Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2022 | Jul. 29, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-37415 | |
Entity Registrant Name | Evolent Health, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 32-0454912 | |
Entity Address, Address Line One | 800 N. Glebe Road | |
Entity Address, Address Line Two | Suite 500 | |
Entity Address, City or Town | Arlington | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 22203 | |
City Area Code | 571 | |
Local Phone Number | 389-6000 | |
Title of 12(b) Security | Class A Common Stock of Evolent Health, Inc., par value $0.01 per share | |
Trading Symbol | EVH | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 91,669,520 | |
Entity Central Index Key | 0001628908 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | |
Current assets: | |||
Cash and cash equivalents | $ 193,070 | $ 266,280 | |
Restricted cash and restricted investments | 74,377 | 75,685 | |
Accounts receivable, net | [1] | 118,525 | 130,604 |
Prepaid expenses and other current assets | [1] | 37,173 | 51,391 |
Total current assets | 423,145 | 523,960 | |
Restricted cash and restricted investments | 12,986 | 12,977 | |
Investments in equity method investees | 3,831 | 5,458 | |
Property and equipment, net | 92,627 | 81,365 | |
Right-of-use assets - operating | 50,873 | 50,203 | |
Prepaid expenses and other noncurrent assets | [1] | 6,655 | 6,790 |
Contract cost assets | 22,721 | 32,624 | |
Intangible assets, net | 264,846 | 279,784 | |
Goodwill | 426,228 | 426,297 | |
Total assets | 1,303,912 | 1,419,458 | |
Current liabilities: | |||
Accounts payable | [1] | 96,565 | 96,084 |
Accrued liabilities | [1] | 75,846 | 107,241 |
Operating lease liability - current | 6,389 | 7,069 | |
Accrued compensation and employee benefits | 29,371 | 51,861 | |
Deferred revenue | 8,711 | 11,944 | |
Reserve for claims and performance-based arrangements | [1] | 125,960 | 171,294 |
Total current liabilities | 342,842 | 445,493 | |
Long-term debt, net | 283,138 | 215,676 | |
Other long-term liabilities | 4,619 | 5,531 | |
Operating lease liabilities - noncurrent | 58,581 | 57,722 | |
Deferred tax liabilities, net | 1,644 | 1,403 | |
Total liabilities | 690,824 | 725,825 | |
Commitments and Contingencies (See Note 11) | |||
Shareholders' Equity | |||
Class A common stock - $0.01 par value; 750,000,000 shares authorized; 91,657,480 and 90,758,318 shares issued, respectively | 916 | 908 | |
Additional paid-in-capital | 1,231,005 | 1,340,989 | |
Accumulated other comprehensive loss | (782) | (362) | |
Retained earnings (accumulated deficit) | (596,928) | (626,779) | |
Treasury stock, at cost; 1,537,582 shares issued, respectively | (21,123) | (21,123) | |
Total shareholders' equity | 613,088 | 693,633 | |
Total liabilities and shareholders' equity | $ 1,303,912 | $ 1,419,458 | |
[1]See Note 18 for amounts attributable to related parties included in these line items. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
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) | 91,657,480 | 90,758,318 |
Treasury stock, at cost (in shares) | 1,537,582 | 1,537,582 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | ||
Income Statement [Abstract] | |||||
Revenue | [1] | $ 319,939 | $ 222,057 | $ 616,996 | $ 437,128 |
Expenses | |||||
Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) | [1] | 249,705 | 172,113 | 469,444 | 329,945 |
Selling, general and administrative expenses | [1] | 58,955 | 42,699 | 117,887 | 101,290 |
Depreciation and amortization expenses | 15,112 | 14,916 | 30,218 | 30,103 | |
Change in fair value of contingent consideration | 800 | 0 | 6,878 | (594) | |
Total operating expenses | 324,572 | 229,728 | 624,427 | 460,744 | |
Operating loss | (4,633) | (7,671) | (7,431) | (23,616) | |
Interest income | 223 | 68 | 340 | 191 | |
Interest expense | (2,148) | (6,274) | (4,389) | (12,611) | |
Gain from equity method investees | 1,952 | 4,879 | 2,548 | 12,662 | |
Gain on transfer of membership | 0 | 0 | 0 | 22,969 | |
Loss on repayment of debt, net | 0 | 0 | 0 | (19,158) | |
Other income (expense), net | 297 | (18) | 475 | (32) | |
Loss from continuing operations before income taxes | (4,309) | (9,016) | (8,457) | (19,595) | |
Provision for (benefit from) income taxes | (184) | 91 | 1,018 | 702 | |
Loss from continuing operations | (4,125) | (9,107) | (9,475) | (20,297) | |
Income (loss) from discontinued operations, net of tax | [2] | (463) | 0 | (463) | 1,383 |
Net loss attributable to common shareholders of Evolent Health, Inc. - Basic | (4,588) | (9,107) | (9,938) | (18,914) | |
Net loss attributable to common shareholders of Evolent Health, Inc. - Diluted | $ (4,588) | $ (9,107) | $ (9,938) | $ (18,914) | |
Basic | |||||
Continuing operations (in dollars per share) | $ (0.05) | $ (0.11) | $ (0.11) | $ (0.24) | |
Discontinued operations (in dollars per share) | 0 | 0 | 0 | 0.02 | |
Basic loss per share attributable to common shareholders of Evolent Health, Inc. (in dollars per share) | (0.05) | (0.11) | (0.11) | (0.22) | |
Diluted | |||||
Continuing operations (in dollars per share) | (0.05) | (0.11) | (0.11) | (0.24) | |
Discontinued operations (in dollars per share) | 0 | 0 | 0 | 0.02 | |
Diluted loss per share attributable to common shareholders of Evolent Health, Inc. (in dollars per share) | $ (0.05) | $ (0.11) | $ (0.11) | $ (0.22) | |
Weighted-average common shares outstanding | |||||
Basic (in shares) | 90,071 | 85,448 | 89,792 | 85,056 | |
Diluted (in shares) | 90,071 | 85,448 | 89,792 | 85,056 | |
Comprehensive income (loss) | |||||
Net loss | $ (4,588) | $ (9,107) | $ (9,938) | $ (18,914) | |
Other comprehensive loss, net of taxes, related to: | |||||
Foreign currency translation adjustment | (288) | (58) | (420) | (89) | |
Total comprehensive loss attributable to common shareholders of Evolent Health, Inc. | $ (4,876) | $ (9,165) | $ (10,358) | $ (19,003) | |
[1]See Note 18 for amounts attributable to unconsolidated related parties included in these line items.[2]Includes $(0.5) million loss on disposal for the three and six months ended June 30, 2022 and $1.9 million gain on disposal of discontinued operations for the six months ended June 30, 2021, respectively |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Statement [Abstract] | |||
Gain on disposal of discontinued operations | $ (0.5) | $ (0.5) | $ 1.9 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional Paid-In Capital | Additional Paid-In Capital Cumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) | Retained Earnings (Accumulated Deficit) Cumulative Effect, Period of Adoption, Adjustment | Treasury Stock |
Beginning balance (in shares) at Dec. 31, 2020 | 85,895 | ||||||||
Beginning balance at Dec. 31, 2020 | $ 619,600 | $ 859 | $ 1,229,320 | $ (278) | $ (589,178) | $ (21,123) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock-based compensation expense | 7,359 | 7,359 | |||||||
Exercise of stock options (in shares) | 900 | ||||||||
Exercise of stock options | 9,376 | $ 9 | 9,367 | ||||||
Restricted stock units vested, net of shares withheld for taxes (in shares) | 400 | ||||||||
