Cover Page
Cover Page - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 21, 2020 | Jun. 30, 2019 | |
Cover page. | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 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 Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
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 Public Float | $ 600 | ||
Entity Common Stock, Shares Outstanding (in shares) | 84,722,479 | ||
Entity Central Index Key | 0001628908 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Documents Incorporated by Reference | Selected portions of the Proxy Statement for the Annual Meeting of Shareholders, scheduled for June 9, 2020 , hav e been incorporated by reference into Part III of this Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended December 31, 2019 . |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | |
Current assets: | |||
Cash and cash equivalents | $ 101,008 | $ 228,320 | |
Restricted cash and restricted investments | 20,080 | 154,718 | |
Accounts receivable, net | [1] | 75,667 | 80,208 |
Prepaid expenses and other current assets | [1] | 28,488 | 22,618 |
Investments, at amortized cost | 1,807 | 0 | |
Contract assets | 1,751 | 2,102 | |
Total current assets | 228,801 | 487,966 | |
Restricted cash and restricted investments | 8,260 | 6,105 | |
Investments, at amortized cost | 16,751 | 10,010 | |
Investments in and advances to equity method investees | 122,618 | 6,276 | |
Property and equipment, net | 85,155 | 73,628 | |
Right-of-use assets - operating | 72,173 | 0 | |
Customer advance for regulatory capital requirements | [1] | 40,000 | |
Prepaid expenses and other noncurrent assets | [1] | 6,253 | 15,028 |
Contract assets | 999 | 961 | |
Contract cost assets | 36,482 | 19,147 | |
Intangible assets, net | 308,459 | 335,036 | |
Goodwill | 572,064 | 768,124 | |
Total assets | 1,498,015 | 1,722,281 | |
Current liabilities: | |||
Accounts payable | [1] | 37,488 | 146,760 |
Accrued liabilities | [1] | 33,343 | 48,957 |
Operating lease liability - current | 6,269 | 0 | |
Accrued compensation and employee benefits | 34,691 | 25,460 | |
Deferred revenue | 19,828 | 20,584 | |
Reserve for claims and performance-based arrangements | [1] | 61,150 | 27,595 |
Total current liabilities | 192,769 | 269,356 | |
Long-term debt, net of discount | 293,667 | 221,041 | |
Other long-term liabilities | 11,732 | 17,090 | |
Operating lease liabilities - noncurrent | 68,858 | 0 | |
Deferred tax liabilities, net | 1,942 | 25,438 | |
Total liabilities | 568,968 | 532,925 | |
Shareholders' Equity (Deficit) | |||
Additional paid-in-capital | 1,173,708 | 1,093,174 | |
Accumulated other comprehensive income (loss) | (234) | (182) | |
Retained earnings (accumulated deficit) | (251,962) | 50,009 | |
Total shareholders' equity (deficit) attributable to Evolent Health, Inc. | 922,358 | 1,143,824 | |
Non-controlling interests | 6,689 | 45,532 | |
Total shareholders' equity (deficit) | 929,047 | 1,189,356 | |
Total liabilities and shareholders' equity (deficit) | 1,498,015 | 1,722,281 | |
Class A Common Stock | |||
Shareholders' Equity (Deficit) | |||
Common stock | 846 | 792 | |
Class B Common Stock | |||
Shareholders' Equity (Deficit) | |||
Common stock | $ 0 | $ 31 | |
[1] | See Note 18 for amounts related to related parties included in these line items. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Class A Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 750,000,000 | 750,000,000 |
Common stock, shares issued (in shares) | 84,588,629 | 79,172,118 |
Common stock, shares outstanding (in shares) | 84,588,629 | 79,172,118 |
Class B Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 0 | 3,190,301 |
Common stock, shares outstanding (in shares) | 0 | 3,190,301 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Revenue | ||||
Total revenue | $ 846,383 | $ 627,063 | $ 434,950 | |
Expenses | ||||
Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) | [1] | 513,059 | 327,825 | 269,352 |
Claims expenses | 135,774 | 70,889 | 0 | |
Selling, general and administrative expenses | [1] | 257,046 | 235,418 | 205,670 |
Depreciation and amortization expenses | 60,913 | 44,515 | 32,368 | |
Gain on disposal of assets | (9,600) | 0 | 0 | |
Goodwill impairment | 199,800 | 0 | 0 | |
Change in fair value of contingent consideration and indemnification asset | (3,997) | (4,104) | 400 | |
Total operating expenses | 1,152,995 | 674,543 | 507,790 | |
Operating loss | (306,612) | (47,480) | (72,840) | |
Interest income | 3,987 | 3,440 | 1,656 | |
Interest expense | (14,534) | (5,484) | (3,636) | |
Loss from equity method investees | (9,465) | (4,736) | (1,755) | |
Other income (expense), net | (492) | 109 | 171 | |
Loss before income taxes and non-controlling interests | (327,116) | (54,151) | (76,404) | |
Provision (benefit) for income taxes | (21,536) | 40 | (6,637) | |
Net loss | (305,580) | (54,191) | (69,767) | |
Net loss attributable to non-controlling interests | (3,609) | (1,533) | (9,102) | |
Net loss attributable to common shareholders of Evolent Health, Inc. | $ (301,971) | $ (52,658) | $ (60,665) | |
Loss per common share | ||||
Basic and diluted (in dollars per share) | $ (3.67) | $ (0.68) | $ (0.94) | |
Weighted-average common shares outstanding | ||||
Basic and diluted (in shares) | 82,364 | 77,338 | 64,351 | |
Comprehensive loss | ||||
Net loss | $ (305,580) | $ (54,191) | $ (69,767) | |
Other comprehensive loss, net of taxes, related to: | ||||
Foreign currency translation adjustment | (52) | (182) | 0 | |
Total comprehensive loss | (305,632) | (54,373) | (69,767) | |
Total comprehensive loss attributable to non-controlling interests | (3,609) | (1,533) | (9,102) | |
Total comprehensive loss attributable to common shareholders of Evolent Health, Inc. | (302,023) | (52,840) | (60,665) | |
Transformation services | ||||
Revenue | ||||
Total revenue | [1] | 15,203 | 32,916 | 29,466 |
Platform and operations services | ||||
Revenue | ||||
Total revenue | [1] | 659,438 | 500,190 | 405,484 |
Premiums | ||||
Revenue | ||||
Total revenue | $ 171,742 | $ 93,957 | $ 0 | |
[1] | See Note 18 for amounts related to related parties included in these line items. |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) - USD ($) shares in Thousands, $ in Thousands | Total | Class A Common Stock | Common StockClass A Common Stock | Common StockClass B Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) | Non-controlling Interests |
Beginning balance (in shares) at Dec. 31, 2016 | 52,587 | 15,347 | ||||||
Beginning balance at Dec. 31, 2016 | $ 912,114 | $ 506 | $ 153 | $ 555,250 | $ 0 | $ 146,617 | $ 209,588 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense | 20,437 | 20,437 | ||||||
Exercise of stock options (in shares) | 788 | |||||||
Exercise of stock options | 4,082 | $ 28 | 4,054 | |||||
Restricted stock units vested, net of shares withheld for taxes (in shares) | 149 | |||||||
Restricted stock units vested, net of shares withheld for taxes | (1,272) | $ 2 | (1,274) | |||||
Shares released from Valence Health escrow (in shares) | (310) | |||||||
Shares released from Valence Health escrow | 908 | $ (3) | 911 | |||||
Exchange of Class B common stock (in shares) | 12,693 | (12,693) | ||||||
Exchange of Class B common stock | 0 | $ 126 | $ (126) | 168,883 | (168,883) | |||
Tax impact of 2017 Securities Offerings | 12,857 | 12,857 | ||||||
Issuance of common stock (in shares) | 20,100 | 8,816 | ||||||
Issuance of common stock | 166,947 | $ 88 | 166,859 | |||||
Foreign currency translation adjustment | 0 | |||||||
Net loss | (69,767) | (60,665) | (9,102) | |||||
Reclassification of non-controlling interests | 0 | (3,824) | 3,824 | |||||
Ending balance (in shares) at Dec. 31, 2017 | 74,723 | 2,654 | ||||||
Ending balance at Dec. 31, 2017 | 1,046,306 | $ 747 | $ 27 | 924,153 | 0 | 85,952 | 35,427 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense | 17,221 | 17,221 | ||||||
Exercise of stock options (in shares) | 1,720 | |||||||
Exercise of stock options | 11,929 | $ 16 | 11,913 | |||||
Restricted stock units vested, net of shares withheld for taxes (in shares) | 212 | |||||||
Restricted stock units vested, net of shares withheld for taxes | (1,236) | $ 2 | (1,238) | |||||
Shares released from Valence Health escrow (in shares) | (67) | |||||||
Shares released from Valence Health escrow | (1,003) | $ 0 | (1,003) | |||||
Exchange of Class B common stock (in shares) | 2,584 | (2,584) | ||||||
Exchange of Class B common stock | 0 | $ 27 | $ (27) | 34,682 | (34,682) | |||
Tax impact of 2017 Securities Offerings | 652 | 652 | ||||||
Issuance of common stock (in shares) | 3,120 | |||||||
Issuance of common stock | 83,173 | $ 31 | 40,355 | 42,787 | ||||
Equity component of 2025 Notes, net of issuance costs | 69,378 | 69,378 | ||||||
Foreign currency translation adjustment | (182) | (182) | ||||||
Net loss | (54,191) | (52,658) | (1,533) | |||||
Reclassification of non-controlling interests | 0 | (2,939) | 2,939 | |||||
Ending balance (in shares) at Dec. 31, 2018 | 79,172 | 3,190 | ||||||
Ending balance at Dec. 31, 2018 | 1,189,356 | $ 792 | $ 31 | 1,093,174 | (182) | 50,009 | 45,532 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense | $ 16,006 | 16,006 | ||||||
Exercise of stock options (in shares) | 138 | 138 | ||||||
Exercise of stock options | $ 1,092 | $ 1 | 1,091 | |||||
Restricted stock units vested, net of shares withheld for taxes (in shares) | 363 | |||||||
Restricted stock units vested, net of shares withheld for taxes | (2,609) | $ 4 | (2,613) | |||||
Exchange of Class B common stock (in shares) | 3,146 | (3,146) | ||||||
Exchange of Class B common stock | 0 | $ 31 | $ (31) | 42,377 | (42,377) | |||
Tax impact of 2017 Securities Offerings | (22) | (22) | ||||||
Issuance of common stock (in shares) | 3,100 | |||||||
Share retirement (in shares) | (5) | (44) | ||||||
Class A common stock issued for Passport earn-out (in shares) | 43 | |||||||
Class A common stock issued for Passport earn-out | 800 | 800 | ||||||
Amount attributable to NCI from business combination | 6,500 | 6,500 | ||||||
Shares issued for equity-method investments and asset acquisitions (in shares) | 1,732 | |||||||
Shares issued for equity-method investments and asset acquisitions | 23,556 | $ 18 | 23,538 | |||||
Foreign currency translation adjustment | (52) | (52) | ||||||
Net loss | (305,580) | (301,971) | (3,609) | |||||
Reclassification of non-controlling interests | 0 | (643) | 643 | |||||
Ending balance (in shares) at Dec. 31, 2019 | 84,589 | 0 | ||||||
Ending balance at Dec. 31, 2019 | $ 929,047 | $ 846 | $ 0 | $ 1,173,708 | $ (234) | $ (251,962) | $ 6,689 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash Flows Used In Operating Activities | |||
Net loss | $ (305,580) | $ (54,191) | $ (69,767) |
Adjustments to reconcile net loss to net cash and restricted cash used in operating activities: | |||
Change in fair value of contingent consideration and indemnification asset | (3,997) | (4,104) | 400 |
Gain on disposal of assets | (9,600) | 0 | 0 |
Loss from equity method investees | 9,465 | 4,736 | 1,755 |
Depreciation and amortization expenses | 60,913 | 44,515 | 32,368 |
Goodwill impairment | 199,800 | 0 | 0 |
Stock-based compensation expense | 15,618 | 17,609 | 20,437 |
Deferred tax (benefit) provision | (23,124) | 44 | (7,271) |
Amortization of contract cost assets | 5,723 | 2,703 | 0 |
Amortization of deferred financing costs | 9,370 | 2,455 | 914 |
Interest from customer advance for regulatory capital requirements | (1,300) | 0 | 0 |
Other current operating cash inflows (outflows), net | (264) | 448 | 490 |
Changes in assets and liabilities, net of acquisitions: | |||
Accounts receivable, net and contract assets | 6,326 | (24,503) | (11,258) |
Prepaid expenses and other current and noncurrent assets | 791 | (14,746) | 2,729 |
Contract cost assets | (23,057) | (11,179) | 0 |
Accounts payable | (5,480) | 7,598 | 5,563 |
Accrued liabilities | (21,852) | 12,180 | (2,781) |
Accrued compensation and employee benefits | 9,246 | (14,571) | (3,303) |
Deferred revenue | (756) | (1,819) | 3,548 |
Reserve for claims and performance-based arrangements | 33,555 | 8,964 | 0 |
Right-of-use operating assets | (20,811) | 0 | 0 |
Operating lease liabilities | 27,724 | 0 | 0 |
Other long-term liabilities | (5,355) | 3,210 | (1,782) |
Net cash and restricted cash used in operating activities | (42,645) | (20,651) | (27,958) |
Cash Flows Used In Investing Activities | |||
Cash paid for asset acquisitions or business combinations | (8,575) | (130,241) | (3,694) |
Customer advance for regulatory capital requirements | (46,400) | 0 | 0 |
Loan for implementation funding | 0 | 0 | (20,000) |
Principal repayment of implementation funding loan and regulatory and capital requirements | 5,400 | 20,000 | 0 |
Amount received from escrow in asset acquisition | 0 | 500 | 0 |
Investments in and advances to equity method investees | (87,480) | (9,360) | (1,128) |
Purchases of investments | (11,125) | (10,010) | 0 |
Maturities and sales of investments | 2,575 | 349 | 44,210 |
Investments in and purchases of property and equipment | (35,534) | (39,550) | (27,848) |
Purchase and maturities of restricted investments | (495) | 7,937 | (3,805) |
Net cash and restricted cash used in investing activities | (181,634) | (160,375) | (12,265) |
Cash Flows (Used In) from Financing Activities | |||
Proceeds from issuance of common stock, net of stock issuance costs | 0 | 0 | 166,947 |
Changes in working capital balances related to claims processing on behalf of partners | (104,268) | 96,153 | (4,200) |
Amount received from escrow in asset acquisition | 500 | 0 | 0 |
Proceeds from stock option exercises | 1,092 | 11,929 | 4,082 |
Change in warrant liability | 7,092 | 0 | 0 |
Proceeds from issuance of long-term debt, net of issuance costs | 62,648 | 167,178 | 0 |
Taxes withheld and paid for vesting of restricted stock units | (2,609) | (1,236) | (1,272) |
Net cash and restricted cash (used in) from financing activities | (35,545) | 274,024 | 165,557 |
Effect of exchange rate on cash and cash equivalents and restricted cash | 30 | (36) | 0 |
Net increase (decrease) in cash and cash equivalents | (259,794) | 92,962 | 125,334 |
Cash and cash equivalents and restricted cash as of beginning-of-period | 388,325 | 295,363 | 170,029 |
Cash and cash equivalents and restricted cash as of end-of-period | $ 128,531 | $ 388,325 | $ 295,363 |
Organization
Organization | 12 Months Ended |
Dec. 31, 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 through its subsidiaries 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, including pharmacy benefit management, specialty care management services and comprehensive health plan administration services. Together, these services enable health systems to manage patient health in a more cost-effective manner. True Health is our second reporting segment. True Health is a physician-led health plan in New Mexico available through the commercial market for employer-sponsored health coverage. Since its inception, the Company has incurred losses from operations. As of December 31, 2019 , the Company had unrestricted cash and cash equivalents of $101.0 million . The Company believes it has sufficient liquidity for the next twelve months as of the date the financial statements were available to be issued. The Company’s headquarters is located in Arlington, Virginia. Evolent Health LLC Governance Our operations are conducted through Evolent Health LLC and subsequent to the Offering Reorganization the financial results of Evolent Health LLC were consolidated in the financial statements of Evolent Health, Inc. Evolent Health, Inc. is a holding company whose principal asset is all of the Class A common units it holds in Evolent Health LLC, and its only business is to act as sole managing member of Evolent Health LLC. As such, it controls Evolent Health LLC’s business and affairs and is responsible for the management of its business. Issuances of Common Units Evolent Health LLC may only issue Class A common units to us, as the sole managing member of Evolent Health LLC. Class B common units may be issued only to persons or entities we permit. Such issuances of Class B common units shall be made in exchange for cash or other consideration. Class B common units may not be transferred as Class B common units except to certain permitted transferees and in accordance with the restrictions on transfer set forth in the third amended and restated operating agreement of Evolent Health LLC. Any such transfer must be accompanied by the transfer of an equal number of shares of our Class B common stock. |
Basis of Presentation, Summary
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle | Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle Basis of Presentation The consolidated financial statements of the Company are prepared in accordance with U.S. GAAP. Our consolidated financial statements include the accounts of all subsidiaries. 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, 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 intercompany 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 clinical solutions including total cost of care services and 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 historically focused on small and large businesses. In 2020, True Health is diversifying to offer coverage for individuals and families as well as the Federal Employee Health Benefits Program. See Note 19 for a discussion of our operating results by segment. Cash and Cash Equivalents We consider all highly liquid instruments with original maturities of three months or less to be cash equivalents. The Company holds materially all of our cash in bank deposits with FDIC participating banks, at cost, which approximates fair value. Cash and cash equivalents held in money market funds are carried at fair value, which approximates cost. Restricted Cash and Restricted Investments Restricted cash and restricted investments include cash and investments used to collateralize various contractual obligations (in thousands) as follows: As of December 31, 2019 2018 Collateral for letters of credit for facility leases (1) $ 3,610 $ 3,710 Collateral with financial institutions (2) 5,742 34,142 Claims processing services (3) 18,171 122,439 Other 817 532 Total restricted cash and restricted investments $ 28,340 $ 160,823 Current restricted investments $ 704 $ 211 Current restricted cash 19,376 154,507 Total current restricted cash and restricted investments $ 20,080 $ 154,718 Non-current restricted investments $ 113 $ 607 Non-current restricted cash 8,147 5,498 Total non-current restricted cash and restricted investments $ 8,260 $ 6,105 (1) Represents restricted cash related to collateral for letters of credit required in conjunction with lease agreements. See Note 10 for further discussion of our lease commitments. (2) Represents collateral held with financial institutions for risk-sharing and other arrangements. As of December 31, 2019 and 2018 , approximately $1.0 million and $31.2 million of the collateral amount was held in a trust account and invested in money market funds related to risk-sharing arrangements. The amounts invested in money market funds are considered restricted cash and are carried at fair value, which approximates cost. See Note 17 for discussion of fair value measurement and Note 9 for discussion of our risk-sharing arrangements. As of December 31, 2019 and 2018, approximately $4.7 million and $2.9 million , of the collateral amounts were held in a FDIC participating bank account. (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 December 31, 2019 2018 Cash and cash equivalents $ 101,008 $ 228,320 Restricted cash and restricted investments 28,340 160,823 Restricted investments included in restricted cash and restricted investments (817 ) (818 ) Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows $ 128,531 $ 388,325 Accounts Receivable and Allowances Accounts receivable are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. We make estimates for the allowance for doubtful accounts and allowance for unbilled receivables based upon our assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of our customers, current economic conditions, and other factors that may affect our ability to collect from customers. 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 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 December 31, 2019 , the outstanding principal balance of the Passport Note was $40.0 million , excluding approximately $1.4 million of accrued interest. Property and Equipment, Net Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment are computed using the straight-line method over the shorter of the estimated useful lives of the assets or the lease term. The following summarizes the estimated useful lives by asset classification: Computer hardware 3 years Computer software 1 year Furniture and equipment 3-7 years Internal-use software development costs 5 years Leasehold improvements Shorter of useful life or remaining lease term When an item is sold or retired, the cost and related accumulated depreciation or amortization is eliminated and the resulting gain or loss, if any, is recorded in gain (loss) on disposal of assets on our consolidated statements of operations and comprehensive income (loss). We periodically review the carrying value of our long-lived assets, including property and equipment, for impairment whenever events or circumstances indicate that the carrying amount of such assets may not be fully recoverable. For long-lived assets to be held and used, impairments are recognized when the carrying amount of a long-lived asset group is not recoverable and exceeds fair value. The carrying amount of a long-lived asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset group. An impairment loss is measured as the amount by which the carrying amount of a long-lived asset group exceeds its fair value. Software Development Costs The Company capitalizes the cost of developing internal-use software, consisting primarily of personnel and related expenses (including stock-based compensation and employee taxes and benefits) for employees and third parties who devote time to their respective projects. Internal-use software costs are capitalized during the application development stage – when the research stage is complete and management has committed to a project to develop software that will be used for its intended purpose. Any costs incurred during subsequent efforts to significantly upgrade and enhance the functionality of the software are also capitalized. Capitalized software costs are included in property and equipment, net on our Consolidated Balance Sheets. Amortization of internal-use software costs are recorded on a straight-line basis over their estimated useful life and begin once the project is substantially complete and the software is ready for its intended purpose. Research and Development Costs Research and development costs consist primarily of personnel and related expenses (including stock-based compensation and employee taxes and benefits) for employees engaged in research and development activities as well as third-party fees. All such costs are expensed as incurred. We focus our research and development efforts on activities that support our technology infrastructure, clinical program development, data analytics and network development capabilities. Research and development costs are recorded within selling, general and administrative expenses on our consolidated statements of operations and comprehensive income (loss) and were $19.8 million , $18.2 million and $17.2 million for the years ended December 31, 2019 , 2018 and 2017 , respectively. Business Combinations Companies acquired during each reporting period are reflected in the results of the Company effective from their respective dates of acquisition through the end of the reporting period. The Company allocates the fair value of purchase consideration to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. Our estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Critical estimates used to value certain identifiable assets include, but are not limited to, expected long-term revenues, future expected operating expenses, cost of capital, and appropriate discount rates. The excess of the fair value of purchase consideration over the fair value of the assets acquired and liabilities assumed in the acquired entity is recorded as goodwill. Goodwill is assigned to the reporting unit that benefits from the synergies arising from the business combination. If the Company obtains new information about facts and circumstances that existed as of the acquisition date during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded 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. Equity Method Investments For entities that are not consolidated, but where the Company has significant influence over the operating or financial decisions of the entity, the Company accounts for the investment under the equity method of accounting. In accordance with the equity method of accounting, the Company will recognize its share of earnings or losses of the investee in the period in which they are reported by the investee. The Company also considers whether there are any indicators of other-than-temporary impairment of its investments accounted for under the equity method. These investments are included in investments in and advances to equity method investees on the consolidated balance sheets with income or loss included in loss from equity method investees on the consolidated statements of operations and comprehensive income (loss). Goodwill In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other - Simplifying the Test for Goodwill Impairment. We adopted this standard effective January 1, 2017. Our updated accounting policy for goodwill impairment is described within this Note. In January 2017, the FASB issued ASU 2017-01, Business Combinations - Clarifying the Definition of a Business. We adopted this standard during June 2017, in conjunction with the acquisition of Accordion Health, Inc. The adoption had an impact on our financial statements with respect to the accounting for the Accordion Health, Inc. acquisition. 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 and our annual goodwill impairment review occurs during the fourth quarter of each year. We perform impairment tests between annual tests if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Our goodwill impairment analysis first assesses qualitative factors to determine whether events or circumstances existed that would lead the Company to conclude it is more likely than not that the fair value of a reporting unit is below its carrying amount. If the Company determines that it is more likely than not that the fair value of a reporting unit is below the carrying amount, a quantitative goodwill assessment is required. In the quantitative evaluation, the fair value of the relevant reporting unit is determined and compared to the carrying value. If the fair value is greater than the carrying value, then the carrying value is deemed to be recoverable and no further action is required. If the fair value estimate is less than the carrying value, goodwill is considered impaired for the amount by which the carrying amount exceeds the reporting unit’s fair value and a charge is reported in goodwill impairment on our consolidated statements of operations and comprehensive income (loss). See Note 7 for additional discussion regarding the goodwill impairment tests conducted during 2019 and 2018 . Intangible Assets, Net Identified intangible assets are recorded at their estimated fair values at the date of acquisition and are amortized over their respective estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are used. The Company acquired additional intangible assets in conjunction with strategic acquisitions made during 2019. Information regarding the determination and allocation of the fair value of the 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 performance-based arrangements and claims 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 20 for additional discussion regarding our reserves for claims and performance-based arrangements. Long-term Debt Convertible notes and amounts borrowed under our credit agreement are carried at cost, net of debt discounts and issuance costs, as long-term debt on the consolidated balance sheets. The debt discounts and issuance costs are amortized to interest expense on the consolidated statements of operations and comprehensive income (loss) using the straight-line method over the contractual term of the note if that method is not materially different from the effective interest rate method. Cash interest payments are due either quarterly or semi-annually in arrears and we accrue interest expense monthly based on the annual coupon rate. See Note 8 for further discussion regarding our convertible notes and credit agreement. 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. 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. Impairment of Equity Method Investments The Company considers certain factors to determine if there is a decrease in its investment value for its equity method investments that is other than temporary. The equity method investments will be written down to fair value if there is evidence of a loss in value which is other-than-temporary. The Company may estimate the fair value of its equity method investments by considering recent investee equity transactions, discounted cash flow analysis and recent operating results. If the fair value of the investment is below the carrying amount, management considers several factors when determining whether other-than-temporary impairment has occurred. The estimation of fair value and whether other-than-temporary impairment has occurred requires the application of significant judgment and future results may vary from current assumptions. There was no material impairment recorded for the years ended December 31, 2019 , 2018 and 2017 . Revenue Recognition In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, in order to clarify the principles of recognizing revenue. The Company adopted the standard effective January 1, 2018, using the modified retrospective method for only contracts that were not completed at the date of initial application. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC Topic 605, Revenue Recognition (“ASC 605”). 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 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 deferred revenue on our consolidated balance sheets. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, in order to clarify the principles of recognizing revenue. This standard establishes the core principle of recognizing revenue to depict the transfer of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The FASB defines a five-step process that systematically identifies the various components of the revenue recognition process, culminating with the recognition of revenue upon satisfaction of an entity’s performance obligations. By completing all five steps of the process, the core principles of revenue recognition will be achieved. The new revenue standard (including updates) is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted only as of annual reporting periods beginning after December 15, 2016. The guidance permits two methods of adoption: i) the full retrospective method applying the standard to each prior reporting period presented, or ii) the modified retrospective method with a cumulative effect of initially applying the guidance recognized at the date of initial application. The standard also allows entities to apply certain practical expedients at their discretion. The Company adopted the standard effective January 1, 2018, using the modified retrospective method for only contracts that were not completed at the date of initial application. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC Topic 605, Revenue Recognition (“ASC 605”). The adoption of this standard resulted in changes related to revenue recognition for contracts that contain certain features, such as variable consideration. These changes generally accelerate revenue recognition. In addition, certain customer setup costs, which have historically been expensed as incurred, will now be capitalized. Evolent recognized the cumulative effect of applying the new revenue standard as a $17.3 million adjustment to the opening balance of retained earnings, including non-controlling interests, in the first quarter of 2018, primarily as a result of capitalization of expenses related to contract acquisition and fulfillment costs and acceleration of revenue due to variable consideration estimation. See Note 5 for further discussion of our policies related to revenue recognition. Cost of Revenue (exclusive of depreciation and amortization) Our cost of revenue includes direct expenses and shared resources that perform services in direct support of clients. Costs consist primarily of employee-related expenses (including compensation, benefits and stock-based compensation), expenses for TPA support and other services, as well as other professional fees. In certain cases, our cost of revenue also includes claims and capitation payments to providers and payments for pharmaceutical treatments and other healthcare expenditures through capitated arrangements. Claims Expenses Our claims expenses consist of the direct medical expenses incurred by our True Health segment. Claims expenses are recognized in the period in which services are provided and include amounts that have been paid by us through the reporting date, as well as estimated medical claims and benefits payable for costs that have been incurred but not paid by us as of the reporting date. Claims expenses include, among other items, fee-for-service claims, pharmacy benefits, various other related medical costs and expenses related to our reinsurance agreement. We use judgment to determine the appropriate assumptions for determining the required estimates. Stock-based Compensation The Company sponsors a stock-based incentive plan that provides for the issuance of stock-based awards to employees, vendors and non-employee directors of the Company or its consolidated subsidiaries. Our stock-based awards generally vest over a four -year period and stock options expire ten years from the date of grant. We expense the fair value of stock-based awards granted under our incentive compensation plans. Fair value of stock options is determined using a Black-Scholes options valuation methodology. The fair value of the awards is expensed over the performance or service period, which generally corresponds to the vesting period, on a straight-line basis and is recognized as an increase to additional paid-in capital. Stock-based compensation expense is reflected in cost of revenue and selling, general and administrative expenses in our consolidated statements of operations and comprehensive income (loss). Additionally, and if applicable, we capitalize personnel expenses attributable to the development of internal-use software, which include stock-based compensation costs. We recognize share-based award forfeitures as they occur. Income Taxes Deferred income taxes are recognized, based on enacted rates, when assets and liabilities have different values for financial statement and tax reporting purposes. A valuation allowance is recorded to the extent required. Considerable judgment and the use of estimates are required in determining whether a valuation allowance is necessary and, if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance, we consider many factors, including: the nature and character of the deferred tax assets and liabilities; taxable income in prior carryback years; future reversals of temporary differences; the length of time carryovers can be utilized; and any tax planning strategies we would employ to avoid a tax benefit from expiring unused. We use a recognition threshold and a measurement attribute for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. We recognize interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense, when applicable. As of December 31, 2019 and 2018 , our identified balance of uncertain income tax positions would not have a material impact to the consolidated financial statements. We are subject to taxation in various jurisdictions in the U.S. and India and remain subject to examination by taxing jurisdictions for the year 2011 and all subsequent periods due to the availability of NOL carryforwards. We are a holding company and our assets consist of our direct ownership in Evolent Health LLC |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 12 Months Ended |
