,622 51,408 198,030 — 41,831 41,831 Other adjustments (2) (753 ) (59,629 ) (60,382 ) — — — Change during the year 17,871 (2,393 ) 15,478 — 10,338 10,338 Ending balance $ 35,586 $ 7,487 $ 43,073 $ — $ 10,338 $ 10,338 (1) Costs related to the Company’s capitation arrangement as well as costs incurred to provide specialty care management services are recorded within cost of revenue in our consolidated statements of operations and comprehensive income (loss). (2) Other adjustments to reserves for claims and performance-based arrangements 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 related to the True Health segment represent premiums received less administrative expenses related to the reinsurance agreement. Refer to Note 9 for additional information about the reinsurance agreement. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2019 | |
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 the periods indicated below (in thousands) were as follows: As of September 30, 2019 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. Treasury bills $ 12,257 $ 361 $ — $ 12,618 Corporate bonds 1,704 76 — 1,780 Other CMOs 4,353 59 13 4,399 Yankees 596 39 — 635 Total investments $ 18,910 $ 535 $ 13 $ 19,432 As of December 31, 2018 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 The amortized cost and fair value of our investments by contractual maturities as of the periods indicated below (in thousands) were as follows: As of September 30, 2019 As of December 31, 2018 Amortized Fair Amortized Fair Cost Value Cost Value Due in one year or less $ 3,815 $ 3,827 $ — $ — Due after one year through five years 15,095 15,605 9,666 9,813 Due after five years through ten years — — 344 351 Total $ 18,910 $ 19,432 $ 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. There were no securities held in an unrealized loss position for more than twelve months as of September 30, 2019 . There were no securities held in an unrealized loss position as of December 31, 2018 . The Company held the following securities (in thousands) in an unrealized loss position for less than twelve months as of September 30, 2019 , and expects to recover the entire cost basis of security: As of September 30, 2019 Number of Fair Unrealized Securities Value Losses Other CMOs 2 $ 1,089 $ 13 |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 9 Months Ended |
Sep. 30, 2019 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information The following represents supplemental disclosure of cash flow information and non-cash investing and financing activities (in thousands): For the Nine Months Ended September 30, 2019 2018 Supplemental disclosure of cash flow information Operating cash flows from operating leases $ 9,378 $ — Leased assets obtained in exchange for new operating lease liabilities 31,661 — Non-cash investing and financing activities Accrued property and equipment purchases $ 234 $ 501 Class A common stock issued for payment of Passport earn-out 800 — Class A common stock issued in connection with business combinations and asset acquisitions 23,556 — Increase to goodwill from measurement period adjustments related to business combinations 350 4 Consideration for asset acquisitions or business combinations 16,000 500 Settlement of escrow related to asset acquisition — 2,519 Settlement of indemnification asset — 1,004 Effects of Class B Exchanges Decrease in non-controlling interests as a result of Class B Exchanges 33,946 25,334 Decrease in deferred tax liability as a result of securities offerings — 908 |
Basis of Presentation, Summar_2
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation In our opinion, the accompanying unaudited interim consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to fairly state our financial position, results of operations, and cash flows. The consolidated balance sheet at December 31, 2018 |
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, 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, reserves for claims and performance-based arrangements, contingent payments, allowance for doubtful accounts, depreciable lives of assets, impairment of long-lived assets (including equity method investments), stock-based compensation, deferred income taxes and valuation allowance, contingent liabilities, valuation of intangible assets (including goodwill), purchase price allocation in taxable stock transactions and 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 may recognize 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 |
Revenue Recognition | Revenue Recognition Our Services segment derives revenue from two sources: (1) transformation services and (2) platform and operations services. Transformation services consist of 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. Platform and operations services generally include multi-year arrangements with customers to provide various population health, health plan operations, specialty care management (through performance-based 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. Revenue is recognized when control of the services is transferred to our customers. 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 for our Services segment from 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 Our True Health segment derives revenue from premiums that are earned over the terms of the related insurance policies. True Health also derives revenue from reinsurance premiums assumed from NMHC under the terms of the reinsurance agreement (as defined in Note 9 ). 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. |
Leases | Leases As discussed in Note 3 , we adopted Accounting Standards Update (“ASU”) 2016-02 effective January 1, 2019. The following reflects our updated policy for leases. The Company enters into various office space, data center, and equipment lease agreements in conducting its normal business operations. At the inception of any contract, the Company evaluates the agreement to determine whether the contract contains a lease. If the contract contains a lease, the Company then evaluates the term and whether the lease is an operating or finance lease. Most leases include one or more options to renew or may have a termination option. The Company determines whether these options are reasonably certain to be exercised at the inception of the lease. The rent expense is recognized on a straight-line basis in the consolidated statements of operations and comprehensive income (loss) over the terms of the respective leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Further, the Company treats all lease and non-lease components as a single combined lease component for all classes of underlying assets. The Company also enters into sublease agreements for some of its leased office space. Rental income attributable to subleases is immaterial and is offset against rent expense over the terms of the respective leases. |
Restricted Cash and Restricted Investments | Restricted Cash and Restricted Investments |
Notes Receivable | Notes Receivable |
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 on 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 at 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 four reporting units. Our annual goodwill impairment review occurs during the fourth quarter of each year. In interim periods between annual goodwill reviews, we also evaluate qualitative factors that could cause us to believe that it is more likely than not that 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 management, strategy, partners, or litigation. 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 estimate of the relevant reporting unit is greater than its carrying value, then the goodwill of the reporting unit is considered not impaired and no further action is required. If the fair value estimate of the relevant reporting unit is less than its 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). |
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. Information regarding the determination and allocation of the fair value of recently 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 10-25 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 |
Reserves for Claims and Performance-based Arrangements | Reserves for claims and performance-based arrangements Reserves for claims and performance-based arrangements for our Services and True Health segments reflect estimates of payments under performance-based arrangements and 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 composed of accruals for incentives and other amounts payable to health care professionals and facilities. Reserves for claims and performance-based arrangements 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 in 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. |
Investments in and Advances to Equity Method Investees | Investments in and advances to equity method investees The Company uses the equity method to account for investments in companies if the investment provides the Company with the ability to exercise significant influence over operating and financial policies of the investee. Consolidated net income includes Evolent’s proportionate share of the net income or loss of these companies. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors or similar governing body, participation in policy-making decisions and material intercompany transactions. |
Foreign Currency | Foreign Currency |
Adoption of New Accounting Standards and Future Adoption of New Accounting Standards | Adoption of New Accounting Standards In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases , in order to establish the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. This update introduces a new standard on accounting for leases, including a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in ASC 606. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. 