Restricted stock units vested, net of shares withheld for taxes | (3,142) | $ 4 | (3,146) | ||||||
Foreign currency translation adjustment | (89) | (89) | |||||||
Net loss | (18,914) | (18,914) | |||||||
Ending balance (in shares) at Jun. 30, 2021 | 87,195 | ||||||||
Ending balance at Jun. 30, 2021 | 614,190 | $ 872 | 1,242,900 | (367) | (608,092) | (21,123) | |||
Beginning balance (in shares) at Dec. 31, 2020 | 85,895 | ||||||||
Beginning balance at Dec. 31, 2020 | 619,600 | $ 859 | 1,229,320 | (278) | (589,178) | (21,123) | |||
Ending balance (in shares) at Dec. 31, 2021 | 90,759 | ||||||||
Ending balance at Dec. 31, 2021 | $ 693,633 | $ (66,383) | $ 908 | 1,340,989 | $ (106,172) | (362) | (626,779) | $ 39,789 | (21,123) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Accounting Standards Update [Extensible Enumeration] | Accounting Standards Update 2020-06 | ||||||||
Beginning balance (in shares) at Mar. 31, 2021 | 86,779 | ||||||||
Beginning balance at Mar. 31, 2021 | $ 617,298 | $ 868 | 1,236,847 | (309) | (598,985) | (21,123) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock-based compensation expense | 3,653 | 3,653 | |||||||
Exercise of stock options (in shares) | 306 | ||||||||
Exercise of stock options | 2,858 | $ 3 | 2,855 | ||||||
Restricted stock units vested, net of shares withheld for taxes (in shares) | 110 | ||||||||
Restricted stock units vested, net of shares withheld for taxes | (454) | $ 1 | (455) | ||||||
Foreign currency translation adjustment | (58) | (58) | |||||||
Net loss | (9,107) | (9,107) | |||||||
Ending balance (in shares) at Jun. 30, 2021 | 87,195 | ||||||||
Ending balance at Jun. 30, 2021 | 614,190 | $ 872 | 1,242,900 | (367) | (608,092) | (21,123) | |||
Beginning balance (in shares) at Dec. 31, 2021 | 90,759 | ||||||||
Beginning balance at Dec. 31, 2021 | 693,633 | $ (66,383) | $ 908 | 1,340,989 | $ (106,172) | (362) | (626,779) | $ 39,789 | (21,123) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock-based compensation expense | 12,358 | 12,358 | |||||||
Exercise of stock options (in shares) | 37 | ||||||||
Exercise of stock options | 309 | 309 | |||||||
Restricted stock units vested, net of shares withheld for taxes (in shares) | 403 | ||||||||
Restricted stock units vested, net of shares withheld for taxes | (5,239) | $ 4 | (5,243) | ||||||
Leveraged stock units vested, net of shares withheld for taxes (in shares) | 458 | ||||||||
Leveraged stock units vested, net of shares withheld for taxes | (11,232) | $ 4 | (11,236) | ||||||
Foreign currency translation adjustment | (420) | (420) | |||||||
Net loss | (9,938) | (9,938) | |||||||
Ending balance (in shares) at Jun. 30, 2022 | 91,657 | ||||||||
Ending balance at Jun. 30, 2022 | 613,088 | $ 916 | 1,231,005 | (782) | (596,928) | (21,123) | |||
Beginning balance (in shares) at Mar. 31, 2022 | 91,588 | ||||||||
Beginning balance at Mar. 31, 2022 | 611,209 | $ 916 | 1,224,250 | (494) | (592,340) | (21,123) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock-based compensation expense | 7,011 | 7,011 | |||||||
Restricted stock units vested, net of shares withheld for taxes (in shares) | 69 | ||||||||
Restricted stock units vested, net of shares withheld for taxes | (256) | (256) | |||||||
Foreign currency translation adjustment | (288) | (288) | |||||||
Net loss | (4,588) | (4,588) | |||||||
Ending balance (in shares) at Jun. 30, 2022 | 91,657 | ||||||||
Ending balance at Jun. 30, 2022 | $ 613,088 | $ 916 | $ 1,231,005 | $ (782) | $ (596,928) | $ (21,123) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | ||
Cash Flows Used In Operating Activities | |||
Net loss | $ (9,938) | $ (18,914) | |
Adjustments to reconcile net loss to net cash and restricted cash used in operating activities: | |||
Change in fair value of contingent consideration | 6,878 | (594) | |
Loss (gain) on discontinued operations | 463 | (1,904) | |
Gain from equity method investees | (2,548) | (12,662) | |
Depreciation and amortization expenses | 30,218 | 30,263 | |
Stock-based compensation expense | 12,358 | 7,359 | |
Deferred tax provision (benefit) | 472 | (268) | |
Amortization of contract cost assets | 13,186 | 8,311 | |
Amortization of deferred financing costs | 1,079 | 8,837 | |
Gain on transfer of membership | 0 | (22,969) | |
Loss on repayment of debt | 0 | 19,158 | |
Other current operating cash inflows (outflows), net | 692 | (729) | |
Changes in assets and liabilities, net of acquisitions: | |||
Accounts receivable, net and contract assets | 13,042 | (120,066) | |
Prepaid expenses and other current and non-current assets | (8,453) | (3,439) | |
Contract cost assets | (3,284) | (3,991) | |
Accounts payable | (823) | 9,904 | |
Accrued liabilities | (24,826) | (17,725) | |
Accrued compensation and employee benefits | (22,379) | (21,505) | |
Deferred revenue | (3,233) | 2,490 | |
Reserve for claims and performance-based arrangements | (45,334) | 62,614 | |
Right-of-use operating assets | (669) | 4,621 | |
Operating lease liabilities | 179 | (2,719) | |
Other long-term liabilities | (858) | 1,518 | |
Net cash and restricted cash used in operating activities | (43,778) | (72,410) | |
Cash Flows Provided by Investing Activities | |||
Cash paid for asset acquisitions and business combinations | (9,070) | (1,472) | |
Proceeds from transfer of membership and release of Passport escrow | 22,969 | 42,996 | |
Disposal of non-strategic assets and divestiture of discontinued operations, net | 0 | 3,490 | |
Return of equity method investments | 4,175 | 9,372 | |
Purchases of investments | 0 | (2,994) | |
Maturities and sales of investments | 0 | 500 | |
Investments in internal-use software and purchases of property and equipment | (17,744) | (11,512) | |
Net cash and restricted cash provided by investing activities | 330 | 40,380 | |
Cash Flows Used In Financing Activities | |||
Changes in working capital balances related to claims processing on behalf of partners | 360 | 2,399 | |
Repayment of Credit Agreement including settlement of warrants | 0 | (98,420) | |
Proceeds from stock option exercises | 309 | 9,376 | |
Distributions to Sponsors | (14,884) | (1,300) | |
Taxes withheld and paid for vesting of equity awards | (16,471) | (3,142) | |
Net cash and restricted cash used in financing activities | (30,686) | (91,087) | |
Effect of exchange rate on cash and cash equivalents and restricted cash | (375) | (54) | |
Net decrease in cash and cash equivalents and restricted cash | (74,509) | (123,171) | |
Cash and cash equivalents and restricted cash as of beginning-of-period | [1] | 354,942 | 361,581 |
Cash and cash equivalents and restricted cash as of end-of-period | [1] | $ 280,433 | $ 238,410 |
[1]As a result of the closing of the sale of True Health during the first quarter of 2021, the consolidated statement of operations and related financial information reflect the Company’s operations and assets and liabilities of True Health as discontinued operations. Cash flows and comprehensive income have not been adjusted and are included in the consolidated statements of cash flows and consolidated statements of comprehensive income (loss) for the six months ended June 30, 2021. See Note 5. |