Dec. 31, 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 year ended December 31, 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 (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequently issued additional guidance that modified ASU 2016-13. The standard requires an entity to change its accounting approach for measuring and recognizing credit losses on certain financial assets measured at amortized cost, including trade receivables, certain non-trade receivables, customer advances and certain off-balance sheet credit exposures, by replacing the existing “incurred loss” framework with an expected credit loss recognition model. The new standard will result in earlier recognition of credit losses based on past events, current conditions, and reasonable and supportable forecasts. The standard is effective for entities with fiscal years beginning after December 15, 2019, including interim periods within such fiscal years. We adopted the requirements of this standard effective January 1, 2020 using the modified retrospective approach and will record a cumulative effect adjustment to January 1, 2020 retained earnings (accumulated deficit). In our previous accounting policy for trade receivables and non-trade receivables, we maintained an allowance for doubtful accounts based on specific identification. Under the new accounting standard, we utilize several factors to develop historical losses, including aging schedules, customer creditworthiness, and historical payment experience, which are then adjusted for current conditions and reasonable and supportable forecasts in measurement of the allowance. In addition, for customer advances and certain off-balance sheet credit exposures, we evaluate the allowance through a discounted cash flow approach. We are finalizing the impact of the adoption of this ASU but we currently do not anticipate a material impact on our financial position 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 | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Transactions | Transactions Equity Investments Passport On December 30, 2019, University Health Care, Inc., d/b/a Passport Health Plan, a Kentucky nonprofit corporation (“Passport”), Passport Health Solutions, LLC, a Kentucky nonprofit limited liability company and subsidiary of Passport (“PHS I”), the Company and Justify Holdings, Inc., a Kentucky corporation and a previous subsidiary of the Company (the “Passport Buyer”), closed a transaction whereby Passport Buyer acquired substantially all of the assets and assumed substantially all of the liabilities of Passport and PHS I for $70.0 million in cash and issued a 30% equity interest in the Passport Buyer to the following provider sponsors of Passport: the University of Louisville, the University of Louisville Physicians, the University Medical Center, the Jewish Heritage Fund for Excellence, Norton Healthcare, Inc. and the Louisville/Jefferson County Primary Care Association (collectively, the “Sponsors”). $16.2 million of the cash consideration was placed in escrow until such time as PHS I delivers to the Passport Buyer certain owned real property and improvements. If the Passport Buyer does not meet certain statutory capital thresholds as a result of the owned real property and improvements not being transferred, the Passport Buyer can require the $16.2 million be released from escrow and returned to the Passport Buyer. If the transfer of owned real property and improvements does not occur by December 31, 2020, then Passport Buyer and PHS I will mutually agree to dispose and/or transfer the owned real property and improvements. On June 18, 2019, we contributed $40.0 million in the form of an advance for regulatory capital requirements under an agreement with Passport (the “Passport Note”). 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 surplus in excess of Passport’s obligations to its policyholders, claimant and beneficiary claims and all other creditors. Additionally, on June 6, 2019, the Company and Passport entered into an Indemnity Agreement (the “Passport Indemnity Agreement”), with an insurance company (the “Surety”). The Surety issued a performance bond in the amount of $25.0 million to secure Passport’s performance under its Medicaid contract with the Kentucky Cabinet of Health and Family Services (“CHFS”). Pursuant to the Indemnity Agreement, the Company and Passport 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 expiry date is June 30, 2020. In March 2019, Evolent Health LLC and Passport entered into an amendment to the prior management services agreement to expand the services provided thereunder to include additional administrative functions, as well as the oncology and cardiovascular services of New Century Health. In connection with the consummation of the transactions, the Sponsors, the Passport Buyer and a subsidiary of the Company entered into a shareholders’ agreement that provides for the governance of the Passport Buyer following the closing, and certain other rights between the parties thereto. The shareholders agreement provides that written consent of majority holders is required for certain significant governance and operational matters, including the appointment, removal or replacement of the Passport Buyer’s chief executive officer, the approval of the annual budget, and other significant matters. Passport is currently one of five Medicaid-managed care organizations serving the Commonwealth of Kentucky. Passport’s current contract to provide managed care for Medicaid expires on December 31, 2020. Passport recently submitted a proposal to continue providing managed care for Medicaid in the Commonwealth of Kentucky through December 31, 2023 in response to the ongoing “request for proposal” process (the “RFP”) of the CHFS. While Passport was not initially awarded a Kentucky managed Medicaid contract for the next contract period, the bidding process was reopened, and a revised proposal was submitted during the first quarter of 2020. Although we cannot guarantee the timing or outcome of the RFP, we expect CHFS to announce results of the RFP in the second quarter of 2020. Contracts awarded under the new RFP process are expected to begin January 1, 2021 and continue through December 31, 2024. We expect the outcome of the final RFP to have a material impact on our revenue from our management services agreement with Passport Buyer and the value of our investment in Passport beyond the current contract period. If Passport is not awarded a contract under the RFP, we expect that we will not receive any material revenue under our management services agreement from Passport Buyer subsequent to December 31, 2020 and the value of our investment in Passport will be negatively impacted. If Passport is awarded a new Medicaid contract, the Sponsors have a put option to sell their 30% ownership in Passport Buyer to the Company for $60.0 million . Similarly, if Passport is awarded a new Medicaid contract, the Company has a call option to acquire the Sponsors’ 30% ownership interest in Passport Buyer for $60.0 million . The put option and the call option are exercisable at any time during the 60 -day period following the “go-live date” (expected to be January 1, 2021) of Passport’s potential new Medicaid contract with CHFS. If Passport is not awarded a new Medicaid contract with CHFS, the Company is required to acquire the Sponsors’ 30% ownership interest in Passport Buyer for $20.0 million within twelve months following the expiration of Passport’s current Medicaid contract. In January 2020, the Company agreed to provide any financial support, if required, for Passport to exceed certain risk-based capital levels under its current Medicaid Management Contract with the Commonwealth of Kentucky and qualify to obtain a new Medicaid Managed Care Contract from the Commonwealth of Kentucky. The Company accounts for its investment in Passport under the equity method of accounting because while it has significant influence over Passport, it shares control over the activities of Passport that most significantly impact Passport’s economic performance. These activities include approval of the annual budget, material provider network additions or deletions and the development of Passport’s amended proposal in the rebid process to the Commonwealth of Kentucky. The annual budget drives the operating decisions of Passport and primarily relates to managing the Kentucky Medicaid contract. The Kentucky Medicaid contract is critical to the success of Passport. Accordingly, the approval of the final budget of Passport for a fiscal year significantly impacts Passport’s economic performance. In addition, we analyzed the Passport transaction to determine if the Company is the primary beneficiary of a variable interest entity. We considered both the power to direct the activities that most significantly impact the economic performance of the VIE and a variable interest that could potentially be significant to the VIE. The Company determined that its interest in this entity meets the definition of a variable interest, however, the Company is not the primary beneficiary since it does not have the power to direct activities, therefore, the Company did not consolidate the VIE. 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 17 for additional information regarding the fair value determination of the earn-out consideration and Note 12 for additional information about the portion of the earn-out that is classified as post-combination compensation expense. The Evolent Health LLC Class B common units, together with a corresponding number of the Company’s Class B common stock, can be exchanged for an equivalent number of the Company’s Class A common stock, and were valued at $83.2 million using the closing price of the Company’s Class A common stock on the NYSE on October 1, 2018 . As a result of the Class B common stock issued for the New Century Health transaction, the Company’s ownership in Evolent Health LLC decreased from 99.0% to 95.3% , immediately following the acquisition. The Company incurred approximately $1.6 million of transaction costs related to the New Century Health transaction during 2018, which are recorded within “Selling, general and administrative expenses” on our consolidated statements of operations and comprehensive income (loss). The Company accounted for the transaction as a business combination using the acquisition method of accounting. The purchase price was 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 Reserve 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 (subject to certain adjustments), of which $0.3 million was deposited in an escrow account. This acquisition is expected to allow the Company to leverage its platform to support a value-based, provider-centric model of care in New Mexico. The Company commenced operations of the commercial health plan and began reporting the results of True Health as a new reportable segment during the first quarter of 2018. See Note 19 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 NMHC 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 19 - 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 Years Ended December 31, 2018 2017 Total revenue $ 763,624 $ 679,323 Net loss (69,337 ) (80,990 ) Net loss attributable to non-controlling interests (3,554 ) (11,544 ) Net loss attributable to common shareholders of Evolent Health, Inc. (65,783 ) (69,446 ) Loss per common share Basic and diluted $ (0.85 ) $ (1.08 ) 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”). Under the terms of the exchange agreements, Class B units received by the Company from relevant Investor Stockholders and New Century Health Class B Members were simultaneously exchanged for an equivalent number of Class A units of Evolent Health LLC, and Evolent Health LLC canceled the Class B units received in the Class B Exchange. On December 27, 2019, the cancellation of the remaining 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 common units of Evolent Health LLC. 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 of the shares of our Class A common stock, Class B common stock or Evolent Health LLC Class B common 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 common units during the March 2018 Private Sale, the Company’s economic interest in Evolent Health LLC increased from 96.6% to 98.9% immediately following the March 2018 Private Sale, 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 March 2018 Private Sale and November 2018 Private Sales are collectively referred to as the “2018 Private Sales.” August 2017 Primary Offering In August 2017, the Company completed a primary offering of 8.8 million shares of its Class A common stock at a price to the public of $19.85 per share and a corresponding price to the underwriters of $19.01 per share (the “August 2017 Primary”). This offering resulted in net cash proceeds to the Company of approximately $166.9 million (gross proceeds of $175.0 million , net of $8.1 million in underwriting discounts and stock issuance costs). For each share of Class A common stock issued by Evolent Health, Inc., the Company received a corresponding Class A common unit from Evolent Health LLC in exchange for contributing the issuance proceeds to Evolent Health LLC. As a result of the Class A common stock and Class A common units of Evolent Health LLC issued during the August 2017 Primary, the Company’s economic interest in Evolent Health LLC increased from 96.1% to 96.6% immediately following the August 2017 Primary, and, accordingly, the Company reclassified a portion of its non-controlling interests into shareholders’ equity attributable to Evolent Health, Inc. 2017 Secondary Offerings The Investor Stockholders initiated several Class B Exchanges as part of various secondary offerings during 2017, thus increasing the Company’s economic interest in Evolent Health LLC, as discussed below. The Company did not receive any proceeds from the secondary offerings described below. June 2017 Secondary Offering In June 2017, the Company completed a secondary offering of 4.5 million shares of its Class A common stock at a price to the underwriters of $25.87 per share (the “June 2017 Secondary”). The shares sold in the June 2017 Secondary consisted of 0.7 million existing shares of the Company’s Class A common stock owned and held by certain Investor Stockholders and 3.8 million newly issued shares of the Company’s Class A common stock received by certain Investor Stockholders pursuant to Class B Exchanges. As a result of these Class B Exchanges and Evolent Health LLC’s cancellation of its Class B common units during the June 2017 Secondary, the Company’s economic interest in Evolent Health LLC increased from 90.5% to 96.1% immediately following the June 2017 Secondary, and, accordingly, the Company reclassified a portion of its non-controlling interests into shareholders’ equity attributable to Evolent Health, Inc. May 2017 Secondary Offering In May 2017, the Company completed a secondary offering of 7.0 million shares of its Class A common stock at a price to the underwriters of $24.30 per share (the “May 2017 Secondary”). The shares were sold by certain of the Selling Stockholders (as defined below). The shares sold in the May 2017 Secondary consisted of 3.1 million existing shares of the Company’s Class A common stock owned and held by the Selling Stockholders, 3.8 million newly issued shares of the Company’s Class A common stock received by certain Investor Stockholders pursuant to Class B Exchanges and 0.1 million shares issued upon the exercise of options by certain management selling stockholders. As a result of these Class B Exchanges and Evolent Health LLC’s cancellation of its Class B common units during the May 2017 Secondary, the Company’s economic interest in Evolent Health LLC increased from 84.9% to 90.5% immediately following the May 2017 Secondary, and, accordingly, the Company reclassified a portion of its non-controlling interests into shareholders’ equity attributable to Evolent Health, Inc. March 2017 Secondary Offering In March 2017, the Company completed a secondary offering of 7.5 million shares of its Class A common stock at a price to the underwriters of $19.53 per share (the “March 2017 Secondary”). The shares sold in the March 2017 Secondary consisted of 3.1 million existing shares of the Company’s Class A common stock owned and held by the Investor Stockholders and 4.4 million newly issued shares of the Company’s Class A common stock received by certain Investor Stockholders pursuant to Class B Exchanges. As a result of these Class B Exchanges and Evolent Health LLC’s cancellation of its Class B common units during the March 2017 Secondary, the Company’s economic interest in Evolent Health LLC increased from 77.4% to 83.9% immediately following the March 2017 Secondary, and, accordingly, the Company reclassified a portion of its non-controlling interests into shareholders’ equity attributable to Evolent Health, Inc. In connection with the March 2017 Secondary, the underwriters exercised, in full, their option to purchase an additional 1.1 million shares of Class A common stock (the “March 2017 Option to Purchase Additional Shares”) from the Investor Stockholders at a price of $19.53 per share. The March 2017 Option to Purchase Additional Shares closed in May 2017. The shares sold in the March 2017 Option to Purchase Additional Shares consisted of 0.5 million existing shares of the Company’s Class A common stock owned and held by certain Investor Stockholders. It also included 0.6 million newly issued shares of the Company’s Class A common stock received by certain Investor Stockholders pursuant to Class B Exchanges. As a result of the Class B Exchanges and Evolent Health LLC’s cancellation of its Class B common units during the March 2017 Option to Purchase Additional Shares, the Company’s economic interest in Evolent Health LLC increased from 83.9% to 84.9% immediately following the March 2017 Option to Purchase Additional Shares, and, accordingly, the Company reclassified a portion of its non-controlling interests into shareholders’ equity attributable to Evolent Health, Inc. The June 2017 Secondary, May 2017 Secondary, March 2017 Secondary and March 2017 Option to Purchase Additional Shares are collectively referred to as the “2017 Secondary Offerings.” Asset Acquisitions Accordion Health, Inc. On June 8, 2017 , the Company entered into an agreement to acquire Accordion for $3.2 million (the “Accordion Purchase Agreement”). Accordion provides technology that the Company believes enhances its RAF services to its partners. In addition to technology assets, the software development team from Accordion joined Evolent as full-time employees. Under the terms of the Accordion Purchase Agreement, members of the software development team will be eligible for an additional $0.8 million earn-out, contingent upon the completion of specified software development targets. We accounted for the transaction as an asset acquisition as substantially all of the fair value of the gross assets acquired was concentrated in a single identified asset, thus satisfying the requirements of the screen test introduced in ASU 2017-01. The assets acquired in the transaction were measured based on the amount of cash paid to Accordion, including transaction costs, as the fair value of the assets given was more readily determinable than the fair value of the assets received. We classified and designated the identifiable assets acquired as a $3.3 million technology intangible asset, inclusive of approximately $0.1 million of capitalized transaction costs. We also assessed and determined the useful life of the acquired intangible assets to be 5 years, and the intangible assets will be amortized on a straight- line basis over this period. The Company will account for the contingent earn-out as a post-acquisition expense if the specified software development targets are achieved. The transaction was a taxable stock acquisition and the Company recognized deferred tax liability of $2.0 million related to the book-tax basis difference in the acquired asset, which resulted in a $2.0 million increase in the value of the intangible asset. The additional deferred tax liability represents a future source of taxable income that enables the Company to release some of its previously established valuation allowance, the reduction of which is accounted for outside of acquisition accounting, resulting in income tax benefit. |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 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 are typically multi-year arrangements with customers to provide various clinical and administrative solutions. Our clinical solutions are designed to lower the medical expenses of our partners and include our total cost of care, population health and specialty care management services; our platform and administrative solutions are designed to provide comprehensive health plan operations and claims processing services, and also include transition or run-out services to customers receiving primarily TPA services. Contracts to provide these services may be developed on an integrated basis. For purposes of revenue disaggregation, we classify contracts including both clinical and administrative solutions into the category corresponding to the majority of services provided under those contracts. 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 from 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 type of services (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 Years Ended December 31, 2019 2018 Services Revenue Transformation services $ 15,203 $ 32,916 Platform and operations services Clinical solutions 458,991 228,464 Administrative solutions 198,618 264,104 Transaction Price Allocated to the Remaining Performance Obligations For contracts with a term greater than one year, we have allocated approximately $164.8 million of transaction price to performance obligations that are unsatisfied as of December 31, 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 48% and 80% 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 or greater 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 non-current 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 non-current accounts receivable are classified within prepaid expenses and other non-current 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 non-current 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 non-current 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 December 31, 2019 2018 Short-term receivables (1) $ 71,707 $ 78,380 Long-term receivables (1) 709 6,550 Short-term contract assets 1,751 2,102 Long-term contract assets 999 961 Short-term deferred revenue 19,828 20,584 Long-term deferred revenue 1,330 1,502 (1) Excludes pharmacy claims receivable and premiums receivable Changes in contract assets and deferred revenue for the year ended December 31, 2019 , are as follows (in thousands): For the Year Ended December 31, 2019 Contract assets Balance as of beginning-of-period $ 3,063 Reclassification to receivables, as the right to consideration becomes unconditional (2,177 ) Contract assets recognized, net of reclassification to receivables 1,864 Balance as of end-of-period $ 2,750 Deferred revenue Balance as of beginning-of-period $ 22,086 Reclassification to revenue, as a result of performance obligations satisfied (17,867 ) Cash received in advance of satisfaction of performance obligations 16,939 Balance as of end-of-period $ 21,158 The amount of revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods was $1.1 million and $18.0 million during the years ended December 31, 2019 , and 2018 , 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 non-current assets and recorded within contract cost assets on our consolidated balance sheets. Amortization expense is recorded within selling, general and administrative expenses on the accompanying consolidated statements of operations and comprehensive income (loss). As of December 31, 2019 , and 2018 , the Company had $4.7 million and $1.5 million , respectively, of contract acquisition cost assets, net of accumulated amortization, and recorded amortiza tion expense of $1.0 million and $0.3 million for the years ended December 31, 2019 and 2018 , respectively. In our platforms and operations arrangements, we incur certain costs related to the implementation of our platform before we begin to satisfy our performance obligation to the customer. The costs, which we expect to recover, are considered costs to fulfill a contract. Our contract fulfillment costs primarily include our employee labor costs and third-party vendor costs. The capitalized contract fulfillment costs are classified as non-current and recorded within contract cost assets on our consolidated balance sheets. Amortization expense is recorded within cost of revenue on the accompanying consolidated statements of operations and comprehensive income (loss). As of December 31, 2019 , and 2018 , the Company had $31.8 million and $17.6 million , respectively, of contract fulfillment cost assets, net of accumulated amortization, and recorded amortization expense of $4.7 million and $2.4 million for the years ended December 31, 2019 and 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 | 12 Months Ended |
Dec. 31, 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 December 31, 2019 2018 Computer hardware $ 11,604 $ 10,421 Furniture and equipment 3,649 3,187 Internal-use software development costs 112,501 81,640 Leasehold improvements 12,415 10,118 Total property and equipment 140,169 105,366 Accumulated depreciation and amortization expenses (55,014 ) (31,738 ) Total property and equipment, net $ 85,155 $ 73,628 The Company capitalized $30.9 million , $33.1 million and $27.1 million of internal-use software development costs for the years ended December 31, 2019 , 2018 and 2017 , respectively. The net book value of capitalized internal-use software development costs was $74.9 million and $62.8 million as of December 31, 2019 and 2018 , respectively. Depreciation expense related to property and equipment was $23.3 million , $17.3 million and $9.2 million for the years ended December 31, 2019 , 2018 and 2017 , respectively, of which amortization expense related to capitalized internal-use software development costs was $18.7 million , $12.4 million and $4.9 million , respectively. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 12 Months Ended |
Dec. 31, 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 reporting units are not discrete legal entities with discrete full financial statements. Our assets and liabilities are employed in and relate to the operations of our reporting units. Therefore, the equity carrying value and future cash flows must be estimated each time a goodwill impairment analysis is performed on a reporting unit. As a result, our assets, liabilities and cash flows are assigned to reporting units using reasonable and consistent allocation methodologies. Our annual goodwill impairment review occurs during the fourth quarter of each fiscal year. We 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. A description of our goodwill impairment tests during 2019 and 2018 follows below. 2019 Goodwill Impairment Test During the second half 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 1 to October 31 decreased by $6.59 per common share, or 43.5% , compared to the average closing price for the period from January 1 to April 30. In addition, it is not certain that Passport will be awarded a Kentucky managed Medicaid contract for the next contract period, which is expected to begin on January 1, 2021. If Passport is not awarded a contract under the RFP, we expect that we will not receive any material revenue under our management services agreement from Passport Buyer subsequent to December 31, 2020 and the value of our investment in Passport and goodwill will be negatively impacted. A non-renewal of Passport’s contract would reduce our medium-term and long-term cash flow projections, causing the decline in our stock price to possibly be further prolonged, indicating it is more likely than not that that the fair value of the reporting units is less than the reporting unit’s carrying amounts. In performing our October 31, 2019 impairment test, we estimated the fair value of our reporting units by considering a discounted cash flow valuation approach (“income approach”). In determining the estimated fair value using the income approach, we projected future cash flows based on management’s estimates and long-term plans and applied a discount rate based on the Company’s weighted average cost of capital. This analysis required us to make judgments about revenues, expenses, fixed asset and working capital requirements, the timing of exchanges of our Class B common shares, capital market assumptions, cash flows, the probability of the Passport RFP outcome and discount rates. The fair values determined by the income approach, as described above, were weighted considering future resolution of the Passport RFP result to determine the concluded fair value for each reporting unit. If the probability of Passport being awarded a contract under the RFP increases, it is unlikely to result in a future impairment charge ignoring other events or circumstances, however, if the probability of Passport being awarded a contract under the RFP decreases, we will likely have a future impairment charge. As of October 31, 2019, we determined that one of our three reporting units in the Services segment had an estimated fair value less than its carrying value. As a result, we recorded a non-cash goodwill impairment charge of $199.8 million in goodwill impairment on our consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2019. If other indications of impairment exist we may be required to recognize additional impairments in the future as a result of market conditions or other factors related to our performance, including changes in our forecasted results, investment strategy, interest rates or assumptions used as part of the goodwill impairment analysis. Any further impairment charges that we may record in the future could be material to our results of operations. As of December 31, 2019 , the remaining goodwill attributable to the reporting unit from which we recognized a non-cash goodwill impairment charge for the year ended December was $431.7 million . After the impairment charge, the estimated fair value of equity for the reporting unit equals the carrying value of equity for such reporting unit. As of December 31, 2019 , the Company assessed whether there were additional events or changes in circumstances since its annual goodwill impairment test that would indicate that it was more likely than not that the fair value of the reporting units was less than the reporting unit’s carrying amounts that would require an additional interim impairment assessment after October 31, 2019. The Company determined there had been no such indicators, therefore, we did not perform an interim goodwill impairment assessment as of December 31, 2019. 2018 Goodwill Impairment Tests On October 31, 2018 , the Company performed its annual goodwill impairment review for fiscal year 2018 . Based on our qualitative assessment, we did not identify sufficient indicators of impairment that would suggest fair value of our single reporting unit was below the carrying value. As a result, a quantitative goodwill impairment analysis was not required. The following table summarizes the changes in the carrying amount of goodwill, by reportable segment, for the periods presented (in thousands): Services True Health Consolidated Balance as of December 31, 2017 $ 628,186 $ — $ 628,186 Goodwill acquired (1) 134,343 5,826 $ 140,169 Measurement period adjustments (2) 4 (121 ) (117 ) Foreign currency translation (3) (114 ) — $ (114 ) Balance as of December 31, 2018 762,419 5,705 768,124 Goodwill acquired 3,416 — 3,416 Measurement period adjustments (2) 351 — 351 Impairment (199,800 ) — (199,800 ) Foreign currency translation (3) (27 ) — (27 ) Balance as of December 31, 2019 $ 566,359 $ 5,705 $ 572,064 (1) Goodwill acquired primarily as a result of the New Century Health and True Health transactions, as discussed in Note 4 . (2) Measurement period adjustments related to transactions completed in 2018. (3) Foreign currency translation related to a transaction completed during 2018. Intangible Assets, Net Details of our intangible assets (in thousands) are presented below: As of December 31, 2019 As of December 31, 2018 Weighted- Average Remaining Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Value Weighted- Average Remaining Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Value Corporate trade name 14.2 $ 23,300 $ 4,891 $ 18,409 15.2 $ 23,300 $ 3,511 $ 19,789 Customer relationships 16.8 291,519 44,750 246,769 18.1 281,219 29,184 252,035 Technology 2.0 82,922 49,760 33,162 3.0 82,922 31,764 51,158 Below market lease, net 2.2 2,048 1,334 714 4.0 4,097 3,003 1,094 Provider network contracts 3.7 12,725 3,320 9,405 4.6 11,900 940 10,960 Total intangible assets, net $ 412,514 $ 104,055 $ 308,459 $ 403,438 $ 68,402 $ 335,036 Amortization expense related to intangible assets for the years ended December 31, 2019 , 2018 and 2017 , was $37.7 million , $27.2 million and $22.8 million , respectively. Future estimated amortization of intangible assets (in thousands) as of December 31, 2019 , is as follows: 2020 $ 33,451 2021 29,316 2022 25,434 2023 22,670 2024 17,111 Thereafter 180,477 Total future amortization of intangible assets $ 308,459 Intangible assets are reviewed for impairment if circumstances indicate the Company may not be able to recover the assets’ carrying value. As discussed above, we identified a triggering event and performed a quantitative analysis over the carrying value of our goodwill balance during the fourth quarter of 2019. Identification of the triggering event also triggered an impairment analysis of the carrying value of our intangible asset group. In conjunction with the impairment testing of the carrying value of our goodwill, we performed an analysis to determine whether the carrying amount of our intangible asset group was recoverable. We performed a quantitative analysis, which required management to compare the total pre-tax, undiscounted future cash flows of the intangible asset group to the current carrying amount. The total undiscounted cash flows included only the future cash flows that are directly associated with and that were expected to arise as a result of the use and eventual disposal of the asset group. Based on our quantitative analysis, we determined that the pre-tax, undiscounted cash flows exceeded the carrying value and therefore concluded that our intangible assets were recoverable. |
Long-term Debt