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 using an effective date method rather than the earliest comparative period. The requirements of ASU 2018-11 are effective on the same date as the requirements of ASU 2016-02. We adopted ASU 2016-02 as of January 1, 2019, using the modified retrospective approach. Further, we elected the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allowed us to carry forward the historical lease classification. Adoption of the new standard resulted in the recording of additional right-of-use assets and lease liabilities of approximately $51.4 million and $47.4 million , respectively, on our consolidated balance sheet as of January 1, 2019. The standard had no impact on our results of operations. In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software: Customer’s 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 adopted the requirements of ASU 2018-15 effective January 1, 2019. There was no material impact to our consolidated balance sheets or results of operations as of or for the three and nine months ended September 30, 2019 . In July 2019, the FASB issued ASU 2019-07, Codification Updates to SEC Sections - Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization and Miscellaneous Updates (SEC Update). ASU 2019-07 clarifies or improves the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations, thereby eliminating redundancies and making the codification easier to apply. The disclosure and presentation amendments included in ASU 2019-07, which were effective upon issuance of the standard and were to be applied prospectively, did not have a material impact on our consolidated financial statements and related disclosures. Future Adoption of New Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments . With respect to assets measured at amortized cost, such as held-to-maturity assets, the update requires presentation of the amortized cost net of a credit loss allowance. The update eliminates the probable initial recognition threshold that was previously required prior to recognizing a credit loss on financial instruments. The credit loss estimate can now reflect an entity’s current estimate of all future expected credit losses as opposed to the previous standard, when an entity only considered past events and current conditions. With respect to available for sale debt securities, the update requires that credit losses be presented as an allowance rather than as a write-down. The update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We intend to adopt the requirements of this standard effective January 1, 2020 and are currently evaluating the impact of the adoption on our financial condition and results of operations. In August 2018, the FASB issued ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement . ASU 2018-13 amends Topic 820 to add, remove, and clarify disclosure requirements related to fair value measurement disclosures. This ASU is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. We are currently evaluating the impact of the adoption on our consolidated financial statements and related disclosures. |
Nonrecurring Fair Value Measurements and Other Fair Value Disclosures | 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. |
Basis of Presentation, Summar_3
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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 As of September 30, December 31, 2019 2018 Collateral for letters of credit for facility leases (1) $ 3,610 $ 3,710 Collateral with financial institutions (2) 5,737 34,142 Claims processing services (3) 99,658 122,439 Other 827 532 Total restricted cash and restricted investments 109,832 160,823 Current restricted investments 702 211 Current restricted cash 100,773 154,507 Total current restricted cash and restricted investments 101,475 154,718 Noncurrent restricted investments 111 607 Noncurrent restricted cash 8,246 5,498 Total noncurrent restricted cash and restricted investments $ 8,357 $ 6,105 (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 September 30, 2019 , and December 31, 2018 , approximately $1.0 million and $31.2 million of the collateral amount was in a trust account and invested in a money market fund. The amounts invested in money market funds are considered restricted cash and are carried at fair value, which approximates cost. See Note 16 for discussion of our fair value measurement and Note 9 for discussion of our risk-sharing arrangements. As of September 30, 2019 , and December 31, 2018 , approximately $4.7 million and $2.9 million , respectively, of the collateral amount was held in FDIC participating bank accounts, primarily related to letters of credit. (3) Represents cash held by the Company related to claims processing services 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. 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 amounts shown in the statements of cash flows. As of September 30, 2019 2018 Cash and cash equivalents $ 96,734 $ 221,837 Restricted cash and restricted investments 109,832 45,722 Restricted investments included in restricted cash and restricted investments (813 ) (712 ) Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows $ 205,753 $ 266,847 |
Schedule of intangible assets | The following summarizes the estimated useful lives by asset classification: Corporate trade name 10-20 years Customer relationships 10-25 years Technology 5 years Provider network contracts 5 years Details of our intangible assets (in thousands) are presented below: As of September 30, 2019 Weighted- Average Gross Net Remaining Carrying Accumulated Carrying Useful Life Amount Amortization Value Corporate trade name 14.4 $ 23,300 $ 4,546 $ 18,754 Customer relationships 17.1 291,519 40,859 250,660 Technology 2.2 82,922 45,260 37,662 Below market lease, net 3.4 4,097 3,148 949 Provider network contracts 3.9 11,900 2,725 9,175 Total $ 413,738 $ 96,538 $ 317,200 As of December 31, 2018 Weighted- Average Gross Net Remaining Carrying Accumulated Carrying Useful Life Amount Amortization Value Corporate trade name 15.2 $ 23,300 $ 3,511 $ 19,789 Customer relationships 18.1 281,219 29,184 252,035 Technology 3.0 82,922 31,764 51,158 Below market lease, net 4.0 4,097 3,003 1,094 Provider network contracts 4.6 11,900 940 10,960 Total $ 403,438 $ 68,402 $ 335,036 |
Transactions (Tables)
Transactions (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Schedule of allocation of purchase price | The purchase price was 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 Reserves for claims and performance-based arrangements 18,631 Deferred tax liabilities 24,041 Other long-term liabilities 6,138 Goodwill 133,110 Net assets acquired $ 211,025 |
Schedule of net assets acquired | 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 | The pro forma adjustments are based on available information and assumptions that the Company believes are reasonable to reflect the impact of these transactions on the Company’s historical financial information on a pro forma basis (in thousands, except per share data). For the Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Revenue $ 220,143 $ 196,317 $ 609,858 $ 570,520 Net income (loss) (25,738 ) (27,982 ) (106,287 ) (53,294 ) Net income (loss) attributable to non-controlling interests (215 ) (1,328 ) (2,114 ) (2,870 ) Net income (loss) attributable to Evolent Health, Inc. (25,523 ) (26,654 ) (104,173 ) (50,423 ) Net income (loss) per Common Share available to common shareholders Basic and Diluted $ (0.30 ) $ (0.34 ) $ (1.27 ) $ (0.66 ) |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | The following table represents Evolent’s Services segment revenue disaggregated by revenue type (in thousands), excluding revenues from our True Health segment and from our downside risk sharing arrangements through our insurance subsidiary, which are accounted for under ASC 944, Financial Services-Insurance . For the Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Services Revenue Transformation services $ 5,184 $ 9,230 $ 10,481 $ 23,950 Platform and operations services 170,999 116,226 461,886 335,509 |
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 September 30, December 31, 2019 2018 Short-term receivables (1) $ 72,486 $ 78,380 Long-term receivables (1) 400 6,550 Short-term contract assets 1,365 2,102 Long-term contract assets 1,245 961 Short-term deferred revenue 22,701 20,584 Long-term deferred revenue 169 1,502 (1) Excludes pharmacy claims receivable and premiums receivable Changes in contract assets and deferred revenue for the nine months ended September 30, 2019 , were as follows (in thousands): Contract assets Balance as of beginning-of-period $ 3,063 Reclass to receivables, as the right to consideration becomes unconditional (1,830 ) Contract assets recognized, net of reclass to receivables 1,377 Balance as of end-of-period $ 2,610 Deferred revenue Balance as of beginning-of-period $ 22,086 Reclass to revenue, as a result of performance obligations satisfied (15,852 ) Cash received in advance of satisfaction of performance obligations 16,636 Balance as of end-of-period $ 22,870 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment | The following summarizes our property and equipment (in thousands): As of As of September 30, December 31, 2019 2018 Computer hardware $ 11,312 $ 10,421 Furniture and equipment 3,439 3,187 Internal-use software development costs 106,604 81,640 Leasehold improvements 10,450 10,118 Total property and equipment 131,805 105,366 Accumulated depreciation and amortization (48,641 ) (31,738 ) Total property and equipment, net $ 83,164 $ 73,628 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | The following tables summarize the changes in the carrying amount of goodwill, by reportable segment, for the periods presented (in thousands): For the Nine Months Ended September 30, 2019 Services True Health Consolidated Balance as of beginning-of-period (1) $ 762,419 $ 5,705 $ 768,124 Goodwill Acquired 3,429 — 3,429 Measurement period adjustments (2) 350 — 350 Foreign currency translation (16 ) — (16 ) Balance as of end-of-period $ 766,182 $ 5,705 $ 771,887 (1) Net of cumulative inception to date impairment of $160.6 million . (2) Measurement period adjustments related to transactions completed during the fourth quarter of 2018. For the Year Ended December 31, 2018 Services True Health Consolidated Balance as of beginning-of-period (1) $ 628,186 $ — $ 628,186 Goodwill Acquired (2) 134,343 5,826 140,169 Measurement period adjustments (3) 4 (121 ) (117 ) Foreign currency translation (4) (114 ) — (114 ) Balance as of end-of-period $ 762,419 $ 5,705 $ 768,124 (1) Net of cumulative inception to date impairment of $160.6 million . (2) Goodwill acquired primarily as a result of the New Century Health and True Health transactions, as discussed in Note 4 . (3) Measurement period adjustments related to transactions completed during the first quarter of 2018. (4) Foreign currency translation related to a transaction completed during the first quarter of 2018. |
Schedule of intangible assets | The following summarizes the estimated useful lives by asset classification: Corporate trade name 10-20 years Customer relationships 10-25 years Technology 5 years Provider network contracts 5 years Details of our intangible assets (in thousands) are presented below: As of September 30, 2019 Weighted- Average Gross Net Remaining Carrying Accumulated Carrying Useful Life Amount Amortization Value Corporate trade name 14.4 $ 23,300 $ 4,546 $ 18,754 Customer relationships 17.1 291,519 40,859 250,660 Technology 2.2 82,922 45,260 37,662 Below market lease, net 3.4 4,097 3,148 949 Provider network contracts 3.9 11,900 2,725 9,175 Total $ 413,738 $ 96,538 $ 317,200 As of December 31, 2018 Weighted- Average Gross Net Remaining Carrying Accumulated Carrying Useful Life Amount Amortization Value Corporate trade name 15.2 $ 23,300 $ 3,511 $ 19,789 Customer relationships 18.1 281,219 29,184 252,035 Technology 3.0 82,922 31,764 51,158 Below market lease, net 4.0 4,097 3,003 1,094 Provider network contracts 4.6 11,900 940 10,960 Total $ 403,438 $ 68,402 $ 335,036 |
Schedule of future estimated amortization of intangible assets | Future estimated amortization of intangible assets (in thousands) as of September 30, 2019 , is as follows: 2019 $ 9,388 2020 33,309 2021 29,173 2022 25,292 2023 22,528 Thereafter 197,510 Total $ 317,200 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of convertible debt | The following table summarizes the carrying value of the long-term debt (in thousands): As of As of September 30, December 31, 2019 2018 2025 Notes Carrying value $ 104,989 $ 98,730 Unamortized debt discount and issuance costs allocated to debt 67,511 73,770 Principal amount $ 172,500 $ 172,500 Remaining amortization period (years) 6.0 6.8 2021 Notes Carrying value $ 123,007 $ 122,311 Unamortized issuance costs 1,993 2,689 Principal amount $ 125,000 $ 125,000 Remaining amortization period (years) 2.2 2.9 |