Organization
Organization | 6 Months Ended |
Jun. 30, 2022 | |
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 supports leading health systems and physician organizations to move their business models from traditional fee for service reimbursement to value-based care, which we consider to be an integrated clinical and financial responsibility for populations. Since its inception, the Company has incurred losses from operations. As of June 30, 2022, the Company had unrestricted cash and cash equivalents of $193.1 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 |
Basis of Presentation, Summary
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles | Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles Basis of Presentation In our opinion, the accompanying unaudited interim consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to fairly state our financial position, results of operations and cash flows. The interim consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain footnote disclosures normally included in financial statements prepared in accordance with United States of America generally accepted accounting principles (“GAAP”) have been omitted pursuant to instructions, rules and regulations prescribed by the United States Securities and Exchange Commission (“SEC”). The disclosures provided herein should be read in conjunction with the audited financial statements and notes thereto included in our 2021 Form 10-K. Summary of Significant Accounting Policies Certain GAAP policies that significantly affect the determination of our financial position, results of operations and cash flows, are summarized below. See “Part II - Item 8. Financial Statements and Supplementary Data - Note 2” in our 2021 Form 10-K for a complete summary of our significant accounting policies. Accounting Estimates and Assumptions The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses for the reporting period. Those estimates are inherently subject to change and actual results could differ from those estimates. In the accompanying consolidated financial statements, estimates are used for, but not limited to, the valuation of assets (including intangibles assets, goodwill 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, credit losses, depreciable lives of assets, impairment of long-lived assets, stock-based compensation, deferred income taxes and valuation allowance, contingent liabilities, 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. 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: June 30, 2022 December 31, 2021 Collateral for letters of credit for facility leases (1) $ 2,269 $ 3,769 Collateral with financial institutions (2) 11,504 11,662 Claims processing services (3) 73,585 73,226 Other 5 5 Total restricted cash and restricted investments $ 87,363 $ 88,662 Current restricted cash 74,377 75,685 Total current restricted cash and restricted investments $ 74,377 $ 75,685 Non-current restricted cash 12,986 12,977 Total non-current restricted cash and restricted investments $ 12,986 $ 12,977 ———————— (1) Represents restricted cash related to collateral for letters of credit required in conjunction with lease agreements. See Note 12 for further discussion of our lease commitments. (2) Represents collateral held with financial institutions for risk-sharing and other arrangements. As of June 30, 2022 and December 31, 2021, approximately $11.5 million and $11.7 million, respectively, of the collateral amounts were held in a FDIC participating bank account. See Note 17 for discussion of fair value measurement and Note 11 for discussion of our risk-sharing arrangements. (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 consolidated statements of cash flows (in thousands): June 30, 2022 2021 Cash and cash equivalents $ 193,070 $ 207,273 Restricted cash and restricted investments 87,363 31,137 Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows (1) $ 280,433 $ 238,410 ———————— (1) As a result of the closing of the sale of True Health during the first quarter of 2021, the consolidated statement of operations and related financial information reflect the Company’s operations and assets and liabilities of True Health as discontinued operations. Cash flows and comprehensive income have not been adjusted and are included in the consolidated statements of cash flows and consolidated statements of comprehensive income (loss) for the six months ended June 30, 2021. See Note 5. 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 are recognized separately from the business combination and are expensed as incurred. Goodwill We recognize the excess of the purchase price, plus the fair value of any non-controlling interests in the acquiree, over the fair value of identifiable net assets acquired as goodwill. Goodwill is not amortized, but is reviewed at least annually for indications of impairment, with consideration given to financial performance and other relevant factors. We perform impairment tests of goodwill at a reporting unit level. Following the sale of True Health, the Company has three 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 we believe 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). 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 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 3 - 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 9 for additional discussion regarding our intangible assets. 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 was $3.8 million and $7.9 million for the three and six months ended June 30, 2022, respectively. Reserves for Claims and Performance-based Arrangements Reserves for claims and performance-based arrangements 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. 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 21 for additional discussion regarding our reserves for claims and performance-based arrangements. Right of Offset Certain customer arrangements give the Company the legal right to net payment for amounts due from customers and claims payable. As of June 30, 2022 and December 31, 2021, approximately 64% and 42% of gross accounts receivable was netted against claims payable in lieu of cash receipt. Furthermore, as of June 30, 2022, approximately 13% of our accounts receivable, net could ultimately be settled on a net basis, once the criteria for netting have been met. 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 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 immaterial and is offset against rent expense over the terms of the respective leases. Refer to Note 12 for additional lease disclosures. Revenue Recognition We derive 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 programs, or implement certain platform and operations services. 