Long-term Debt | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term Debt Credit Agreement On December 30, 2019, the Company entered into a credit agreement, by and among the Company, the Borrower, certain subsidiaries of the Company, as guarantors, the lenders from time to time party thereto, and Ares Capital Corporation, as administrative agent and collateral agent, together with the Company, pursuant to which the lenders agreed to extend credit to the Borrower in the form of (i) an initial secured term loan in the aggregate principal amount of $75.0 million (the “Initial Term Loan Facility”) and (ii) a delayed draw secured term loan facility in the aggregate principal amount of up to $50.0 million (the “DDTL Facility” and, together with the Initial Term Loan Facility, the “Senior Credit Facilities”), subject to the satisfaction of specified conditions. The Borrower borrowed the loan under the Initial Term Loan Facility on December 30, 2019. In connection with the Credit Agreement, on December 30, 2019, the Company entered into a Security Agreement, by and among the Company, the Borrower, the other guarantors and the collateral agent for the benefit of the secured parties, and a Guarantee Agreement, by the Company and each of the other guarantors in favor of the collateral agent for the benefit of the secured parties. The Senior Credit Facilities are guaranteed by the Company and the Company’s domestic subsidiaries, subject to certain exceptions. The Senior Credit Facilities are secured by a first priority security interest in all of the capital stock of the borrower and each guarantor (other than the Company) and substantially all of the assets of the borrower and each guarantor, subject to certain exceptions. The proceeds of the Initial Term Loan was used to finance the Passport transaction, fees and expenses incurred in connection therewith. The proceeds of the DDTL Facility may be used, subject to our satisfaction of specified conditions, to finance the repayment or repurchase of the Company’s 2.00% Convertible Senior Notes due December 1, 2021 and to fund permitted acquisitions. The Initial Term Loan and any loans under the DDTL Facility will mature on the date that is the earliest of (a) December 30, 2024, (b) the date on which all amounts outstanding under the Credit Agreement have been declared or have automatically become due and payable under the terms of the Credit Agreement and (c) the date that is ninety-one ( 91 ) days prior to the maturity date of the 2021 Convertible Notes unless certain liquidity conditions are satisfied (the foregoing, the “Maturity Date”). The interest rate for each loan under the Senior Credit Facilities is calculated, at the option of the Borrower, at either the eurodollar rate plus 8.00% , or the base rate plus 7.00% . A commitment fee of 1.00% per annum is payable by the Borrower quarterly in arrears on the unused portion of the DDTL Facility. Amounts outstanding under the Senior Credit Facilities may be prepaid at the option of the Borrower subject to applicable premiums, including a make-whole premium payable on certain prepayments made prior to the second anniversary of the closing of the Senior Credit Facilities, and a call protection premium payable on the amount prepaid in certain instances as follows: (1) 4.00% of the principal amount so prepaid after the second anniversary of the closing of the Senior Credit Facilities but prior the third anniversary of the closing of the Senior Credit Facilities; (2) 3.00% of the principal amount so prepaid after the third anniversary of the closing of the Senior Credit Facilities but prior the fourth anniversary of the closing of the Senior Credit Facilities; and (3) 2.00% of the principal amount so prepaid after the fourth anniversary of the closing of the Senior Credit Facilities but prior the fifth anniversary of the closing of the Senior Credit Facilities. Amounts outstanding under the Senior Credit Facility are subject to mandatory prepayment upon the occurrence of certain events and conditions, including non-ordinary course asset dispositions, receipt of certain casualty proceeds, issuances of certain debt obligations and a change of control transaction. The Senior Credit Facilities contain customary borrowing conditions, affirmative, negative and reporting covenants, representations and warranties, and events of default, including cross-defaults to other material indebtedness. In addition, the Company is required to comply at certain times with certain financial covenants comprised of a minimum net revenue test and a minimum liquidity test commencing upon closing of the Senior Credit Facilities and a total secured leverage ratio commencing on the last day of the fiscal quarter ending March 31, 2021. If an event of default occurs, the lenders would be entitled to take enforcement action, including foreclosure on collateral and acceleration of amounts owed under the Senior Credit Facilities. We incurred $4.7 million of debt issuance costs in connection with this credit agreement, which will be included in long-term debt, net of discount on our consolidated balance sheets and will be amortized into interest expense over the life of the agreement. The Company was in compliance with all required covenants as of December 31, 2019 . Warrant Agreement In conjunction with the Company’s entry into the credit agreement, the Company entered into warrant agreements whereby it agreed to sell to the holders of the warrants an aggregate of 1,513,786 shares of Class A common stock at a per share purchase price equal to $8.05 . The holders can exercise the warrants at any time until thirty days after the maturity of the credit agreement. The Company, at its sole discretion, can elect to pay the holders in cash in an amount determined based on the fair market value of the Class A common stock for the shares of Class A common stock issuable upon exercise of the warrants in lieu of delivering the shares. 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 $2.6 million and $0.5 million related to the 2025 Notes for the years ended December 31, 2019 and 2018 . The 2025 Notes will mature on October 15, 2025 , unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Prior to the close of business on the business day immediately preceding April 15, 2025 , the 2025 Notes will be convertible at the option of the holders only upon the satisfaction of certain conditions, as described in the indenture, dated as of October 22, 2018 , between the Company and U.S. Bank National Association, as trustee. At any time on or after April 15, 2025 , until the close of business on the business day immediately preceding the maturity date, holders may convert, at their option, all or any portion of their notes at the conversion rate. The 2025 Notes will be convertible at an initial conversion rate of 29.9135 shares of Class A common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $33.43 per share of the Company’s Class A common stock. In the aggregate, the 2025 Notes are initially convertible into 5.2 million shares of the Company’s Class A common stock (excluding any shares issuable by the Company upon a conversion in connection with a make-whole fundamental change or a notice of redemption as described in the governing indenture). The conversion rate may be adjusted under certain circumstances. The 2025 Notes are convertible, in multiples of $1,000 principal amount, at the option of the holders at any time prior to the close of business on the business day immediately preceding the maturity date. Upon conversion, the Company will pay or deliver, as the case may be, cash or shares of the Company’s Class A common stock, or a combination of cash and shares of the Company’s Class A common stock, at the Company’s election. The option to settle the 2025 Notes in cash or shares of the Company’s Class A common stock, or a combination of cash and shares of the Company’s Class A common stock, at the Company’s election, resulted in a bifurcation of the carrying value of the 2025 Notes into a debt component and an equity component. The debt component was determined to be $100.7 million , before issuance costs, based on the fair value of a nonconvertible debt instrument with the same term. The equity component was determined to be $71.8 million , before issuance costs, and was recorded within additional paid-in capital. The equity component is the difference between the aggregate principal amount of the debt and the debt component. Issuance costs of $3.4 million and $2.5 million are allocated to the debt and equity components in proportion to the allocation of proceeds. Along with the equity component of $71.8 million , $3.4 million of issuance costs will be amortized to interest expense on the consolidated statements of operations and comprehensive income (loss). 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 years ended December 31, 2019 and 2018 , the Company recorded $8.5 million and $1.5 million , respectively, in interest expense related to the amortization of the debt discount and the issuance costs allocated to the debt component. Holders of the 2025 Notes may require the Company to repurchase all or part of their notes upon the occurrence of a fundamental change at a price equal to 100.0% of the principal amount of the notes being repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The Company may not redeem the 2025 Notes prior to October 20, 2022 . The Company may redeem for cash all or any portion of the 2025 Notes, at its option, on or after October 20, 2022 , if the last reported sale price of the Company’s Class A common stock has been at least 130.0% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100.0% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. 2021 Notes In December 2016 , the Company issued $125.0 million aggregate principal amount of its 2.00% Convertible Senior Notes due 2021 in a private placement to qualified institutional buyers within the meaning of Rule 144A under the Securities Act of 1933, as amended. The 2021 Notes were issued at par for net proceeds of $120.4 million . We incurred $4.6 million of debt issuance costs in connection with the 2021 Notes, which we are amortizing to non-cash interest expense using the straight-line method over the contractual term of the 2021 Notes, since this method was not materially different from the effective interest method. The closing of the private placement of the 2021 Notes occurred on December 5, 2016 . Holders of the 2021 Notes are entitled to cash interest payments, which are payable semiannually in arrears on June 1 and December 1 of each year, beginning on June 1, 2017 , at a rate equal to 2.00% per annum. The 2021 Notes will mature on December 1, 2021 , unless earlier repurchased or converted in accordance with their terms prior to such date. In addition, holders of the 2021 Notes may require the Company to repurchase their 2021 Notes upon the occurrence of a fundamental change at a price equal to 100.00% of the principal amount of the 2021 Notes being repurchased, plus any accrued and unpaid interest. Upon maturity, and at the option of the holders of the 2021 Notes, the principal amount of the notes may be settled via shares of the Company’s Class A common stock. We recorded interest expense of $2.5 million and non-cash interest expense related to the amortization of deferred financing costs of $0.9 million for each of the years ended December 31, 2019 , 2018 and 2017 , respectively. The 2021 Notes are convertible into shares of the Company’s Class A common stock, based on an initial conversion rate of 41.6082 shares of Class A common stock per $1,000 principal amount of the 2021 Notes, which is equivalent to an initial conversion price of approximately $24.03 per share of the Company’s Class A common stock. In the aggregate, the 2021 Notes are initially convertible into 5.2 million shares of the Company’s Class A common stock (excluding any shares issuable by the Company upon a conversion in connection with a make-whole provision upon a fundamental change under the governing indenture. The conversion rate may be adjusted under certain circumstances). The 2021 Notes are convertible, in multiples of $1,000 principal amount, at the option of the holders at any time prior to the close of business on the business day immediately preceding the maturity date. Upon conversion, we will deliver for each $1,000 principal amount of notes converted a number of shares of our Class A common stock equal to the applicable conversion rate (together with a cash payment in lieu of delivering any fractional share) on the third business day following the relevant conversion date. Convertible Senior Notes Carrying Value The 2025 Notes and 2021 Notes are recorded on our accompanying consolidated balance sheets at their net carrying values of $107.2 million and $123.2 million , respectively, as of December 31, 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 were $122.0 million and $111.3 million , respectively, based on traded prices on December 31, 2019 and December 11, 2019, respectively, which are Level 2 inputs. As of December 31, 2018 , the estimated fair value of the 2025 and 2021 Notes were $158.8 million and $133.6 million , respectively, based on a traded price on December 28, 2018 and December 26, 2018, respectively, which are Level 2 inputs. The 2025 Notes and the 2021 Notes also have embedded conversion options and contingent interest provisions, which have not been recorded as separate financial instruments. The following table summarizes the carrying value of the long-term convertible debt (in thousands): As of December 31, 2019 2018 2025 Notes Carrying value $ 107,169 $ 98,730 Unamortized debt discount and issuance costs allocated to debt 65,331 73,770 Principal amount $ 172,500 $ 172,500 Remaining amortization period (years) 5.8 6.8 2021 Notes Carrying value $ 123,237 $ 122,311 Unamortized issuance costs 1,763 2,689 Principal amount $ 125,000 $ 125,000 Remaining amortization period (years) 1.9 2.9 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 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 December 31, 2019 and 2018 , respectively, in accordance with the Company’s contribution agreements with certain equity-method investees. These obligations are outside of the Company’s control and payment could be requested during 2020. 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 December 31, 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. As of December 31, 2019 and 2018 , there were no outstanding balances related to this letter of credit. Purchase Obligations Our contractual obligations related to vendor contracts (in thousands) as of December 31, 2019 , were as follows: Less than 1 year $ 5,923 1 to 3 years 5,451 3 to 5 years — More than 5 years — Total contractual obligations related to vendor contracts $ 11,374 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, UPMC, TPG and another investor to register for sale under the Securities Act shares of our Class A common stock, including those delivered in exchange for Class B common stock and Class B common units. Subject to certain conditions and limitations, this agreement provides these investors with certain demand, piggyback and shelf registration rights. The registration rights granted under the registration rights agreement will terminate upon the date the holders of shares that are a party thereto no longer hold any such shares that are entitled to registration rights. Pursuant to our contractual obligations under this agreement, we filed a registration statement on Form S-3 with the SEC on July 28, 2016, which was declared effective on August 12, 2016. 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 years ended December 31, 2019 and 2018 . Pursuant to the terms of the registration rights agreement, we incurred $1.5 million in expenses related to secondary offerings during the year ended December 31, 2017. These expenses are recorded within selling, general and administrative expenses on our consolidated statements of operations and comprehensive income. 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 year ended December 31, 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, the Company entered into letters of credit of $5.7 million and $34.1 million as of December 31, 2019 and 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 entered into a $10.0 million capital-only reinsurance agreement with NMHC which expired 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. 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. Under the terms of the new reinsurance agreement, NMHC ceded 90% of its gross premiums to the Company and the Company indemnified NMHC for 90% of its claims liability. The maximum amount of exposure to the Company was capped at 105% of premiums ceded to the Company by NMHC. The new reinsurance agreement qualified for reinsurance accounting due to the deemed risk transfer and, as such, the Company recorded the full amount of the gross reinsurance premiums and claims assumed by the Company within premiums and claims expenses, respectively, and recorded claims-related administrative expenses within selling, general and administrative expenses on our consolidated statements of operations and comprehensive income (loss) from the legal effective date of the Reinsurance Agreement. Amounts owed to NMHC under the reinsurance agreement are recorded within 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. During the third quarter of 2019, the Company terminated the new reinsurance agreement with NMHC effective in the fourth quarter of 2019, approximately one and a half months prior to its scheduled end. The following summarizes premiums and claims assumed under the Reinsurance Agreement for the years ended December 31, 2019 and 2018 (in thousands): For the Years Ended December 31, 2019 2018 Reinsurance premiums assumed $ 83,325 $ 3,242 Claims assumed 72,594 3,934 Claims-related administrative expenses 14,024 551 Increase in reserves for claims and performance-based arrangements attributable to the Reinsurance Agreement (3,293 ) (1,243 ) Reserves for claims and performance-based arrangements attributable to the Reinsurance Agreement at the beginning of the period 1,243 — Reinsurance payments 4,536 — Payables for claims and performance-based arrangements attributable to the Reinsurance Agreement at the end of the period $ — $ 1,243 UPMC Reseller Agreement The Company and UPMC are parties to a reseller, services and non-competition agreement, dated August 31, 2011, which was amended and restated by the parties on June 27, 2013 (as amended through the date hereof, the “UPMC Reseller Agreement”). Under the terms of the UPMC Reseller Agreement, UPMC has appointed the Company as a non-exclusive reseller of certain services, subject to certain conditions and limitations specified in the UPMC Reseller Agreement. In consideration for the Company’s obligations under the UPMC Reseller Agreement and subject to certain conditions described therein, UPMC has agreed not to sell certain products and services directly to a defined list of 20 of the Company’s customers. Contingencies Tax Receivables Agreement In connection with the offering reorganization 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 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 class action complaint against the Company, asserting claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934, in the United States District Court, Eastern District of Virginia, Alexandria Division. An amended complaint was filed on January 10, 2020. The case, Plymouth County Retirement System v. Evolent Health, Inc., Frank Williams, Nicholas McGrane, Seth Blackley, Christie Spencer, and Steven Wigginton, alleges that the Company’s executives made false or misleading statements regarding its business with Passport. The Company filed a motion to dismiss the amended complaint on February 6, 2020. Briefing on the motion is expected to be complete in March 2020. Under the Private Securities Litigation Reform Act (PSLRA), all discovery in the case is stayed until the motion to dismiss is decided upon by the court. Based on the Company’s investigation so far, we believe the case has little legal or factual merit. However, the outcome of any litigation is uncertain, and at this early stage, the Company 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 December 31, 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 December 31, 2019 , approximately 95.1% of our $128.5 million of cash and cash equivalents (including restricted cash) were held in bank deposits with FDIC participating banks, approximately 3.7% were held in money market funds and 1.2% 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 the partner included in our Services segment who represented at least 10.0% of our consolidated trade accounts receivable for the periods presented: As of December 31, 2019 2018 Cook County Health and Hospitals System 48.4 % 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 customers of our services segment who represented at least 10.0% of our consolidated revenue for the periods presented: For the Years Ended December 31, 2019 2018 2017 Passport 18.7 % 17.5 % 20.6 % New Mexico Health Connections 10.9 % * * * Represents less than 10.0% of the respective balance |
Leases
Leases | 12 Months Ended |
Dec. 31, 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. In addition, some leases contain escalation clauses. 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 of 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 Company leases office space and computer and other equipment under operating lease agreements expiring at various dates through 2031. Under the lease agreements, in addition to base rent, the Company is generally responsible for operating and maintenance costs and related fees. Several of these agreements include tenant improvement allowances, rent holidays or rent escalation clauses. When such items are included in a lease agreement, we record a deferred rent asset or liability on our consolidated balance sheets equal to the difference between rent expense and future minimum lease payments due. The rent expense related to these items is recognized on a straight-line basis over the terms of the leases. The Company’s primary office location is in Arlington, Virginia, which has served as its corporate headquarters since 2013. The Arlington, Virginia office lease expires in January 2032. Certain leases acquired as part of the Valence Health transaction included existing sublease agreements for office locations in Chicago, Illinois. In connection with various lease agreements, the Company is required to maintain $3.6 million in letters of credit. As of December 31, 2019 , the Company held $3.6 million in restricted cash and restricted investments on the consolidated balance sheet as collateral for the letters of credit. The following table summarizes our primary office leases as of December 31, 2019 (in thousands): Location Lease Termination Term (in years) Future Minimum Lease Commitments Letter of Credit Amount Required Arlington, VA 12.1 $ 40,832 $ 1,579 Chicago, IL 11.3 41,857 232 Louisville, KY (1) 6.5 — — Pune, India 3.8 3,265 — Brea, CA 2.4 2,547 — (1) Lease payments of $4.3 million for Louisville, KY have been prepaid as of December 31, 2019 . The following table summarizes the components of our lease cost for the year ended December 31, 2019 (in thousands): For the Year Ended December 31, 2019 Operating lease cost $ 13,903 Amortization of right-of-use assets 598 Interest expense 26 Variable lease cost 4,177 Total lease cost $ 18,704 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 for the years ended December 31, 2018 and 2017 , was $14.2 million and $10.9 million , respectively. The Company does not have any material capital leases. Maturity of lease liabilities (in thousands) as of December 31, 2019 , is as follows: As of December 31, 2019 2020 10,747 2021 10,975 2022 9,822 2023 9,191 2024 8,614 Thereafter 53,893 Total lease payments (1) 103,242 Less: Interest 28,115 Present value of lease liabilities $ 75,127 (1) We have additional operating lease agreements for office space that have not yet commenced as of December 31, 2019 . The minimum lease payments for those leases are $0.1 million and the leases will commence during 2020. Our weighted-average discount rate and our weighted remaining lease terms (in years) are as follows: As of December 31, 2019 Weighted average discount rate 6.25 % Weighted average remaining lease term 9.9 |
Earnings (Loss) Per Common Shar
Earnings (Loss) Per Common Share | 12 Months Ended |
Dec. 31, 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 Years Ended December 31, 2019 2018 2017 Net loss $ (305,580 ) $ (54,191 ) $ (69,767 ) Less: Net loss attributable to non-controlling interests (3,609 ) (1,533 ) (9,102 ) Net loss available for common shareholders - basic and diluted (1) (301,971 ) (52,658 ) (60,665 ) Weighted-average common shares outstanding - basic and diluted (1) 82,364 77,338 64,351 Loss per common share Basic and diluted $ (3.67 ) $ (0.68 ) $ (0.94 ) (1) 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. Anti-dilutive shares (in thousands) excluded from the calculation of weighted-average common shares presented above are presented below: For the Years Ended December 31, 2019 2018 2017 Exchangeable Class B common stock 1,399 1,831 7,285 RSUs 813 1,027 525 Stock options 1,324 2,517 2,829 Convertible senior notes 10,361 6,176 5,201 Total 13,897 11,551 15,840 |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation | Stock-based Compensation 2011 and 2015 Equity Incentive Plans The Company issues awards, including stock options, performance-based stock options, restricted stock LSUs and RSUs, under the Evolent Health Holdings, Inc. 2011 Equity Incentive Plan (the “2011 Plan”) and the 2015 Evolent Health, Inc. Omnibus Incentive Compensation Plan (the “2015 Plan”). We assumed the 2011 Plan in connection with the merger of Evolent Health Holdings with and into Evolent Health, Inc. The 2011 Plan allows for the grant of an array of equity-based and cash incentive awards to our directors, employees and other service providers. The 2011 Plan was amended on September 23, 2013, to increase the number of shares authorized to 9.1 million shares of the Company’s common stock. As of December 31, 2019 and 2018 , 4.8 million stock options and 3.8 million shares of restricted stock have been issued, net of forfeitures, under the 2011 Plan. On May 1, 2015, the Board of Directors approved and authorized the 2015 Plan which provides for the issuance of up to 6.0 million shares of the Company’s Class A common stock to employees and non-employee directors of the Company and its consolidated subsidiaries. The 2015 Plan was amended on June 13, 2018, to increase the number of shares authorized to 10.5 million . Upon confirmation of the amended 2015 Plan, the 2011 was automatically terminated and no further awards may be granted under the 2011 Plan. The 2011 Plan will continue to govern awards previously granted under the 2011 Plan. As of December 31, 2019 and 2018 , 2.8 million and 3.3 million stock options and 4.4 million and 2.1 million RSUs have been issued, net of forfeitures, under the 2015 Plan. We follow an employee model for our stock-based compensation as awards are granted in the stock of the Company to employees and non-employee directors of the Company or its consolidated subsidiaries. Following the adoption of ASU 2018-07 during 2018, we also follow the employee model for stock-based compensation for awards granted to acquire goods and services from non-employees. Stock-based Compensation Expense Total compensation expense by award type and line item in our consolidated financial statements was as follows (in thousands): For the Years Ended December 31, 2019 2018 2017 Award Type Stock options $ 4,237 $ 9,008 $ 15,487 Performance-based stock options 448 447 447 RSUs 8,877 7,766 4,503 Performance-based RSUs (388 ) 388 — LSUs 2,444 — — Total compensation expense by award type $ 15,618 $ 17,609 $ 20,437 Line Item Cost of revenue $ 2,673 $ 1,475 $ 1,371 Selling, general and administrative expenses 12,945 16,134 19,066 Total compensation expense by financial statement line item $ 15,618 $ 17,609 $ 20,437 No stock-based compensation was capitalized as software development costs for the years ended December 31, 2019 , 2018 and 2017 . Total unrecognized compensation expense (in thousands) and expected weighted-average period (in years) by award type for all of our stock-based incentive plans were as follows: As of December 31, 2019 Unrecognized Compensation Expense Weighted Average Period Stock options $ 5,829 2.22 Performance-based stock options 75 0.17 RSUs 12,767 2.58 LSUs 6,356 2.17 Total $ 25,027 Stock Options Other than the performance-based stock options described below, options awarded under the incentive compensation plans are generally subject to a four -year graded service vesting period where 25% of the award vests after each year of service and have a maximum term of 10 years . Information with respect to our options is presented in the following disclosures. The option price assumptions used for our stock option awards were as follows: For the Years Ended December 31, 2019 2018 2017 Weighted-average fair value per option granted $ 6.52 $ 6.30 $ 8.38 Assumptions: Expected term (in years) 6.25 6.25 6.25 Expected volatility 51.6 % 38.9 % 42.8 % Risk-free interest rate 1.9- 2.7% 2.6 - 2.9% 1.9 - 2.1% Dividend yield — % — % — % The fair value of options is determined using a Black-Scholes options valuation model with the assumptions disclosed in the table above. The dividend rate is based on the expected dividend rate during the expected life of the option. Expected volatility is based on the historical volatility over the most recent period commensurate with the estimated expected term of the Company’s awards due to the limited history of our own stock price. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life represents the period of time the stock options are expected to be outstanding and is based on the simplified method. Under the simplified method, the expected life of an option is presumed to be the midpoint between the vesting date and the end of the contractual term. We used the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. Information with respect to our stock options (in thousands), including weighted-average remaining contractual term (in years) and aggregate intrinsic value (in thousands) was as follows: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding as of December 31, 2018 5,089 $ 9.82 6.86 $ 51,556 Granted 437 12.48 Exercised (138 ) 7.91 Forfeited (560 ) 15.63 Outstanding as of December 31, 2019 4,828 $ 9.44 6.01 $ (1,880 ) Vested and expected to vest after December 31, 2019 4,553 $ 9.16 5.91 $ (488 ) Exercisable at December 31, 2019 3,453 $ 7.58 5.23 $ 5,082 The total fair value of options vested during the years ended December 31, 2019 , 2018 and 2017 , was $5.9 million , $11.3 million and $13.0 million , respectively. The total intrinsic value of options exercised during 2019 , 2018 and 2017 was $0.6 million , $25.1 million and $14.2 million , respectively. We issue new shares to satisfy option exercises. Performance-based stock option awards In March 2016, the Company granted approximately 0.3 million performance-based options to certain employees to create incentives for continued long-term success and to more closely align executive pay with our stockholders’ interests. Each of the grants is subject to market-based vesting, as follows: • one-third of the shares subject to the option award will vest in the event that the average closing price of the Company’s Class A common stock on the NYSE is at least $13.35 per share for a consecutive ninety day period; • one-third of the shares subject to the option award will vest in the event that the average closing price of the Company’s Class A common stock on the NYSE is at least $16.43 per share for a consecutive ninety day period; and • one-third of the shares subject to the option award will vest in the event that the average closing price of the Company’s Class A common stock on the NYSE is at least $19.51 per share for a consecutive ninety day period. In addition, the percentage of options per tranche that has satisfied the market-based performance hurdle is also subject to a service completion schedule. The aggregate percentage of options eligible to vest is based upon each of the service completions dates below: • 50% of the shares subject to the option award vested on March 1, 2019, and • 50% of the shares subject to the option award will vest on March 1, 2020. We measured the fair value of the performance-based stock options using a Monte Carlo simulation approach with the following assumptions: risk-free interest rate of 1.83% , volatility of 65% , expected term of ten years and dividend yield of 0% as we do not currently pay dividends nor expect to do so during the expected option term. These inputs resulted in a weighted-average fair value per option granted of $6.68 . During 2016 all of the average stock price milestones were achieved and therefore the awards are now only subject to the service completion obligations. Information with respect to our performance-based stock options (shares and aggregate intrinsic value shown in thousands, weighted-average remaining contractual term shown in years) was as follows: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding as of December 31, 2018 268 $ 10.27 7.17 $ 2,592 Outstanding as of December 31, 2019 268 10.27 6.17 (326 ) Vested and expected to vest after December 31, 2019 268 $ 10.27 6.17 $ (326 ) Restricted Stock Units Other than the performance-based RSUs described below, and other than RSUs granted to our non-employee directors which have a one year vesting period, RSUs awarded under the incentive compensation plans are generally subject to a four -year graded service vesting period where 25% of the award vests after each year of service and are issued to the participants for no consideration. During 2018, we also granted certain RSUs with a one-year vesting period in conjunction with the New Century Health transaction. Information with respect to our RSUs is presented below (in thousands, except for weighted-average grant-date fair value): Total RSUs Weighted Average Grant Date Fair Value Outstanding as of December 31, 2018 1,391 $ 16.01 Granted 976 10.66 Forfeited (337 ) 14.81 Vested (537 ) 17.54 Outstanding as of December 31, 2019 1,493 $ 12.23 During the years ended December 31, 2019 , 2018 and 2017 , we granted RSUs with a weighted-average grant date fair value of $10.66 , $16.12 and $19.35 , respectively, which represents the weighted-average closing price of our common stock on the grant date. The total fair value of RSUs vested during the years ended December 31, 2019 , 2018 and 2017 was $7.3 million , $4.8 million and $2.9 million , respectively. Leveraged Stock Unit Awards During 2019, the Company granted 0.7 million shares to certain employees to create incentives for continued long-term success and to more closely align executive pay with our stockholders’ interests. Each of the grants is subject to share price-based vesting on the business day following the third anniversary of the grant date, as follows: • If the stock price has increased by 33.3% , 75% of the shares will vest • If the stock price has increased by 50% , 100% of the shares will vest • If the stock price has increased by 100% , 150% of the shares will vest • If the stock price has increased by 200% , 200% of the shares will vest (this is the maximum possible vest amount) We measured the fair value of the performance-based stock options using a Monte Carlo simulation approach with the following assumptions: risk-free interest rate of 2.54% , volatility of 51.65% , expected term of ten years and dividend yield of 0% as we do not currently pay dividends nor expect to do so during the expected option term. These inputs resulted in a weighted-average fair value per option granted of $12.85 . Information with respect to our leveraged stock unit awards (shares and aggregate intrinsic value shown in thousands, weighted-average remaining contractual term shown in years) was as follows: Leveraged Stock Units Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding as of December 31, 2019 685 $ 12.85 9.17 $ (2,603 ) Vested and expected to vest after December 31, 2019 685 $ 12.85 9.17 $ (2,603 ) Performance-based RSUs During 2018, in conjunction with the New Century Health transaction, we issued performance-based RSU awards to certain employees of New Century Health that became Evolent Health employees following the transaction. The awards were to vest based on the passage of time ( 18 -month vesting period) and the achievement of certain operating results by New Century Health in 2019. Upon completion of the vesting period, the award recipients would have received a variable number of Evolent Health Class A common shares based on the predetermined monetary value of the award. Accordingly, these performance-based RSUs are recorded as liability awards. As one of the vesting criteria was continued employment at Evolent Health, these performance-based RSUs were considered compensation expense for the Company as opposed to contingent consideration related to the acquisition of New Century Health. See Note 4 for additional discussion of the New Century Health transaction. The maximum monetary value of the original performance-based award, provided New Century Health meets or exceeds the defined operating results targets, was capped at $8.6 million . The fair value of the performance-based RSUs was estimated based on the real options approach, a form of the income approach, which estimated the probability of New Century Health achieving certain operating results during 2019. The most significant unobservable inputs used in the valuation of the performance-based RSUs was the risk-neutral probability of New Century Health achieving the defined operating results target or meeting the operating results target cap. A significant increase in either of those metrics, in isolation, would result in a significantly higher fair value of the performance-based RSUs. In determining the fair value of the performance-based RSUs, we determined the risk-neutral probability of New Century Health achieving operating results target was approximately 39.0% and we determined the risk-neutral probability of New Century Health meeting the operating results target cap was approximately 24.0% . 