Commitments and Contingencies
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of premiums and claims assumed under the Reinsurance Agreement | The following table summarizes premiums and claims assumed under the reinsurance agreement for the nine months ended September 30, 2019 (in thousands): Reinsurance premiums assumed $ 71,698 Claims assumed 61,655 Claims-related administrative expenses 12,069 Increase (decrease) in reserves for claims and performance-based arrangements attributable to the Reinsurance Agreement 2,026 Reserves for claims and performance-based arrangements attributable to the Reinsurance Agreement at the beginning of the period 1,243 Reinsurance payments 2,057 (Receivables) Payables for claims and performance-based arrangements attributable to the Reinsurance Agreement at the end of the period $ 1,212 |
Summary of major partners | The following table summarizes those partners who represented at least 10.0% of our revenue for the periods presented: For the Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Customer A 11.4 % * 12.8 % * Customer B 22.2 % 18.8 % 16.4 % 18.9 % * Represents less than 10.0% of the respective balance. 10.0% of our trade accounts receivable for the periods presented: As of As of September 30, December 31, 2019 2018 Customer C 31.9 % 23.3 % |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Schedule of components of lease expense, weighted-average discount rate and weighted-remaining lease terms | The following table summarizes the components of our lease expense (in thousands): For the Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2019 Operating lease cost $ 3,288 $ 10,407 Variable lease cost 929 3,505 Total lease cost $ 4,217 $ 13,912 Our weighted-average discount rate and our weighted remaining lease terms (in years) are as follows: As of September 30, 2019 Weighted average discount rate 6.25 % Weighted average remaining lease term 9.8 |
Schedule of maturity of lease liabilities | Maturity of lease liabilities (in thousands) as of September 30, 2019 , is as follows: Operating lease expense (1) 2019 $ 2,240 2020 10,638 2021 10,825 2022 9,702 2023 9,617 2024 and thereafter 61,630 Total lease payments 104,652 Less: Interest 28,702 Present value of lease liabilities 75,950 (1) We have additional operating lease agreements for office space that have not yet commenced as of September 30, 2019 . The minimum lease payments for those leases are $8.6 million and the leases will commence throughout the remainder of 2019. |
Earnings (Loss) Per Common Sh_2
Earnings (Loss) Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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 Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Net income (loss) $ (25,738 ) $ (12,555 ) $ (106,287 ) $ (36,651 ) Less: Net income (loss) attributable to non-controlling interests (217 ) (126 ) (2,412 ) (680 ) Net income (loss) available for common shareholders (1) (2) $ (25,521 ) $ (12,429 ) $ (103,875 ) $ (35,971 ) Weighted-average common shares outstanding (2) (3) 83,819 77,999 81,831 76,871 Earnings (Loss) per Common Share Basic $ (0.30 ) $ (0.16 ) $ (1.27 ) $ (0.47 ) Diluted (0.30 ) (0.16 ) (1.27 ) (0.47 ) (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 Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Exchangeable Class B common stock 706 766 1,650 1,251 Restricted stock units ("RSUs"), performance-based RSUs and leveraged stock units ("LSUs") 548 1,197 857 923 Stock options and performance-based stock options 834 2,698 1,427 2,486 Convertible senior notes 10,361 5,201 10,361 5,201 Total 12,449 9,862 14,295 9,861 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [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 Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Award Type Stock options $ 223 $ 2,139 $ 2,486 $ 7,009 Performance-based stock options 112 113 334 334 RSUs 2,280 1,795 7,340 5,217 Performance-based RSUs 2,406 — 3,178 — LSUs 737 — 1,707 — Total $ 5,758 $ 4,047 $ 15,045 $ 12,560 Line Item Cost of revenue $ 1,597 $ 376 $ 3,279 $ 1,130 Selling, general and administrative expenses 4,161 3,671 11,766 11,430 Total $ 5,758 $ 4,047 $ 15,045 $ 12,560 |
Stock-based awards granted | Stock-based awards were granted as follows (in thousands): For the Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Stock options 38 3 437 1,054 RSUs 212 18 730 857 Performance-based RSUs 903 — 903 — LSUs — — 720 — In August 2019, in connection with the settlement of the earn-out payable to the former employees of New Century Health, the Company canceled outstanding restricted stock units held by the former employees of New Century Health and issued new restricted stock units with modified performance conditions. No other changes to the original grant terms were made. In accordance with ASC Topic 718, Share Based Payments, canceled equity award accompanied by the concurrent grant of a replacement award shall be accounted for as a modification of the terms of the canceled award. The modification was treated as a Type 1 modification , as the awards were expected to vest under the original terms. Incremental compensation cost of $4.7 million was measured as the excess of the fair value of the modified award over the fair value of the original award immediately before the terms were modified and will be recorded over the remaining requisite service period. |
Income Taxes Income Taxes (Tabl
Income Taxes Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision (benefit) for income tax and effective tax rates | Provision (benefit) for income tax (in thousands) and effective tax rates for the three and nine months ended September 30, 2019 and September 30, 2018 , were as follows: For the Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Provision (benefit) for income taxes $ (849 ) $ 135 $ 53 $ 29 Effective tax rate 3.2 % (0.9 )% (0.1 )% (0.1 )% |
Non-controlling Interests (Tabl
Non-controlling Interests (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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 Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Non-controlling interests as of beginning-of-period $ 16,078 $ 10,148 $ 45,532 $ 35,427 Cumulative-effect adjustment from adoption of new accounting principle — — — 594 Decrease in non-controlling interests as a result of Class B Exchanges — — (33,946 ) (25,334 ) Amount attributable to NCI from 2019 business combination — — 6,500 — Net income (loss) attributable to non-controlling interests (217 ) (126 ) (2,412 ) (680 ) Reclassification of non-controlling interests 27 (14 ) 214 1 Non-controlling interests as of end-of-period $ 15,888 $ 10,008 $ 15,888 $ 10,008 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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 September 30, 2019 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ 3,175 $ — $ — $ 3,175 Restricted cash and restricted investments (1) 2 — — 2 Total $ 3,177 $ — $ — $ 3,177 Liabilities Contingent consideration (2) — — 13,600 13,600 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 (1) Represents the cash and cash equivalents and restricted cash and restricted investments that were held in money market funds as of September 30, 2019 , and December 31, 2018 , as presented in the tables above. (2) Represents the contingent earn-out consideration related to the University Health Care, Inc. d/b/a Passport Health Plan (“Passport”) and the New Century Health acquisitions, as well as contingent consideration for the GlobalHealth transaction, as described below. As of September 30, 2019 , $3.7 million was attributable to Passport, $3.2 million was attributable to New Century Health, and $6.7 million was attributable to GlobalHealth. As of December 31, 2018 , $5.6 million was attributable to Passport and $3.2 million was attributable to New Century Health. |
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 September 30, 2019 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ 3,175 $ — $ — $ 3,175 Restricted cash and restricted investments (1) 2 — — 2 Total $ 3,177 $ — $ — $ 3,177 Liabilities Contingent consideration (2) — — 13,600 13,600 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 (1) Represents the cash and cash equivalents and restricted cash and restricted investments that were held in money market funds as of September 30, 2019 , and December 31, 2018 , as presented in the tables above. (2) Represents the contingent earn-out consideration related to the University Health Care, Inc. d/b/a Passport Health Plan (“Passport”) and the New Century Health acquisitions, as well as contingent consideration for the GlobalHealth transaction, as described below. As of September 30, 2019 , $3.7 million was attributable to Passport, $3.2 million was attributable to New Century Health, and $6.7 million was attributable to GlobalHealth. As of December 31, 2018 , $5.6 million was attributable to Passport and $3.2 million was attributable to New Century Health. |
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 Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Balance as of beginning-of-period $ 14,100 $ 8,200 $ 8,800 $ 8,700 Additions (1) — — 5,900 — Settlements — — (800 ) — Realized and unrealized (gains) losses, net (500 ) 100 (300 ) (400 ) Balance as of end-of-period $ 13,600 $ 8,300 $ 13,600 $ 8,300 (1) |
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 September 30, 2019 Fair Valuation Significant Assumption or Value Technique Unobservable Inputs Input Ranges Passport contingent consideration $ 3,700 Real options approach Risk-adjusted recurring revenue CAGR 93.9 % (1) Discount rate 4.8% - 5.3% 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) GlobalHealth contingent consideration $ 6,700 Monte Carlo simulation Stock price volatility 60 % (3) 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 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. (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. (3) Equity volatility based on Evolent’s daily stock price returns for a one -year look-back period. The large one-day stock price drop on May 29, 2019, was excluded from the volatility calculation. |
Related Parties (Tables)