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 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 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 |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Adoption of New Accounting Standards In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes. The amendments in the ASU remove certain exceptions to the intraperiod tax allocation of losses and gains from different financial statement components and to the method of recognizing income taxes on interim period losses and the recognition of deferred tax liabilities for outside basis differences. In addition, the new guidance simplifies aspects of the accounting for franchise taxes and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The Company adopted this standard starting in the first quarter of 2021, which did not have a material impact on our consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity . The ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Specifically, the ASU removes the separation models for convertible debt with a cash conversion feature or convertible instruments with a beneficial conversion feature and no longer permits the use of the treasury stock method from calculating earnings per share. As a result, after adopting the ASU’s guidance, we do not separately present in equity an embedded conversion feature of such debt. Instead, we account for a convertible debt instrument wholly as debt unless (i) a convertible instrument contains features that require bifurcation as a derivative or (ii) a convertible debt instrument was issued at a substantial premium. Additionally, the ASU removes certain conditions for equity classification related to contracts in an entity’s own equity (e.g., warrants) and amends certain guidance related to the computation of earnings per share for convertible instruments and contracts on an entity’s own equity. The Company adopted the standard using a modified retrospective method on January 1, 2022, with adjustments which increased retained earnings by $39.8 million, reduced additional paid-in capital by $106.2 million and increased the net carrying amount of the 2024 and 2025 Notes by $25.1 million and $41.3 million, respectively. Recent Accounting Pronouncements Not Yet Effective In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value. This new standard is effective for our interim and annual periods beginning after December 15, 2022, with early adoption permitted. We are currently evaluating the adoption impacts on our consolidated financial statements. |
Transactions
Transactions | 6 Months Ended |
Jun. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Transactions | Transactions Business Combinations Vital Decisions On October 1, 2021, the Company completed its acquisition of Vital Decisions, including 100% of the voting equity interests. Vital Decisions is a leading provider of technology-enabled advance care planning services, ensuring that the care of individuals with serious illness aligns with their values and changing preferences throughout their health journey and, in particular, as they approach end-of-life decisions. The transaction is expected to deepen our capabilities, allowing us to cross-sell across customers and enhance our value proposition to partners. Total merger consideration, net of cash on hand and certain closing adjustments, was $117.7 million, based on the closing price of the Company’s Class A common stock on the NYSE on October 1, 2021. The merger consideration consisted of $46.5 million of cash consideration, 1.8 million shares of Class A common stock, fair valued at $56.6 million as of October 1, 2021, and an earn-out of up to $45.0 million, fair valued at $14.6 million as of October 1, 2021. See Note 18 for additional information regarding the fair value determination of the earn-out consideration. The purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of October 1, 2021, as follows (in thousands): Purchase consideration: Cash $ 46,500 Fair value of Class A common stock issued 56,626 Fair value of contingent consideration 14,600 Total consideration $ 117,726 Tangible assets acquired: Cash and cash equivalents $ 1,430 Accounts receivable 3,301 Prepaid expenses and other current assets 78 Other non-current assets 2,564 Total tangible assets acquired 7,373 Identifiable intangible assets acquired: Customer relationships 32,500 Technology 5,000 Corporate trade name 2,500 Total identifiable intangible assets acquired 40,000 Liabilities assumed: Accounts payable 93 Accrued liabilities 661 Accrued compensation and employee benefits 970 Deferred tax liabilities, net 499 Deferred revenue 2,000 Operating lease liabilities 2,712 Total liabilities assumed 6,935 Goodwill 77,288 Net assets acquired $ 117,726 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, technology and corporate trade names will be amortized on a straight-line basis over their preliminary estimated useful lives of 13 years, 5 years, and 15 years, respectively. The customer relationships are primarily attributable to existing contracts with current customers. The technology consists primarily of a proprietary advance care planning documentation portal where patients can input information, and doctor/patient conversations are populated for later reference. The corporate trade name reflects the value that we believe the Vital Decisions brand name carries in the market. The fair value of the intangible assets was determined using the income approach and the relief from royalty 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. 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 Clinical Solutions segment. Goodwill is considered to be an indefinite lived asset. $69.6 million of the goodwill recorded on the transaction is deductible for tax purposes. The amounts above reflect management’s preliminary estimate of the fair value of the tangible and intangible assets acquired and liabilities assumed. Any necessary adjustments will be finalized by the end of the third quarter of 2022. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued OperationsOn January 11, 2021, Evolent Health LLC, EH Holdings and True Health, each wholly owned subsidiaries of the Company, entered into a Stock Purchase Agreement (the “True Health SPA”) with Bright Health Management, Inc. (“Bright HealthCare”), pursuant to which EH Holdings agreed to sell all of its equity interests in True Health to Bright HealthCare. Closing of the transactions contemplated by the True Health SPA occurred on March 31, 2021 (the “True Health Closing”) and the Company has had no continuing involvement with True Health subsequent to the closing except a pre-existing services agreement for claims processing and other health plan administrative functions. As of the first quarter of 2021, the Company determined that True Health met the discontinued operations criteria under ASC 205, and as such, True Health assets and liabilities as of December 31, 2020, and the results of operations for all periods presented are classified as discontinued operations and are not included in continuing operations in the consolidated financial statements. The following table summarizes the results of operations of the Company’s True Health business, which are