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 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes An income tax benefit (expense) of $21.5 million , less than $(0.1) million and $6.6 million has been recognized for the years ending December 31, 2019, 2018, and 2017, respectively. Our loss before provision for income taxes was as follows (in thousands): For the Years Ended December 31, 2019 2018 2017 Domestic $ (328,161 ) $ (54,681 ) $ (76,404 ) Foreign 1,045 530 — Loss before income taxes and non-controlling interests $ (327,116 ) $ (54,151 ) $ (76,404 ) Components of income tax expense (benefit) (in thousands) consist of the following: For the Years Ended December 31, 2019 2018 2017 Current Federal $ 1,175 $ 458 $ 368 State and local 14 9 266 Foreign 399 251 — Total current tax expense 1,588 718 634 Deferred Federal (27,334 ) (14,820 ) 3,202 State and local (5,046 ) (2,252 ) (3,102 ) Foreign 6 (49 ) — Total deferred tax expense (32,374 ) (17,121 ) 100 Change in valuation allowance 9,250 16,443 (7,371 ) Total tax expense (benefit) $ (21,536 ) $ 40 $ (6,637 ) As of December 31, 2019 and 2018 , the Company has accrued income taxes payable of $0.6 million and $0.5 million , respectively, which is recorded in accrued liabilities on the consolidated balance sheets. A reconciliation of the U.S. statutory tax rate to our effective tax rate and our statutory rate is presented below: For the Years Ended December 31, 2019 2018 2017 U.S. statutory tax rate 21.0 % 21.0 % 35.0 % U.S. state income taxes, net of U.S. federal tax benefit 4.4 % 3.6 % 3.3 % Foreign earnings at other than U.S. rates (0.1 )% (0.2 )% — % Change in valuation allowance (2.8 )% (30.4 )% (34.0 )% Change in valuation allowance, tax reform — % — % 43.7 % Impact of tax reform — % — % (36.0 )% Non-deductible goodwill impairment (15.8 )% — % — % Non-controlling interest (0.3 )% (0.7 )% (4.6 )% Excess tax benefits on stock-based compensation (0.2 )% 3.9 % 3.1 % Federal and state research tax credits — % 4.5 % — % Change in uncertain tax positions 0.1 % (1.1 )% — % Effect of investment in MHG (1.4 )% — % — % Change in indefinite reinvestment assertion for domestic subsidiaries 2.6 % — % — % Other, net (0.8 )% (0.7 )% (1.8 )% Effective rate 6.7 % (0.1 )% 8.7 % Deferred tax balances reflect the impact of temporary differences between the carrying amount of assets and liabilities and their tax basis and are stated at the tax rates in effect when the temporary differences are expected to be recovered or settled. Significant components of the Company’s deferred tax assets and liabilities (in thousands) were as follows: As of December 31, 2019 2018 Deferred Tax Assets Start-up and organizational costs $ 149 $ 160 Internally developed software costs — 3,283 Goodwill 19,142 — Operating lease liabilities 18,055 — Accrued expenses 9,534 — Stock based compensation 8,899 — Net operating loss carryforwards 112,316 76,019 Federal and state research tax credits 1,828 1,828 Other 3,941 861 Subtotal 173,864 82,151 Valuation allowance (50,815 ) (37,037 ) Total deferred tax assets 123,049 45,114 Deferred Tax Liabilities Internally developed software costs 14,603 — Intangible assets 58,655 26,710 Outside basis differences 5,865 43,492 Right-of-use assets - Operating 16,180 — Contract fulfillment costs 9,510 — Convertible debt 15,732 — Fixed assets 796 — Other 3,650 — Total deferred tax liabilities 124,991 70,202 Net deferred tax assets (liabilities) $ (1,942 ) $ (25,088 ) As a result of the Company’s acquisition of all remaining Class B units of Evolent Health, LLC, the Company has full ownership of the assets and liabilities of Evolent Health LLC. Therefore, the Company no longer provides for deferred taxes with respect to its outside basis difference in its investment in Evolent Health LLC and recognizes such based on the differences in the financial reporting and tax basis of Evolent Health LLC’s assets and liabilities. Changes in our valuation allowance (in thousands) were as follows: For the Years Ended December 31, 2019 2018 2017 Balance at beginning-of-year $ 37,037 $ 53,201 $ 26,376 Charged to costs and expenses 9,250 16,443 (7,371 ) Charged to other accounts (1) 4,528 (32,607 ) 34,196 Balance at end-of-year $ 50,815 $ 37,037 $ 53,201 (1) Amounts charged to other accounts includes an increase of $4.5 million and a decrease of $32.6 million and an increase of $34.2 million charged to additional paid-in-capital for the years ended December 31, 2019 , 2018 and 2017 , respectively. For the year ended December 31, 2019 , the effective tax rate was 6.7% , and the corresponding tax benefit recorded was $21.5 million . Our effective tax rate in 2019 was impacted by the tax expense for the impairment of non-deductible goodwill, change in valuation allowance for current year losses, and offset in part by the tax effects resulting from the Company’s acquisition of all remaining Class B units of Evolent Health, LLC, resulting in it becoming a disregarded entity for U.S. federal and state income purposes on December 26, 2019. The change in Evolent Health, LLC’s tax status results in a tax benefit from the reversal of the Company’s deferred tax liability related to its investment in certain U.S. corporate subsidiaries through Evolent Health, LLC, offset by an increase in valuation allowance. In addition, the Company intends to file a consolidated tax return beginning January 1, 2020, which results in a tax benefit offsetting the change in valuation allowance to the extent the deferred tax liabilities of our U.S. corporate subsidiaries can be used as a source of future taxable income to support the Company’s deferred tax assets. Our valuation allowance assessment is made without considering deferred tax liabilities of $1.9 million established with respect to certain indefinite-lived components that cannot be utilized against indefinite-lived deferred tax assets or components that are expected to reverse outside of the net operating loss carryover period, as these are not considered a source of future taxable income for realizing our deferred tax assets. For the year ended December 31, 2018 , the effective tax rate was (0.1)% , due to the impact of the valuation allowance recorded against the Company’s net deferred tax assets, with the exception of indefinite lived components and those expected to reverse outside of the net operating loss carryover period as part of the outside basis difference in our partnership interest in Evolent Health LLC. For the year ended December 31, 2017 , the effective tax rate was 8.7% , due to the impact of the valuation allowance recorded against the Company’s net deferred tax assets, with the exception of indefinite lived components and those expected to reverse outside of the net operating loss carryover period as part of the outside basis difference in our partnership interest in Evolent Health LLC. The benefit recorded during the year primarily relates to the effects of the Tax Act, largely due to the revaluation of our deferred tax assets and liabilities for the new statutory income tax rate, and release of valuation allowance related to indefinite-lived intangible deferred tax liabilities now considered a source of income as support for the realization of future indefinite-lived NOL deferred tax assets. On December 22, 2017, the U.S. government enacted the Tax Act. The Tax Act establishes new U.S. tax laws impacting the Company, which included a reduction of the U.S. corporate income tax rate from 35% to 21% effective for tax years beginning after December 31, 2017, an indefinite carryforward period and 80% taxable income limitation on NOLs arising after December 31, 2017, and the repeal of the corporate alternative minimum tax. As of December 31, 2017, the Company had recorded a provisional estimate of $5.8 million tax benefit for the financial statement impact of the Tax Act in accordance with SEC Staff Accounting Bulletin No. 118. As of December 22, 2018, the Company had completed the analysis based on legislative updates relating to the Tax Act currently available, which resulted in an additional SAB 118 tax benefit of $0.3 million . As of December 31, 2019 , the Company had $203 million of federal and $257 million of state NOL carryforwards available to offset future taxable income that begin to expire in 2032 and 2022 , respectively, and $236 million federal and $137 million of state NOLs with an indefinite carryforward period, subject to a utilization limit of 80% of taxable income in any given year. However, as realization of such tax benefit is not more likely than not, based on our evaluation, we have established a valuation allowance. Internal Revenue Code Section 382 imposes limitations on the utilization of NOLs in the event of certain changes in ownership of the Company, which may have occurred or could occur in the future. This could impose an annual limit on the Company’s ability to utilize NOLs and could cause U.S. federal income taxes to be paid earlier than otherwise would be paid if such limitations were not in effect. As of December 31, 2019, the Company had $2.1 million and $0.3 million of research and development credits for federal and state income tax purposes, which could expire unutilized beginning in 2037 and 2028, respectively. The Company has established valuation allowance against those credits. Changes in our unrecognized tax benefits (in thousands) were as follows: For the Years Ended December 31, 2019 2018 2017 Balance at beginning-of-year $ 934 $ 762 $ — Gross increases - tax positions in prior period — 934 1,108 Gross decreases - tax positions in prior period — (762 ) — Gross increases - tax positions in current period — — 74 Lapse of statute of limitations (181 ) — — Change in tax rate — — (420 ) Balance at end-of-year $ 753 $ 934 $ 762 We are subject to taxation in various jurisdictions in the U.S. and India. Tax years 2011 an all subsequent periods remain subject to examination by the U.S. federal and state taxing jurisdictions due to the availability of NOL carryforwards. Included in the balance of unrecognized tax benefits as of December 31, 2019 , are $0.8 million of tax benefits that, if recognized, would not affect the overall effective tax rate, due to the offsetting impact on the Company’s valuation allowance. The Company has not recognized interest and penalties related to uncertain tax positions due to the current NOL position. The Company had recognized $0.9 million of uncertain tax positions as of December 31, 2018 , and $0.8 million as of December 31, 2017 . The Company and its subsidiaries are not currently subject to income tax audits in any U.S. state or local jurisdiction, or any foreign jurisdiction, for any tax year. Tax Receivables Agreement Pursuant to the Offering Reorganization, Class B Exchanges are expected to increase our tax basis in our share of Evolent Health LLC’s tangible and intangible assets. These increases in tax basis are expected to increase our depreciation and amortization deductions and create other tax benefits and, therefore, may reduce the amount of tax that we would otherwise be required to pay in the future. In addition, certain NOLs of Evolent Health Holdings (and of an affiliate of TPG) are available to us as a result of the Offering Reorganization. In connection with the Offering Reorganization, we entered into the TRA with the holders of Class B common units. The agreement requires us to pay to such holders 85% of the cash savings, if any, in U.S. federal, state and local and foreign income tax (as applicable) we realize as a result of any deductions attributable to future increases in tax basis following the Class B Exchanges (calculated assuming that any post-offering transfer of Class B common units had not occurred) or deductions attributable to imputed interest or future increases in tax basis following payments made under the TRA. We are accounting for these payments as contingent liabilities and will recognize them in our Consolidated Statements of Operations and Comprehensive Income (Loss) when their realization is probable. Additionally, pursuant to the same agreement we will pay the former stockholders of Evolent Health Holdings 85% of the amount of the cash savings, if any, in U.S. federal, state and local and foreign income tax that we realize as a result of the utilization of the NOLs of Evolent Health Holdings (and the affiliate of TPG) attributable to periods prior to the Offering Reorganization, approximately $79.3 million , as well as deductions attributable to imputed interest on any payments made under the agreement. We will benefit from the remaining 15% of any realized cash savings. The TRA was effective upon the completion of the Offering Reorganization and will remain in effect until all such tax benefits have been used or expired, or until the agreement is terminated. See Note 9 for additional discussion of the implications of the TRA. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2019 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans We sponsor a tax-qualified 401(k) retirement plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax advantaged basis. We make matching contributions to the plan in accordance with the plan documents and various limitations under Section 401(a) of the Internal Revenue Code of 1986, as amended. The Company made $2.6 million , $8.6 million and $8.0 million in contributions to the 401(k) plan for the years ended December 31, 2019 , 2018 and 2017 , respectively. |
Investments In and Advances to
Investments In and Advances to Equity Method Investees | 12 Months Ended |
Dec. 31, 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 holds ownership interests in joint ventures and other entities which are accounted for under the equity method. The Company evaluates its interests in these entities to determine whether they meet the definition of a VIE and whether the Company is required to consolidate these entities. A VIE is consolidated by its primary beneficiary, which is the party that has both (i) the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) a variable interest that could potentially be significant to the VIE. To determine whether or not a variable interest the Company holds could potentially be significant to the VIE, the Company considers both qualitative and quantitative factors regarding the nature, size and form of the Company's involvement with the VIE. The Company has determined that its interests in these entities meet the definition of a variable interest, however, the Company is not the primary beneficiary since it does not have the power to direct activities, therefore, the Company did not consolidate the VIEs below. As of December 31, 2019 and 2018 , the Company’s economic interests in its equity method investments ranged between 4% and 70% , respectively and 4% and 40% , respectively, and voting interests in its equity method investments ranged between 25% and 57% , respectively and 4% and 40% , respectively. 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 $9.5 million , $4.7 million and $1.8 million for the years ended December 31, 2019 , 2018 and 2017 , respectively. The Company signed services agreements with certain of the aforementioned entities to provide certain management, operational and support services to help manage elements of their service offerings. Revenue related to these services agreements for the years ended December 31, 2019 , 2018 and 2017 , was $41.5 million , $10.7 million and $0.4 million , respectively. Unconsolidated VIEs Passport On December 30, 2019, we completed the acquisition of approximately 70% ownership interest in Passport Buyer, which owns substantially all of the assets and assumed substantially all of the liabilities of Passport. At closing, we contributed approximately $70.0 million in cash and issued a 30% equity interest in the Passport Buyer to the following provider sponsors of Passport: the University of Louisville, the University of Louisville Physicians, the University Medical Center, the Jewish Heritage Fund for Excellence, Norton Healthcare, Inc. and the Louisville/Jefferson County Primary Care Association (collectively, the “Sponsors”). At the closing of the transaction, our economic interest in Justify Holdings, Inc. was approximately 70% and our voting interest was approximately 57% . Global On May 24, 2019, we completed the acquisition of approximately a 45% 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. 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 closing of the transaction, our economic interest in GlobalHealth was approximately 45% and our voting interest was approximately 29% . As of December 31, 2019 , we hold approximately a 43% ownership interest in MHG. As the Passport and MHG investments represent unconsolidated VIEs to the Company, the assets and liabilities of the investments themselves are not recorded on the Company’s balance sheets. The following table represents the carrying value of the associated assets and liabilities and the associated maximum loss exposure for the unconsolidated VIEs as of the date indicated (in thousands): As of December 31, 2019 Passport Buyer Momentum Health Group, LLC Assets: Current assets $ 271,894 $ 50,729 Non current assets 577 39,259 Total assets $ 272,471 $ 89,988 Liabilities Current liabilities 181,206 $ 55,442 Non current liabilities 40 44,650 Total liabilities $ 181,246 $ 100,092 Investment carrying value $ 70,000 $ 46,456 Loan and interest receivable 41,387 — Guarantee 25,000 — Maximum exposure $ 136,387 $ 46,456 Summarized Financial Information of Equity Method Investees The following table represents the aggregated summarized financial information as of and for the dates indicated (in thousands): As of December 31, 2019 2018 Current assets $ 356,085 $ 19,698 Non current assets 43,744 67 Current liabilities 267,300 12,748 Noncurrent liabilities 57,599 — Non controlling interests 70,535 6,608 For the Year Ended December 31, 2019 2018 2017 Revenue $ 387,960 $ 3,591 $ — Operating loss (60,572 ) (13,085 ) — Net loss (73,685 ) (13,066 ) — Net loss attributable to entity (23,348 ) (4,099 ) — |
Non-controlling Interests
Non-controlling Interests | 12 Months Ended |
Dec. 31, 2019 | |
Noncontrolling Interest [Abstract] | |
Non-controlling Interests | Non-controlling Interests Immediately following the Offering Reorganization and IPO in May 2015, the Company owned 70.3% of Evolent Health LLC. The Company’s ownership percentage changes with the issuance of Class A or Class B common stock and Class B Exchanges. In order to account for any changes in the Company’s ownership of Evolent Health LLC, we record a reclassification of equity between non-controlling interests and shareholders’ equity attributable to Evolent Health, Inc. 2019 During 2019, all remaining holders of Class B units executed Class B Exchanges. These Class B Exchanges resulted in the issuance of 3.1 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 to 100% 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. The Company paid $1.3 million on behalf of certain holders of Class B units to satisfy income tax obligations related to certain exchanges. 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 During the year ended December 31, 2018 , the Company completed the March 2018 Private Sale. The shares sold in the March 2018 Private Sale consisted of 1.2 million existing shares of the Company’s Class A common stock owned and held by The Advisory Board and 1.8 million newly-issued shares of the Company’s Class A common stock received by The Advisory Board pursuant to a Class B Exchange. As a result of this Class B Exchange and Evolent Health LLC’s cancellation of the Class B common units during the March 2018 Private Sale, the Company’s economic interest in Evolent Health LLC increased from 96.6% to 98.9% immediately following the March 2018 Private Sale 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. 2017 During the year ended December 31, 2017 , the Company completed the 2017 Secondary Offerings discussed in Note 4. The shares sold in the 2017 Secondary Offerings consisted of 20.1 million shares of the Company’s Class A common stock, consisting of 7.4 million existing shares of the Company’s Class A common stock owned and held by certain Selling Stockholders, 12.6 million newly-issued shares of the Company’s Class A common stock received by certain Investor Stockholders pursuant to Class B Exchanges and 0.1 million shares issued upon the exercise of options by certain management selling stockholders. As a result of these Class B Exchanges and Evolent Health LLC’s cancellation of its Class B common units during the 2017 Secondary Offerings, the Company’s economic interest in Evolent Health LLC increased from 77.4% to 96.1% immediately following the June 2017 Secondary. In addition, the Company issued 8.8 million shares of its Class A Common Stock during the August 2017 Primary for net proceeds of $166.9 million . For each share of Class A common stock issued by Evolent Health, Inc., the Company received a corresponding Class A common unit from Evolent Health LLC in exchange for contributing the issuance proceeds to Evolent Health LLC. As a result of the Class A common stock and Class A common units issued in conjunction with the August 2017 Primary, the Company’s economic interest in Evolent Health LLC increased from 96.1% to 96.6% immediately following the August 2017 Primary. As of December 31, 2019 and 2018 , we owned 100.0% and 96.1% of the economic interests in Evolent Health LLC, respectively. See Note 4 for further discussion of our business combinations and securities offerings. Changes in non-controlling interests (in thousands) for the periods presented were as follows: For the Years Ended December 31, 2019 2018 Non-controlling interests balance as of beginning-of-year $ 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 (42,377 ) (34,682 ) Amount attributable to NCI from business combination 6,500 — Issuance of Class B common stock for business combination — 42,787 Net income (loss) attributable to non-controlling interests (3,609 ) (1,533 ) Reclassification of non-controlling interests 643 2,939 Non-controlling interests balance as of end-of-year $ 6,689 $ 45,532 |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Dec. 31, 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 December 31, 2019 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ 3,698 — — $ 3,698 Restricted cash and restricted investments (1) 1,004 — — 1,004 Total fair value of assets measured on a recurring basis $ 4,702 $ — $ — $ 4,702 Liabilities Contingent consideration (2) $ — $ — $ 9,883 $ 9,883 Warrants (3) — — 7,092 7,092 Total fair value of liabilities measured on a recurring basis $ — $ — $ 16,975 $ 16,975 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 fair value of assets measured on a recurring basis $ 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 December 31, 2019 and 2018 , as presented in the tables above. (2) Represents the fair value of earn-out consideration related to the Passport, Global Health and other transactions, as described in Note 4 . As of December 31, 2019 , $3.7 million is attributable to Passport, $5.2 million to Global Health and $1.0 million is attributable to other transactions. As of December 31, 2018 , $5.6 million is attributable to Passport and $3.2 million is attributable to New Century Health. (3) Represents the fair value of 1,513,786 shares issuable under the warrant agreements discussed in Note 8 . The Company recognizes any transfers between levels within the hierarchy as of the beginning of the reporting period. There were no transfers between fair value levels for the years ended December 31, 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 included a provision for additional equity consideration contingent upon the Company obtaining new third-party Medicaid business in future periods. The fair value of the contingent equity consideration was estimated based on the real options approach, a form of the income approach, which estimated the probability of the Company achieving future revenues under the agreement. The significant unobservable inputs used in the fair value measurement of the Passport contingent consideration are the five -year risk-adjusted recurring revenue compound annual growth rate (“CAGR”) and the applicable discount rate. A significant increase in the assumed five -year risk-adjusted recurring revenue CAGR projection or decrease in discount rate in isolation would result in a significantly higher fair value of the contingent consideration. 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. The GlobalHealth transaction includes a provision for additional consideration contingent upon the Company’s future share price payable in cash or stock at the Company’s election. 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 Years Ended December 31, 2019 2018 Balance as of beginning of year $ 8,800 $ 8,700 Additions (1) 12,992 3,200 Settlements (800 ) — Realized and unrealized gains, net (4,017 ) (3,100 ) Balance as of end of year $ 16,975 $ 8,800 (1) Addition is related to the GlobalHealth and credit agreement transactions. The following table summarizes the fair value (in thousands), valuation techniques and significant unobservable inputs of our Level 3 fair value measurements as of the periods presented: As of December 31, 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/time value 4.8% - 5.3% GlobalHealth contingent consideration $ 5,200 Monte Carlo simulation Stock price volatility 80.0 % (2) Other contingent considerations $ 983 Management estimate Adjusted EBITDA $ 19,235 Warrants $ 7,092 Black-Scholes Stock price volatility 55.0 % Annual risk free rate 1.7 % 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 % (3) Risk-neutral probability meets earn-out cap 24.0 % (3) (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) Equity volatility based on Evolent’s daily stock price returns for a look-back period corresponding to the time until the Second Test Date. The large one-day stock price drop on November 27, 2019, was excluded from the volatility calculation. The contingent liability expires on June 30, 2020. (3) 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. 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. 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 2021 Notes. |
Related Parties
Related Parties | 12 Months Ended |
Dec. 31, 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 15 , the Company has economic interests in several entities that are accounted for under the equity method of accounting, including Passport. 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. Revenues related to the services agreements were approximately $41.5 million , $10.7 million and $0.4 million for the years ended December 31, 2019 , 2018 and 2017 , 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 assets and liabilities attributable to our related parties (in thousands): As of December 31, 2019 2018 Assets Accounts receivable $ 8,781 $ 8,519 Prepaid expenses - current 1,592 85 Customer advance for regulatory capital requirements 40,000 — Prepaid expenses and other noncurrent assets 2,709 2,500 Liabilities Accounts payable $ 6,429 $ 1,564 Accrued liabilities 2,583 798 Reserve for claims and performance-based arrangements 4,264 — The following table presents revenues and expenses attributable to our related parties (in thousands): For the Years Ended December 31, 2019 2018 2017 Revenue Transformation services $ 4,009 $ 10,540 $ 597 Platform and operations services 60,325 37,490 32,335 Expenses Cost of revenue (exclusive of depreciation and amortization expenses) 28,954 9,451 22,389 Selling, general and administrative expenses 991 917 1,153 |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 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 clinical solutions including total cost of care services and 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 revenue in accordance with U.S. GAAP and Adjusted EBITDA as the relevant segment performance measures 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 net loss attributable to common shareholders of Evolent Health, Inc. before interest income, interest expense, (provision) benefit for income taxes, depreciation and amortization expenses, adjusted to exclude loss from equity method investees, gain on disposal of assets, changes in fair value of contingent consideration and indemnification asset, other income (expense), net, net 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, acquisition-related costs from acquisitions and business combinations, and other infrequently occurring adjustments. Management considers revenue and Adjusted EBITDA to be the appropriate metrics to evaluate and compare the ongoing operating performance of our segments on a consistent basis across reporting periods as they eliminate the effect of items which are not indicative of each segment's core operating performance. The following tables present our segment information (in thousands): Services True Health (1) Intersegment Eliminations Consolidated Revenue For the Year Ended December 31, 2019 Services: Transformation Services $ 15,203 $ — $ — $ 15,203 Platform and Operations Services 671,919 — (12,481 ) 659,438 Services Revenue 687,122 — (12,481 ) 674,641 True Health (1) : Premiums — 172,722 (980 ) 171,742 Total Revenue 687,122 172,722 (13,461 ) 846,383 For the Year Ended December 31, 2018 Services: Transformation Services $ 32,916 $ — $ — $ 32,916 Platform and Operations Services 514,515 — (14,325 ) 500,190 Services Revenue 547,431 — (14,325 ) 533,106 True Health (1) : Premiums — 94,763 (806 ) 93,957 Total Revenue 547,431 94,763 (15,131 ) 627,063 For the Year Ended December 31, 2017 Services: Transformation Services $ 29,466 $ — $ — $ 29,466 Platform and Operations Services 405,484 — — 405,484 Total Revenue 434,950 — — 434,950 Services True Health (1) Segments Total For the Year Ended December 31, 2019 Adjusted EBITDA $ (14,667 ) $ 3,699 $ (10,968 ) For the Year Ended December 31, 2018 Adjusted EBITDA $ 21,310 $ 1,915 $ 23,225 For the Year Ended December 31, 2017 Adjusted EBITDA $ (2,204 ) $ — $ (2,204 ) (1) The True Health segment was created in January 2018. The following table presents our reconciliation of segments total Adjusted EBITDA to net loss attributable to Evolent Health, Inc. (in thousands): For the Years Ended December 31, 2019 2018 2017 Net loss attributable to common shareholders of Evolent Health, Inc. $ (301,971 ) $ (52,658 ) $ (60,665 ) Less: Interest income 3,987 3,440 1,656 Interest expense (14,534 ) (5,484 ) (3,636 ) (Provision) benefit for income taxes 21,536 (40 ) 6,637 Depreciation and amortization expenses (60,913 ) (44,515 ) (32,368 ) Goodwill impairment (199,800 ) — — Loss from equity method investees (9,465 ) (4,736 ) (1,755 ) Gain on disposal of assets 9,600 — — Change in fair value of contingent consideration and indemnification asset 3,997 4,104 (400 ) Other income (expense), net (492 ) 109 171 Net loss attributable to non-controlling interests 3,609 1,533 9,102 ASC 606 transition adjustments — (4,498 ) — Purchase accounting adjustments (1,915 ) (861 ) (1,467 ) Stock-based compensation expense (15,618 ) (17,609 ) (20,437 ) Severance costs (17,350 ) (2,205 ) — Amortization of contract cost assets (2,876 ) (2,456 ) — Acquisition costs (10,769 ) (2,665 ) (15,964 ) Adjusted EBITDA $ (10,968 ) $ 23,225 $ (2,204 ) 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 | 12 Months Ended |
Dec. 31, 2019 | |
Insurance [Abstract] | |
Reserves for Claims and performance-Based Arrangements | Reserve 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 for our Services and True Health segments reflect actual 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 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, and for newer lines of business where there is not sufficient paid claims history to develop completion factors, the Company expects to rely more heavily on medical cost trend and expected loss ratio 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. Activity in reserves for claims and performance-based arrangements for the years ended December 31, 2019 and 2018 , was as follows (in thousands): For the Years Ended December 31, 2019 2018 Services (1) True Health (3) Total Services (1) True Health (3) Total Beginning balance $ 17,715 $ 9,880 $ 27,595 $ 18,631 $ — $ 18,631 Incurred costs related to current year 267,064 136,303 403,367 $ 38,674 $ 70,889 $ 109,563 Incurred costs related to prior year (334 ) (529 ) (863 ) — — — Paid costs related to current year 220,050 61,621 281,671 38,124 58,318 96,442 Paid costs related to prior year 8,165 8,092 16,257 — — — Change during the year 38,515 66,061 104,576 550 12,571 13,121 Other adjustments (2) (1,720 ) (69,301 ) (71,021 ) (1,466 ) (2,691 ) (4,157 ) Ending balance $ 54,510 $ 6,640 $ 61,150 $ 17,715 $ 9,880 $ 27,595 (1) Costs incurred to provide specialty care management services are recorded within cost of revenue in our statement of operations. (2) Other adjustments to 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. (3) There is no single or common claim frequency metric used in the health care industry. The Company believes a relevant metric for its health insurance business is the number of customers for whom an insured medical claim was paid. Number of claims processed for the years ended December 31, 2019 and 2018 were 317,187 and 294,158 , respectively. |
Investments
Investments | 12 Months Ended |
Dec. 31, 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 December 31, 2019 and 2018 (in thousands) were as follows: As of December 31, 2019 As of December 31, 2018 Amortized Cost Gross Unrealized Fair Value Amortized Cost Gross Unrealized Fair Value Gains Losses Gains Losses U.S. Treasury bills $ 10,784 $ 270 $ — $ 11,054 $ 7,982 $ 120 $ — $ 8,102 Corporate bonds 1,705 70 — 1,775 887 17 — 904 Collateralized mortgage obligations 5,472 56 (5 ) 5,523 545 6 — 551 Yankees 597 30 — 627 596 11 — 607 Total investments $ 18,558 $ 426 $ (5 ) $ 18,979 $ 10,010 $ 154 $ — $ 10,164 The amortized cost and fair value of our investments by contractual maturities as of December 31, 2019 and 2018 (in thousands) were as follows: As of December 31, 2019 As of December 31, 2018 Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 1,807 $ 1,810 $ — $ — Due after one year through five years 16,121 16,542 9,666 9,813 Due after five years through ten years 630 627 344 351 Total investments $ 18,558 $ 18,979 $ 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 the 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 December 31, 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 December 31, 2019 , and expects to recover the entire cost basis of the security: Number of Securities Fair Value Unrealized Losses Collateralized mortgage obligations 4 $ 2,075 $ 5 |
Quarterly Results of Operations
Quarterly Results of Operations (unaudited) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Data [Abstract] | |
Quarterly Results of Operations (unaudited) | Quarterly Results of Operations (unaudited) The unaudited consolidated quarterly results of operations (in thousands, except per share data) were as follows: 1st 2nd 3rd 4th (a) 2019 Total revenue $ 197,756 $ 191,959 $ 220,143 $ 236,525 Total operating expenses 244,402 217,192 240,281 451,120 Net loss (48,649 ) (31,900 ) (25,738 ) (199,293 ) Net loss attributable to non-controlling interests (1,910 ) (285 ) (217 ) (1,197 ) Net loss attributable to common shareholders of Evolent Health, Inc. (46,739 ) (31,615 ) (25,521 ) (198,096 ) Loss per common share Basic and Diluted $ (0.59 ) $ (0.38 ) $ (0.30 ) $ (2.36 ) 2018 Total revenue $ 139,714 $ 144,298 $ 149,947 $ 193,104 Total operating expenses 153,846 153,264 160,977 206,456 Net loss (14,065 ) (10,031 ) (12,555 ) (17,540 ) Net loss attributable to non-controlling interests (439 ) (115 ) (126 ) (853 ) Net loss attributable to common shareholders of Evolent Health, Inc. (13,626 ) (9,916 ) (12,429 ) (16,687 ) Loss per common share Basic and Diluted $ (0.18 ) $ (0.13 ) $ (0.16 ) $ (0.21 ) (a) Large change in results in the fourth quarter are due to goodwill impairment |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 12 Months Ended |
Dec. 31, 2019 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information The following represents supplemental cash flow information (in thousands): For the Years Ended December 31, 2019 2018 2017 Supplemental Disclosure of Non-cash Investing and Financing Activities Class A and Class B common stock issued in connection with business combinations $ 23,556 $ 83,173 $ — Change in goodwill due to measurement period adjustments related to business combinations (351 ) (117 ) 1,611 Decrease in accrued financing costs related to 2021 Notes — — 196 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 — Tax benefit related to Accordion intangible technology — — 2,042 Acquisition consideration payable 800 — — Accrued property and equipment purchases (527 ) 368 229 Accrued deferred financing costs — 607 — Effects of Class B Exchanges Decrease in non-controlling interests as a result of Class B Exchanges 42,377 34,682 168,883 Decrease in deferred tax liability as a result of securities offerings and exchanges (22 ) 652 12,857 Effects of Leases Operating cash flows from operating leases 12,330 — — Leased assets obtained in exchange for operating lease liabilities 30,463 — — Supplemental Disclosures Cash paid during the period for interest 5,037 2,500 2,472 Cash paid during the year for taxes, net 1,484 343 674 |