Related Parties (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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 Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Revenue Transformation services $ 2,100 $ 5,332 $ 3,300 $ 6,112 Platform and operations services 15,143 12,180 44,961 27,072 Expenses Cost of revenue (exclusive of depreciation and amortization expenses) 8,467 2,390 22,954 6,842 Selling, general and administrative expenses 229 241 772 620 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Reconciliation of revenue from segments to consolidated | The following tables present our segment information (in thousands): Intersegment Services True Health Eliminations Consolidated Revenue Three Months Ended September 30, 2019 Services: Transformation services $ 5,184 $ — $ — $ 5,184 Platform and operations 174,688 — (3,250 ) 171,438 Services revenue 179,872 — (3,250 ) 176,622 True Health: Premiums — 43,765 (244 ) 43,521 Total revenue $ 179,872 $ 43,765 $ (3,494 ) $ 220,143 Three Months Ended September 30, 2018 Services: Transformation services $ 9,230 $ — $ — $ 9,230 Platform and operations 121,631 — (3,537 ) 118,094 Services revenue 130,861 — (3,537 ) 127,324 True Health: Premiums — 22,829 (206 ) 22,623 Total revenue $ 130,861 $ 22,829 $ (3,743 ) $ 149,947 Segments Services True Health Total Three Months Ended September 30, 2019 Adjusted EBITDA $ 3,139 $ 194 $ 3,333 Three Months Ended September 30, 2018 Adjusted EBITDA $ 4,065 $ 732 $ 4,797 Intersegment Services True Health Eliminations Consolidated Revenue Nine Months Ended September 30, 2019 Services: Transformation services $ 10,481 $ — $ — $ 10,481 Platform and operations 472,638 — (9,386 ) 463,252 Services revenue 483,119 — (9,386 ) 473,733 True Health: Premiums — 136,905 (780 ) 136,125 Total revenue $ 483,119 $ 136,905 $ (10,166 ) $ 609,858 Nine Months Ended September 30, 2018 Services: Transformation services $ 23,950 $ — $ — $ 23,950 Platform and operations 352,207 — (10,949 ) 341,258 Services revenue 376,157 — (10,949 ) 365,208 True Health: Premiums — 69,353 (602 ) 68,751 Total revenue $ 376,157 $ 69,353 $ (11,551 ) $ 433,959 Segments Services True Health Total Nine Months Ended September 30, 2019 Adjusted EBITDA $ (21,157 ) $ 2,038 $ (19,119 ) Nine Months Ended September 30, 2018 Adjusted EBITDA $ 16,674 $ 921 $ 17,595 |
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 Three For the Nine Months Ended Months Ended September 30, September 30, 2019 2018 2019 2018 Net Income (Loss) Attributable to Evolent Health, Inc. $ (25,521 ) $ (12,429 ) $ (103,875 ) $ (35,971 ) Less: Interest income 1,124 968 3,026 2,918 Interest expense (3,630 ) (853 ) (10,812 ) (2,561 ) (Provision) benefit for income taxes 849 (135 ) (53 ) (29 ) Depreciation and amortization expenses (15,408 ) (10,352 ) (44,966 ) (29,882 ) Income (loss) from equity method investees (3,859 ) (1,381 ) (6,187 ) (2,787 ) Gain (loss) on disposal of assets — — 9,600 — Change in fair value of contingent consideration and indemnification asset 500 (100 ) 300 1,404 Other income (expense), net (84 ) (124 ) (244 ) (64 ) Net (income) loss attributable to non-controlling interests 217 126 2,412 680 ASC 606 transition adjustments — — — (4,498 ) Purchase accounting adjustments (165 ) (214 ) (926 ) (647 ) Stock-based compensation expense (5,758 ) (4,047 ) (15,045 ) (12,560 ) Severance costs (307 ) — (14,790 ) (1,489 ) Amortization of contract cost assets (1,061 ) (658 ) (2,613 ) (1,797 ) Transaction costs (1,272 ) (456 ) (4,458 ) (2,254 ) Adjusted EBITDA $ 3,333 $ 4,797 $ (19,119 ) $ 17,595 |
Reserves for Claims and Perfo_2
Reserves for Claims and Performance-Based Arrangements (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Insurance [Abstract] | |
Activity in claims reserves | Activity in reserves for claims and performance-based arrangements was as follows (in thousands): For the Nine Months Ended September 30, 2019 2018 Services (1) True Health Consolidated Services (1) True Health Consolidated Beginning balance $ 17,715 $ 9,880 $ 27,595 $ — $ — $ — Incurred costs related to: Current year 165,581 108,881 274,462 — 52,169 52,169 Prior years (335 ) (237 ) (572 ) — — — Total incurred 165,246 108,644 273,890 — 52,169 52,169 Paid costs related to: Current year 138,491 43,191 181,682 — 41,831 41,831 Prior years 8,131 8,217 16,348 — — — Total paid 146,622 51,408 198,030 — 41,831 41,831 Other adjustments (2) (753 ) (59,629 ) (60,382 ) — — — Change during the year 17,871 (2,393 ) 15,478 — 10,338 10,338 Ending balance $ 35,586 $ 7,487 $ 43,073 $ — $ 10,338 $ 10,338 (1) Costs related to the Company’s capitation arrangement as well as costs incurred to provide specialty care management services are recorded within cost of revenue in our consolidated statements of operations and comprehensive income (loss). (2) Other adjustments to reserves for claims and performance-based arrangements 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 related to the True Health segment represent premiums received less administrative expenses related to the reinsurance agreement. Refer to Note 9 for additional information about the reinsurance agreement. |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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 the periods indicated below (in thousands) were as follows: As of September 30, 2019 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. Treasury bills $ 12,257 $ 361 $ — $ 12,618 Corporate bonds 1,704 76 — 1,780 Other CMOs 4,353 59 13 4,399 Yankees 596 39 — 635 Total investments $ 18,910 $ 535 $ 13 $ 19,432 As of December 31, 2018 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 the periods indicated below (in thousands) were as follows: As of September 30, 2019 As of December 31, 2018 Amortized Fair Amortized Fair Cost Value Cost Value Due in one year or less $ 3,815 $ 3,827 $ — $ — Due after one year through five years 15,095 15,605 9,666 9,813 Due after five years through ten years — — 344 351 Total $ 18,910 $ 19,432 $ 10,010 $ 10,164 |
Schedule of securities in an unrealized loss position for less than twelve months | The Company held the following securities (in thousands) in an unrealized loss position for less than twelve months as of September 30, 2019 , and expects to recover the entire cost basis of security: As of September 30, 2019 Number of Fair Unrealized Securities Value Losses Other CMOs 2 $ 1,089 $ 13 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental cash flow information | The following represents supplemental disclosure of cash flow information and non-cash investing and financing activities (in thousands): For the Nine Months Ended September 30, 2019 2018 Supplemental disclosure of cash flow information Operating cash flows from operating leases $ 9,378 $ — Leased assets obtained in exchange for new operating lease liabilities 31,661 — Non-cash investing and financing activities Accrued property and equipment purchases $ 234 $ 501 Class A common stock issued for payment of Passport earn-out 800 — Class A common stock issued in connection with business combinations and asset acquisitions 23,556 — Increase to goodwill from measurement period adjustments related to business combinations 350 4 Consideration for asset acquisitions or business combinations 16,000 500 Settlement of escrow related to asset acquisition — 2,519 Settlement of indemnification asset — 1,004 Effects of Class B Exchanges Decrease in non-controlling interests as a result of Class B Exchanges 33,946 25,334 Decrease in deferred tax liability as a result of securities offerings — 908 |
Organization (Details)
Organization (Details) $ in Thousands | 9 Months Ended | |||||||||||
Sep. 30, 2019USD ($)segment | May 31, 2019 | Apr. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018USD ($) | Nov. 30, 2018 | Oct. 31, 2018 | Oct. 01, 2018 | Sep. 30, 2018USD ($) | Jun. 29, 2018 | Mar. 31, 2018 | Aug. 31, 2017 | |
Organization [Line Items] | ||||||||||||
Number of reportable segments | segment | 2 | |||||||||||
Cash and cash equivalents | $ | $ 96,734 | $ 228,320 | $ 221,837 | |||||||||
Evolent Health LLC | ||||||||||||
Organization [Line Items] | ||||||||||||
Parent's ownership percentage | 99.20% | 99.20% | 99.10% | 96.10% | 96.10% | 96.10% | 95.30% | 95.30% | 99.00% | 99.10% | 98.90% | 96.60% |
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 Principles - Operating Segments (Details) | 9 Months Ended |
Sep. 30, 2019segment | |
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 Principles - Restricted Cash and Restricted Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 |
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Total restricted cash and restricted investments | $ 109,832 | $ 160,823 | $ 45,722 |
Current restricted investments | 702 | 211 | |
Current restricted cash | 100,773 | 154,507 | |
Total current restricted cash and restricted investments | 101,475 | 154,718 | |
Noncurrent restricted investments | 111 | 607 | |
Noncurrent restricted cash | 8,246 | 5,498 | |
Total non-current restricted cash and restricted investments | 8,357 | 6,105 | |
Cash and cash equivalents | 96,734 | 228,320 | 221,837 |
Restricted investments included in restricted cash and restricted investments | (813) | $ (712) | |
Collateral for letters of credit for facility leases | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Total restricted cash and restricted investments | 3,610 | 3,710 | |
Collateral with financial institutions | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Total restricted cash and restricted investments | 5,737 | 34,142 | |
Claims processing services | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Total restricted cash and restricted investments | 99,658 | 122,439 | |
Other | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Total restricted cash and restricted investments | 827 | 532 | |
Collateral with financial institutions, money market fund | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Total restricted cash and restricted investments | 31,200 | ||
FDIC participating bank account | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Total restricted cash and restricted investments | $ 4,700 | $ 2,900 |
Basis of Presentation, Summar_6
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles - Notes Receivable (Details) - Surplus Note - Current Customer - Notes Receivable - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2019 | Sep. 30, 2019 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Contributions to acquire notes receivable | $ 40 | |
Interest rate | 6.50% | |
Notes receivable, net amount | $ 40 | |
Accrued interest | $ 0.7 |
Basis of Presentation, Summar_7
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles - Goodwill (Details) | 9 Months Ended |
Sep. 30, 2019reporting_unit | |
Accounting Policies [Abstract] | |
Number of reporting units | 4 |
Basis of Presentation, Summar_8
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles - Intangible Assets, Net (Details) | 9 Months Ended |
Sep. 30, 2019 | |
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 | 10 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 |
Recently Issued Accounting St_2
Recently Issued Accounting Standards (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right-of-use assets - operating | $ 75,768 | |
Right-of-use liabilities - operating | $ 75,950 | |
Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right-of-use assets - operating | $ 51,400 | |
Right-of-use liabilities - operating | $ 47,400 |
Transactions - New Century Heal
Transactions - New Century Health (Details) - USD ($) $ in Thousands, shares in Millions | Oct. 01, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | May 31, 2019 | Apr. 30, 2019 | Mar. 31, 2019 | Nov. 30, 2018 | Oct. 31, 2018 | Jun. 29, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Aug. 31, 2017 |
Purchase consideration: | |||||||||||||
Cash | $ 8,575 | $ 11,552 | |||||||||||
Liabilities assumed: | |||||||||||||