included in income from discontinued operations in the consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2021: For the Three Months Ended June 30, 2021 For the Six Revenue Platform and operations $ — $ 38 Premiums — 44,795 Total revenue — 44,833 Expenses Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) (1) — 5,885 Claims expenses — 33,954 Selling, general and administrative expenses (2) — 5,764 Depreciation and amortization expenses — 160 Total operating expenses — 45,763 Operating loss — (930) Interest income — 112 Interest expense — (4) Other loss — (25) Loss before income taxes and non-controlling interests — (847) Provision for income taxes — (326) Net loss $ — $ (521) ———————— (1) Cost of revenue includes intercompany expenses between the Company and True Health that are recorded in income from continuing operations in the consolidated statements of operations and comprehensive income (loss) related to an existing services agreement for claims processing and other health plan administrative functions of $2.8 million for the six months ended June 30, 2021. (2) Selling, general and administrative expenses includes intercompany expenses between the Company and True Health that are recorded in income from continuing operations on the consolidated statements of operations and comprehensive income (loss) related to an existing services agreement for claims processing and other health plan administrative functions of $1.1 million for the six months ended June 30, 2021. The consolidated statements of cash flows for all periods have not been adjusted to separately disclose cash flows related to discontinued operations. Cash flows related to the True Health business during the six months ended June 30, 2021: Cash flows provided by operating activities $ 5,002 Cash flows used in investing activities (2,494) |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition We derive revenue primarily from platform and operations services. Platform and operations services are typically multi-year arrangements with customers to provide various clinical and administrative solutions. In our Clinical Solutions segment, our solutions are designed to lower the medical expenses of our partners and include our total cost of care and specialty care management services. In our Evolent Health Services segment, our 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 third-party administration (“TPA”) services. Our performance obligation in these arrangements is to provide an integrated suite of services, including access to our platform that is customized to meet the specialized needs of our customers and members. Generally, we will apply the series guidance to the performance obligation as we have determined that each time increment is distinct. We primarily utilize a variable fee structure for these services that typically includes 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. In our Clinical Solutions segment, we enter into capitation arrangements that may include performance-based arrangements and/or gainshare features. We recognize capitation revenue on a gross basis when we have established control over the services within our scope and recognize capitation revenue on a net basis when we do not have control over the services within our scope. 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. As we integrate goods and services provided by third parties into our overall service, we control the goods and services provided to the customer prior to its delivery. As such, we are the principal and we will recognize revenue on a gross basis. In certain cases, we act as an agent and do not control the services from third parties before it is delivered to the customer thereby recognizing revenue on a net basis. Disaggregation of Revenue The following table represents Evolent’s revenue disaggregated by segment and end-market for (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 2022 2021 2022 2021 Evolent Health Services Clinical Solutions Evolent Health Services Clinical Solutions Medicaid $ 55,422 $ 52,064 $ 86,080 $ 53,648 $ 122,336 $ 112,993 $ 156,967 $ 96,987 Medicare 9,863 6,346 101,529 90,761 14,696 14,684 193,796 176,544 Commercial and other 27,051 16,453 39,994 2,785 62,162 32,023 67,039 3,897 Total $ 92,336 $ 74,863 $ 227,603 $ 147,194 $ 199,194 $ 159,700 $ 417,802 $ 277,428 Transaction Price Allocated to the Remaining Performance Obligations For contracts with a term greater than one year, we have allocated approximately $139.6 million of transaction price to performance obligations that are unsatisfied as of June 30, 2022. 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 28%, 60% and 82% of these remaining performance obligations by December 31, 2022, 2023 and 2024, 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 prepaid expenses and other current 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 as of June 30, 2022 and December 31, 2021 (in thousands): June 30, 2022 December 31, 2021 Short-term receivables (1) $ 116,580 $ 129,012 Long-term receivables (1) 5,038 4,877 Short-term deferred revenue 8,711 11,944 Long-term deferred revenue 3,605 4,437 ———————— (1) Excludes pharmacy claims receivable and premiums receivable. Changes in deferred revenue for the six months ended June 30, 2022 are as follows (in thousands): Deferred revenue Balance as of beginning-of-period $ 16,381 Reclassification to revenue, as a result of performance obligations satisfied (10,796) Cash received in advance of satisfaction of performance obligations 6,731 Balance as of end of period $ 12,316 The amount of revenue recognized from performance obligations satisfied (or partially satisfied) in a previous period was $19.5 million and $46.1 million for the three and six months ended June 30, 2022, due primarily to net gain share as well as changes in 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 June 30, 2022 and December 31, 2021, the Company had $3.8 million and $5.2 million, respectively, of contract acquisition cost assets, net of accumulated amortization recorded in contract cost assets on the consolidated balance sheets. In addition, the Company recorded amortiza tion expense of $0.3 million and $1.7 million for the three and six months ended June 30, 2022, respectively, and $0.6 million and $1.0 million for the three and six months ended June 30, 2021, respectively. In our platform and operations arrangements, we incur certain costs related to the implementation of our platform before we begin to satisfy our performance obligation to the customer. The costs, which we expect to recover, are considered costs to fulfill a contract. Our contract fulfillment costs primarily include our employee labor costs and third-party vendor costs. The capitalized contract fulfillment costs are classified as 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 June 30, 2022 and December 31, 2021, the Company had $18.9 million and $27.4 million, respectively, of contract fulfillment cost assets, net of accumulated amortization recorded in contract cost assets on the consolidated balance sheets. In addition, the Company recorded amortization expense including the acceleration of amortization of contract costs for certain customers of $1.2 million and $11.5 million for the three and six months ended June 30, 2022, respectively, and $4.6 million and $7.3 million for the three and six months ended June 30, 2021, respectively. These costs are deferred and then amortized on a straight-line basis over a period of benefit that we have determined to be the shorter of the contract term or five years. The period of benefit was based on our technology, the nature of our customer arrangements and other factors. |