Basis of Presentation, Summar_2
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of Presentation The consolidated financial statements of the Company are prepared in accordance with U.S. GAAP. Our consolidated financial statements include the accounts of all subsidiaries. |
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, 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 intercompany 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 segments: (1) Services, and (2) True Health. Our Services segment consists of our technology-enabled clinical solutions including total cost of care services and 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 historically focused on small and large businesses. In 2020, True Health is diversifying to offer coverage for individuals and families as well as the Federal Employee Health Benefits Program. See Note 19 for a discussion of our operating results by segment. |
Cash and cash equivalents | Cash and Cash Equivalents We consider all highly liquid instruments with original maturities of three months or less to be cash equivalents. The Company holds materially all of our cash in bank deposits with FDIC participating banks, at cost, which approximates fair value. Cash and cash equivalents held in money market funds are carried at fair value, which approximates cost. |
Restricted cash and restricted investments | Restricted Cash and Restricted Investments Restricted cash and restricted investments include cash and investments used to collateralize various contractual obligations (in thousands) as follows: As of December 31, 2019 2018 Collateral for letters of credit for facility leases (1) $ 3,610 $ 3,710 Collateral with financial institutions (2) 5,742 34,142 Claims processing services (3) 18,171 122,439 Other 817 532 Total restricted cash and restricted investments $ 28,340 $ 160,823 Current restricted investments $ 704 $ 211 Current restricted cash 19,376 154,507 Total current restricted cash and restricted investments $ 20,080 $ 154,718 Non-current restricted investments $ 113 $ 607 Non-current restricted cash 8,147 5,498 Total non-current restricted cash and restricted investments $ 8,260 $ 6,105 (1) Represents restricted cash related to collateral for letters of credit required in conjunction with lease agreements. See Note 10 for further discussion of our lease commitments. (2) Represents collateral held with financial institutions for risk-sharing and other arrangements. As of December 31, 2019 and 2018 , approximately $1.0 million and $31.2 million of the collateral amount was held in a trust account and invested in money market funds related to risk-sharing arrangements. The amounts invested in money market funds are considered restricted cash and are carried at fair value, which approximates cost. See Note 17 for discussion of fair value measurement and Note 9 for discussion of our risk-sharing arrangements. As of December 31, 2019 and 2018, approximately $4.7 million and $2.9 million , of the collateral amounts were held in a FDIC participating bank account. (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 December 31, 2019 2018 Cash and cash equivalents $ 101,008 $ 228,320 Restricted cash and restricted investments 28,340 160,823 Restricted investments included in restricted cash and restricted investments (817 ) (818 ) Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows $ 128,531 $ 388,325 |
Accounts receivable and allowances | Accounts Receivable and Allowances Accounts receivable are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. We make estimates for the allowance for doubtful accounts and allowance for unbilled receivables based upon our assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of our customers, current economic conditions, and other factors that may affect our ability to collect from customers. |
Notes receivable | 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 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 December 31, 2019 , the outstanding principal balance of the Passport Note was $40.0 million , excluding approximately $1.4 million of accrued interest. |
Property and equipment, net | Property and Equipment, Net Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment are computed using the straight-line method over the shorter of the estimated useful lives of the assets or the lease term. The following summarizes the estimated useful lives by asset classification: Computer hardware 3 years Computer software 1 year Furniture and equipment 3-7 years Internal-use software development costs 5 years Leasehold improvements Shorter of useful life or remaining lease term When an item is sold or retired, the cost and related accumulated depreciation or amortization is eliminated and the resulting gain or loss, if any, is recorded in gain (loss) on disposal of assets on our consolidated statements of operations and comprehensive income (loss). We periodically review the carrying value of our long-lived assets, including property and equipment, for impairment whenever events or circumstances indicate that the carrying amount of such assets may not be fully recoverable. For long-lived assets to be held and used, impairments are recognized when the carrying amount of a long-lived asset group is not recoverable and exceeds fair value. The carrying amount of a long-lived asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset group. An impairment loss is measured as the amount by which the carrying amount of a long-lived asset group exceeds its fair value. |
Software development costs | Software Development Costs |
Research and development costs | Research and Development Costs Research and development costs consist primarily of personnel and related expenses (including stock-based compensation and employee taxes and benefits) for employees engaged in research and development activities as well as third-party fees. All such costs are expensed as incurred. We focus our research and development efforts on activities that support our technology infrastructure, clinical program development, data analytics and network development capabilities. Research and development costs are recorded within selling, general and administrative expenses on our consolidated statements of operations and comprehensive income (loss) and were $19.8 million , $18.2 million and $17.2 million for the years ended December 31, 2019 , 2018 and 2017 , respectively. |
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. |
Equity method investments | 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. Impairment of Equity Method Investments The Company considers certain factors to determine if there is a decrease in its investment value for its equity method investments that is other than temporary. The equity method investments will be written down to fair value if there is evidence of a loss in value which is other-than-temporary. The Company may estimate the fair value of its equity method investments by considering recent investee equity transactions, discounted cash flow analysis and recent operating results. If the fair value of the investment is below the carrying amount, management considers several factors when determining whether other-than-temporary impairment has occurred. The estimation of fair value and whether other-than-temporary impairment has occurred requires the application of significant judgment and future results may vary from current assumptions. There was no material impairment recorded for the years ended December 31, 2019 , 2018 and 2017 . Equity Method Investments For entities that are not consolidated, but where the Company has significant influence over the operating or financial decisions of the entity, the Company accounts for the investment under the equity method of accounting. In accordance with the equity method of accounting, the Company will recognize its share of earnings or losses of the investee in the period in which they are reported by the investee. The Company also considers whether there are any indicators of other-than-temporary impairment of its investments accounted for under the equity method. These investments are included in investments in and advances to equity method investees on the consolidated balance sheets with income or loss included in loss from equity method investees on the consolidated statements of operations and comprehensive income (loss). |
Goodwill | Goodwill In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other - Simplifying the Test for Goodwill Impairment. We adopted this standard effective January 1, 2017. Our updated accounting policy for goodwill impairment is described within this Note. In January 2017, the FASB issued ASU 2017-01, Business Combinations - Clarifying the Definition of a Business. We adopted this standard during June 2017, in conjunction with the acquisition of Accordion Health, Inc. The adoption had an impact on our financial statements with respect to the accounting for the Accordion Health, Inc. acquisition. 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 and our annual goodwill impairment review occurs during the fourth quarter of each year. We perform impairment tests between annual tests if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Our goodwill impairment analysis first assesses qualitative factors to determine whether events or circumstances existed that would lead the Company to conclude it is more likely than not that the fair value of a reporting unit is below its carrying amount. If the Company determines that it is more likely than not that the fair value of a reporting unit is below the carrying amount, a quantitative goodwill assessment is required. In the quantitative evaluation, the fair value of the relevant reporting unit is determined and compared to the carrying value. If the fair value is greater than the carrying value, then the carrying value is deemed to be recoverable and no further action is required. If the fair value estimate is less than the carrying value, goodwill is considered impaired for the amount by which the carrying amount exceeds the reporting unit’s fair value and a charge is reported in goodwill impairment on our consolidated statements of operations and comprehensive income (loss). See Note 7 for additional discussion regarding the goodwill impairment tests conducted during 2019 and 2018 . |
Intangible assets, net | Intangible Assets, Net Identified intangible assets are recorded at their estimated fair values at the date of acquisition and are amortized over their respective estimated useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are used. The Company acquired additional intangible assets in conjunction with strategic acquisitions made during 2019. Information regarding the determination and allocation of the fair value of the 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 claim and performance-based arrangements | Reserves for claims and performance-based arrangements Reserves for performance-based arrangements and claims 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 20 for additional discussion regarding our reserves for claims and performance-based arrangements. |
Long-term debt | Long-term Debt Convertible notes and amounts borrowed under our credit agreement are carried at cost, net of debt discounts and issuance costs, as long-term debt on the consolidated balance sheets. The debt discounts and issuance costs are amortized to interest expense on the consolidated statements of operations and comprehensive income (loss) using the straight-line method over the contractual term of the note if that method is not materially different from the effective interest rate method. Cash interest payments are due either quarterly or semi-annually in arrears and we accrue interest expense monthly based on the annual coupon rate. See Note 8 for further discussion regarding our convertible notes and credit agreement. |
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. Refer to Note 10 for additional lease disclosures. |
Revenue recognition and cost of revenue | Revenue Recognition In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, in order to clarify the principles of recognizing revenue. The Company adopted the standard effective January 1, 2018, using the modified retrospective method for only contracts that were not completed at the date of initial application. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC Topic 605, Revenue Recognition (“ASC 605”). 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 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 deferred revenue on our consolidated balance sheets. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, in order to clarify the principles of recognizing revenue. This standard establishes the core principle of recognizing revenue to depict the transfer of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The FASB defines a five-step process that systematically identifies the various components of the revenue recognition process, culminating with the recognition of revenue upon satisfaction of an entity’s performance obligations. By completing all five steps of the process, the core principles of revenue recognition will be achieved. The new revenue standard (including updates) is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted only as of annual reporting periods beginning after December 15, 2016. The guidance permits two methods of adoption: i) the full retrospective method applying the standard to each prior reporting period presented, or ii) the modified retrospective method with a cumulative effect of initially applying the guidance recognized at the date of initial application. The standard also allows entities to apply certain practical expedients at their discretion. The Company adopted the standard effective January 1, 2018, using the modified retrospective method for only contracts that were not completed at the date of initial application. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC Topic 605, Revenue Recognition (“ASC 605”). The adoption of this standard resulted in changes related to revenue recognition for contracts that contain certain features, such as variable consideration. These changes generally accelerate revenue recognition. In addition, certain customer setup costs, which have historically been expensed as incurred, will now be capitalized. Evolent recognized the cumulative effect of applying the new revenue standard as a $17.3 million adjustment to the opening balance of retained earnings, including non-controlling interests, in the first quarter of 2018, primarily as a result of capitalization of expenses related to contract acquisition and fulfillment costs and acceleration of revenue due to variable consideration estimation. See Note 5 for further discussion of our policies related to revenue recognition. Cost of Revenue (exclusive of depreciation and amortization) Our cost of revenue includes direct expenses and shared resources that perform services in direct support of clients. Costs consist primarily of employee-related expenses (including compensation, benefits and stock-based compensation), expenses for TPA support and other services, as well as other professional fees. In certain cases, our cost of revenue also includes claims and capitation payments to providers and payments for pharmaceutical treatments and other healthcare expenditures through capitated arrangements. |
Claims expenses | Claims Expenses Our claims expenses consist of the direct medical expenses incurred by our True Health segment. Claims expenses are recognized in the period in which services are provided and include amounts that have been paid by us through the reporting date, as well as estimated medical claims and benefits payable for costs that have been incurred but not paid by us as of the reporting date. Claims expenses include, among other items, fee-for-service claims, pharmacy benefits, various other related medical costs and expenses related to our reinsurance agreement. We use judgment to determine the appropriate assumptions for determining the required estimates. |
Stock-based compensation | Stock-based Compensation The Company sponsors a stock-based incentive plan that provides for the issuance of stock-based awards to employees, vendors and non-employee directors of the Company or its consolidated subsidiaries. Our stock-based awards generally vest over a four -year period and stock options expire ten years from the date of grant. We expense the fair value of stock-based awards granted under our incentive compensation plans. Fair value of stock options is determined using a Black-Scholes options valuation methodology. The fair value of the awards is expensed over the performance or service period, which generally corresponds to the vesting period, on a straight-line basis and is recognized as an increase to additional paid-in capital. Stock-based compensation expense is reflected in cost of revenue and selling, general and administrative expenses in our consolidated statements of operations and comprehensive income (loss). Additionally, and if applicable, we capitalize personnel expenses attributable to the development of internal-use software, which include stock-based compensation costs. We recognize share-based award forfeitures as they occur. |
Income taxes | Income Taxes Deferred income taxes are recognized, based on enacted rates, when assets and liabilities have different values for financial statement and tax reporting purposes. A valuation allowance is recorded to the extent required. Considerable judgment and the use of estimates are required in determining whether a valuation allowance is necessary and, if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance, we consider many factors, including: the nature and character of the deferred tax assets and liabilities; taxable income in prior carryback years; future reversals of temporary differences; the length of time carryovers can be utilized; and any tax planning strategies we would employ to avoid a tax benefit from expiring unused. We use a recognition threshold and a measurement attribute for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. We recognize interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense, when applicable. As of December 31, 2019 and 2018 , our identified balance of uncertain income tax positions would not have a material impact to the consolidated financial statements. We are subject to taxation in various jurisdictions in the U.S. and India and remain subject to examination by taxing jurisdictions for the year 2011 and all subsequent periods due to the availability of NOL carryforwards. We are a holding company and our assets consist of our direct ownership in Evolent Health LLC, for which we are the managing member. Prior to the Class B unit exchanges on December 26, 2019, Evolent Health LLC was classified as a partnership for U.S. federal and applicable state and local income tax purposes and, as such, was not subject to U.S. federal, state and local income taxes. Taxable income or loss generated by Evolent Health LLC was allocated to holders of its units, including us, on a pro rata basis. Accordingly, we were subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of Evolent Health LLC. As a result of the 2019 Class B units exchanges, we became the sole owner of Evolent Health LLC and its entity classification changed from a partnership to an entity disregarded as separate from its owner for U.S. federal, state and local income tax purposes. Following the Class B units exchanges, any taxable income or loss generated by Evolent Health LLC is reportable and taxable only on the Company’s federal, state and local income tax returns. Evolent Health LLC has direct ownership in corporate subsidiaries, which are subject to U.S. and foreign taxes with respect to their own operations during 2019. |
Earnings (loss) per share | Earnings (Loss) per Share Basic earnings (loss) per share is computed by dividing net income (loss) available to Class A common shareholders by the weighted-average number of Class A common shares outstanding. For periods of net income, and when the effects are not anti-dilutive, we calculate diluted earnings per share by dividing net income available to Class A common shareholders by the weighted average number of Class A common shares plus the weighted average number of Class A common shares assuming the conversion of our convertible notes, as well as the impact of all potential dilutive common shares, consisting primarily of common stock options and unvested restricted stock awards using the treasury stock method and our exchangeable Class B common stock. For periods of net loss, shares used in the diluted earnings (loss) per share calculation represent basic shares as using potentially dilutive shares would be anti-dilutive. |
Fair value measurement | Fair Value Measurement Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. Our consolidated balance sheets include various financial instruments (primarily cash not held in money-market funds, restricted cash, accounts receivable, accounts payable, accrued expenses and other liabilities) that are carried at cost and that approximate fair value. See Note 17 for further discussion regarding fair value measurement. Nonrecurring Fair Value Measurements In addition to the assets and liabilities that are recorded at fair value on a recurring basis, the Company records certain assets and liabilities at fair value on a nonrecurring basis as required by GAAP. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges. This includes 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. 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 2021 Notes. 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. |
Foreign currency | Foreign Currency The Company formed a subsidiary in India during the first quarter of 2018. The functional currency of our international subsidiary is the Indian Rupee. We translate the financial statements of this subsidiary to U.S. dollars using month-end rates of exchange for assets and liabilities, and 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 years ended December 31, 2019 and 2018 . |
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 year ended December 31, 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 (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequently issued additional guidance that modified ASU 2016-13. The standard requires an entity to change its accounting approach for measuring and recognizing credit losses on certain financial assets measured at amortized cost, including trade receivables, certain non-trade receivables, customer advances and certain off-balance sheet credit exposures, by replacing the existing “incurred loss” framework with an expected credit loss recognition model. The new standard will result in earlier recognition of credit losses based on past events, current conditions, and reasonable and supportable forecasts. The standard is effective for entities with fiscal years beginning after December 15, 2019, including interim periods within such fiscal years. We adopted the requirements of this standard effective January 1, 2020 using the modified retrospective approach and will record a cumulative effect adjustment to January 1, 2020 retained earnings (accumulated deficit). In our previous accounting policy for trade receivables and non-trade receivables, we maintained an allowance for doubtful accounts based on specific identification. Under the new accounting standard, we utilize several factors to develop historical losses, including aging schedules, customer creditworthiness, and historical payment experience, which are then adjusted for current conditions and reasonable and supportable forecasts in measurement of the allowance. In addition, for customer advances and certain off-balance sheet credit exposures, we evaluate the allowance through a discounted cash flow approach. We are finalizing the impact of the adoption of this ASU but we currently do not anticipate a material impact on our financial position 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. |
Basis of Presentation, Summar_3
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle (Tables) | 12 Months Ended |
Dec. 31, 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 December 31, 2019 2018 Collateral for letters of credit for facility leases (1) $ 3,610 $ 3,710 Collateral with financial institutions (2) 5,742 34,142 Claims processing services (3) 18,171 122,439 Other 817 532 Total restricted cash and restricted investments $ 28,340 $ 160,823 Current restricted investments $ 704 $ 211 Current restricted cash 19,376 154,507 Total current restricted cash and restricted investments $ 20,080 $ 154,718 Non-current restricted investments $ 113 $ 607 Non-current restricted cash 8,147 5,498 Total non-current restricted cash and restricted investments $ 8,260 $ 6,105 (1) Represents restricted cash related to collateral for letters of credit required in conjunction with lease agreements. See Note 10 for further discussion of our lease commitments. (2) Represents collateral held with financial institutions for risk-sharing and other arrangements. As of December 31, 2019 and 2018 , approximately $1.0 million and $31.2 million of the collateral amount was held in a trust account and invested in money market funds related to risk-sharing arrangements. The amounts invested in money market funds are considered restricted cash and are carried at fair value, which approximates cost. See Note 17 for discussion of fair value measurement and Note 9 for discussion of our risk-sharing arrangements. As of December 31, 2019 and 2018, approximately $4.7 million and $2.9 million , of the collateral amounts were held in a FDIC participating bank account. (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 December 31, 2019 2018 Cash and cash equivalents $ 101,008 $ 228,320 Restricted cash and restricted investments 28,340 160,823 Restricted investments included in restricted cash and restricted investments (817 ) (818 ) Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows $ 128,531 $ 388,325 |
Summary of property and equipment | The following summarizes the estimated useful lives by asset classification: Computer hardware 3 years Computer software 1 year Furniture and equipment 3-7 years Internal-use software development costs 5 years Leasehold improvements Shorter of useful life or remaining lease term The following summarizes our property and equipment (in thousands): As of December 31, 2019 2018 Computer hardware $ 11,604 $ 10,421 Furniture and equipment 3,649 3,187 Internal-use software development costs 112,501 81,640 Leasehold improvements 12,415 10,118 Total property and equipment 140,169 105,366 Accumulated depreciation and amortization expenses (55,014 ) (31,738 ) Total property and equipment, net $ 85,155 $ 73,628 |
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 December 31, 2019 As of December 31, 2018 Weighted- Average Remaining Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Value Weighted- Average Remaining Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Value Corporate trade name 14.2 $ 23,300 $ 4,891 $ 18,409 15.2 $ 23,300 $ 3,511 $ 19,789 Customer relationships 16.8 291,519 44,750 246,769 18.1 281,219 29,184 252,035 Technology 2.0 82,922 49,760 33,162 3.0 82,922 31,764 51,158 Below market lease, net 2.2 2,048 1,334 714 4.0 4,097 3,003 1,094 Provider network contracts 3.7 12,725 3,320 9,405 4.6 11,900 940 10,960 Total intangible assets, net $ 412,514 $ 104,055 $ 308,459 $ 403,438 $ 68,402 $ 335,036 |
Transactions (Tables)
Transactions (Tables) | 12 Months Ended |
Dec. 31, 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 Reserve 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 Years Ended December 31, 2018 2017 Total revenue $ 763,624 $ 679,323 Net loss (69,337 ) (80,990 ) Net loss attributable to non-controlling interests (3,554 ) (11,544 ) Net loss attributable to common shareholders of Evolent Health, Inc. (65,783 ) (69,446 ) Loss per common share Basic and diluted $ (0.85 ) $ (1.08 ) |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | The following table represents Evolent’s Services segment revenue disaggregated by type of services (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 Years Ended December 31, 2019 2018 Services Revenue Transformation services $ 15,203 $ 32,916 Platform and operations services Clinical solutions 458,991 228,464 Administrative solutions 198,618 264,104 |
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 December 31, 2019 2018 Short-term receivables (1) $ 71,707 $ 78,380 Long-term receivables (1) 709 6,550 Short-term contract assets 1,751 2,102 Long-term contract assets 999 961 Short-term deferred revenue 19,828 20,584 Long-term deferred revenue 1,330 1,502 (1) Excludes pharmacy claims receivable and premiums receivable Changes in contract assets and deferred revenue for the year ended December 31, 2019 , are as follows (in thousands): For the Year Ended December 31, 2019 Contract assets Balance as of beginning-of-period $ 3,063 Reclassification to receivables, as the right to consideration becomes unconditional (2,177 ) Contract assets recognized, net of reclassification to receivables 1,864 Balance as of end-of-period $ 2,750 Deferred revenue Balance as of beginning-of-period $ 22,086 Reclassification to revenue, as a result of performance obligations satisfied (17,867 ) Cash received in advance of satisfaction of performance obligations 16,939 Balance as of end-of-period $ 21,158 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment | The following summarizes the estimated useful lives by asset classification: Computer hardware 3 years Computer software 1 year Furniture and equipment 3-7 years Internal-use software development costs 5 years Leasehold improvements Shorter of useful life or remaining lease term The following summarizes our property and equipment (in thousands): As of December 31, 2019 2018 Computer hardware $ 11,604 $ 10,421 Furniture and equipment 3,649 3,187 Internal-use software development costs 112,501 81,640 Leasehold improvements 12,415 10,118 Total property and equipment 140,169 105,366 Accumulated depreciation and amortization expenses (55,014 ) (31,738 ) Total property and equipment, net $ 85,155 $ 73,628 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | The following table summarizes the changes in the carrying amount of goodwill, by reportable segment, for the periods presented (in thousands): Services True Health Consolidated Balance as of December 31, 2017 $ 628,186 $ — $ 628,186 Goodwill acquired (1) 134,343 5,826 $ 140,169 Measurement period adjustments (2) 4 (121 ) (117 ) Foreign currency translation (3) (114 ) — $ (114 ) Balance as of December 31, 2018 762,419 5,705 768,124 Goodwill acquired 3,416 — 3,416 Measurement period adjustments (2) 351 — 351 Impairment (199,800 ) — (199,800 ) Foreign currency translation (3) (27 ) — (27 ) Balance as of December 31, 2019 $ 566,359 $ 5,705 $ 572,064 (1) Goodwill acquired primarily as a result of the New Century Health and True Health transactions, as discussed in Note 4 . (2) Measurement period adjustments related to transactions completed in 2018. (3) Foreign currency translation related to a transaction completed during 2018. |
Schedule of intangible assets details | 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 December 31, 2019 As of December 31, 2018 Weighted- Average Remaining Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Value Weighted- Average Remaining Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Value Corporate trade name 14.2 $ 23,300 $ 4,891 $ 18,409 15.2 $ 23,300 $ 3,511 $ 19,789 Customer relationships 16.8 291,519 44,750 246,769 18.1 281,219 29,184 252,035 Technology 2.0 82,922 49,760 33,162 3.0 82,922 31,764 51,158 Below market lease, net 2.2 2,048 1,334 714 4.0 4,097 3,003 1,094 Provider network contracts 3.7 12,725 3,320 9,405 4.6 11,900 940 10,960 Total intangible assets, net $ 412,514 $ 104,055 $ 308,459 $ 403,438 $ 68,402 $ 335,036 |
Schedule of future estimated amortization of intangible assets | Future estimated amortization of intangible assets (in thousands) as of December 31, 2019 , is as follows: 2020 $ 33,451 2021 29,316 2022 25,434 2023 22,670 2024 17,111 Thereafter 180,477 Total future amortization of intangible assets $ 308,459 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of convertible debt | The following table summarizes the carrying value of the long-term convertible debt (in thousands): As of December 31, 2019 2018 2025 Notes Carrying value $ 107,169 $ 98,730 Unamortized debt discount and issuance costs allocated to debt 65,331 73,770 Principal amount $ 172,500 $ 172,500 Remaining amortization period (years) 5.8 6.8 2021 Notes Carrying value $ 123,237 $ 122,311 Unamortized issuance costs 1,763 2,689 Principal amount $ 125,000 $ 125,000 Remaining amortization period (years) 1.9 2.9 |
Commitments and Contingencies
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future contractual obligations | Our contractual obligations related to vendor contracts (in thousands) as of December 31, 2019 , were as follows: Less than 1 year $ 5,923 1 to 3 years 5,451 3 to 5 years — More than 5 years — Total contractual obligations related to vendor contracts $ 11,374 |
Summary of premiums and claims assumed | The following summarizes premiums and claims assumed under the Reinsurance Agreement for the years ended December 31, 2019 and 2018 (in thousands): For the Years Ended December 31, 2019 2018 Reinsurance premiums assumed $ 83,325 $ 3,242 Claims assumed 72,594 3,934 Claims-related administrative expenses 14,024 551 Increase in reserves for claims and performance-based arrangements attributable to the Reinsurance Agreement (3,293 ) (1,243 ) Reserves for claims and performance-based arrangements attributable to the Reinsurance Agreement at the beginning of the period 1,243 — Reinsurance payments 4,536 — Payables for claims and performance-based arrangements attributable to the Reinsurance Agreement at the end of the period $ — $ 1,243 |
Summary of major customers | The following table summarizes those customers of our services segment who represented at least 10.0% of our consolidated revenue for the periods presented: For the Years Ended December 31, 2019 2018 2017 Passport 18.7 % 17.5 % 20.6 % New Mexico Health Connections 10.9 % * * * Represents less than 10.0% of the respective balance 10.0% of our consolidated trade accounts receivable for the periods presented: As of December 31, 2019 2018 Cook County Health and Hospitals System 48.4 % 23.3 % |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of maturity of lease liabilities | Maturity of lease liabilities (in thousands) as of December 31, 2019 , is as follows: As of December 31, 2019 2020 10,747 2021 10,975 2022 9,822 2023 9,191 2024 8,614 Thereafter 53,893 Total lease payments (1) 103,242 Less: Interest 28,115 Present value of lease liabilities $ 75,127 (1) We have additional operating lease agreements for office space that have not yet commenced as of December 31, 2019 . The minimum lease payments for those leases are $0.1 million and the leases will commence during 2020. The following table summarizes our primary office leases as of December 31, 2019 (in thousands): Location Lease Termination Term (in years) Future Minimum Lease Commitments Letter of Credit Amount Required Arlington, VA 12.1 $ 40,832 $ 1,579 Chicago, IL 11.3 41,857 232 Louisville, KY (1) 6.5 — — Pune, India 3.8 3,265 — Brea, CA 2.4 2,547 — (1) Lease payments of $4.3 million for Louisville, KY have been prepaid as of December 31, 2019 . |
Schedule of components of lease expense, weighted-average discount rate and weighted-remaining lease terms | The following table summarizes the components of our lease cost for the year ended December 31, 2019 (in thousands): For the Year Ended December 31, 2019 Operating lease cost $ 13,903 Amortization of right-of-use assets 598 Interest expense 26 Variable lease cost 4,177 Total lease cost $ 18,704 Our weighted-average discount rate and our weighted remaining lease terms (in years) are as follows: As of December 31, 2019 Weighted average discount rate 6.25 % Weighted average remaining lease term 9.9 |
Earnings (Loss) Per Common Sh_2
Earnings (Loss) Per Common Share (Tables) | 12 Months Ended |