Goodwill | $ 771,887 | $ 768,124 | $ 628,186 | ||||||||||
Technology | |||||||||||||
Liabilities assumed: | |||||||||||||
Useful life | 5 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 | ||||||||||||
Transaction costs | $ 1,600 | ||||||||||||
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 | ||||||||||||
Liabilities assumed: | |||||||||||||
Accounts payable | 1,167 | ||||||||||||
Accrued liabilities | 1,494 | ||||||||||||
Accrued compensation and employee benefits | 3,966 | ||||||||||||
Reserves for claims and performance-based arrangements | 18,631 | ||||||||||||
Deferred tax liabilities | 24,041 | ||||||||||||
Other long-term liabilities | 6,138 | ||||||||||||
Goodwill | 133,110 | ||||||||||||
Net assets acquired | $ 211,025 | ||||||||||||
New Century Health | Class B | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Consideration transferred, equity interests issued and issuable, shares issued (in shares) | 3.1 | 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 | ||||||||||||
Liabilities assumed: | |||||||||||||
Useful life | 15 years | ||||||||||||
New Century Health | Technology | |||||||||||||
Identifiable intangible assets acquired: | |||||||||||||
Identifiable intangible assets | $ 27,000 | ||||||||||||
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 | ||||||||||||
Evolent Health LLC | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Parent's ownership percentage | 95.30% | 99.20% | 99.00% | 96.10% | 99.20% | 99.10% | 96.10% | 96.10% | 95.30% | 99.10% | 98.90% | 96.60% |
Transactions - New Mexico Healt
Transactions - New Mexico Health Connections (Details) - USD ($) $ in Thousands | Jan. 02, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Purchase consideration: | |||||
Cash paid to NMHC | $ 8,575 | $ 11,552 | |||
Identifiable intangible assets acquired and liabilities assumed | |||||
Goodwill | $ 771,887 | $ 768,124 | $ 628,186 | ||
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: | |||||
Cash paid to NMHC | $ 10,000 | ||||
Cash paid to escrow agent | 252 | ||||
Total consideration | 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 - Pro Forma Inform
Transactions - Pro Forma Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||||
Revenue | $ 220,143 | $ 196,317 | $ 609,858 | $ 570,520 | |
Net income (loss) | (25,738) | (27,982) | (106,287) | (53,294) | |
Net income (loss) attributable to non-controlling interests | (215) | (1,328) | (2,114) | (2,870) | |
Net income (loss) attributable to Evolent Health, Inc. | $ (25,523) | $ (26,654) | $ (104,173) | $ (50,423) | |
Net income (loss) available to common shareholders, basic (in dollars per share) | $ (0.30) | $ (0.34) | $ (1.27) | $ (0.66) | |
Net income (loss) available to common shareholders, diluted (in dollars per share) | $ (0.38) | $ (0.16) | $ (0.97) | $ (0.47) | |
New Century Health | |||||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||||
Adjustment for removal of transaction costs | $ 1,600 |
Transactions - Securities Offer
Transactions - Securities Offerings and Sales (Details) - shares | 1 Months Ended | 3 Months Ended | |||||||||||
May 31, 2019 | Nov. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Apr. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Oct. 31, 2018 | Oct. 01, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Jun. 29, 2018 | Aug. 31, 2017 | |
Class A | |||||||||||||
Organization [Line Items] | |||||||||||||
Common stock, outstanding (in shares) | 83,825,595 | 79,172,118 | |||||||||||
Class A | Common Stock | |||||||||||||
Organization [Line Items] | |||||||||||||
Issuance of common stock (in shares) | 1,600,000 | 800,000 | 3,000,000 | 2,500,000 | |||||||||
Class A | Common Stock | Evolent Health, Selling Stockholders | |||||||||||||
Organization [Line Items] | |||||||||||||
Issuance of common stock (in shares) | 100,000 | 1,200,000 | |||||||||||
Class A | Common Stock | Investor Stockholders | |||||||||||||
Organization [Line Items] | |||||||||||||
Issuance of common stock (in shares) | 1,800,000 | ||||||||||||
Common stock, outstanding (in shares) | 0 | ||||||||||||
Class A | Common Stock | TPG | |||||||||||||
Organization [Line Items] | |||||||||||||
Issuance of common stock (in shares) | 700,000 | ||||||||||||
Evolent Health LLC | |||||||||||||
Organization [Line Items] | |||||||||||||
Parent's ownership percentage | 99.20% | 96.10% | 98.90% | 99.20% | 99.10% | 96.10% | 96.10% | 95.30% | 95.30% | 99.00% | 99.10% | 96.60% |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | ||
Disaggregation of Revenue [Line Items] | |||||
Revenues | $ 220,143 | $ 149,947 | $ 609,858 | $ 433,959 | |
Transformation services | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | [1] | 5,184 | 9,230 | 10,481 | 23,950 |
Platform and operations services | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | [1] | 171,438 | 118,094 | 463,252 | 341,258 |
Services | Transformation services | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 5,184 | 9,230 | 10,481 | 23,950 | |
Services | Platform and operations services | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | $ 170,999 | $ 116,226 | $ 461,886 | $ 335,509 | |
[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 | Sep. 30, 2019USD ($) |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation | $ 83.8 |
Revenue, remaining performance obligation, percent to be recognized in current fiscal year | 75.00% |
Revenue, remaining performance obligation, percent to be recognized in next fiscal year | 96.00% |
Revenue Recognition - Contract
Revenue Recognition - Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |||
Short-term receivables | $ 72,486 | $ 72,486 | $ 78,380 |
Long-term receivables | 400 | 400 | 6,550 |
Short-term contract assets | 1,365 | 1,365 | 2,102 |
Long-term contract assets | 1,245 | 1,245 | 961 |
Short-term deferred revenue | 22,701 | 22,701 | 20,584 |
Long-term deferred revenue | 169 | 169 | $ 1,502 |
Contract assets | |||
Balance as of beginning-of-period | 3,063 | ||
Reclass to receivables, as the right to consideration becomes unconditional | (1,830) | ||
Contract assets recognized, net of reclass to receivables | 1,377 | ||
Balance as of end-of-period | 2,610 | 2,610 | |
Deferred revenue | |||
Balance as of beginning-of-period | 22,086 | ||
Reclass to revenue, as a result of performance obligations satisfied | (15,852) | ||
Cash received in advance of satisfaction of performance obligations | 16,636 | ||
Balance as of end-of-period | 22,870 | 22,870 | |
Revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods | $ 2,500 | $ 2,400 |
Revenue Recognition - Contrac_2
Revenue Recognition - Contract Cost Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Capitalized Contract Cost [Line Items] | |||||
Contract cost amortization (Bonuses and Commissions - less than $0.1 million for the three and six months ended June 30, 2018) | $ 4,132 | $ 1,900 | |||
Capitalized contract cost, amortization period | 5 years | 5 years | |||
Bonuses and Commissions | |||||
Capitalized Contract Cost [Line Items] | |||||
Contract cost assets | $ 4,300 | $ 4,300 | $ 1,500 | ||
Contract cost amortization (Bonuses and Commissions - less than $0.1 million for the three and six months ended June 30, 2018) | 300 | $ 100 | 500 | 200 | |
Contract Fulfillment Costs | |||||
Capitalized Contract Cost [Line Items] | |||||
Contract cost assets | 25,700 | 25,700 | $ 17,600 | ||
Contract cost amortization (Bonuses and Commissions - less than $0.1 million for the three and six months ended June 30, 2018) | $ 1,100 | $ 600 | $ 3,700 | $ 1,700 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | $ 131,805 | $ 131,805 | $ 105,366 | ||
Accumulated depreciation and amortization | (48,641) | (48,641) | (31,738) | ||
Total property and equipment, net | 83,164 | 83,164 | 73,628 | ||
Depreciation expense | 6,000 | $ 4,300 | 16,900 | $ 11,800 | |
Capitalized computer software, amortization | 4,900 | 3,100 | 13,500 | 8,500 | |
Computer hardware | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 11,312 | 11,312 | 10,421 | ||
Furniture and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 3,439 | 3,439 | 3,187 | ||
Internal-use software development costs | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 106,604 | 106,604 | 81,640 | ||
Total property and equipment, net | 74,300 | 74,300 | 62,800 | ||
Capitalized computer software additions | 8,100 | $ 7,000 | 25,000 | $ 25,100 | |
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | $ 10,450 | $ 10,450 | $ 10,118 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, Net - Goodwill (Details) $ in Thousands | 5 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($)reporting_unit | Dec. 31, 2018USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Number of reporting units | reporting_unit | 4 | ||
Goodwill [Line Items] | |||
Goodwill, impairment testing, percentage share price decrease | 42.00% | ||
Goodwill [Roll Forward] | |||
Balance as of beginning-of-period | $ 768,124 | $ 628,186 | |
Goodwill Acquired | 3,429 | 140,169 | |
Measurement period adjustment, goodwill | 350 | (117) | |
Foreign currency translation | (16) | (114) | |
Balance as of end-of-period | $ 771,887 | 771,887 | 768,124 |
Accumulated impairment | 160,600 | 160,600 | 160,600 |
Services | |||
Goodwill [Roll Forward] | |||
Balance as of beginning-of-period | 762,419 | 628,186 | |
Goodwill Acquired | 3,429 | 134,343 | |
Measurement period adjustment, goodwill | 350 | 4 | |
Foreign currency translation | (16) | (114) | |
Balance as of end-of-period | 766,182 | 766,182 | 762,419 |
True Health | |||
Goodwill [Roll Forward] | |||
Balance as of beginning-of-period | 5,705 | 0 | |
Goodwill Acquired | 0 | 5,826 | |
Measurement period adjustment, goodwill | 0 | (121) | |
Foreign currency translation | 0 | 0 | |
Balance as of end-of-period | $ 5,705 | $ 5,705 | $ 5,705 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets, Net - Intangible Assets, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | $ 413,738 | $ 413,738 | $ 403,438 | ||
Accumulated Amortization | 96,538 | 96,538 | 68,402 | ||
Net Carrying Value | 317,200 | 317,200 | $ 335,036 | ||
Amortization of intangible assets | 9,400 | $ 6,100 | $ 28,100 | $ 18,000 | |
Corporate trade name | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-Average Remaining Useful Life | 14 years 4 months 24 days | 15 years 2 months 12 days | |||
Gross Carrying Amount | 23,300 | $ 23,300 | $ 23,300 | ||
Accumulated Amortization | 4,546 | 4,546 | 3,511 | ||
Net Carrying Value | 18,754 | $ 18,754 | $ 19,789 | ||
Customer relationships | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-Average Remaining Useful Life | 17 years 1 month 6 days | 18 years 1 month 6 days | |||
Gross Carrying Amount | 291,519 | $ 291,519 | $ 281,219 | ||
Accumulated Amortization | 40,859 | 40,859 | 29,184 | ||
Net Carrying Value | 250,660 | $ 250,660 | $ 252,035 | ||
Technology | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-Average Remaining Useful Life | 2 years 2 months 12 days | 3 years | |||
Gross Carrying Amount | 82,922 | $ 82,922 | $ 82,922 | ||
Accumulated Amortization | 45,260 | 45,260 | 31,764 | ||
Net Carrying Value | 37,662 | $ 37,662 | $ 51,158 | ||
Below market lease, net | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-Average Remaining Useful Life | 3 years 4 months 24 days | 4 years | |||