Credit Losses
Credit Losses | 6 Months Ended |
Jun. 30, 2022 | |
Credit Loss [Abstract] | |
Credit Losses | Credit Losses We are exposed to credit losses primarily through our accounts receivable from revenue transactions, investments held at amortized cost and customer advances for regulatory capital and other notes receivable. We estimate expected credit losses based on past events, current conditions and reasonable and supportable forecasts. Expected credit losses are measured over the remaining contractual life of these assets. As part of our consideration of current and forward-looking economic conditions, we considered the impact of the COVID-19 pandemic and current inflationary pressures on our customers’ and other third parties’ ability to pay. We did not observe notable increases in delinquencies during the three and six months ended June 30, 2022. Given the nature of our business, our past collection experience during recessionary and pre-recessionary periods and our forecasted impact of the COVID-19 pandemic on our business, we did not record material changes in our allowances due to the COVID-19 pandemic during the three and six months ended June 30, 2022. Accounts Receivable from Revenue Transactions Accounts receivable represent the amounts owed to the Company for goods or services provided to customers or third parties. Current accounts receivables are classified within accounts receivable, net on the Company’s consolidated balance sheets, while non-current accounts receivables are classified within prepaid expenses and other noncurrent assets on the Company’s consolidated balance sheets. We monitor our ongoing credit exposure through active review of counterparty balances against contract terms, due dates and business strategy. Our activities include timely account reconciliation, dispute resolution and payment confirmation. We may employ legal counsel to pursue recovery of defaulted receivables. In addition, the Company will establish a general reserve based on delinquency rates. Historical loss rates are determined for each delinquency bucket in 30-day past-due intervals and then applied to the composition of the reporting date balance based on delinquency. The allowance implied from application of the historical loss rates is then adjusted, as necessary, for current conditions and reasonable and supportable forecasts. Based on an aging analysis of our trade accounts receivable, non-trade accounts receivable and contract assets as of June 30, 2022, 90% were current, 6% were past due less than 60 days, with 8% past due less than 120 days and at December 31, 2021, 90% was current, 2% was past due less than 60 days, with 3% past due less than 120 days. As of June 30, 2022 and December 31, 2021, in total we reported on the consolidated balance sheet $127.7 million and $171.5 million of accounts receivable, certain non-trade accounts receivable included in prepaid expenses and other assets, net of allowances of $3.1 million and $3.4 million, respectively. The following table summarizes the changes in allowance for credit losses on our accounts receivables, certain non-trade accounts receivable and contract assets (in thousands): For the Six Months Ended June 30, 2022 2021 Balance as of beginning of period $ (3,374) $ (7,056) Provision for credit losses 322 (611) Balance as of end of period $ (3,052) $ (7,667) |
Property and Equipment, Net
Property and Equipment, Net | 6 Months Ended |
Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, Net The following summarizes our property and equipment (in thousands): June 30, 2022 December 31, 2021 Computer hardware $ 26,452 $ 21,970 Furniture and equipment 4,021 3,581 Internal-use software development costs 173,099 159,587 Leasehold improvements 23,112 15,325 Total property and equipment 226,684 200,463 Accumulated depreciation and amortization expenses (134,057) (119,098) Total property and equipment, net $ 92,627 $ 81,365 The Company capitalized $7.1 million and $13.5 million for the three and six months ended June 30, 2022, respectively, and $5.6 million and $11.1 million for the three and six months ended June 30, 2021, respectively, of internal-use software development costs. The net book value of capitalized internal-use software development costs was $71.5 million and $71.2 million as of June 30, 2022 and December 31, 2021, respectively. Depreciation expense related to property and equipment was $7.8 million and $15.4 million for the three and six months ended June 30, 2022, respectively, and $7.6 million and $15.4 million for the three and six months ended June 30, 2021, respectively, of which amortization expense related to capitalized internal-use software development costs was $6.5 million and $13.2 million for the three and six months ended June 30, 2022, respectively, and $6.6 million and $13.3 million for the three and six months ended June 30, 2021, respectively. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 6 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, Net | Goodwill and Intangible Assets, Net Goodwill Goodwill has an estimated indefinite life and is not amortized; rather, it is reviewed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The Company has three reporting units, each with discrete financial information. 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 on October 31 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. We did not identify any qualitative factors that would trigger a quantitative goodwill impairment test during the three and six months ended June 30, 2022 . We will perform our annual impairment test on October 31, 2022. 