Dec. 31, 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 Years Ended December 31, 2019 2018 2017 Net loss $ (305,580 ) $ (54,191 ) $ (69,767 ) Less: Net loss attributable to non-controlling interests (3,609 ) (1,533 ) (9,102 ) Net loss available for common shareholders - basic and diluted (1) (301,971 ) (52,658 ) (60,665 ) Weighted-average common shares outstanding - basic and diluted (1) 82,364 77,338 64,351 Loss per common share Basic and diluted $ (3.67 ) $ (0.68 ) $ (0.94 ) (1) 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. |
Schedule of antidilutive securities excluded from computation of earnings per share | Anti-dilutive shares (in thousands) excluded from the calculation of weighted-average common shares presented above are presented below: For the Years Ended December 31, 2019 2018 2017 Exchangeable Class B common stock 1,399 1,831 7,285 RSUs 813 1,027 525 Stock options 1,324 2,517 2,829 Convertible senior notes 10,361 6,176 5,201 Total 13,897 11,551 15,840 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 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 Years Ended December 31, 2019 2018 2017 Award Type Stock options $ 4,237 $ 9,008 $ 15,487 Performance-based stock options 448 447 447 RSUs 8,877 7,766 4,503 Performance-based RSUs (388 ) 388 — LSUs 2,444 — — Total compensation expense by award type $ 15,618 $ 17,609 $ 20,437 Line Item Cost of revenue $ 2,673 $ 1,475 $ 1,371 Selling, general and administrative expenses 12,945 16,134 19,066 Total compensation expense by financial statement line item $ 15,618 $ 17,609 $ 20,437 |
Schedule of unrecognized compensation expense | Total unrecognized compensation expense (in thousands) and expected weighted-average period (in years) by award type for all of our stock-based incentive plans were as follows: As of December 31, 2019 Unrecognized Compensation Expense Weighted Average Period Stock options $ 5,829 2.22 Performance-based stock options 75 0.17 RSUs 12,767 2.58 LSUs 6,356 2.17 Total $ 25,027 |
Option price assumptions | The option price assumptions used for our stock option awards were as follows: For the Years Ended December 31, 2019 2018 2017 Weighted-average fair value per option granted $ 6.52 $ 6.30 $ 8.38 Assumptions: Expected term (in years) 6.25 6.25 6.25 Expected volatility 51.6 % 38.9 % 42.8 % Risk-free interest rate 1.9- 2.7% 2.6 - 2.9% 1.9 - 2.1% Dividend yield — % — % — % |
Stock option information | Information with respect to our stock options (in thousands), including weighted-average remaining contractual term (in years) and aggregate intrinsic value (in thousands) was as follows: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding as of December 31, 2018 5,089 $ 9.82 6.86 $ 51,556 Granted 437 12.48 Exercised (138 ) 7.91 Forfeited (560 ) 15.63 Outstanding as of December 31, 2019 4,828 $ 9.44 6.01 $ (1,880 ) Vested and expected to vest after December 31, 2019 4,553 $ 9.16 5.91 $ (488 ) Exercisable at December 31, 2019 3,453 $ 7.58 5.23 $ 5,082 |
Performance-based stock option awards activity | Information with respect to our performance-based stock options (shares and aggregate intrinsic value shown in thousands, weighted-average remaining contractual term shown in years) was as follows: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding as of December 31, 2018 268 $ 10.27 7.17 $ 2,592 Outstanding as of December 31, 2019 268 10.27 6.17 (326 ) Vested and expected to vest after December 31, 2019 268 $ 10.27 6.17 $ (326 ) |
Restricted stock units information | Information with respect to our RSUs is presented below (in thousands, except for weighted-average grant-date fair value): Total RSUs Weighted Average Grant Date Fair Value Outstanding as of December 31, 2018 1,391 $ 16.01 Granted 976 10.66 Forfeited (337 ) 14.81 Vested (537 ) 17.54 Outstanding as of December 31, 2019 1,493 $ 12.23 |
Leveraged stock units activity | Information with respect to our leveraged stock unit awards (shares and aggregate intrinsic value shown in thousands, weighted-average remaining contractual term shown in years) was as follows: Leveraged Stock Units Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding as of December 31, 2019 685 $ 12.85 9.17 $ (2,603 ) Vested and expected to vest after December 31, 2019 685 $ 12.85 9.17 $ (2,603 ) |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of loss before provision for income taxes | Our loss before provision for income taxes was as follows (in thousands): For the Years Ended December 31, 2019 2018 2017 Domestic $ (328,161 ) $ (54,681 ) $ (76,404 ) Foreign 1,045 530 — Loss before income taxes and non-controlling interests $ (327,116 ) $ (54,151 ) $ (76,404 ) |
Components of income tax expense (benefit) | Components of income tax expense (benefit) (in thousands) consist of the following: For the Years Ended December 31, 2019 2018 2017 Current Federal $ 1,175 $ 458 $ 368 State and local 14 9 266 Foreign 399 251 — Total current tax expense 1,588 718 634 Deferred Federal (27,334 ) (14,820 ) 3,202 State and local (5,046 ) (2,252 ) (3,102 ) Foreign 6 (49 ) — Total deferred tax expense (32,374 ) (17,121 ) 100 Change in valuation allowance 9,250 16,443 (7,371 ) Total tax expense (benefit) $ (21,536 ) $ 40 $ (6,637 ) |
Schedule of reconciliation of the U.S. statutory tax rate to our effective tax rate | A reconciliation of the U.S. statutory tax rate to our effective tax rate and our statutory rate is presented below: For the Years Ended December 31, 2019 2018 2017 U.S. statutory tax rate 21.0 % 21.0 % 35.0 % U.S. state income taxes, net of U.S. federal tax benefit 4.4 % 3.6 % 3.3 % Foreign earnings at other than U.S. rates (0.1 )% (0.2 )% — % Change in valuation allowance (2.8 )% (30.4 )% (34.0 )% Change in valuation allowance, tax reform — % — % 43.7 % Impact of tax reform — % — % (36.0 )% Non-deductible goodwill impairment (15.8 )% — % — % Non-controlling interest (0.3 )% (0.7 )% (4.6 )% Excess tax benefits on stock-based compensation (0.2 )% 3.9 % 3.1 % Federal and state research tax credits — % 4.5 % — % Change in uncertain tax positions 0.1 % (1.1 )% — % Effect of investment in MHG (1.4 )% — % — % Change in indefinite reinvestment assertion for domestic subsidiaries 2.6 % — % — % Other, net (0.8 )% (0.7 )% (1.8 )% Effective rate 6.7 % (0.1 )% 8.7 % |
Schedule of deferred tax assets and liabilities | Significant components of the Company’s deferred tax assets and liabilities (in thousands) were as follows: As of December 31, 2019 2018 Deferred Tax Assets Start-up and organizational costs $ 149 $ 160 Internally developed software costs — 3,283 Goodwill 19,142 — Operating lease liabilities 18,055 — Accrued expenses 9,534 — Stock based compensation 8,899 — Net operating loss carryforwards 112,316 76,019 Federal and state research tax credits 1,828 1,828 Other 3,941 861 Subtotal 173,864 82,151 Valuation allowance (50,815 ) (37,037 ) Total deferred tax assets 123,049 45,114 Deferred Tax Liabilities Internally developed software costs 14,603 — Intangible assets 58,655 26,710 Outside basis differences 5,865 43,492 Right-of-use assets - Operating 16,180 — Contract fulfillment costs 9,510 — Convertible debt 15,732 — Fixed assets 796 — Other 3,650 — Total deferred tax liabilities 124,991 70,202 Net deferred tax assets (liabilities) $ (1,942 ) $ (25,088 ) |
Changes in valuation allowance | Changes in our valuation allowance (in thousands) were as follows: For the Years Ended December 31, 2019 2018 2017 Balance at beginning-of-year $ 37,037 $ 53,201 $ 26,376 Charged to costs and expenses 9,250 16,443 (7,371 ) Charged to other accounts (1) 4,528 (32,607 ) 34,196 Balance at end-of-year $ 50,815 $ 37,037 $ 53,201 (1) Amounts charged to other accounts includes an increase of $4.5 million and a decrease of $32.6 million and an increase of $34.2 million charged to additional paid-in-capital for the years ended December 31, 2019 , 2018 and 2017 , respectively. |
Changes in unrecognized tax benefits | Changes in our unrecognized tax benefits (in thousands) were as follows: For the Years Ended December 31, 2019 2018 2017 Balance at beginning-of-year $ 934 $ 762 $ — Gross increases - tax positions in prior period — 934 1,108 Gross decreases - tax positions in prior period — (762 ) — Gross increases - tax positions in current period — — 74 Lapse of statute of limitations (181 ) — — Change in tax rate — — (420 ) Balance at end-of-year $ 753 $ 934 $ 762 |
Investments In and Advances t_2
Investments In and Advances to Equity Method Investees Investments In and Advances to Equity Method Investees (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of carrying value of the associated assets and liabilities and the associated maximum loss exposure for the unconsolidated VIEs | The following table represents the carrying value of the associated assets and liabilities and the associated maximum loss exposure for the unconsolidated VIEs as of the date indicated (in thousands): As of December 31, 2019 Passport Buyer Momentum Health Group, LLC Assets: Current assets $ 271,894 $ 50,729 Non current assets 577 39,259 Total assets $ 272,471 $ 89,988 Liabilities Current liabilities 181,206 $ 55,442 Non current liabilities 40 44,650 Total liabilities $ 181,246 $ 100,092 Investment carrying value $ 70,000 $ 46,456 Loan and interest receivable 41,387 — Guarantee 25,000 — Maximum exposure $ 136,387 $ 46,456 |
Schedule of summarized equity method investees financial information | The following table represents the aggregated summarized financial information as of and for the dates indicated (in thousands): As of December 31, 2019 2018 Current assets $ 356,085 $ 19,698 Non current assets 43,744 67 Current liabilities 267,300 12,748 Noncurrent liabilities 57,599 — Non controlling interests 70,535 6,608 For the Year Ended December 31, 2019 2018 2017 Revenue $ 387,960 $ 3,591 $ — Operating loss (60,572 ) (13,085 ) — Net loss (73,685 ) (13,066 ) — Net loss attributable to entity (23,348 ) (4,099 ) — |
Non-controlling Interests (Tabl
Non-controlling Interests (Tables) | 12 Months Ended |
Dec. 31, 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 Years Ended December 31, 2019 2018 Non-controlling interests balance as of beginning-of-year $ 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 (42,377 ) (34,682 ) Amount attributable to NCI from business combination 6,500 — Issuance of Class B common stock for business combination — 42,787 Net income (loss) attributable to non-controlling interests (3,609 ) (1,533 ) Reclassification of non-controlling interests 643 2,939 Non-controlling interests balance as of end-of-year $ 6,689 $ 45,532 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 12 Months Ended |
Dec. 31, 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 December 31, 2019 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ 3,698 — — $ 3,698 Restricted cash and restricted investments (1) 1,004 — — 1,004 Total fair value of assets measured on a recurring basis $ 4,702 $ — $ — $ 4,702 Liabilities Contingent consideration (2) $ — $ — $ 9,883 $ 9,883 Warrants (3) — — 7,092 7,092 Total fair value of liabilities measured on a recurring basis $ — $ — $ 16,975 $ 16,975 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 fair value of assets measured on a recurring basis $ 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 December 31, 2019 and 2018 , as presented in the tables above. (2) Represents the fair value of earn-out consideration related to the Passport, Global Health and other transactions, as described in Note 4 . As of December 31, 2019 , $3.7 million is attributable to Passport, $5.2 million to Global Health and $1.0 million is attributable to other transactions. As of December 31, 2018 , $5.6 million is attributable to Passport and $3.2 million is attributable to New Century Health. (3) Represents the fair value of 1,513,786 shares issuable under the warrant agreements discussed in Note 8 . |
Summary of liabilities at fair value on recurring basis | The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis (in thousands): As of December 31, 2019 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents (1) $ 3,698 — — $ 3,698 Restricted cash and restricted investments (1) 1,004 — — 1,004 Total fair value of assets measured on a recurring basis $ 4,702 $ — $ — $ 4,702 Liabilities Contingent consideration (2) $ — $ — $ 9,883 $ 9,883 Warrants (3) — — 7,092 7,092 Total fair value of liabilities measured on a recurring basis $ — $ — $ 16,975 $ 16,975 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 fair value of assets measured on a recurring basis $ 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 December 31, 2019 and 2018 , as presented in the tables above. (2) Represents the fair value of earn-out consideration related to the Passport, Global Health and other transactions, as described in Note 4 . As of December 31, 2019 , $3.7 million is attributable to Passport, $5.2 million to Global Health and $1.0 million is attributable to other transactions. As of December 31, 2018 , $5.6 million is attributable to Passport and $3.2 million is attributable to New Century Health. (3) Represents the fair value of 1,513,786 shares issuable under the warrant agreements discussed in Note 8 . |
Changes in contingent consideration measured at fair value | The changes in our contingent consideration, measured at fair value, for which the Company uses Level 3 inputs to determine fair value are as follows (in thousands): For the Years Ended December 31, 2019 2018 Balance as of beginning of year $ 8,800 $ 8,700 Additions (1) 12,992 3,200 Settlements (800 ) — Realized and unrealized gains, net (4,017 ) (3,100 ) Balance as of end of year $ 16,975 $ 8,800 (1) Addition is related to the GlobalHealth and credit agreement transactions. |
Valuation techniques and significant unobservable inputs of Level 3 fair value measurements | The following table summarizes the fair value (in thousands), valuation techniques and significant unobservable inputs of our Level 3 fair value measurements as of the periods presented: As of December 31, 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/time value 4.8% - 5.3% GlobalHealth contingent consideration $ 5,200 Monte Carlo simulation Stock price volatility 80.0 % (2) Other contingent considerations $ 983 Management estimate Adjusted EBITDA $ 19,235 Warrants $ 7,092 Black-Scholes Stock price volatility 55.0 % Annual risk free rate 1.7 % 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 % (3) Risk-neutral probability meets earn-out cap 24.0 % (3) (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) Equity volatility based on Evolent’s daily stock price returns for a look-back period corresponding to the time until the Second Test Date. The large one-day stock price drop on November 27, 2019, was excluded from the volatility calculation. The contingent liability expires on June 30, 2020. (3) 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. |
Related Parties (Tables)
Related Parties (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Schedule of related parties | The following table presents assets and liabilities attributable to our related parties (in thousands): As of December 31, 2019 2018 Assets Accounts receivable $ 8,781 $ 8,519 Prepaid expenses - current 1,592 85 Customer advance for regulatory capital requirements 40,000 — Prepaid expenses and other noncurrent assets 2,709 2,500 Liabilities Accounts payable $ 6,429 $ 1,564 Accrued liabilities 2,583 798 Reserve for claims and performance-based arrangements 4,264 — The following table presents revenues and expenses attributable to our related parties (in thousands): For the Years Ended December 31, 2019 2018 2017 Revenue Transformation services $ 4,009 $ 10,540 $ 597 Platform and operations services 60,325 37,490 32,335 Expenses Cost of revenue (exclusive of depreciation and amortization expenses) 28,954 9,451 22,389 Selling, general and administrative expenses 991 917 1,153 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Reconciliation of revenue from segments to consolidated | The following tables present our segment information (in thousands): Services True Health (1) Intersegment Eliminations Consolidated Revenue For the Year Ended December 31, 2019 Services: Transformation Services $ 15,203 $ — $ — $ 15,203 Platform and Operations Services 671,919 — (12,481 ) 659,438 Services Revenue 687,122 — (12,481 ) 674,641 True Health (1) : Premiums — 172,722 (980 ) 171,742 Total Revenue 687,122 172,722 (13,461 ) 846,383 For the Year Ended December 31, 2018 Services: Transformation Services $ 32,916 $ — $ — $ 32,916 Platform and Operations Services 514,515 — (14,325 ) 500,190 Services Revenue 547,431 — (14,325 ) 533,106 True Health (1) : Premiums — 94,763 (806 ) 93,957 Total Revenue 547,431 94,763 (15,131 ) 627,063 For the Year Ended December 31, 2017 Services: Transformation Services $ 29,466 $ — $ — $ 29,466 Platform and Operations Services 405,484 — — 405,484 Total Revenue 434,950 — — 434,950 Services True Health (1) Segments Total For the Year Ended December 31, 2019 Adjusted EBITDA $ (14,667 ) $ 3,699 $ (10,968 ) For the Year Ended December 31, 2018 Adjusted EBITDA $ 21,310 $ 1,915 $ 23,225 For the Year Ended December 31, 2017 Adjusted EBITDA $ (2,204 ) $ — $ (2,204 ) (1) The True Health segment was created in January 2018. |
Reconciliation of Adjusted EBITDA to net income (loss) | The following table presents our reconciliation of segments total Adjusted EBITDA to net loss attributable to Evolent Health, Inc. (in thousands): For the Years Ended December 31, 2019 2018 2017 Net loss attributable to common shareholders of Evolent Health, Inc. $ (301,971 ) $ (52,658 ) $ (60,665 ) Less: Interest income 3,987 3,440 1,656 Interest expense (14,534 ) (5,484 ) (3,636 ) (Provision) benefit for income taxes 21,536 (40 ) 6,637 Depreciation and amortization expenses (60,913 ) (44,515 ) (32,368 ) Goodwill impairment (199,800 ) — — Loss from equity method investees (9,465 ) (4,736 ) (1,755 ) Gain on disposal of assets 9,600 — — Change in fair value of contingent consideration and indemnification asset 3,997 4,104 (400 ) Other income (expense), net (492 ) 109 171 Net loss attributable to non-controlling interests 3,609 1,533 9,102 ASC 606 transition adjustments — (4,498 ) — Purchase accounting adjustments (1,915 ) (861 ) (1,467 ) Stock-based compensation expense (15,618 ) (17,609 ) (20,437 ) Severance costs (17,350 ) (2,205 ) — Amortization of contract cost assets (2,876 ) (2,456 ) — Acquisition costs (10,769 ) (2,665 ) (15,964 ) Adjusted EBITDA $ (10,968 ) $ 23,225 $ (2,204 ) |
Reserves for Claims and perfo_2
Reserves for Claims and performance-Based Arrangements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Insurance [Abstract] | |
Activity in claims reserves | Activity in reserves for claims and performance-based arrangements for the years ended December 31, 2019 and 2018 , was as follows (in thousands): For the Years Ended December 31, 2019 2018 Services (1) True Health (3) Total Services (1) True Health (3) Total Beginning balance $ 17,715 $ 9,880 $ 27,595 $ 18,631 $ — $ 18,631 Incurred costs related to current year 267,064 136,303 403,367 $ 38,674 $ 70,889 $ 109,563 Incurred costs related to prior year (334 ) (529 ) (863 ) — — — Paid costs related to current year 220,050 61,621 281,671 38,124 58,318 96,442 Paid costs related to prior year 8,165 8,092 16,257 — — — Change during the year 38,515 66,061 104,576 550 12,571 13,121 Other adjustments (2) (1,720 ) (69,301 ) (71,021 ) (1,466 ) (2,691 ) (4,157 ) Ending balance $ 54,510 $ 6,640 $ 61,150 $ 17,715 $ 9,880 $ 27,595 (1) Costs incurred to provide specialty care management services are recorded within cost of revenue in our statement of operations. (2) Other adjustments to 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. (3) There is no single or common claim frequency metric used in the health care industry. The Company believes a relevant metric for its health insurance business is the number of customers for whom an insured medical claim was paid. Number of claims processed for the years ended December 31, 2019 and 2018 were 317,187 and 294,158 , respectively. |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 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 December 31, 2019 and 2018 (in thousands) were as follows: As of December 31, 2019 As of December 31, 2018 Amortized Cost Gross Unrealized Fair Value Amortized Cost Gross Unrealized Fair Value Gains Losses Gains Losses U.S. Treasury bills $ 10,784 $ 270 $ — $ 11,054 $ 7,982 $ 120 $ — $ 8,102 Corporate bonds 1,705 70 — 1,775 887 17 — 904 Collateralized mortgage obligations 5,472 56 (5 ) 5,523 545 6 — 551 Yankees 597 30 — 627 596 11 — 607 Total investments $ 18,558 $ 426 $ (5 ) $ 18,979 $ 10,010 $ 154 $ — $ 10,164 |
Investments classified by contractual maturity date | The amortized cost and fair value of our investments by contractual maturities as of December 31, 2019 and 2018 (in thousands) were as follows: As of December 31, 2019 As of December 31, 2018 Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 1,807 $ 1,810 $ — $ — Due after one year through five years 16,121 16,542 9,666 9,813 Due after five years through ten years 630 627 344 351 Total investments $ 18,558 $ 18,979 $ 10,010 $ 10,164 |
Schedule of securities held in an unrealized loss position | The Company held the following securities (in thousands) in an unrealized loss position for less than twelve months as of December 31, 2019 , and expects to recover the entire cost basis of the security: Number of Securities Fair Value Unrealized Losses Collateralized mortgage obligations 4 $ 2,075 $ 5 |
Quarterly Results of Operatio_2
Quarterly Results of Operations (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Data [Abstract] | |
Unaudited consolidated quarterly results of operations | The unaudited consolidated quarterly results of operations (in thousands, except per share data) were as follows: 1st 2nd 3rd 4th (a) 2019 Total revenue $ 197,756 $ 191,959 $ 220,143 $ 236,525 Total operating expenses 244,402 217,192 240,281 451,120 Net loss (48,649 ) (31,900 ) (25,738 ) (199,293 ) Net loss attributable to non-controlling interests (1,910 ) (285 ) (217 ) (1,197 ) Net loss attributable to common shareholders of Evolent Health, Inc. (46,739 ) (31,615 ) (25,521 ) (198,096 ) Loss per common share Basic and Diluted $ (0.59 ) $ (0.38 ) $ (0.30 ) $ (2.36 ) 2018 Total revenue $ 139,714 $ 144,298 $ 149,947 $ 193,104 Total operating expenses 153,846 153,264 160,977 206,456 Net loss (14,065 ) (10,031 ) (12,555 ) (17,540 ) Net loss attributable to non-controlling interests (439 ) (115 ) (126 ) (853 ) Net loss attributable to common shareholders of Evolent Health, Inc. (13,626 ) (9,916 ) (12,429 ) (16,687 ) Loss per common share Basic and Diluted $ (0.18 ) $ (0.13 ) $ (0.16 ) $ (0.21 ) (a) Large change in results in the fourth quarter are due to goodwill impairment |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of cash flow, supplemental disclosures | The following represents supplemental cash flow information (in thousands): For the Years Ended December 31, 2019 2018 2017 Supplemental Disclosure of Non-cash Investing and Financing Activities Class A and Class B common stock issued in connection with business combinations $ 23,556 $ 83,173 $ — Change in goodwill due to measurement period adjustments related to business combinations (351 ) (117 ) 1,611 Decrease in accrued financing costs related to 2021 Notes — — 196 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 — Tax benefit related to Accordion intangible technology — — 2,042 Acquisition consideration payable 800 — — Accrued property and equipment purchases (527 ) 368 229 Accrued deferred financing costs — 607 — Effects of Class B Exchanges Decrease in non-controlling interests as a result of Class B Exchanges 42,377 34,682 168,883 Decrease in deferred tax liability as a result of securities offerings and exchanges (22 ) 652 12,857 Effects of Leases Operating cash flows from operating leases 12,330 — — Leased assets obtained in exchange for operating lease liabilities 30,463 — — Supplemental Disclosures Cash paid during the period for interest 5,037 2,500 2,472 Cash paid during the year for taxes, net 1,484 343 674 |
Organization (Details)
Organization (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($)segment | Dec. 31, 2018USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of reportable segments | segment | 2 | |
Cash and cash equivalents | $ | $ 101,008 | $ 228,320 |
Basis of Presentation, Summar_4
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Operating Segments (Details) | 12 Months Ended |
Dec. 31, 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 Principle - Restricted Cash and Restricted Investments (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Total restricted cash and restricted investments | $ 28,340 | $ 160,823 | ||
Current restricted investments | 704 | 211 | ||
Current restricted cash | 19,376 | 154,507 | ||
Total current restricted cash and restricted investments | 20,080 | 154,718 | ||
Non-current restricted investments | 113 | 607 | ||
Non-current restricted cash | 8,147 | 5,498 | ||
Total non-current restricted cash and restricted investments | 8,260 | 6,105 | ||
Cash and cash equivalents | 101,008 | 228,320 | ||
Restricted investments included in restricted cash and restricted investments | (817) | (818) | ||
Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows | 128,531 | 388,325 | $ 295,363 | $ 170,029 |
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 | 5,742 | 34,142 | ||
Claims processing services | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Total restricted cash and restricted investments | 18,171 | 122,439 | ||
Other | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Total restricted cash and restricted investments | 817 | 532 | ||
Collateral with financial institutions, money market funds | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Total restricted cash and restricted investments | 1,000 | 31,200 | ||
Bank time deposits | ||||
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 Principle - Notes Receivable (Details) - Current Customer - USD ($) | Dec. 31, 2019 | Jun. 30, 2019 |
Implementation Fund Loan | Loans Payable | ||
Short-term Debt [Line Items] | ||
Face amount | $ 40,000,000 | |
Interest rate | 6.50% | |
Notes Receivable | Surplus Note | ||
Short-term Debt [Line Items] | ||
Loans and leases receivable, net amount | $ 40,000,000 | |
Interest receivable | $ 1,400,000 |
Basis of Presentation, Summar_7
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Estimated Useful Life of Property, Plant and Equipment (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Computer hardware | |
Property and Equipment [Line Items] | |
Useful life | 3 years |
Computer software | |
Property and Equipment [Line Items] | |
Useful life | 1 year |
Internal-use software development costs | |
Property and Equipment [Line Items] | |
Useful life | 5 years |
Minimum | Furniture and equipment | |
Property and Equipment [Line Items] | |
Useful life | 3 years |
Maximum | Furniture and equipment | |
Property and Equipment [Line Items] | |
Useful life | 7 years |
Basis of Presentation, Summar_8
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Research and Development Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | |||
Research and development costs | $ 19.8 | $ 18.2 | $ 17.2 |
Basis of Presentation, Summar_9
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Goodwill (Details) | Oct. 31, 2019unit | Dec. 31, 2019reporting_unit | Dec. 31, 2019unit |
Accounting Policies [Abstract] | |||
Number of reporting units for goodwill testing | 3 | 4 | 4 |
Basis of Presentation, Summa_10
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Intangible Assets, Net (Details) | 12 Months Ended |
Dec. 31, 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 |
Basis of Presentation, Summa_11
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Impairment of Equity Method Investments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | |||
Equity method investment, other than temporary impairment | $ 0 | $ 0 | $ 0 |
Basis of Presentation, Summa_12
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Revenue Recognition (Details) - Accounting Standards Update 2014-09 $ in Thousands | Jan. 01, 2018USD ($) |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Cumulative-effect adjustment from adoption of ASC 606 | $ 17,309 |
Retained Earnings (Accumulated Deficit) | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Cumulative-effect adjustment from adoption of ASC 606 | $ 16,715 |
Basis of Presentation, Summa_13
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principle - Stock-based Compensation (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Vesting period | 4 years |
Expiration period | 10 years |
Recently Issued Accounting St_2
Recently Issued Accounting Standards (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease, right-of-use asset | $ 72,173 | $ 0 | |
Present value of lease liabilities | $ 75,127 | ||
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease, right-of-use asset | $ 51,400 | ||
Present value of lease liabilities | $ 47,400 |
Transactions - Passport (Detail
Transactions - Passport (Details) - Variable Interest Entity, Not Primary Beneficiary - Passport - USD ($) $ in Millions | Dec. 30, 2019 | Jun. 18, 2019 |
Business Acquisition [Line Items] | ||
Payments to acquire equity method investments | $ 70 | |
Noncontrolling interest in joint ventures | 30.00% | |
Cash consideration in escrow, amount | $ 16.2 | |
Performance bond amount | 25 | |
New Medicaid contract awarded, option to sell ownership, consideration, amount | 60 | |
New Medicaid contract awarded, option to acquire ownership, consideration, amount | $ 60 | |
New Medicaid contract awarded, option to acquire or sell ownership, term following go-live date | 60 days | |
New Medicaid contract not awarded, requirement to acquire ownership, consideration, amount | $ 20 | |
New Medicaid contract not awarded, requirement to acquire ownership, term following expiration of current Medicaid contract | 12 months | |
Passport Note | ||
Business Acquisition [Line Items] | ||
Notes receivable, related parties, noncurrent | $ 40 | |
Interest rate | 6.50% |
Transactions - New Century Heal
Transactions - New Century Health (Details) - USD ($) $ in Thousands, shares in Millions | Oct. 01, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Purchase consideration: | ||||
Cash | $ 8,575 | $ 130,241 | $ 3,694 | |
Liabilities assumed: | ||||
Goodwill | $ 572,064 | 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] | ||||
Equity method investment, ownership percentage | 100.00% | |||
Total merger consideration, net of cash on hand and certain closing adjustments | $ 205,100 | |||
Payments to acquire businesses, net | 118,700 | |||
Contingent consideration arrangements (up to) | 20,000 | |||
Contingent consideration arrangements fair value | 3,200 | |||
Purchase consideration: | ||||
Cash | 124,652 | |||
Fair value of Class B common stock issued | 83,173 | |||
Fair value of contingent consideration | 3,200 | |||
Total consideration | 211,025 | |||
Tangible assets acquired: | ||||
Cash and cash equivalents | 5,963 | |||
Accounts receivable | 5,559 | |||
Prepaid expenses and other current assets | 7,901 | |||
Property and equipment | 381 | |||
Other non-current assets | 148 | |||
Liabilities assumed: | ||||
Accounts payable | 1,167 | |||
Accrued liabilities | 1,494 | |||
Accrued compensation and employee benefits | 3,966 | |||
Reserve 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 Common Stock | ||||
Business Acquisition [Line Items] | ||||
Consideration transferred, equity interests issued and issuable, shares issued (in shares) | 3.1 | |||
Contingent consideration arrangements (up to) | $ 11,400 | |||
New Century Health | Selling, general and administrative expenses | ||||
Business Acquisition [Line Items] | ||||
Transaction costs | $ 1,600 | |||
New Century Health | Customer relationships | ||||
Identifiable intangible assets acquired: | ||||
Identifiable intangible assets | $ 72,500 | |||
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 |
Transactions - New Mexico Healt
Transactions - New Mexico Health Connections (Details) - USD ($) $ in Thousands | Jan. 02, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Purchase consideration: | ||||
Payments to acquire businesses | $ 8,575 | $ 130,241 | $ 3,694 | |
Identifiable intangible assets acquired and liabilities assumed | ||||
Goodwill | $ 572,064 | 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: | ||||
Payments to acquire businesses | $ 10,000 | |||
Contingent consideration, liability | 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) | |||
Fair Value, Recurring | ||||
Purchase consideration: | ||||
Contingent consideration, liability | $ 9,883 | $ 8,800 |
Transactions - Pro Forma Inform
Transactions - Pro Forma Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustments | |||
Revenue | $ 763,624 | $ 679,323 | |
Net loss | (69,337) | (80,990) | |
Net loss attributable to non-controlling interests | (3,554) | (11,544) | |
Net loss attributable to common shareholders of Evolent Health, Inc. | $ (65,783) | $ (69,446) | |
Net loss available to common shareholders, basic (in dollars per share) | $ (0.85) | $ (1.08) | |
Net loss available to common shareholders, diluted (in dollars per share) | $ (3.66) | $ (0.85) | $ (1.08) |
Transactions - Securities Offer
Transactions - Securities Offerings and Sales (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||||||||||||||||||
May 31, 2019 | Nov. 30, 2018 | Mar. 31, 2018 | Aug. 31, 2017 | Jun. 30, 2017 | May 31, 2017 | Mar. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Oct. 31, 2019 | Apr. 30, 2019 | Oct. 31, 2018 | Oct. 01, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Feb. 28, 2018 | Jul. 31, 2017 | May 30, 2017 | Feb. 28, 2017 | Jun. 05, 2015 | |
Organization [Line Items] | |||||||||||||||||||||
Share price (in dollars per share) | $ 6.59 | ||||||||||||||||||||
Offering expenses | $ 0 | $ 0 | $ 1,500,000 | ||||||||||||||||||
Class A Common Stock | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Issuance of common stock (in shares) | 8,800,000 | 20,100,000 | |||||||||||||||||||
Common stock, shares outstanding (in shares) | 84,588,629 | 79,172,118 | |||||||||||||||||||
Proceeds from issuance of common stock, net of payments of stock issuance costs | $ 166,900,000 | ||||||||||||||||||||
Proceeds from issuance of common stock | $ 175,000,000 | ||||||||||||||||||||
Class A Common Stock | Evolent Health, Selling Stockholders | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Issuance of common stock (in shares) | 7,400,000 | ||||||||||||||||||||
Class A Common Stock | Investor Stockholders | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Issuance of common stock (in shares) | 12,600,000 | ||||||||||||||||||||
Class A Common Stock | Management Selling Stockholders | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Issuance of common stock (in shares) | 100,000 | ||||||||||||||||||||
Class A Common Stock | Common Stock | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Issuance of common stock (in shares) | 1,600,000 | 800,000 | 3,000,000 | 4,500,000 | 7,000,000 | 7,500,000 | 3,100,000 | 8,816,000 | |||||||||||||
Share price (in dollars per share) | $ 19.85 | $ 25.87 | $ 24.30 | $ 19.53 | |||||||||||||||||
Offering expenses | $ 8,100,000 | ||||||||||||||||||||
Class A Common Stock | Common Stock | Evolent Health, Selling Stockholders | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Issuance of common stock (in shares) | 100,000 | 1,200,000 | 700,000 | 3,100,000 | 3,100,000 | ||||||||||||||||
Class A Common Stock | Common Stock | Over-Allotment Option | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Issuance of common stock (in shares) | 1,100,000 | ||||||||||||||||||||
Share price (in dollars per share) | $ 19.53 | ||||||||||||||||||||
Class A Common Stock | Common Stock | Over-Allotment Option | Evolent Health, Selling Stockholders | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Issuance of common stock (in shares) | 500,000 | ||||||||||||||||||||
Class A Common Stock | Common Stock | The Advisory Board | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Issuance of common stock (in shares) | 1,800,000 | ||||||||||||||||||||
Common stock, shares outstanding (in shares) | 0 | ||||||||||||||||||||
Class A Common Stock | Common Stock | TPG | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Issuance of common stock (in shares) | 700,000 | ||||||||||||||||||||
Common stock, shares outstanding (in shares) | 0 | ||||||||||||||||||||
Class A Common Stock | Common Stock | Underwriters | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Share price (in dollars per share) | $ 19.01 | ||||||||||||||||||||
Class A Common Stock | Common Stock | Investor Stockholders | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Issuance of common stock (in shares) | 3,800,000 | 3,800,000 | 4,400,000 | ||||||||||||||||||
Class A Common Stock | Common Stock | Investor Stockholders | Over-Allotment Option | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Issuance of common stock (in shares) | 600,000 | ||||||||||||||||||||