Gross Carrying Amount | 4,097 | $ 4,097 | $ 4,097 | ||
Accumulated Amortization | 3,148 | 3,148 | 3,003 | ||
Net Carrying Value | 949 | $ 949 | $ 1,094 | ||
Provider network contracts | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-Average Remaining Useful Life | 3 years 10 months 24 days | 4 years 7 months 6 days | |||
Gross Carrying Amount | 11,900 | $ 11,900 | $ 11,900 | ||
Accumulated Amortization | 2,725 | 2,725 | 940 | ||
Net Carrying Value | $ 9,175 | $ 9,175 | $ 10,960 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets, Net - Schedule of Future Estimated Amortization (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2019 | $ 9,388 | |
2020 | 33,309 | |
2021 | 29,173 | |
2022 | 25,292 | |
2023 | 22,528 | |
Thereafter | 197,510 | |
Net Carrying Value | $ 317,200 | $ 335,036 |
Long-term Debt - 2025 Notes (De
Long-term Debt - 2025 Notes (Details) $ / shares in Units, shares in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2018USD ($)shares$ / shares | Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) | Oct. 24, 2018USD ($) | Oct. 22, 2018USD ($) | |
Debt Instrument [Line Items] | ||||||
Carrying amount | $ 227,996,000 | $ 227,996,000 | $ 221,041,000 | |||
Senior Convertible Notes due 2025 | ||||||
Debt Instrument [Line Items] | ||||||
Debt issuance costs | $ 3,400,000 | |||||
Senior Notes | Senior Convertible Notes due 2025 | ||||||
Debt Instrument [Line Items] | ||||||
Face amount | $ 172,500,000 | 172,500,000 | 172,500,000 | $ 172,500,000 | $ 22,500,000 | $ 150,000,000 |
Interest rate | 1.50% | |||||
Proceeds from issuance of debt | $ 166,600,000 | |||||
Debt issuance costs | $ 5,900,000 | |||||
Interest expense | 600,000 | 1,900,000 | ||||
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 | $ 2,100,000 | $ 6,200,000 | ||||
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 (at least) | 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 | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2016USD ($)shares$ / shares | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Debt Instrument [Line Items] | ||||||
Amortization of deferred financing costs (2016 - less than) | $ 6,954,000 | $ 688,000 | ||||
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% | |||||
Proceeds from issuance of debt | $ 120,400,000 | |||||
Debt issuance costs | $ 4,600,000 | |||||
Repurchase covenant, repurchase price due to fundamental change as percentage of principal amount | 100.00% | |||||
Interest expense | 600,000 | 1,900,000 | ||||
Amortization of deferred financing costs (2016 - less than) | $ 200,000 | $ 200,000 | $ 700,000 | $ 700,000 | ||
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 | |||||
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 ($) | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2019 | Dec. 31, 2018 | Oct. 31, 2018 | Oct. 24, 2018 | Oct. 22, 2018 | Dec. 31, 2016 | |
Senior Convertible Notes due 2025 | ||||||
Debt Instrument [Line Items] | ||||||
Carrying value | $ 104,989,000 | $ 98,730,000 | ||||
Unamortized debt discount and issuance costs allocated to debt | 67,511,000 | 73,770,000 | ||||
Principal amount | $ 172,500,000 | $ 172,500,000 | $ 172,500,000 | $ 22,500,000 | $ 150,000,000 | |
Remaining amortization period | 6 years | 6 years 9 months 18 days | ||||
Senior Convertible Notes due 2025 | Level 2 | ||||||
Debt Instrument [Line Items] | ||||||
Fair value | $ 111,700,000 | $ 158,800,000 | ||||
Convertible Senior Notes due 2021 | ||||||
Debt Instrument [Line Items] | ||||||
Carrying value | 123,007,000 | 122,311,000 | ||||
Unamortized debt discount and issuance costs allocated to debt | 1,993,000 | 2,689,000 | ||||
Principal amount | $ 125,000,000 | $ 125,000,000 | $ 125,000,000 | |||
Remaining amortization period | 2 years 2 months 12 days | 2 years 10 months 24 days | ||||
Convertible Senior Notes due 2021 | Level 2 | ||||||
Debt Instrument [Line Items] | ||||||
Fair value | $ 110,100,000 | $ 133,600,000 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) | 3 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | |
Restricted Cash and Cash Equivalents Items [Line Items] | |||||
Operating capital support commitment, maximum amount | $ 11,000,000 | $ 4,000,000 | |||
Restricted funds | 160,823,000 | 109,832,000 | $ 45,722,000 | ||
Carrying amount | $ 221,041,000 | $ 227,996,000 | |||
Tax receivables agreement, percent of tax savings to be paid | 85.00% | ||||
New Mexico Health Connections | |||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||
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% | ||||
Reinsurance arrangement, percentage of claims liability indemnified | 90.00% | ||||
Reinsurance arrangement, maximum amount of insurance risk as a percentage of premiums ceded | 105.00% | ||||
Restricted cash for letters of credit | |||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||
Restricted funds | $ 1,800,000 | ||||
Letters of credit for facility leases | |||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||
Restricted funds | $ 3,710,000 | 3,610,000 | |||
Collateral with financial institutions | |||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||
Restricted funds | 34,100,000 | 1,000,000 | |||
Collateral for reinsurance agreement | New Mexico Health Connections | |||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||
Restricted funds | $ 10,000,000 | ||||
Minimum | |||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||
Letters of credit outstanding, minimum | 3,600,000 | ||||
Letter of Credit | Line of Credit | |||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||
Line of credit, maximum borrowing capacity | $ 5,000,000 | 1,800,000 | |||
Line of credit, quarterly rental fee percentage | 0.80% | ||||
Carrying amount | $ 0 | ||||
Surety Performance Bond | |||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||
Loss contingency, estimate of possible loss | $ 25,000,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Reinsurance Agreement (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Reserves for claims and performance-based arrangements attributable to the Reinsurance Agreement at the beginning of the period | $ 1,243 |
Reinsurance premiums assumed | 71,698 |
Claims assumed | 61,655 |
Claims-related administrative expenses | 12,069 |
(Increase) decrease in claims reserves attributable to the Reinsurance Agreement | 2,026 |
Reinsurance payments | 2,057 |
(Receivables) Payables for claims and performance-based arrangements attributable to the Reinsurance Agreement at the end of the period | $ 1,212 |
Commitments and Contingencies_3
Commitments and Contingencies - Concentration Risk (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Concentration Risk [Line Items] | |||||
Percentage of cash and cash equivalents held with FDIC participating banks | 98.00% | 98.00% | |||
Cash and cash equivalents (including restricted cash) | $ 205.8 | $ 205.8 | |||
Percentage of cash and cash equivalents held in money market funds | 1.50% | 1.50% | |||
Percentage of cash held in international banks (less than) | 0.50% | 0.50% | |||
Customer C | Customer Concentration Risk | Accounts Receivable | Customer Receivable | |||||
Concentration Risk [Line Items] | |||||
Concentration risk | 31.90% | 23.30% | |||
Customer A | Customer Concentration Risk | Revenue | |||||
Concentration Risk [Line Items] | |||||
Concentration risk | 11.40% | 12.80% | |||
Customer B | Customer Concentration Risk | Revenue | |||||
Concentration Risk [Line Items] | |||||
Concentration risk | 22.20% | 18.80% | 16.40% | 18.90% |
Leases (Components of Lease Exp
Leases (Components of Lease Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Leases [Abstract] | ||||
Operating lease cost | $ 3,288 | $ 10,407 | ||
Variable lease cost | 929 | 3,505 | ||
Total lease cost | $ 4,217 | $ 13,912 | ||
Rent expense, net of sublease income | $ 3,300 | $ 10,100 |
Leases (Maturity of Lease Liabi
Leases (Maturity of Lease Liabilities) (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
2019 | $ 2,240 |
2020 | 10,638 |
2021 | 10,825 |
2022 | 9,702 |
2023 | 9,617 |
2024 and thereafter | 61,630 |
Total lease payments | 104,652 |
Less: | |
Interest | 28,702 |
Present value of lease liabilities | 75,950 |
Lessee, operating lease, lease not yet commenced, undiscounted amount | $ 8,600 |
Leases (Weighted-average Discou
Leases (Weighted-average Discount Rate and Weighted-remaining Lease Terms) (Details) | Sep. 30, 2019 |
Leases [Abstract] | |
Weighted average discount rate | 6.25% |
Weighted average remaining lease term | 9 years 9 months 18 days |
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 | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) | $ (25,738) | $ (12,555) | $ (106,287) | $ (36,651) |
Less: | ||||
Net income (loss) attributable to non-controlling interests | (217) | (126) | (2,412) | (680) |
Net income (loss) available for common shareholders | $ (25,521) | $ (12,429) | $ (103,875) | $ (35,971) |
Weighted-average common shares outstanding (in shares) | 83,819,000 | 77,999,000 | 81,831,000 | 76,871,000 |
Earnings (Loss) per Common Share | ||||
Basic (in dollars per share) | $ (0.30) | $ (0.16) | $ (1.27) | $ (0.47) |
Diluted (in dollars per share) | $ (0.30) | $ (0.16) | $ (1.27) | $ (0.47) |
Class B | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
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 | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
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) | 12,449 | 9,862 | 14,295 | 9,861 |
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) | 706 | 766 | 1,650 | 1,251 |
Restricted stock units (RSUs), performance-based RSUs and leveraged stock units (LSUs) | ||||
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) | 548 | 1,197 | 857 | 923 |
Stock options and performance-based 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) | 834 | 2,698 | 1,427 | 2,486 |
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) | 10,361 | 5,201 | 10,361 | 5,201 |
Stock-based Compensation - Comp
Stock-based Compensation - Compensation Expense (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Share-based compensation expense | $ 5,758,000 | $ 4,047,000 | $ 15,045,000 | $ 12,560,000 | |
Share-based compensation expense capitalized as software development costs | 0 | 0 | 0 | 0 | |
Cost of revenue | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Share-based compensation expense | 1,597,000 | 376,000 | 3,279,000 | 1,130,000 | |
Selling, general and administrative expenses | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Share-based compensation expense | 4,161,000 | 3,671,000 | 11,766,000 | 11,430,000 | |
Stock options | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Share-based compensation expense | 223,000 | 2,139,000 | 2,486,000 | 7,009,000 | |
Performance-based stock options | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Share-based compensation expense | 112,000 | 113,000 | 334,000 | 334,000 | |
RSUs | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Share-based compensation expense | 2,280,000 | 1,795,000 | 7,340,000 | 5,217,000 | |
Performance-based RSUs | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Share-based compensation expense | 2,406,000 | 0 | 3,178,000 | 0 | |