2021 Goodwill Impairment Test On October 31, 2021, the Company performed its annual goodwill impairment review for fiscal year 2021. Based on our qualitative assessment, we did not identify sufficient indicators of impairment that would suggest the fair value of any of our three reporting units was below their respective carrying values. As a result, a quantitative goodwill impairment analysis was not required. Change in Goodwill The following table summarizes the changes in the carrying amount of goodwill, by reportable segment, for the periods presented (in thousands): EHS Clinical Solutions Consolidated Balance as of December 31, 2021 (1) $ 214,334 $ 211,963 $ 426,297 Foreign currency translation (69) — (69) Balance as of June 30, 2022 $ 214,265 $ 211,963 $ 426,228 Balance as of December 31, 2020 (1) $ 214,354 $ 134,675 $ 349,029 Foreign currency translation (20) — (20) Balance as of June 30, 2021 $ 214,334 $ 134,675 $ 349,009 ———————— (1) Net of cumulative inception to date impairment of $575.5 million as of both December 31, 2021 and 2020. Intangible Assets, Net Details of our intangible assets (in thousands, except weighted-average useful lives) as of June 30, 2022 and December 31, 2021 are presented below: June 30, 2022 December 31, 2021 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 11.9 $ 25,800 $ 8,466 $ 17,334 12.4 $ 25,800 $ 7,693 $ 18,107 Customer relationships 14.4 311,019 81,125 229,894 14.9 311,019 72,697 238,322 Technology 1.7 87,922 77,041 10,881 2.0 87,922 73,378 14,544 Below market lease, net 0.8 1,218 1,050 168 1.3 1,218 950 268 Provider network contracts (1) 1.7 16,236 9,667 6,569 2.2 16,417 7,874 8,543 Total intangible assets, net $ 442,195 $ 177,349 $ 264,846 $ 442,376 $ 162,592 $ 279,784 Amortization expense related to intangible assets was $7.3 million and $14.8 million for the three and six months ended June 30, 2022, respectively, and $7.2 million and $14.7 million for the three and six months ended June 30, 2021, respectively. Future estimated amortization of intangible assets (in thousands) as of June 30, 2022, is as follows: 2022 $ 14,375 2023 26,760 2024 20,875 2025 19,330 2026 19,153 Thereafter 164,353 Total future amortization of intangible assets $ 264,846 Intangible assets are reviewed for impairment if circumstances indicate the Company may not be able to recover the assets’ carrying value. We did not identify any circumstances during the three and six months ended June 30, 2022, that would require an impairment test for our intangible assets. |
Long-term Debt
Long-term Debt | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term Debt 2024 Notes In August 2020, the Company issued $117.1 million aggregate principal amount of its 3.50% Convertible Senior Notes due 2024 (the “2024 Notes”) in privately negotiated exchange and/or subscription agreements, with certain holders of its outstanding 2021 Notes and certain new investors. The Company issued $84.2 million aggregate principal amount of 2024 Notes in exchange for $84.2 million aggregate principal amount of the 2021 Notes and an aggregate cash payment of $2.5 million, and issued $32.8 million aggregate principal amount of New Notes for cash at par. We incurred $3.0 million of debt issuance costs in connection with the 2024 Notes, which we are amortizing to non-cash interest expense using the straight-line method over the contractual term of the 2024 Notes. The closing of the private placement of the 2024 Notes occurred on August 19, 2020. Holders of the 2024 Notes are entitled to cash interest payments, which are payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2020, at a rate equal to 3.50% per annum. The 2024 Notes will mature on December 1, 2024, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Upon maturity the principal amount of the notes may be settled via shares of the Company’s Class A common stock. We recorded interest expense of $1.0 million and $2.0 million for both the three and six months ended June 30, 2022 and 2021, respectively. The 2024 Notes are convertible into cash, 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, based on an initial conversion rate of 54.8667 shares of Class A common stock per $1,000 principal amount of the 2024 Notes, which is equivalent to an initial conversion price of approximately $18.23 per share of the Company’s Class A common stock. In the aggregate, the 2024 Notes are initially convertible into 6.4 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 or a notice of redemption under the governing indenture). The conversion rate may be adjusted under certain circumstances. 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 2024 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 2024 Notes into a debt component and an equity component prior to the adoption of ASU 2020-06. The debt component was determined to be $78.9 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 $38.1 million before issuance costs and was recorded within additional paid-in capital. Issuance costs of $1.7 million and $1.3 million were allocated to the debt and equity components in proportion to the allocation of proceeds. Along with the equity component of $38.1 million, $1.7 million of issuance costs was amortized to interest expense on the consolidated statements of operations and comprehensive income (loss) using the effective interest method. On January 1, 2022, we adopted ASU 2020-06 using the retrospective transition method. As a result, prior period financial information and disclosures are not adjusted and continue to be reported under the accounting standards that were in effect prior to the adoption of ASU 2020-06. The adoption of ASU 2020-06 resulted in the combination of the debt and equity components of the 2024 Notes into a single debt instrument recorded in long term debt, net on the consolidated balance sheet. This resulted in a $38.1 million decrease in additional paid-in capital and a $1.3 million increase in additional paid-in capital from the previously bifurcated equity component from deferred financing fees, respectively, and an $11.7 million decrease to the January 1, 2022 accumulated deficit, representing the cumulative non-cash interest expense recognized related to the amortization of the debt discount associated with the bifurcated equity component of the 2024 Notes. These adjustments resulted in an increase of $25.1 million to the debt component of the 2024 Notes. Additionally, the allocation of the issuance costs to the equity component and all issuance costs related to the 2024 Notes are being amortized to interest expense using the effective interest method over the contractual term of the 2024 Notes which is included in the cumulative adjustment to the opening balance of accumulated deficit. The Company recorded interest expense related to the amortization of the issuance costs of $0.2 million and $0.4 million for the three and six months ended June 30, 2022, respectively, and $2.0 million and $3.9 million for the three and six months ended June 30, 2021, respectively. Holders of the 2024 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 2024 Notes prior to March 1, 2023. The Company may redeem for cash all or any portion of the 2024 Notes, at its option, on or after March 1, 2023, 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. Credit Agreement On December 30, 2019, the Company entered into a credit agreement, by and among the Company, Evolent Health LLC, as the borrower (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 (the “2019 Credit Agreement”), 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. The proceeds of the Initial Term Loan were used to finance the transactions contemplated by the Passport APA and pay fees and expenses incurred in connection therewith. On August 19, 2020, an amendment to the Company's 2019 Credit Agreement became effective. The amendment effected