Class A Common Stock | Common Stock | Management Selling Stockholders | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Issuance of common stock (in shares) | 100,000 | ||||||||||||||||||||
Class B Common Stock | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Common stock, shares outstanding (in shares) | 0 | 3,190,301 | |||||||||||||||||||
Class B Common Stock | Common Stock | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Issuance of common stock (in shares) | 3,120,000 | ||||||||||||||||||||
Class B Common Stock | Common Stock | TPG | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Common stock, shares outstanding (in shares) | 0 | ||||||||||||||||||||
Common Class B Units | Common Stock | TPG | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Common stock, shares outstanding (in shares) | 0 | ||||||||||||||||||||
Evolent Health LLC | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Parent's ownership percentage | 99.20% | 96.10% | 98.90% | 96.60% | 96.10% | 90.50% | 83.90% | 100.00% | 96.10% | 77.40% | 99.10% | 95.30% | 95.30% | 99.00% | 96.60% | 96.10% | 84.90% | 77.40% | 70.30% | ||
Evolent Health LLC | Over-Allotment Option | |||||||||||||||||||||
Organization [Line Items] | |||||||||||||||||||||
Parent's ownership percentage | 84.90% | 83.90% |
Transactions - Asset Acquisitio
Transactions - Asset Acquisitions (Details) - Accordion Health, Inc. $ in Millions | Jun. 08, 2017USD ($) |
Business Acquisition [Line Items] | |
Accordion purchase agreement, amount | $ 3.2 |
Accordion purchase agreement, contingent earn-out | 0.8 |
Accordion purchase agreement, deferred tax liabilities | 2 |
Technology Assets | |
Business Acquisition [Line Items] | |
Accordion purchase agreement, intangible assets acquired | 3.3 |
Accordion purchase agreement, capitalized transaction costs | $ 0.1 |
Useful life | 5 years |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Disaggregation of Revenue [Line Items] | ||||||||||||
Total revenue | $ 236,525 | $ 220,143 | $ 191,959 | $ 197,756 | $ 193,104 | $ 149,947 | $ 144,298 | $ 139,714 | $ 846,383 | $ 627,063 | $ 434,950 | |
Transformation services | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Total revenue | [1] | 15,203 | 32,916 | $ 29,466 | ||||||||
Services | Transformation services | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Total revenue | 15,203 | 32,916 | ||||||||||
Services | Clinical solutions | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Total revenue | 458,991 | 228,464 | ||||||||||
Services | Administrative solutions | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Total revenue | $ 198,618 | $ 264,104 | ||||||||||
[1] | See Note 18 for amounts related to related parties included in these line items. |
Revenue Recognition - Transacti
Revenue Recognition - Transaction Price Allocated to the Remaining Performance Obligations (Details) $ in Millions | Dec. 31, 2019USD ($) |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation | $ 164.8 |
Revenue, remaining performance obligation, percent to be recognized in current fiscal year | 48.00% |
Revenue, remaining performance obligation, percent to be recognized in next fiscal year | 80.00% |
Revenue Recognition - Contract
Revenue Recognition - Contract Balances (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | ||
Short-term receivables | $ 71,707 | $ 78,380 |
Long-term receivables | 709 | 6,550 |
Short-term contract assets | 1,751 | 2,102 |
Contract assets (noncurrent) | 999 | 961 |
Short-term deferred revenue | 19,828 | 20,584 |
Long-term deferred revenue | 1,330 | 1,502 |
Contract Assets Rollforward | ||
Contract with customer, assets | 2,750 | 3,063 |
Reclassification to receivables, as the right to consideration becomes unconditional | (2,177) | |
Contract assets recognized, net of reclassification to receivables | 1,864 | |
Deferred Revenue Rollforward | ||
Contract with customer, liability | 21,158 | 22,086 |
Reclassification to revenue, as a result of performance obligations satisfied | (17,867) | |
Cash received in advance of satisfaction of performance obligations | 16,939 | |
Revenue recognized from performed obligations | $ 1,100 | $ 18,000 |
Revenue Recognition - Contrac_2
Revenue Recognition - Contract Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Capitalized Contract Cost [Line Items] | |||
Contract cost amortization | $ 5,723 | $ 2,703 | $ 0 |
Capitalized contract cost, amortization period | 5 years | ||
Bonuses and Commissions | |||
Capitalized Contract Cost [Line Items] | |||
Contract cost assets | $ 4,700 | 1,500 | |
Contract cost amortization | 1,000 | 300 | |
Contract Fulfillment Costs | |||
Capitalized Contract Cost [Line Items] | |||
Contract cost assets | 31,800 | 17,600 | |
Contract cost amortization | $ 4,700 | $ 2,400 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property and Equipment [Line Items] | |||
Total property and equipment | $ 140,169 | $ 105,366 | |
Accumulated depreciation and amortization expenses | (55,014) | (31,738) | |
Total property and equipment, net | 85,155 | 73,628 | |
Depreciation expense | 23,300 | 17,300 | $ 9,200 |
Capitalized computer software, amortization | 18,700 | 12,400 | 4,900 |
Computer hardware | |||
Property and Equipment [Line Items] | |||
Total property and equipment | 11,604 | 10,421 | |
Furniture and equipment | |||
Property and Equipment [Line Items] | |||
Total property and equipment | 3,649 | 3,187 | |
Internal-use software development costs | |||
Property and Equipment [Line Items] | |||
Total property and equipment | 112,501 | 81,640 | |
Total property and equipment, net | 74,900 | 62,800 | |
Capitalized computer software additions | 30,900 | 33,100 | $ 27,100 |
Leasehold improvements | |||
Property and Equipment [Line Items] | |||
Total property and equipment | $ 12,415 | $ 10,118 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, Net - Impairment Testing (Details) $ / shares in Units, $ in Thousands | Oct. 31, 2019unit$ / shares | Oct. 31, 2019$ / shares | Dec. 31, 2019USD ($) | Dec. 31, 2019USD ($)reporting_unit | Dec. 31, 2019USD ($)unit | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Finite-Lived Intangible Assets [Line Items] | |||||||
Number of reporting units for goodwill testing | 3 | 4 | 4 | ||||
Share price (in dollars per share) | $ / shares | $ 6.59 | $ 6.59 | |||||
Goodwill, impairment testing, percentage share price decrease | 43.50% | ||||||
Goodwill | $ 572,064 | $ 572,064 | $ 572,064 | $ 768,124 | $ 628,186 | ||
Number of reporting units, fair value in excess of carrying amount | unit | 1 | ||||||
Goodwill impairment | 199,800 | $ 0 | $ 0 | ||||
Valuation, Income Approach | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
Goodwill | 431,700 | $ 431,700 | $ 431,700 | ||||
Goodwill impairment | $ 199,800 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets, Net - Schedule of Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill [Roll Forward] | |||
Balance as of beginning of period | $ 768,124 | $ 628,186 | |
Goodwill acquired | 3,416 | 140,169 | |
Measurement period adjustments | 351 | (117) | |
Impairment | (199,800) | 0 | $ 0 |
Foreign currency translation | (27) | (114) | |
Balance as of end of period | 572,064 | 768,124 | 628,186 |
Services | |||
Goodwill [Roll Forward] | |||
Balance as of beginning of period | 762,419 | 628,186 | |
Goodwill acquired | 3,416 | 134,343 | |
Measurement period adjustments | 351 | 4 | |
Impairment | (199,800) | ||
Foreign currency translation | (27) | (114) | |
Balance as of end of period | 566,359 | 762,419 | 628,186 |
True Health | |||
Goodwill [Roll Forward] | |||
Balance as of beginning of period | 5,705 | 0 | |
Goodwill acquired | 0 | 5,826 | |
Measurement period adjustments | 0 | (121) | |
Impairment | 0 | ||
Foreign currency translation | 0 | 0 | |
Balance as of end of period | $ 5,705 | $ 5,705 | $ 0 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets, Net - Intangible Assets, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 412,514 | $ 403,438 | |
Accumulated Amortization | 104,055 | 68,402 | |
Total future amortization of intangible assets | 308,459 | 335,036 | |
Amortization of Intangible Assets | $ 37,700 | $ 27,200 | $ 22,800 |
Corporate trade name | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted- Average Remaining Useful Life | 14 years 2 months 12 days | 15 years 2 months 12 days | |
Gross Carrying Amount | $ 23,300 | $ 23,300 | |
Accumulated Amortization | 4,891 | 3,511 | |
Total future amortization of intangible assets | $ 18,409 | $ 19,789 | |
Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted- Average Remaining Useful Life | 16 years 9 months 18 days | 18 years 1 month 6 days | |
Gross Carrying Amount | $ 291,519 | $ 281,219 | |
Accumulated Amortization | 44,750 | 29,184 | |
Total future amortization of intangible assets | $ 246,769 | $ 252,035 | |
Technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted- Average Remaining Useful Life | 2 years | 3 years | |
Gross Carrying Amount | $ 82,922 | $ 82,922 | |
Accumulated Amortization | 49,760 | 31,764 | |
Total future amortization of intangible assets | $ 33,162 | $ 51,158 | |
Below Market Leases | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted- Average Remaining Useful Life | 2 years 2 months 12 days | 4 years | |
Gross Carrying Amount | $ 2,048 | $ 4,097 | |
Accumulated Amortization | 1,334 | 3,003 | |
Total future amortization of intangible assets | $ 714 | $ 1,094 | |
Provider network contracts | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted- Average Remaining Useful Life | 3 years 8 months 12 days | 4 years 7 months 6 days | |
Gross Carrying Amount | $ 12,725 | $ 11,900 | |
Accumulated Amortization | 3,320 | 940 | |
Total future amortization of intangible assets | $ 9,405 | $ 10,960 |
Goodwill and Intangible Asset_6
Goodwill and Intangible Assets, Net - Amortization of Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2020 | $ 33,451 | |
2021 | 29,316 | |
2022 | 25,434 | |
2023 | 22,670 | |
2024 | 17,111 | |
Thereafter | 180,477 | |
Total future amortization of intangible assets | $ 308,459 | $ 335,036 |
Long-term Debt - Credit Agreeme
Long-term Debt - Credit Agreement (Details) - USD ($) | Dec. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2016 |
Secured Debt | Initial Term Loan Facility | ||||
Debt Instrument [Line Items] | ||||
Face amount | $ 75,000,000 | |||
Secured Debt | Senior Credit Facilities | ||||
Debt Instrument [Line Items] | ||||
Debt issuance costs | $ 4,700,000 | |||
Secured Debt | Senior Credit Facilities | Maximum | ||||
Debt Instrument [Line Items] | ||||
Term | 91 days | |||
Secured Debt | Senior Credit Facilities | After the Second Anniversary of the Closing of the Senior Credit Facilities but Prior to the Third Anniversary | ||||
Debt Instrument [Line Items] | ||||
Redemption, call protection premium, percentage | 4.00% | |||
Secured Debt | Senior Credit Facilities | After the Third Anniversary of the Closing of the Senior Credit Facilities but Prior to the Fourth Anniversary | ||||
Debt Instrument [Line Items] | ||||
Redemption, call protection premium, percentage | 3.00% | |||
Secured Debt | Senior Credit Facilities | After the Fourth Anniversary of the Closing of the Senior Credit Facilities but Prior to the Fifth Anniversary | ||||
Debt Instrument [Line Items] | ||||
Redemption, call protection premium, percentage | 2.00% | |||
Secured Debt | Senior Credit Facilities | Eurodollar | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 8.00% | |||
Secured Debt | Senior Credit Facilities | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 7.00% | |||
Senior Notes | Convertible Senior Notes due 2021 | ||||
Debt Instrument [Line Items] | ||||
Face amount | $ 125,000,000 | $ 125,000,000 | $ 125,000,000 | |
Interest rate | 2.00% | 2.00% | ||
Debt issuance costs | $ 4,600,000 | |||
DDTL Facility | Line of Credit | Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 50,000,000 | |||
Commitment fee percentage | 1.00% |
Long-term Debt - Warrant Agreem
Long-term Debt - Warrant Agreement (Details) - Class A Common Stock | Dec. 30, 2019$ / sharesshares |
Class of Warrant or Right [Line Items] | |
Warrants agreed to be sold (in shares) | shares | 1,513,786 |
Exercise price of warrants or rights (in dollars per share) | $ / shares | $ 8.05 |
Period during which warrants or rights exercisable, after maturity of credit agreement | 30 days |
Long-term Debt - 2025 Notes (De
Long-term Debt - 2025 Notes (Details) $ / shares in Units, shares in Millions | 1 Months Ended | 12 Months Ended | |||
Oct. 31, 2018USD ($)shares$ / shares | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Oct. 24, 2018USD ($) | Oct. 22, 2018USD ($) | |
Debt Instrument [Line Items] | |||||
Carrying amount | $ 293,667,000 | $ 221,041,000 | |||
Senior Convertible Notes Due 2025 | |||||
Debt Instrument [Line Items] | |||||
Debt issuance costs | $ 5,900,000 | ||||
Senior Notes | Senior Convertible Notes Due 2025 | |||||
Debt Instrument [Line Items] | |||||
Face amount | $ 172,500,000 | 172,500,000 | 172,500,000 | $ 22,500,000 | $ 150,000,000 |
Interest rate | 1.50% | ||||
Proceeds from issuance of debt | $ 166,600,000 | ||||
Debt issuance costs | 3,400,000 | ||||
Interest expense | 2,600,000 | 500,000 | |||
Debt conversion denominator shares per principal amount | $ 1,000 | ||||
Conversion price (in dollars per share) | $ / shares | $ 33.43 | ||||
Initial conversion amount (in shares) | shares | 5.2 | ||||
Carrying amount | $ 100,700,000 | ||||
Non-cash amortization of debt discount and debt issuance costs | $ 8,500,000 | $ 1,500,000 | |||
Repurchase covenant, repurchase price due to fundamental change as percentage of principal amount | 100.00% | ||||
Repurchase covenant, sale price as a percentage of conversion price | 130.00% | ||||
Repurchase covenant, trading days, minimum | 20 days | ||||
Repurchase covenant, consecutive trading days, minimum | 30 days | ||||
Repurchase covenant, repurchase price due to change in sale price as percentage of conversion price | 100.00% | ||||
Senior Notes | Senior Convertible Notes Due 2025 | Common Stock | |||||
Debt Instrument [Line Items] | |||||
Proceeds from issuance of debt | $ 71,800,000 | ||||
Debt issuance costs | $ 2,500,000 | ||||
Senior Notes | Senior Convertible Notes Due 2025 | Class A Common Stock | Common Stock | |||||
Debt Instrument [Line Items] | |||||
Initial conversion rate per $ 1000 principal amount | 0.0299135 |
Long-term Debt - 2021 Notes (De
Long-term Debt - 2021 Notes (Details) $ / shares in Units, shares in Millions | 1 Months Ended | 12 Months Ended | |||
Dec. 31, 2016USD ($)shares$ / shares | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 30, 2019 | |
Debt Instrument [Line Items] | |||||
Amortization of deferred financing costs | $ 9,370,000 | $ 2,455,000 | $ 914,000 | ||
Senior Notes | Convertible Senior Notes due 2021 | |||||
Debt Instrument [Line Items] | |||||
Face amount | $ 125,000,000 | 125,000,000 | 125,000,000 | ||
Interest rate | 2.00% | 2.00% | |||
Proceeds from issuance of debt | $ 120,400,000 | ||||
Debt issuance costs | $ 4,600,000 | ||||
Repurchase covenant, repurchase price due to fundamental change as percentage of principal amount | 100.00% | ||||
Interest expense | 2,500,000 | ||||
Amortization of deferred financing costs | $ 900,000 | $ 900,000 | $ 900,000 | ||
Debt conversion denominator shares per principal amount | $ 1,000 | ||||
Class A Common Stock | Common Stock | Senior Notes | Convertible Senior Notes due 2021 | |||||
Debt Instrument [Line Items] | |||||
Initial conversion rate per $ 1000 principal amount | 0.0416082 | ||||
Conversion price (in dollars per share) | $ / shares | $ 24.03 | ||||
Initial conversion amount (in shares) | shares | 5.2 |
Long-term Debt - Convertible Se
Long-term Debt - Convertible Senior Notes Carrying Value (Details) - USD ($) | 12 Months Ended | ||||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Oct. 31, 2018 | Oct. 24, 2018 | Oct. 22, 2018 | Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |||||||
Amortization of deferred financing costs | $ 9,370,000 | $ 2,455,000 | $ 914,000 | ||||
Senior Notes | Senior Convertible Notes Due 2025 | |||||||
Debt Instrument [Line Items] | |||||||
Carrying value | 107,169,000 | 98,730,000 | |||||
Unamortized debt discount and issuance costs allocated to debt | 65,331,000 | 73,770,000 | |||||
Principal amount | $ 172,500,000 | $ 172,500,000 | $ 172,500,000 | $ 22,500,000 | $ 150,000,000 | ||
Remaining amortization period (years) | 5 years 9 months 18 days | 6 years 9 months 18 days | |||||
Senior Notes | Senior Convertible Notes Due 2025 | Level 2 | |||||||
Debt Instrument [Line Items] | |||||||
Fair value | $ 122,000,000 | $ 158,800,000 | |||||
Senior Notes | Convertible Senior Notes due 2021 | |||||||
Debt Disclosure [Abstract] | |||||||
Amortization of deferred financing costs | 900,000 | 900,000 | $ 900,000 | ||||
Debt Instrument [Line Items] | |||||||
Carrying value | 123,237,000 | 122,311,000 | |||||
Unamortized debt discount and issuance costs allocated to debt | 1,763,000 | 2,689,000 | |||||
Principal amount | $ 125,000,000 | $ 125,000,000 | $ 125,000,000 | ||||
Remaining amortization period (years) | 1 year 10 months 24 days | 2 years 10 months 24 days | |||||
Senior Notes | Convertible Senior Notes due 2021 | Level 2 | |||||||
Debt Instrument [Line Items] | |||||||
Fair value | $ 111,300,000 | $ 133,600,000 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Jun. 30, 2019 | |
Restricted Cash and Cash Equivalents Items [Line Items] | ||||||||
Operating capital support commitment, maximum amount | $ 11,000,000 | $ 4,000,000 | $ 11,000,000 | |||||
Restricted funds | 160,823,000 | 28,340,000 | 160,823,000 | |||||
Carrying amount | $ 221,041,000 | 293,667,000 | 221,041,000 | |||||
Offering expenses | $ 0 | $ 0 | $ 1,500,000 | |||||
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 | |||||||
Reinsurance arrangement, capital amount | $ 10,000,000 | |||||||
Reinsurance arrangement, percentage of gross premiums ceded | 90.00% | 90.00% | ||||||
Reinsurance arrangement, percentage of claims liability indemnified | 90.00% | 90.00% | ||||||
Reinsurance arrangement, maximum amount of insurance risk as a percentage of premiums ceded | 105.00% | 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 | $ 3,710,000 | |||||
Collateral with financial institutions | ||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||||||
Restricted funds | 34,142,000 | 5,742,000 | 34,142,000 | |||||
Restricted cash and investments | 34,100,000 | 5,700,000 | 34,100,000 | |||||
Letter of Credit | Line of Credit | ||||||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||||||
Maximum borrowing capacity | $ 5,000,000 | $ 1,800,000 | ||||||
Line of credit, quarterly rental fee percentage | 0.80% | |||||||
Carrying amount | $ 0 | $ 0 | $ 0 | |||||
Surety 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 - Purchase Obligations (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Less than 1 year | $ 5,923 |
1 to 3 years | 5,451 |
3 to 5 years | 0 |
More than 5 years | 0 |
Total contractual obligations related to vendor contracts | $ 11,374 |
Commitments and Contingencies_3
Commitments and Contingencies - Reinsurance Agreements (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Insurance Loss Reserves [Roll Forward] | ||
Reserves for claims and performance-based arrangements attributable to the Reinsurance Agreement at the beginning of the period | $ 1,243 | $ 0 |
Reinsurance premiums assumed | 83,325 | 3,242 |
Claims assumed | 72,594 | 3,934 |
Claims-related administrative expenses | 14,024 | 551 |
Increase in reserves for claims and performance-based arrangements attributable to the Reinsurance Agreement | (3,293) | (1,243) |
Reinsurance payments | 4,536 | 0 |
Payables for claims and performance-based arrangements attributable to the Reinsurance Agreement at the end of the period | $ 0 | $ 1,243 |
Commitments and Contingencies_4
Commitments and Contingencies - Concentration Risk (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Concentration Risk [Line Items] | ||||
Percentage of cash and cash equivalents held with FDIC participating bank | 95.10% | |||
Cash and cash equivalents (including restricted cash) | $ 128,531 | $ 388,325 | $ 295,363 | $ 170,029 |
Percentage of cash and cash equivalents held in money market funds | 3.70% | |||
Percentage of cash held in international banks (less than) | 1.20% | |||
Passport | Customer Concentration Risk | Revenues | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 18.70% | 17.50% | 20.60% | |
Cook County Health and Hospitals System | Customer Concentration Risk | Accounts Receivable | Customer Receivable | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 48.40% | 23.30% | ||
New Mexico Health Connections | Customer Concentration Risk | Revenues | ||||
Concentration Risk [Line Items] | ||||
Concentration risk | 10.90% |
Leases - Narratives (Details)
Leases - Narratives (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2019 | |
Lessee, Lease, Description [Line Items] | |||
Restricted funds | $ 160,823 | $ 28,340 | |
Rent expense | $ 14,200 | $ 10,900 | |
Lease Agreements | |||
Lessee, Lease, Description [Line Items] | |||
Letters of credit outstanding, amount | 3,600 | ||
Restricted funds | $ 3,600 |
Leases - Material Office Leases
Leases - Material Office Leases (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Lessee, Lease, Description [Line Items] | |
Future Minimum Lease Commitments | $ 103,242 |
Lease Agreements | |
Lessee, Lease, Description [Line Items] | |
Letter of Credit Amount Required | $ 3,600 |
Arlington, VA | Lease Agreements | |
Lessee, Lease, Description [Line Items] | |
Lease Termination Term (in years) | 12 years 1 month 6 days |
Future Minimum Lease Commitments | $ 40,832 |
Letter of Credit Amount Required | $ 1,579 |
Chicago, IL | Lease Agreements | |
Lessee, Lease, Description [Line Items] | |
Lease Termination Term (in years) | 11 years 3 months 18 days |
Future Minimum Lease Commitments | $ 41,857 |
Letter of Credit Amount Required | $ 232 |
Louisville, KY | Lease Agreements | |
Lessee, Lease, Description [Line Items] | |
Lease Termination Term (in years) | 6 years 6 months |
Future Minimum Lease Commitments | $ 0 |
Letter of Credit Amount Required | 0 |
Prepaid rent | $ 4,300 |
Pune, India | Lease Agreements | |
Lessee, Lease, Description [Line Items] | |
Lease Termination Term (in years) | 3 years 9 months 18 days |
Future Minimum Lease Commitments | $ 3,265 |
Letter of Credit Amount Required | $ 0 |
Brea, CA | Lease Agreements | |
Lessee, Lease, Description [Line Items] | |
Lease Termination Term (in years) | 2 years 4 months 24 days |
Future Minimum Lease Commitments | $ 2,547 |
Letter of Credit Amount Required | $ 0 |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Leases [Abstract] | |
Operating lease cost | $ 13,903 |
Amortization of right-of-use assets | 598 |
Interest expense | 26 |
Variable lease cost | 4,177 |
Total lease cost | $ 18,704 |
Leases - Maturity of Lease Liab
Leases - Maturity of Lease Liabilities (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 10,747 |
2021 | 10,975 |
2022 | 9,822 |
2023 | 9,191 |
2024 | 8,614 |
Thereafter | 53,893 |
Total lease payments | 103,242 |
Less: | |
Interest | 28,115 |
Present value of lease liabilities | 75,127 |
Lessee, operating lease, lease not yet commenced, undiscounted amount | $ 100 |
Leases - Weighted-average Disco
Leases - Weighted-average Discount Rate and Weighted-remaining Lease Terms (Details) | Dec. 31, 2019 |
Leases [Abstract] | |
Weighted average discount rate | 6.25% |
Weighted average remaining lease term | 9 years 10 months 24 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 | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Class of Stock [Line Items] | |||||||||||
Net loss | $ (199,293) | $ (25,738) | $ (31,900) | $ (48,649) | $ (17,540) | $ (12,555) | $ (10,031) | $ (14,065) | $ (305,580) | $ (54,191) | $ (69,767) |
Less: | |||||||||||
Net loss attributable to non-controlling interests | (1,197) | (217) | (285) | (1,910) | (853) | (126) | (115) | (439) | (3,609) | (1,533) | (9,102) |
Net loss attributable to common shareholders of Evolent Health, Inc. | $ (198,096) | $ (25,521) | $ (31,615) | $ (46,739) | $ (16,687) | $ (12,429) | $ (9,916) | $ (13,626) | $ (301,971) | $ (52,658) | $ (60,665) |
Weighted-average common shares outstanding - Basic and diluted (in shares) | 82,364,000 | 77,338,000 | 64,351,000 | ||||||||
Loss per common share | |||||||||||
Basic and diluted (in dollars per share) | $ (2.36) | $ (0.30) | $ (0.38) | $ (0.59) | $ (0.21) | $ (0.16) | $ (0.13) | $ (0.18) | $ (3.67) | $ (0.68) | $ (0.94) |
Class B Common Stock | |||||||||||
Loss per common share | |||||||||||
Convertible preferred stock, shares issued upon conversion (in shares) | 1 | 1 |
Earnings (Loss) Per Common Sh_4
Earnings (Loss) Per Common Share - Antidilutive Securities (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
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) | 13,897 | 11,551 | 15,840 |
Exchangeable Class B common stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of antidilutive securities excluded from the calculation of earning per share (in shares) | 1,399 | 1,831 | 7,285 |
RSUs | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of antidilutive securities excluded from the calculation of earning per share (in shares) | 813 | 1,027 | 525 |
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) | 1,324 | 2,517 | 2,829 |
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 | 6,176 | 5,201 |
Stock-based Compensation - 2011
Stock-based Compensation - 2011 and 2015 Equity Incentive Plans (Details) - shares shares in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Jun. 13, 2018 | May 01, 2015 | Sep. 23, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options issued (in shares) | 4,828 | 5,089 | |||
RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of RSUs and shares of restricted stock issued (in shares) | 1,493 | 1,391 | |||
2011 Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options issued (in shares) | 4,800 | ||||
2011 Plan | Restricted stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of RSUs and shares of restricted stock issued (in shares) | 3,800 | ||||
2011 Plan | Class A Common Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares authorized (in shares) | 9,100 | ||||
2015 Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options issued (in shares) | 2,800 | 3,300 | |||
2015 Plan | RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of RSUs and shares of restricted stock issued (in shares) | 4,400 | 2,100 | |||
2015 Plan | Class A Common Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares authorized (in shares) | 10,500 | 6,000 |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock-based Compensation Expense (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Share-based compensation expense | $ 15,618,000 | $ 17,609,000 | $ 20,437,000 |
Stock-based compensation capitalized as software development costs | 0 | 0 | 0 |
Cost of revenue | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Share-based compensation expense | 2,673,000 | 1,475,000 | 1,371,000 |
Selling, general and administrative expenses | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Share-based compensation expense | 12,945,000 | 16,134,000 | 19,066,000 |
Stock options | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Share-based compensation expense | 4,237,000 | 9,008,000 | 15,487,000 |
Performance-based stock options | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Share-based compensation expense | 448,000 | 447,000 | 447,000 |
RSUs | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Share-based compensation expense | 8,877,000 | 7,766,000 | 4,503,000 |
Performance-based RSUs | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Share-based compensation expense | (388,000) | 388,000 | 0 |
LSUs | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Share-based compensation expense | $ 2,444,000 | $ 0 | $ 0 |
Stock-based Compensation - Unre
Stock-based Compensation - Unrecognized Compensation Expense (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount | $ 25,027 |
Stock options | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |
Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount | $ 5,829 |
Weighted Average Period | 2 years 2 months 19 days |
Performance-based stock options | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |
Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount | $ 75 |
Weighted Average Period | 5 days |
RSUs | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 12,767 |
Weighted Average Period | 2 years 6 months 29 days |
LSUs | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 6,356 |
Weighted Average Period | 2 years 2 months 1 day |
Stock-based Compensation - St_2
Stock-based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
Expiration period | 10 years | ||
Weighted-average fair value per option granted (in dollars per share) | $ 6.52 | $ 6.30 | $ 8.38 |
Assumptions: | |||
Expected term (in years) | 6 years 3 months | 6 years 3 months | 6 years 3 months |
Expected volatility | 51.60% | 38.90% | 42.80% |
Risk-free interest rate, minimum | 1.90% | 2.60% | 1.90% |
Risk-free interest rate, maximum | 2.70% | 2.90% | 2.10% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Fair value of options vested | $ 5.9 | $ 11.3 | $ 13 |
Intrinsic value of options exercised | $ 0.6 | $ 25.1 | $ 14.2 |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
Vesting percentage | 25.00% | ||
Expiration period | 10 years |
Stock-based Compensation - St_3
Stock-based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Options | ||
Outstanding at the beginning of the period (in shares) | 5,089 | |
Granted (in shares) | 437 | |
Exercised (in shares) | (138) | |
Forfeited (in shares) | (560) | |
Outstanding at the end of the period (in shares) | 4,828 | 5,089 |
Vested and expected to vest at the end of the period (in shares) | 4,553 | |
Exercisable at the end of the period (in shares) | 3,453 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Outstanding at the beginning of the period (in dollars per share) | $ 9.82 | |
Granted (in dollars per share) | 12.48 | |
Exercised (in dollars per share) | 7.91 | |
Forfeited (in dollars per share) | 15.63 | |
Outstanding at the end of the period (in dollars per share) | 9.44 | $ 9.82 |
Vested and expected to vest at the end of the period (in dollars per share) | 9.16 | |
Exercisable at the end of the period (in dollars per share) | $ 7.58 | |
Weighted Average Remaining Contractual Term | ||
Outstanding | 6 years 3 days | 6 years 10 months 9 days |
Vested and expected to vest | 5 years 10 months 28 days | |
Exercisable | 5 years 2 months 23 days | |
Aggregate Intrinsic Value | ||
Outstanding | $ (1,880) | $ 51,556 |
Vested and expected to vest | (488) | |
Exercisable | $ 5,082 |
Stock-based Compensation - Perf
Stock-based Compensation - Performance-based Stock Option Awards (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2016 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 437 | |||
Expected volatility | 51.60% | 38.90% | 42.80% | |
Expected term (in years) | 6 years 3 months | 6 years 3 months | 6 years 3 months | |
Dividend yield | 0.00% | 0.00% | 0.00% | |
Weighted-average fair value per option granted (in dollars per share) | $ 6.52 | $ 6.30 | $ 8.38 | |
Outstanding at the end of the period (in shares) | 4,828 | 5,089 | ||
Vested and expected to vest at the end of the period (in shares) | 4,553 | |||
Weighted Average Exercise Price, outstanding at the end of the period (in dollars per share) | $ 9.44 | $ 9.82 | ||
Weighted Average Exercise Price, vested and expected to vest at the end of the period (in dollars per share) | $ 9.16 | |||
Weighted Average Remaining Contractual Term | ||||
Outstanding | 6 years 3 days | 6 years 10 months 9 days | ||
Vested and expected to vest | 5 years 10 months 28 days | |||
Aggregate Intrinsic Value | ||||
Outstanding | $ (1,880) | $ 51,556 | ||
Vested and expected to vest | $ (488) | |||
Performance-based stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 300 | |||
Risk free interest rate | 1.83% | |||
Expected volatility | 65.00% | |||
Expected term (in years) | 10 years | |||
Dividend yield | 0.00% | |||
Weighted-average fair value per option granted (in dollars per share) | $ 6.68 | |||
Outstanding at the end of the period (in shares) | 268 | 268 | ||
Vested and expected to vest at the end of the period (in shares) | 268 | |||
Weighted Average Exercise Price, outstanding at the end of the period (in dollars per share) | $ 10.27 | $ 10.27 | ||
Weighted Average Exercise Price, vested and expected to vest at the end of the period (in dollars per share) | $ 10.27 | |||
Weighted Average Remaining Contractual Term | ||||
Outstanding | 6 years 2 months 1 day | 7 years 2 months 1 day | ||
Vested and expected to vest | 6 years 2 months 1 day | |||
Aggregate Intrinsic Value | ||||
Outstanding | $ (326) | $ 2,592 | ||
Vested and expected to vest | $ (326) | |||
Performance-based stock options | Vest on March 1, 2019 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 50.00% | |||
Performance-based stock options | Vest on March 1, 2020 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 50.00% | |||
Performance-based stock options | Class A Common Stock | Tranche One | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting rights, share price threshold (in dollars per share) | $ 13.35 | |||
Vesting percentage | 33.33% | |||
Consecutive term | 90 days | |||
Performance-based stock options | Class A Common Stock | Tranche Two | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting rights, share price threshold (in dollars per share) | $ 16.43 | |||
Vesting percentage | 33.33% | |||
Consecutive term | 90 days | |||
Performance-based stock options | Class A Common Stock | Tranche Three | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting rights, share price threshold (in dollars per share) | $ 19.51 | |||
Vesting percentage | 33.33% | |||
Consecutive term | 90 days |
Stock-based Compensation - Rest
Stock-based Compensation - Restricted Stock Units (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Requisite service period for vesting | 4 years | ||
Vesting percentage | 25.00% | ||
Total RSUs | |||
Outstanding at the beginning of the period (in shares) | 1,391 | ||
Granted (in shares) | 976 | ||
Forfeited / Canceled (in shares) | (337) | ||
Vested (in shares) | (537) | ||
Outstanding at the end of the period (in shares) | 1,493 | 1,391 | |
Weighted-Average Grant-Date Fair Value | |||
Outstanding at the beginning of the period (in dollars per share) | $ 16.01 | ||
Granted (in dollars per share) | 10.66 | $ 16.12 | $ 19.35 |
Forfeited (in dollars per share) | 14.81 | ||
Vested (in dollars per share) | 17.54 | ||
Outstanding at the end of the period (in dollars per share) | $ 12.23 | $ 16.01 | |
Aggregate intrinsic value, vested | $ 7.3 | $ 4.8 | $ 2.9 |
RSUs | Non-Employee Directors | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 1 year | ||
New Century Health | RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 1 year |
Stock-based Compensation - Leve
Stock-based Compensation - Leveraged Stock Units (Details) - $ / shares shares in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 51.60% | 38.90% | 42.80% |
Expected term | 6 years 3 months | 6 years 3 months | 6 years 3 months |
Dividend yield | 0.00% | 0.00% | 0.00% |
LSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted (in shares) | 0.7 | ||
Risk free interest rate | 2.54% | ||
Expected volatility | 51.65% | ||
Expected term | 10 years | ||
Dividend yield | 0.00% | ||
Granted (in dollars per share) | $ 12.85 | ||
LSUs | Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 75.00% | ||
Award vesting rights, stock price increase, percentage | 33.30% | ||
LSUs | Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 100.00% | ||
Award vesting rights, stock price increase, percentage | 50.00% | ||
LSUs | Tranche Three | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 150.00% | ||
Award vesting rights, stock price increase, percentage | 100.00% | ||
LSUs | Tranche Four | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 200.00% | ||
Award vesting rights, stock price increase, percentage | 200.00% |
Stock-based Compensation - Le_2
Stock-based Compensation - Leveraged Stock Units Activity (Details) - LSUs $ / shares in Units, shares in Thousands, $ in Thousands | Dec. 31, 2019USD ($)$ / sharesshares |
Outstanding as of December 31, 2019 | |
Leveraged Stock Units (in shares) | shares | 685 |
Weighted Average Grant Date Fair Value (in dollars per share) | $ / shares | $ 12.85 |
Weighted Average Remaining Contractual Term | 9 years 2 months 1 day |
Aggregate Intrinsic Value | $ | $ (2,603) |
Vested and expected to vest after December 31, 2019 | |
Leveraged Stock Units (in shares) | shares | 685 |