LSUs | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Share-based compensation expense | $ 737,000 | $ 0 | $ 1,707,000 | $ 0 | |
Accounting Standards Update 2017-09 | RSUs | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Plan modification, incremental cost | $ 4,700,000 |
Stock-based Compensation - Awar
Stock-based Compensation - Awards Granted (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based awards granted (in shares) | 38,000 | 3,000 | 437,000 | 1,054,000 | |
RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based awards granted (in shares) | 212,000 | 18,000 | 730,000 | 857,000 | |
Performance-based RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based awards granted (in shares) | 903,000 | 0 | 903,000 | 0 | |
LSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based awards granted (in shares) | 0 | 0 | 720,000 | 0 | |
Accounting Standards Update 2017-09 | RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Plan modification, incremental cost | $ 4.7 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Income Tax Contingency [Line Items] | ||||||
Provision (benefit) for income taxes (less than - continuing operations) | $ (849) | $ 135 | $ 53 | $ 29 | ||
Effective tax rate | 3.20% | (0.90%) | (0.10%) | (0.10%) | ||
Loss before income taxes and non-controlling interests | $ 26,587 | $ 12,420 | $ 106,234 | $ 36,622 | ||
Effective income tax rate reconciliation, annual estimate | 1.70% | |||||
Discrete income tax expense, deconsolidation gain recognized | $ 2,000 | |||||
Gain on disposition of assets | $ 0 | $ 0 | $ 9,600 | 0 | ||
Unrecognized tax benefits | $ 900 | |||||
Tax receivables agreement, percent of tax savings to be paid | 85.00% | 85.00% | ||||
Global Health Joint Venture | ||||||
Income Tax Contingency [Line Items] | ||||||
Gain on disposition of assets | $ 9,600 | |||||
Continuing Operations | ||||||
Income Tax Contingency [Line Items] | ||||||
Provision (benefit) for income taxes (less than - continuing operations) | $ 100 | $ 100 |
Investments In and Advances t_2
Investments In and Advances to Equity Method Investees (Details) - USD ($) $ in Thousands | May 24, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Schedule of Equity Method Investments [Line Items] | ||||||
Gain on disposition of assets | $ 0 | $ 0 | $ 9,600 | $ 0 | ||
Loss from affiliates | $ 3,859 | 1,381 | $ 6,187 | 2,787 | ||
Global Health Joint Venture | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Economic interest percentage | 43.00% | 43.00% | 43.00% | |||
Payments to Acquire Equity Method Investments | $ 15,000 | |||||
Equity interest issued or issuable (in shares) | 1,577,841 | |||||
Gain on disposition of assets | $ 9,600 | |||||
Contingent consideration, liability | $ 5,900 | $ 5,900 | ||||
Voting interest percentage | 29.00% | 29.00% | 29.00% | |||
Equity Method Investee | Services Agreements | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Revenue related to long-term services agreement | $ 11,800 | $ 5,100 | $ 29,900 | $ 5,900 | ||
Minimum | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Economic interest percentage | 4.00% | 4.00% | 4.00% | |||
Voting interest percentage | 4.00% | 4.00% | 4.00% | |||
Maximum | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Economic interest percentage | 43.00% | 43.00% | 40.00% | |||
Voting interest percentage | 43.00% | 43.00% | 40.00% |
Non-controlling Interests (Deta
Non-controlling Interests (Details) - USD ($) $ in Thousands, shares in Millions | Oct. 01, 2018 | May 31, 2019 | Nov. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Apr. 30, 2019 | Mar. 31, 2019 | Oct. 31, 2018 | Jun. 29, 2018 | Aug. 31, 2017 |
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||||||||||||||
Non-controlling interests as of beginning-of-period | $ 45,532 | |||||||||||||
Net income (loss) attributable to non-controlling interests | $ (217) | $ (126) | (2,412) | $ (680) | ||||||||||
Reclassification of non-controlling interests | 0 | 0 | 0 | |||||||||||
Non-controlling interests as of end-of-period | 15,888 | 15,888 | $ 45,532 | |||||||||||
Non-controlling Interests | ||||||||||||||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||||||||||||||
Non-controlling interests as of beginning-of-period | $ 10,008 | 16,078 | 10,148 | 45,532 | 35,427 | 35,427 | ||||||||
Cumulative-effect adjustment from adoption of new accounting principle | 0 | 0 | 0 | 594 | ||||||||||
Decrease in non-controlling interests as a result of Class B Exchanges | 0 | 0 | (33,946) | (25,334) | ||||||||||
Amount attributable to NCI from 2019 business combination | 0 | 0 | 6,500 | 0 | ||||||||||
Net income (loss) attributable to non-controlling interests | (217) | (126) | (2,412) | (680) | ||||||||||
Reclassification of non-controlling interests | 27 | (14) | 214 | 1 | ||||||||||
Non-controlling interests as of end-of-period | $ 15,888 | $ 10,008 | $ 15,888 | $ 10,008 | $ 45,532 | |||||||||
Class A | Common Stock | ||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||
Issuance of common stock (in shares) | 1.6 | 0.8 | 3 | 2.5 | ||||||||||
Class A | Investor Stockholders | Common Stock | ||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||
Issuance of common stock (in shares) | 1.8 | |||||||||||||
Class A | TPG | Common Stock | ||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||
Issuance of common stock (in shares) | 0.7 | |||||||||||||
Class A | Evolent Health, Selling Stockholders | Common Stock | ||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||
Issuance of common stock (in shares) | 0.1 | 1.2 | ||||||||||||
Evolent Health LLC | ||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||
Parent's ownership percentage | 95.30% | 99.20% | 96.10% | 98.90% | 99.20% | 99.00% | 99.20% | 99.00% | 96.10% | 99.10% | 96.10% | 95.30% | 99.10% | 96.60% |
New Century Health | Class B | ||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||
Consideration transferred, shares issued (in shares) | 3.1 | 3.1 |
Fair Value Measurement - Assets
Fair Value Measurement - Assets and Liabilities on Recurring Basis (Details) $ in Thousands | Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) | Oct. 01, 2018USD ($)year |
Recurring | |||
Assets | |||
Cash and cash equivalents | $ 3,175 | $ 11,391 | |
Restricted cash and restricted investments | 2 | 31,226 | |
Total | 3,177 | 42,617 | |
Liabilities | |||
Contingent consideration, liability | 13,600 | 8,800 | |
Recurring | Level 1 | |||
Assets | |||
Cash and cash equivalents | 3,175 | 11,391 | |
Restricted cash and restricted investments | 2 | 31,226 | |
Total | 3,177 | 42,617 | |
Liabilities | |||
Contingent consideration, liability | 0 | 0 | |
Recurring | Level 2 | |||
Assets | |||
Cash and cash equivalents | 0 | 0 | |
Restricted cash and restricted investments | 0 | 0 | |
Total | 0 | 0 | |
Liabilities | |||
Contingent consideration, liability | 0 | 0 | |
Recurring | Level 3 | |||
Assets | |||
Cash and cash equivalents | 0 | 0 | |
Restricted cash and restricted investments | 0 | 0 | |
Total | 0 | 0 | |
Liabilities | |||
Contingent consideration, liability | 13,600 | 8,800 | |
Passport | Recurring | |||
Liabilities | |||
Contingent consideration, liability | 3,700 | 5,600 | |
New Century Health | |||
Liabilities | |||
Contingent consideration arrangements (up to) | $ 20,000 | ||
New Century Health | Recurring | |||
Liabilities | |||
Contingent consideration, liability | 3,200 | $ 3,200 | |
GlobalHealth | |||
Liabilities | |||
Contingent consideration, liability | 5,900 | ||
GlobalHealth | New Century Health | Recurring | |||
Liabilities | |||
Contingent consideration, liability | $ 6,700 | ||
Measurement Input, Look-back Period | Contingent consideration | Real options approach | New Century Health | |||
Liabilities | |||
Contingent consideration, liability, measurement input | year | 1 | ||
Former Owners Of New Century Health | New Century Health | |||
Liabilities | |||
Contingent consideration arrangements (up to) | $ 11,400 |
Fair Value Measurement - Change
Fair Value Measurement - Changes in Contingent Consideration (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance as of beginning of period | $ 14,100 | $ 8,200 | $ 8,800 | $ 8,700 |
Additions | 0 | 0 | 5,900 | 0 |
Settlements | 0 | 0 | (800) | 0 |
Realized and unrealized (gains) losses, net | (500) | 100 | (300) | (400) |
Balance as of end of period | $ 13,600 | $ 8,300 | $ 13,600 | $ 8,300 |
Fair Value Measurement - Valuat
Fair Value Measurement - Valuation Techniques and Significant Unobservable Inputs (Details) $ in Thousands | 9 Months Ended | ||||||
Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) | Oct. 01, 2018year | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||||||
Contingent consideration, Fair Value | $ 13,600 | $ 14,100 | $ 8,800 | $ 8,300 | $ 8,200 | $ 8,700 | |
Level 3 | Real options approach 2017-2021 | Contingent consideration | |||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||||||
Risk-adjusted recurring revenue compound annual growth rate, period | 5 years | ||||||
New Century Health | Real options approach | Measurement Input, Look-back Period | Contingent consideration | |||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||||||
Assumption or Input Ranges | year | 1 | ||||||
Recurring | Passport | Level 3 | Real options approach | Risk-adjusted recurring revenue CAGR | Contingent consideration | |||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||||||
Contingent consideration, Fair Value | $ 3,700 | $ 5,600 | |||||
Assumption or Input Ranges | 0.939 | 1.039 | |||||
Recurring | Passport | Level 3 | Real options approach | Discount rate | Contingent consideration | Minimum | |||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||||||
Assumption or Input Ranges | 0.048 | 0.055 | |||||
Recurring | Passport | Level 3 | Real options approach | Discount rate | Contingent consideration | Maximum | |||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||||||
Assumption or Input Ranges | 0.053 | 0.065 | |||||
Recurring | Passport | Level 3 | Real options approach 2017-2021 | Contingent consideration | |||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||||||
Risk-adjusted recurring revenue compound annual growth rate, period | 5 years | ||||||
Recurring | Passport | Level 3 | Real options approach 2017-2021 | Risk-adjusted recurring revenue CAGR | Contingent consideration | |||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||||||
Theoretical recurring revenue | $ 1,000 | ||||||
Recurring | New Century Health | Level 3 | Real options approach | Risk-neutral probability exceeds threshold | Contingent consideration | |||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||||||
Contingent consideration, Fair Value | $ 3,200 | $ 3,200 | |||||
Assumption or Input Ranges | 0.390 | 0.390 | |||||
Recurring | New Century Health | Level 3 | Real options approach | Risk-neutral probability meets earn-out cap | Contingent consideration | |||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||||||
Assumption or Input Ranges | 0.240 | 0.240 | |||||
GlobalHealth | Recurring | Level 3 | Monte Carlo simulation | Stock price volatility | Contingent consideration | |||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||||||
Contingent consideration, Fair Value | $ 6,700 | ||||||
Assumption or Input Ranges | 0.60 |
Related Parties (Details)
Related Parties (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Equity Method Investee | Services Agreements | ||||
Related Party Transaction [Line Items] | ||||
Revenue related to long-term services agreement | $ 11.8 | $ 5.1 | $ 29.9 | $ 5.9 |
Related Parties - Revenues and
Related Parties - Revenues and Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | ||
Revenue | |||||
Revenues | $ 220,143 | $ 149,947 | $ 609,858 | $ 433,959 | |
Expenses | |||||
Cost of revenue (exclusive of depreciation and amortization expenses) | [1] | 131,763 | 73,967 | 357,587 | 214,945 |
Selling, general and administrative expenses | [1] | 58,808 | 59,566 | 200,578 | 172,495 |
Affiliates | |||||
Expenses | |||||
Cost of revenue (exclusive of depreciation and amortization expenses) | 8,467 | 2,390 | 22,954 | 6,842 | |
Selling, general and administrative expenses | 229 | 241 | 772 | 620 | |
Transformation services | |||||
Revenue | |||||
Revenues | [1] | 5,184 | 9,230 | 10,481 | 23,950 |
Transformation services | Affiliates | |||||
Revenue | |||||
Revenues | 2,100 | 5,332 | 3,300 | 6,112 | |
Platform and operations services | |||||
Revenue | |||||
Revenues | [1] | 171,438 | 118,094 | 463,252 | 341,258 |
Platform and operations services | Affiliates | |||||
Revenue | |||||
Revenues | $ 15,143 | $ 12,180 | $ 44,961 | $ 27,072 | |
[1] | See Note 17 for amounts related to related parties included in these line items. |
Segment Reporting (Details)
Segment Reporting (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)segment | Sep. 30, 2018USD ($) | ||
Segment Reporting [Abstract] | |||||
Number of reportable segments | segment | 2 | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | $ 220,143 | $ 149,947 | $ 609,858 | $ 433,959 | |
Adjusted EBITDA | 3,333 | 4,797 | (19,119) | 17,595 | |
Operating segments | Services | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 179,872 | 130,861 | 483,119 | 376,157 | |
Adjusted EBITDA | 3,139 | 4,065 | (21,157) | 16,674 | |
Operating segments | True Health | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 43,765 | 22,829 | 136,905 | 69,353 | |
Adjusted EBITDA | 194 | 732 | 2,038 | 921 | |
Intersegment eliminations | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | (3,494) | (3,743) | (10,166) | (11,551) | |
Transformation services | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | [1] | 5,184 | 9,230 | 10,481 | 23,950 |
Transformation services | Services | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 5,184 | 9,230 | 10,481 | 23,950 | |
Transformation services | Operating segments | Services | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 5,184 | 9,230 | 10,481 | 23,950 | |
Transformation services | Operating segments | True Health | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 0 | 0 | 0 | 0 | |
Transformation services | Intersegment eliminations | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 0 | 0 | 0 | 0 | |
Platform and operations services | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | [1] | 171,438 | 118,094 | 463,252 | 341,258 |
Platform and operations services | Services | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 170,999 | 116,226 | 461,886 | 335,509 | |
Platform and operations services | Operating segments | Services | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 174,688 | 121,631 | 472,638 | 352,207 | |
Platform and operations services | Operating segments | True Health | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 0 | 0 | 0 | 0 | |
Platform and operations services | Intersegment eliminations | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | (3,250) | (3,537) | (9,386) | (10,949) | |
Services revenue | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 176,622 | 127,324 | 473,733 | 365,208 | |
Services revenue | Operating segments | Services | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 179,872 | 130,861 | 483,119 | 376,157 | |
Services revenue | Operating segments | True Health | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 0 | 0 | 0 | 0 | |
Services revenue | Intersegment eliminations | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | (3,250) | (3,537) | (9,386) | (10,949) | |
Premiums | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 43,521 | 22,623 | 136,125 | 68,751 | |
Premiums | Operating segments | Services | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 0 | 0 | 0 | 0 | |
Premiums | Operating segments | True Health | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 43,765 | 22,829 | 136,905 | 69,353 | |
Premiums | Intersegment eliminations | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | $ (244) | $ (206) | $ (780) | $ (602) | |
[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 | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Segment Reporting [Abstract] | ||||
Net Income (Loss) Attributable to Evolent Health, Inc. | $ (25,521) | $ (12,429) | $ (103,875) | $ (35,971) |
Interest income | 1,124 | 968 | 3,026 | 2,918 |
Interest expense | (3,630) | (853) | (10,812) | (2,561) |
(Provision) benefit for income taxes | 849 | (135) | (53) | (29) |
Depreciation and amortization expenses | (15,408) | (10,352) | (44,966) | (29,882) |
Income (loss) from equity method investees | (3,859) | (1,381) | (6,187) | (2,787) |
Gain (loss) on disposal of assets | 0 | 0 | 9,600 | 0 |
Change in fair value of contingent consideration and indemnification asset | 500 | (100) | 300 | 1,404 |
Other income (expense), net | (84) | (124) | (244) | (64) |
Net income (loss) attributable to non-controlling interests | 217 | 126 | 2,412 | 680 |
ASC 606 transition adjustments | 0 | 0 | 0 | (4,498) |
Purchase accounting adjustments | (165) | (214) | (926) | (647) |
Stock-based compensation expense | (5,758) | (4,047) | (15,045) | (12,560) |
Severance costs | (307) | 0 | (14,790) | (1,489) |
Amortization of contract cost assets | (1,061) | (658) | (2,613) | (1,797) |
Transaction costs | (1,272) | (456) | (4,458) | (2,254) |
Adjusted EBITDA | $ 3,333 | $ 4,797 | $ (19,119) | $ 17,595 |
Reserves for Claims and Perfo_3
Reserves for Claims and Performance-Based Arrangements (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Liability for Unpaid Claims and Claims Adjustment Expense, Period Increase (Decrease) [Abstract] | ||
Beginning balance | $ 27,595 | $ 0 |
Incurred costs related to: | ||
Current year | 274,462 | 52,169 |
Prior years | (572) | 0 |
Total incurred | 273,890 | 52,169 |
Paid costs related to: | ||
Current year | 181,682 | 41,831 |
Prior years | 16,348 | 0 |
Total paid | 198,030 | 41,831 |
Other adjustments | (60,382) | 0 |
Change during the year | 15,478 | 10,338 |
Ending balance | 43,073 | 10,338 |
Services | ||
Liability for Unpaid Claims and Claims Adjustment Expense, Period Increase (Decrease) [Abstract] | ||
Beginning balance | 17,715 | 0 |
Incurred costs related to: | ||
Current year | 165,581 | 0 |
Prior years | (335) | 0 |
Total incurred | 165,246 | 0 |
Paid costs related to: | ||
Current year | 138,491 | 0 |
Prior years | 8,131 | 0 |
Total paid | 146,622 | 0 |
Other adjustments | (753) | 0 |
Change during the year | 17,871 | 0 |
Ending balance | 35,586 | 0 |
True Health | ||
Liability for Unpaid Claims and Claims Adjustment Expense, Period Increase (Decrease) [Abstract] | ||
Beginning balance | 9,880 | 0 |
Incurred costs related to: | ||
Current year | 108,881 | 52,169 |
Prior years | (237) | 0 |
Total incurred | 108,644 | 52,169 |
Paid costs related to: | ||
Current year | 43,191 | 41,831 |
Prior years | 8,217 | 0 |
Total paid | 51,408 | 41,831 |
Other adjustments | (59,629) | 0 |
Change during the year | (2,393) | 10,338 |
Ending balance | $ 7,487 | $ 10,338 |
Investments - Investment Summar
Investments - Investment Summary (Details) - Level 2 - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Costs | $ 18,910 | $ 10,010 |
Gross Unrealized Gains | 535 | 154 |
Gross Unrealized Losses | 13 | 0 |
Fair Value | 19,432 | 10,164 |
U.S. Treasury bills | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Costs | 12,257 | 7,982 |
Gross Unrealized Gains | 361 | 120 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 12,618 | 8,102 |
Corporate bonds | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Costs | 1,704 | 887 |
Gross Unrealized Gains | 76 | 17 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 1,780 | 904 |
Other CMOs | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Costs | 4,353 | 545 |
Gross Unrealized Gains | 59 | 6 |
Gross Unrealized Losses | 13 | 0 |
Fair Value | 4,399 | 551 |
Yankees | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Costs | 596 | 596 |
Gross Unrealized Gains | 39 | 11 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 635 | $ 607 |
Investments - Contractual Matur
Investments - Contractual Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Amortized Cost | ||
Due in one year or less | $ 3,815 | $ 0 |
Due after one year through five years | 15,095 | 9,666 |
Due after five years through ten years | 0 | 344 |
Total | 18,910 | 10,010 |
Fair Value | ||
Due in one year or less | 3,827 | 0 |
Due after one year through five years | 15,605 | 9,813 |
Due after five years through ten years | 0 | 351 |
Total | $ 19,432 | $ 10,164 |
Investments - Unrealized Losses
Investments - Unrealized Losses (Details) $ in Thousands | Sep. 30, 2019USD ($)security | Dec. 31, 2018security |
Schedule of Held-to-maturity Securities [Line Items] | ||
Unrealized loss for less than twelve months, 12 months or longer, number of securities | 0 | |
Unrealized loss for less than twelve months, Number of Securities | 0 | |
Other CMOs | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Unrealized loss for less than twelve months, Number of Securities | 2 | |
Unrealized loss for less than twelve months, Fair Value | $ | $ 1,089 | |
Unrealized loss for less than twelve months, Unrealized Losses | $ | $ 13 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Supplemental disclosure of cash flow information | ||
Operating cash flows from operating leases | $ 9,378 | $ 0 |
Leased assets obtained in exchange for new operating lease liabilities | 31,661 | 0 |
Non-cash investing and financing activities | ||
Accrued property and equipment purchases | 234 | 501 |
Class A common stock issued for payment of Passport earn-out | 800 | 0 |
Class A common stock issued in connection with business combinations and asset acquisitions | 23,556 | 0 |
Increase to goodwill from measurement period adjustments related to business combinations | 350 | 4 |
Consideration for asset acquisitions or business combinations | 16,000 | 500 |
Settlement of escrow related to asset acquisition | 0 | 2,519 |
Settlement of indemnification asset | 0 | 1,004 |
Effects of Class B Exchanges | ||
Decrease in deferred tax liability as a result of securities offerings | 33,946 | 25,334 |
Decrease in deferred tax liability as a result of securities offerings | $ 0 | $ 908 |
Uncategorized Items - evh093019
Label | Element | Value |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 17,309,000 |
Noncontrolling Interest [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 594,000 |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 16,715,000 |