Weighted Average Grant Date Fair Value (in dollars per share) | $ / shares | $ 12.85 |
Weighted Average Remaining Contractual Term | 9 years 2 months 1 day |
Aggregate Intrinsic Value | $ | $ (2,603) |
Stock-based Compensation - Pe_2
Stock-based Compensation - Performance-based RSUs (Details) $ in Millions | 1 Months Ended | 12 Months Ended | |
Aug. 31, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
Performance-based RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 18 months | ||
Authorized amount | $ 8.6 | ||
Risk-neutral probability exceeds threshold | Contingent Consideration Liability | Real options approach | New Century Health | Fair Value, Recurring | Level 3 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Measurement input | 0.390 | ||
Risk-neutral probability meets earn-out cap | Contingent Consideration Liability | Real options approach | New Century Health | Fair Value, Recurring | Level 3 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Measurement input | 0.240 | 0.240 | |
Accounting Standards Update 2017-09 | Performance-based RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Incremental cost | $ 4.7 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | Dec. 22, 2018 | Dec. 31, 2017 | Dec. 22, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Contingency [Line Items] | |||||||
Provision (benefit) for income taxes | $ (21,536) | $ 40 | $ (6,637) | ||||
Taxes payable | $ 600 | $ 500 | |||||
Effective rate | 6.70% | (0.10%) | 8.70% | ||||
Deferred tax liabilities, indefinite-lived intangible assets | $ 1,900 | ||||||
Prior year effective income tax percentage | 35.00% | ||||||
Unrecognized tax benefits | $ 762 | 753 | $ 934 | $ 762 | $ 0 | ||
Effective income tax rate, Tax Cuts and Jobs Act, percent | 0.21 | ||||||
Tax cuts and jobs act, incomplete accounting, provisional income tax expense | $ 5,800 | ||||||
Tax cuts and jobs act, measurement period adjustment, income tax expense (benefit) | $ (300) | ||||||
Unrecognized tax benefits that would not impact effective tax rate | $ 800 | ||||||
Tax receivable agreement, percent of cash savings paid to shareholders | 85.00% | ||||||
Tax receivable agreement, percent of cash savings not paid to shareholders | 15.00% | ||||||
Federal and state research tax credits | $ 1,828 | $ 1,828 | |||||
Periods Prior to June 2015 | |||||||
Income Tax Contingency [Line Items] | |||||||
Net operating loss carryforwards | 79,300 | ||||||
Federal | |||||||
Income Tax Contingency [Line Items] | |||||||
Federal and state research tax credits | 2,100 | ||||||
State and Local Jurisdiction | |||||||
Income Tax Contingency [Line Items] | |||||||
Federal and state research tax credits | 300 | ||||||
Finite-lived Tax Credit Carryforward | Federal | |||||||
Income Tax Contingency [Line Items] | |||||||
Net operating loss carryforwards | 203,000 | ||||||
Finite-lived Tax Credit Carryforward | State and Local Jurisdiction | |||||||
Income Tax Contingency [Line Items] | |||||||
Net operating loss carryforwards | 257,000 | ||||||
Indefinite-lived Tax Credit Carryforward | Federal | |||||||
Income Tax Contingency [Line Items] | |||||||
Net operating loss carryforwards | 236,000 | ||||||
Indefinite-lived Tax Credit Carryforward | State and Local Jurisdiction | |||||||
Income Tax Contingency [Line Items] | |||||||
Net operating loss carryforwards | $ 137,000 |
Income Taxes - Schedule of Loss
Income Taxes - Schedule of Loss Before Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest [Abstract] | |||
Domestic | $ (328,161) | $ (54,681) | $ (76,404) |
Foreign | 1,045 | 530 | 0 |
Loss before income taxes and non-controlling interests | $ (327,116) | $ (54,151) | $ (76,404) |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current | |||
Federal | $ 1,175 | $ 458 | $ 368 |
State and local | 14 | 9 | 266 |
Foreign | 399 | 251 | 0 |
Total current tax expense | 1,588 | 718 | 634 |
Deferred | |||
Federal | (27,334) | (14,820) | 3,202 |
State and local | (5,046) | (2,252) | (3,102) |
Foreign | 6 | (49) | 0 |
Total deferred tax expense | (32,374) | (17,121) | 100 |
Change in valuation allowance | 9,250 | 16,443 | (7,371) |
Total tax expense (benefit) | $ (21,536) | $ 40 | $ (6,637) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Statutory Rate to Effective Tax Rate (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
U.S. statutory tax rate | 21.00% | 21.00% | 35.00% |
U.S. state income taxes, net of U.S. federal tax benefit | 4.40% | 3.60% | 3.30% |
Foreign earnings at other than U.S. rates | (0.10%) | (0.20%) | 0.00% |
Change in valuation allowance | (2.80%) | (30.40%) | (34.00%) |
Change in valuation allowance, tax reform | 0.00% | 0.00% | 43.70% |
Impact of tax reform | 0.00% | 0.00% | (36.00%) |
Non-deductible goodwill impairment | (15.80%) | 0.00% | 0.00% |
Non-controlling interest | (0.30%) | (0.70%) | (4.60%) |
Excess tax benefits on stock-based compensation | (0.20%) | 3.90% | 3.10% |
Federal and state research tax credits | 0.00% | 4.50% | 0.00% |
Change in uncertain tax positions | 0.10% | (1.10%) | 0.00% |
Effect of investment in MHG | (1.40%) | 0.00% | 0.00% |
Change in indefinite reinvestment assertion for domestic subsidiaries | 2.60% | 0.00% | 0.00% |
Other, net | (0.80%) | (0.70%) | (1.80%) |
Effective rate | 6.70% | (0.10%) | 8.70% |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred Tax Assets | ||
Start-up and organizational costs | $ 149 | $ 160 |
Internally developed software costs | 0 | 3,283 |
Goodwill | 19,142 | 0 |
Operating lease liabilities | 18,055 | 0 |
Accrued expenses | 9,534 | 0 |
Stock based compensation | 8,899 | 0 |
Net operating loss carryforwards | 112,316 | 76,019 |
Federal and state research tax credits | 1,828 | 1,828 |
Other | 3,941 | 861 |
Subtotal | 173,864 | 82,151 |
Valuation allowance | (50,815) | (37,037) |
Total deferred tax assets | 123,049 | 45,114 |
Deferred Tax Liabilities | ||
Internally developed software costs | 14,603 | 0 |
Intangible assets | 58,655 | 26,710 |
Outside basis differences | 5,865 | 43,492 |
Right-of-use assets - Operating | 16,180 | 0 |
Contract fulfillment costs | 9,510 | 0 |
Convertible debt | 15,732 | 0 |
Fixed assets | 796 | 0 |
Other | 3,650 | 0 |
Total deferred tax liabilities | 124,991 | 70,202 |
Net deferred tax assets (liabilities) | $ (1,942) | $ (25,088) |
Income Taxes - Changes in Valua
Income Taxes - Changes in Valuation Allowance (Details) - Valuation Allowance of Deferred Tax Assets - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at beginning-of-year | $ 37,037 | $ 53,201 | $ 26,376 |
Charged to costs and expenses | 9,250 | 16,443 | (7,371) |
Charged to other accounts | 4,528 | (32,607) | 34,196 |
Balance at end-of-year | 50,815 | 37,037 | 53,201 |
Valuation allowance increase (decrease) charged to additional paid-in capital | $ 4,500 | $ 32,600 | $ (34,200) |
Income Taxes - Changes In Unrec
Income Taxes - Changes In Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance at beginning-of-year | $ 934 | $ 762 | $ 0 |
Gross increases - tax positions in prior period | 0 | 934 | 1,108 |
Gross decreases - tax positions in prior period | 0 | (762) | 0 |
Gross increases - tax positions in current period | 0 | 0 | 74 |
Lapse of statute of limitations | (181) | 0 | 0 |
Change in tax rate | 0 | 0 | (420) |
Balance at end-of-year | $ 753 | $ 934 | $ 762 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |||
Employer discretionary contribution amount | $ 2.6 | $ 8.6 | $ 8 |
Investments In and Advances t_3
Investments In and Advances to Equity Method Investees (Details) - USD ($) $ in Thousands | Dec. 30, 2019 | May 24, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Schedule of Equity Method Investments [Line Items] | |||||
Proportionate share of losses | $ 9,465 | $ 4,736 | $ 1,755 | ||
Amount received from escrow in asset acquisition | 500 | 0 | 0 | ||
Gain on disposal of assets | 9,600 | 0 | 0 | ||
Equity Method Investee | Services Agreements | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Income from long-term services agreement | $ 41,500 | $ 10,700 | $ 400 | ||
Minimum | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Economic interest percentage | 4.00% | ||||
Voting interest percentage | 25.00% | 4.00% | |||
Maximum | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Economic interest percentage | 70.00% | ||||
Voting interest percentage | 57.00% | 40.00% | |||
Passport | Variable Interest Entity, Not Primary Beneficiary | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Noncontrolling interest in joint ventures | 30.00% | ||||
Equity method investment, ownership percentage | 70.00% | ||||
Payments to acquire equity method investments | $ 70,000 | ||||
Equity method investment, ownership percentage | 57.00% | ||||
Global Health | Variable Interest Entity, Not Primary Beneficiary | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investment, ownership percentage | 45.00% | 43.00% | |||
Payments to acquire equity method investments | $ 15,000 | ||||
Business acquisition, equity interest issued or issuable, number of shares (in shares) | 1,577,841 | ||||
Gain on disposal of assets | $ 9,600 | ||||
Contingent consideration, liability | $ 5,900 | ||||
Equity method investment, ownership percentage | 29.00% |
Investments In and Advances t_4
Investments In and Advances to Equity Method Investees - Schedule of Assets and Liabilities and Maximum Loss Exposure of Unconsolidated VIEs (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Passport | ||
ASSETS | ||
Current assets | $ 271,894 | |
Non current assets | 577 | |
Total assets | 272,471 | |
Liabilities | ||
Current liabilities | 181,206 | |
Non current liabilities | 40 | |
Total liabilities | 181,246 | |
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure [Abstract] | ||
Investment carrying value | 70,000 | |
Loan and interest receivable | 41,387 | |
Guarantee | 25,000 | |
Maximum exposure | $ 136,387 | |
Global Health | ||
ASSETS | ||
Current assets | $ 50,729 | |
Non current assets | 39,259 | |
Total assets | 89,988 | |
Liabilities | ||
Current liabilities | 55,442 | |
Non current liabilities | 44,650 | |
Total liabilities | 100,092 | |
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure [Abstract] | ||
Investment carrying value | 46,456 | |
Loan and interest receivable | 0 | |
Guarantee | 0 | |
Maximum exposure | $ 46,456 |
Investments In and Advances t_5
Investments In and Advances to Affiliates - Summarized Financial Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Balance Sheet Related Disclosures [Abstract] | |||
Current assets | $ 356,085 | $ 19,698 | |
Non current assets | 43,744 | 67 | |
Liabilities, Current | 267,300 | 12,748 | |
Noncurrent liabilities | 57,599 | 0 | |
Non controlling interests | 70,535 | 6,608 | |
Income Statement Related Disclosures [Abstract] | |||
Revenue | 387,960 | 3,591 | $ 0 |
Operating loss | (60,572) | (13,085) | 0 |
Net loss | (73,685) | (13,066) | 0 |
Net loss attributable to entity | $ (23,348) | $ (4,099) | $ 0 |
Non-controlling Interests (Deta
Non-controlling Interests (Details) - USD ($) shares in Thousands, $ in Thousands | Oct. 01, 2018 | May 31, 2019 | Nov. 30, 2018 | Mar. 31, 2018 | Aug. 31, 2017 | Jun. 30, 2017 | May 31, 2017 | Mar. 31, 2017 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Apr. 30, 2019 | Oct. 31, 2018 | Feb. 28, 2018 | Jul. 31, 2017 | May 30, 2017 | Feb. 28, 2017 | Jun. 05, 2015 |
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||||||||||||||||||||||||||
Non-controlling interests balance as of beginning-of-year | $ 45,532 | $ 45,532 | ||||||||||||||||||||||||
Amount attributable to NCI / issuance of class B common stock | 6,500 | $ 0 | ||||||||||||||||||||||||
Net income (loss) attributable to non-controlling interests | $ 1,197 | $ 217 | $ 285 | 1,910 | $ 853 | $ 126 | $ 115 | $ 439 | 3,609 | 1,533 | $ 9,102 | |||||||||||||||
Reclassification of non-controlling interests | 0 | 0 | $ 0 | |||||||||||||||||||||||
Non-controlling interests balance as of end-of-year | $ 6,689 | $ 45,532 | $ 6,689 | $ 45,532 | ||||||||||||||||||||||
Evolent Health LLC | ||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||||||||||||||
Parent's ownership percentage | 95.30% | 99.20% | 96.10% | 98.90% | 96.60% | 96.10% | 90.50% | 83.90% | 100.00% | 96.10% | 99.00% | 98.90% | 100.00% | 96.10% | 77.40% | 99.10% | 95.30% | 96.60% | 96.10% | 84.90% | 77.40% | 70.30% | ||||
Non-controlling Interests | ||||||||||||||||||||||||||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||||||||||||||||||||||||||
Non-controlling interests balance as of beginning-of-year | $ 45,532 | $ 35,427 | $ 45,532 | $ 35,427 | ||||||||||||||||||||||
Cumulative-effect adjustment from adoption of new accounting principle | 0 | 594 | ||||||||||||||||||||||||
Decrease in non-controlling interests as a result of Class B Exchanges | (42,377) | (34,682) | ||||||||||||||||||||||||
Net income (loss) attributable to non-controlling interests | (3,609) | (1,533) | ||||||||||||||||||||||||
Reclassification of non-controlling interests | 643 | 2,939 | $ 3,824 | |||||||||||||||||||||||
Non-controlling interests balance as of end-of-year | $ 6,689 | $ 45,532 | $ 6,689 | $ 45,532 | $ 35,427 | |||||||||||||||||||||
Class A Common Stock | ||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||||||||||||||
Issuance of common stock (in shares) | 8,800 | 20,100 | ||||||||||||||||||||||||
Proceeds from issuance of common stock, net of payments of stock issuance costs | $ 166,900 | |||||||||||||||||||||||||
Class A Common Stock | Common Stock | ||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||||||||||||||
Issuance of common stock (in shares) | 1,600 | 800 | 3,000 | 4,500 | 7,000 | 7,500 | 3,100 | 8,816 | ||||||||||||||||||
Class A Common Stock | Investor Stockholders | ||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||||||||||||||
Issuance of common stock (in shares) | 12,600 | |||||||||||||||||||||||||
Class A Common Stock | Investor Stockholders | Common Stock | ||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||||||||||||||
Issuance of common stock (in shares) | 3,800 | 3,800 | 4,400 | |||||||||||||||||||||||
Class A Common Stock | Management Selling Stockholders | ||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||||||||||||||
Issuance of common stock (in shares) | 100 | |||||||||||||||||||||||||
Class A Common Stock | Management Selling Stockholders | Common Stock | ||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||||||||||||||
Issuance of common stock (in shares) | 100 | |||||||||||||||||||||||||
Class A Common Stock | The Advisory Board | Common Stock | ||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||||||||||||||
Issuance of common stock (in shares) | 1,800 | |||||||||||||||||||||||||
Class A Common Stock | TPG | Common Stock | ||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||||||||||||||
Issuance of common stock (in shares) | 700 | |||||||||||||||||||||||||
Class B Common Stock | ||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||||||||||||||
Income tax expense, obligations related to exchanges | $ 1,300 | |||||||||||||||||||||||||
Class B Common Stock | Common Stock | ||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||||||||||||||
Issuance of common stock (in shares) | 3,120 | |||||||||||||||||||||||||
Class B Common Stock | Non-controlling Interests | ||||||||||||||||||||||||||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||||||||||||||||||||||||||
Amount attributable to NCI / issuance of class B common stock | $ 0 | $ 42,787 | ||||||||||||||||||||||||
Evolent Health, Selling Stockholders | Class A Common Stock | ||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||||||||||||||
Issuance of common stock (in shares) | 7,400 | |||||||||||||||||||||||||
Evolent Health, Selling Stockholders | Class A Common Stock | Common Stock | ||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||||||||||||||
Issuance of common stock (in shares) | 100 | 1,200 | 700 | 3,100 | 3,100 | |||||||||||||||||||||
New Century Health | Class B Common Stock | ||||||||||||||||||||||||||
Noncontrolling Interest [Line Items] | ||||||||||||||||||||||||||
Consideration transferred, equity interests issued and issuable, shares issued (in shares) | 3,100 |
Fair Value Measurement - Assets
Fair Value Measurement - Assets and Liabilities on Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Liabilities | |||
Contingent consideration, fair value | $ 16,975 | $ 8,800 | $ 8,700 |
Warrants and rights outstanding (in shares) | 1,513,786 | ||
Fair Value, Recurring | |||
Assets | |||
Cash and cash equivalents | $ 3,698 | 11,391 | |
Restricted cash and restricted investments | 1,004 | 31,226 | |
Total fair value of assets measured on a recurring basis | 4,702 | 42,617 | |
Liabilities | |||
Contingent consideration, liability | 9,883 | 8,800 | |
Total fair value of liabilities measured on a recurring basis | 16,975 | ||
Level 1 | Fair Value, Recurring | |||
Assets | |||
Cash and cash equivalents | 3,698 | 11,391 | |
Restricted cash and restricted investments | 1,004 | 31,226 | |
Total fair value of assets measured on a recurring basis | 4,702 | 42,617 | |
Liabilities | |||
Contingent consideration, liability | 0 | 0 | |
Warrants | 0 | ||
Total fair value of liabilities measured on a recurring basis | 0 | ||
Level 2 | Fair Value, Recurring | |||
Assets | |||
Cash and cash equivalents | 0 | 0 | |
Restricted cash and restricted investments | 0 | 0 | |
Total fair value of assets measured on a recurring basis | 0 | 0 | |
Liabilities | |||
Contingent consideration, liability | 0 | 0 | |
Warrants | 0 | ||
Total fair value of liabilities measured on a recurring basis | 0 | ||
Level 3 | Fair Value, Recurring | |||
Assets | |||
Cash and cash equivalents | 0 | 0 | |
Restricted cash and restricted investments | 0 | 0 | |
Total fair value of assets measured on a recurring basis | 0 | 0 | |
Liabilities | |||
Contingent consideration, liability | 9,883 | 8,800 | |
Warrants | 7,092 | ||
Total fair value of liabilities measured on a recurring basis | 16,975 | ||
Passport | Fair Value, Recurring | |||
Liabilities | |||
Contingent consideration, liability | 3,700 | 5,600 | |
Global Health | Fair Value, Recurring | |||
Liabilities | |||
Contingent consideration, liability | 5,200 | ||
Other Transactions | Fair Value, Recurring | |||
Liabilities | |||
Contingent consideration, liability | $ 1,000 | ||
New Century Health | Fair Value, Recurring | |||
Liabilities | |||
Contingent consideration, liability | $ 3,200 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Millions | Feb. 01, 2016 | Oct. 01, 2018 |
Passport | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Risk-adjusted recurring revenue compound annual growth rate, number of years | 5 years | |
New Century Health | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration arrangements (up to) | $ 20 | |
Class B Common Stock | New Century Health | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration arrangements (up to) | $ 11.4 |
Fair Value Measurement - Change
Fair Value Measurement - Changes in Contingent Consideration and Other (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance as of beginning of year | $ 8,800 | $ 8,700 |
Additions | 12,992 | 3,200 |
Settlements | (800) | 0 |
Realized and unrealized gains, net | (4,017) | (3,100) |
Balance as of end of year | $ 16,975 | $ 8,800 |
Fair Value Measurement - Valuat
Fair Value Measurement - Valuation Techniques and Significant Unobservable Inputs (Details) $ in Thousands | Feb. 01, 2016 | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Fair value | $ 16,975 | $ 8,800 | $ 8,700 | |
Passport | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Risk-adjusted recurring revenue compound annual growth rate, number of years | 5 years | |||
Passport | Level 3 | Contingent Consideration Liability | Real Options Approach Valuation Technique 2017-2021 | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Risk-adjusted recurring revenue compound annual growth rate, number of years | 5 years | |||
Fair Value, Recurring | Level 3 | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Warrants | $ 7,092 | |||
Fair Value, Recurring | Level 3 | Warrant | Black-Scholes | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Warrants | 7,092 | |||
Fair Value, Recurring | Passport | Level 3 | Contingent Consideration Liability | Real options approach | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Fair value | $ 3,700 | $ 5,600 | ||
Fair Value, Recurring | Passport | Level 3 | Contingent Consideration Liability | Real options approach | Risk-adjusted recurring revenue CAGR | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Measurement input | 0.939 | 1.039 | ||
Fair Value, Recurring | Passport | Level 3 | Contingent Consideration Liability | Real options approach | Discount rate/time value | Minimum | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Measurement input | 0.048 | 0.055 | ||
Fair Value, Recurring | Passport | Level 3 | Contingent Consideration Liability | Real options approach | Discount rate/time value | Maximum | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Measurement input | 0.053 | 0.065 | ||
Fair Value, Recurring | Passport | Level 3 | Contingent Consideration Liability | Real Options Approach Valuation Technique 2017-2021 | Risk-adjusted recurring revenue CAGR | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Theoretical recurring revenue | $ 1,000 | |||
Fair Value, Recurring | Passport | Level 3 | Warrant | Black-Scholes | Stock price volatility | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Measurement input | 0.550 | |||
Fair Value, Recurring | Passport | Level 3 | Warrant | Black-Scholes | Annual risk free rate | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Measurement input | 0.017 | |||
Fair Value, Recurring | Global Health | Level 3 | Contingent Consideration Liability | Monte Carlo simulation | Stock price volatility | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Fair value | $ 5,200 | |||
Measurement input | 0.800 | |||
Fair Value, Recurring | New Century Health | Level 3 | Contingent Consideration Liability | Real options approach | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Fair value | $ 3,200 | |||
Fair Value, Recurring | New Century Health | Level 3 | Contingent Consideration Liability | Real options approach | Risk-neutral probability exceeds threshold | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Measurement input | 0.390 | |||
Fair Value, Recurring | New Century Health | Level 3 | Contingent Consideration Liability | Real options approach | Risk-neutral probability meets earn-out cap | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Measurement input | 0.240 | 0.240 | ||
Fair Value, Recurring | New Century Health | Level 3 | Contingent Consideration Liability | Management estimate | Adjusted EBITDA | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Fair value | $ 983 | |||
Measurement input | 19,235,000 |
Related Parties (Details)
Related Parties (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Equity Method Investee | Services Agreements | |||
Related Party Transaction [Line Items] | |||
Income from long-term services agreement | $ 41.5 | $ 10.7 | $ 0.4 |
Related Parties - Assets and Li
Related Parties - Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | ||
ASSETS | ||||
Accounts receivable | [1] | $ 75,667 | $ 80,208 | |
Prepaid expenses - current | [1] | 28,488 | 22,618 | |
Customer advance for regulatory capital requirements | [1] | 40,000 | ||
Prepaid expenses and other noncurrent assets | [1] | 6,253 | 15,028 | |
Liabilities | ||||
Accounts payable | [1] | 37,488 | 146,760 | |
Accrued liabilities | [1] | 33,343 | 48,957 | |
Affiliated Entity | ||||
ASSETS | ||||
Accounts receivable | 8,781 | 8,519 | ||
Prepaid expenses - current | 1,592 | 85 | ||
Customer advance for regulatory capital requirements | 40,000 | 0 | [1] | |
Prepaid expenses and other noncurrent assets | 2,709 | 2,500 | ||
Liabilities | ||||
Accounts payable | 6,429 | 1,564 | ||
Accrued liabilities | 2,583 | 798 | ||
Reserve for claims and performance-based arrangements | $ 4,264 | $ 0 | ||
[1] | See Note 18 for amounts related to related parties included in these line items. |
Related Parties - Revenues and
Related Parties - Revenues and Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Revenue | ||||||||||||
Total revenue | $ 236,525 | $ 220,143 | $ 191,959 | $ 197,756 | $ 193,104 | $ 149,947 | $ 144,298 | $ 139,714 | $ 846,383 | $ 627,063 | $ 434,950 | |
Expenses | ||||||||||||
Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) | [1] | 513,059 | 327,825 | 269,352 | ||||||||
Selling, general and administrative expenses | [1] | 257,046 | 235,418 | 205,670 | ||||||||
Affiliated Entity | ||||||||||||
Expenses | ||||||||||||
Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) | 28,954 | 9,451 | 22,389 | |||||||||
Selling, general and administrative expenses | 991 | 917 | 1,153 | |||||||||
Transformation services | ||||||||||||
Revenue | ||||||||||||
Total revenue | [1] | 15,203 | 32,916 | 29,466 | ||||||||
Transformation services | Affiliated Entity | ||||||||||||
Revenue | ||||||||||||
Total revenue | 4,009 | 10,540 | 597 | |||||||||
Platform and operations services | ||||||||||||
Revenue | ||||||||||||
Total revenue | [1] | 659,438 | 500,190 | 405,484 | ||||||||
Platform and operations services | Affiliated Entity | ||||||||||||
Revenue | ||||||||||||
Total revenue | $ 60,325 | $ 37,490 | $ 32,335 | |||||||||
[1] | See Note 18 for amounts related to related parties included in these line items. |
Segment Reporting (Details)
Segment Reporting (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2019USD ($)segment | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | ||
Segment Reporting [Abstract] | ||||||||||||
Number of reportable segments | segment | 2 | |||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | $ 236,525 | $ 220,143 | $ 191,959 | $ 197,756 | $ 193,104 | $ 149,947 | $ 144,298 | $ 139,714 | $ 846,383 | $ 627,063 | $ 434,950 | |
Adjusted EBITDA | (10,968) | 23,225 | (2,204) | |||||||||
Operating segments | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | 687,122 | 547,431 | ||||||||||
Adjusted EBITDA | (14,667) | 21,310 | (2,204) | |||||||||
Operating segments | True Health | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | 172,722 | 94,763 | ||||||||||
Adjusted EBITDA | 3,699 | 1,915 | 0 | |||||||||
Intersegment eliminations | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | (13,461) | (15,131) | ||||||||||
Adjusted EBITDA | (10,968) | 23,225 | (2,204) | |||||||||
Transformation services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | [1] | 15,203 | 32,916 | 29,466 | ||||||||
Transformation services | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | 15,203 | 32,916 | ||||||||||
Transformation services | Operating segments | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | 15,203 | 32,916 | 29,466 | |||||||||
Transformation services | Operating segments | True Health | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | 0 | 0 | 0 | |||||||||
Transformation services | Intersegment eliminations | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | 0 | 0 | 0 | |||||||||
Platform and operations services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | [1] | 659,438 | 500,190 | 405,484 | ||||||||
Platform and operations services | Operating segments | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | 671,919 | 514,515 | 405,484 | |||||||||
Platform and operations services | Operating segments | True Health | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | 0 | 0 | 0 | |||||||||
Platform and operations services | Intersegment eliminations | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | (12,481) | (14,325) | 0 | |||||||||
Services Revenue | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | 674,641 | 533,106 | 434,950 | |||||||||
Services Revenue | Operating segments | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | 687,122 | 547,431 | 434,950 | |||||||||
Services Revenue | Operating segments | True Health | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | 0 | 0 | 0 | |||||||||
Services Revenue | Intersegment eliminations | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | (12,481) | (14,325) | 0 | |||||||||
Premiums | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | 171,742 | 93,957 | $ 0 | |||||||||
Premiums | Operating segments | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | 0 | |||||||||||
Premiums | Operating segments | Services | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | 0 | |||||||||||
Premiums | Operating segments | True Health | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | 172,722 | 94,763 | ||||||||||
Premiums | Intersegment eliminations | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Revenues | $ (980) | $ (806) | ||||||||||
[1] | See Note 18 for amounts related to related parties included in these line items. |
Segment Reporting - Reconciliat
Segment Reporting - Reconciliation of Adjusted EBITDA (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Segment Reporting [Abstract] | |||||||||||
Net loss attributable to common shareholders of Evolent Health, Inc. | $ 301,971 | $ 52,658 | $ 60,665 | ||||||||
Interest income | 3,987 | 3,440 | 1,656 | ||||||||
Interest expense | (14,534) | (5,484) | (3,636) | ||||||||
(Provision) benefit for income taxes | 21,536 | (40) | 6,637 | ||||||||
Depreciation and amortization expenses | (60,913) | (44,515) | (32,368) | ||||||||
Impairment | (199,800) | 0 | 0 | ||||||||
Loss from equity method investees | (9,465) | (4,736) | (1,755) | ||||||||
Gain on disposal of assets | 9,600 | 0 | 0 | ||||||||
Change in fair value of contingent consideration and indemnification asset | 3,997 | 4,104 | (400) | ||||||||
Other income (expense), net | (492) | 109 | 171 | ||||||||
Net loss attributable to non-controlling interests | $ 1,197 | $ 217 | $ 285 | $ 1,910 | $ 853 | $ 126 | $ 115 | $ 439 | 3,609 | 1,533 | 9,102 |
ASC 606 transition adjustments | 0 | (4,498) | 0 | ||||||||
Purchase accounting adjustments | (1,915) | (861) | (1,467) | ||||||||
Stock-based compensation expense | (15,618) | (17,609) | (20,437) | ||||||||
Severance costs | (17,350) | (2,205) | 0 | ||||||||
Amortization of contract cost assets | (2,876) | (2,456) | 0 | ||||||||
Acquisition costs | (10,769) | (2,665) | (15,964) | ||||||||
Adjusted EBITDA | $ (10,968) | $ 23,225 | $ (2,204) |
Reserves for Claims and perfo_3
Reserves for Claims and performance-Based Arrangements - Claims Reserves (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($)claim | Dec. 31, 2018USD ($)claim | |
Liability for Unpaid Claims and Claims Adjustment Expense, Period Increase (Decrease) [Abstract] | ||
Beginning balance | $ 27,595 | $ 18,631 |
Incurred costs related to current year | 403,367 | 109,563 |
Incurred costs related to prior year | (863) | 0 |
Paid costs related to current year | 281,671 | 96,442 |
Paid costs related to prior year | 16,257 | 0 |
Change during the year | 104,576 | 13,121 |
Other adjustments | (71,021) | (4,157) |
Ending balance | 61,150 | 27,595 |
Services | ||
Liability for Unpaid Claims and Claims Adjustment Expense, Period Increase (Decrease) [Abstract] | ||
Beginning balance | 17,715 | 18,631 |
Incurred costs related to current year | 267,064 | 38,674 |
Incurred costs related to prior year | (334) | 0 |
Paid costs related to current year | 220,050 | 38,124 |
Paid costs related to prior year | 8,165 | 0 |
Change during the year | 38,515 | 550 |
Other adjustments | (1,720) | (1,466) |
Ending balance | 54,510 | 17,715 |
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 | 136,303 | 70,889 |
Incurred costs related to prior year | (529) | 0 |
Paid costs related to current year | 61,621 | 58,318 |
Paid costs related to prior year | 8,092 | 0 |
Change during the year | 66,061 | 12,571 |
Other adjustments | (69,301) | (2,691) |
Ending balance | $ 6,640 | $ 9,880 |
Number of claims processed, including denied claims | claim | 317,187 | 294,158 |
Investments - Investment Summar
Investments - Investment Summary (Details) - Level 2 - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Costs | $ 18,558 | $ 10,010 |
Gross Unrealized Gains | 426 | 154 |
Gross Unrealized Losses | (5) | 0 |
Fair Value | 18,979 | 10,164 |
U.S. Treasury bills | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Costs | 10,784 | 7,982 |
Gross Unrealized Gains | 270 | 120 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 11,054 | 8,102 |
Corporate bonds | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Costs | 1,705 | 887 |
Gross Unrealized Gains | 70 | 17 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 1,775 | 904 |
Collateralized mortgage obligations | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Costs | 5,472 | 545 |
Gross Unrealized Gains | 56 | 6 |
Gross Unrealized Losses | (5) | 0 |
Fair Value | 5,523 | 551 |
Yankees | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Costs | 597 | 596 |
Gross Unrealized Gains | 30 | 11 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 627 | $ 607 |
Investments - Contractual Matur
Investments - Contractual Maturity (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Amortized Cost | ||
Due in one year or less | $ 1,807 | $ 0 |
Due after one year through five years | 16,121 | 9,666 |
Due after five years through ten years | 630 | 344 |
Total investments | 18,558 | 10,010 |
Fair Value | ||
Due in one year or less | 1,810 | 0 |
Due after one year through five years | 16,542 | 9,813 |
Due after five years through ten years | 627 | 351 |
Total investments | $ 18,979 | $ 10,164 |
Investments - Unrealized Losses
Investments - Unrealized Losses (Details) - Other CMOs $ in Thousands | Dec. 31, 2019USD ($)security |
Schedule of Held-to-maturity Securities [Line Items] | |
Unrealized loss for less than twelve months, Number of Securities | security | 4 |
Unrealized loss for less than twelve months, Fair Value | $ 2,075 |
Unrealized loss for less than twelve months, Unrealized Losses | $ 5 |
Quarterly Results of Operatio_3
Quarterly Results of Operations (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Financial Data [Abstract] | |||||||||||
Total revenue | $ 236,525 | $ 220,143 | $ 191,959 | $ 197,756 | $ 193,104 | $ 149,947 | $ 144,298 | $ 139,714 | $ 846,383 | $ 627,063 | $ 434,950 |
Total operating expenses | 451,120 | 240,281 | 217,192 | 244,402 | 206,456 | 160,977 | 153,264 | 153,846 | 1,152,995 | 674,543 | 507,790 |
Net loss | (199,293) | (25,738) | (31,900) | (48,649) | (17,540) | (12,555) | (10,031) | (14,065) | (305,580) | (54,191) | (69,767) |
Net loss attributable to non-controlling interests | (1,197) | (217) | (285) | (1,910) | (853) | (126) | (115) | (439) | (3,609) | (1,533) | (9,102) |
Net loss attributable to common shareholders of Evolent Health, Inc. | $ (198,096) | $ (25,521) | $ (31,615) | $ (46,739) | $ (16,687) | $ (12,429) | $ (9,916) | $ (13,626) | $ (301,971) | $ (52,658) | $ (60,665) |
Loss per common share | |||||||||||
Basic and diluted (in dollars per share) | $ (2.36) | $ (0.30) | $ (0.38) | $ (0.59) | $ (0.21) | $ (0.16) | $ (0.13) | $ (0.18) | $ (3.67) | $ (0.68) | $ (0.94) |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Supplemental Disclosure of Non-cash Investing and Financing Activities | |||
Change in goodwill due to measurement period adjustments related to business combinations | $ (351) | $ (117) | $ 1,611 |
Decrease in accrued financing costs related to 2021 Notes | 0 | 0 | 196 |
Consideration for asset acquisitions or business combinations | 16,000 | 500 | 0 |
Settlement of escrow related to asset acquisition | 0 | 2,519 | 0 |
Settlement of indemnification asset | 0 | 1,004 | 0 |
Tax benefit related to Accordion intangible technology | 0 | 0 | 2,042 |
Acquisition consideration payable | 800 | 0 | 0 |
Accrued property and equipment purchases | (527) | 368 | 229 |
Accrued deferred financing costs | 0 | 607 | 0 |
Effects of Class B Exchanges | |||
Decrease in deferred tax liability as a result of securities offerings and exchanges | (22) | 652 | 12,857 |
Effects of Leases | |||
Operating cash flows from operating leases | 12,330 | 0 | 0 |
Leased assets obtained in exchange for operating lease liabilities | 30,463 | 0 | 0 |
Supplemental Disclosures | |||
Cash paid during the period for interest | 5,037 | 2,500 | 2,472 |
Cash paid during the year for taxes, net | 1,484 | 343 | 674 |
Class A Common Stock | |||
Supplemental Disclosure of Non-cash Investing and Financing Activities | |||
Class A and Class B common stock issued in connection with business combinations | 23,556 | 83,173 | 0 |
Class B Common Stock | |||
Effects of Class B Exchanges | |||
Decrease in non-controlling interests as a result of Class B Exchanges | $ 42,377 | $ 34,682 | $ 168,883 |
Uncategorized Items - evh123119
Label | Element | Value |
Accounting Standards Update 2014-09 [Member] | Noncontrolling Interest [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 594,000 |