changes to, among other things, permit the Company's use of cash in the exchange transactions in connection with the issuance of the 2024 Notes, permit the issuance of the 2024 Notes and permit certain note repurchases, as well as to implement amendments to certain minimum liquidity thresholds. On January 8, 2021, the Company repaid all outstanding amounts owed under and terminated the 2019 Credit Agreement with Ares Capital Corporation. The total amount paid to Ares Capital Corporation under the 2019 Credit Agreement in connection with the prepayment was $98.6 million, which included $9.7 million for the make-whole premium as well as $0.2 million in accrued interest. As a result of this transaction, the Company recorded a loss on the repayment of debt of $19.2 million, representing the remaining unamortized debt issuance costs of $9.5 million, the make-whole premium and $35 thousand of legal expenses. Warrant Agreement In conjunction with the Company’s entry into the 2019 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 could exercise the warrants at any time until thirty days after the maturity of the 2019 Credit Agreement. The Company, at its sole discretion, could 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. On January 8, 2021, the Company settled the outstanding warrants associated with the 2019 Credit Agreement for $13.7 million. 2025 Notes In October 2018, the Company issued $172.5 million aggregate principal amount of its 1.50% Convertible Senior Notes due 2025 (the “2025 Notes”) in a private placement to qualified institutional buyers within the meaning of Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The 2025 Notes were issued at par for net proceeds of $166.6 million. We incurred $5.9 million of debt issuance costs in connection with the 2025 Notes. The closing of the private placement of $150.0 million aggregate principal amount of the 2025 Notes occurred on October 22, 2018 and the Company completed the offering and sale of an additional $22.5 million aggregate principal amount of the 2025 Notes on October 24, 2018, pursuant to the initial purchasers’ exercise in full of their option to purchase additional notes. Holders of the 2025 Notes are entitled to cash interest payments, which are payable semiannually in arrears on April 15 and October 15 of each year, beginning on April 15, 2019, at a rate equal to 1.50% per annum. The Company recorded interest expense of $0.7 million and $1.3 million for both the three and six months ended June 30, 2022 and 2021 respectively. The 2025 Notes will mature on October 15, 2025, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Prior to the close of business on the business day immediately preceding April 15, 2025, the 2025 Notes will be convertible at the option of the holders only upon the satisfaction of certain conditions, as described in the indenture, dated as of October 22, 2018, between the Company and U.S. Bank National Association, as trustee. At any time on or after April 15, 2025, until the close of business on the business day immediately preceding the maturity date, holders may convert, at their option, all or any portion of their notes at the conversion rate. The 2025 Notes will be convertible at an initial conversion rate of 29.9135 shares of Class A common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $33.43 per share of the Company’s Class A common stock. In the aggregate, the 2025 Notes are initially convertible into 5.2 million shares of the Company’s Class A common stock (excluding any shares issuable by the Company upon a conversion in connection with a make-whole fundamental change or a notice of redemption as described in the governing indenture). The conversion rate may be adjusted under certain circumstances. 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 prior to the adoption of ASU 2020-06. 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. On January 1, 2022, we adopted ASU 2020-06 using the retrospective transition method. As a result, prior period financial information and disclosures are not adjusted and continue to be reported under the accounting standards that were in effect prior to the adoption of ASU 2020-06. The adoption of ASU 2020-06 resulted in the combination of the debt and equity components of the 2024 Notes into a single debt instrument recorded in long term debt, net on the consolidated balance sheet. This resulted in a $71.8 million decrease in additional paid-in capital and a $2.5 million increase in additional paid-in capital from the previously bifurcated equity component from deferred financing fees, respectively, and a $28.1 million decrease to the January 1, 2022 accumulated deficit, representing the cumulative non-cash interest expense recognized related to the amortization of the debt discount associated with the bifurcated equity component of the 2025 Notes. These adjustments resulted in an increase of $41.3 million to the debt component of the 2025 Notes. Additionally, the allocation of the issuance costs to the equity component and all issuance costs related to the 2025 Notes are being amortized to interest expense using the effective interest method over the contractual term of the 2025 Notes which is included in the cumulative adjustment to the opening balance of accumulated deficit. The Company recorded interest expense related to the amortization of the issuance costs of $0.3 million and $0.6 million for the three and six months ended June 30, 2022, respectively, and $2.4 million and $4.8 million for the three and six months ended June 30, 2021, respectively. Holders of the 2025 Notes may require the Company to repurchase all or part of their notes upon the occurrence of a fundamental change at a price equal to 100.0% of the principal amount of the notes being repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The Company may not redeem the 2025 Notes prior to October 20, 2022. The Company may redeem for cash all or any portion of the 2025 Notes, at its option, on or after October 20, 2022, if the last reported sale price of the Company’s Class A common stock has been at least 130.0% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100.0% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. 2021 Notes In December 2016, the Company issued $125.0 million aggregate principal amount of its 2.00% Convertible Senior Notes due 2021 (the “2021 Notes”) in a private placement to qualified institutional buyers within the meaning of Rule 144A under the Securities Act. 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 amortized to non-cash interest expense using the straight-line method over the contractual term of the 2021 Notes, since this method was not materially different from the effective interest method. The closing of the private placement of the 2021 Notes occurred on December 5, 2016. In August 2020, as part of the issuance of the 2024 Notes, the Company issued $84.2 million aggregate principal amount of the 2024 Notes in exchange for $84.2 million aggregate principal of its 2021 Notes. There was no cash consideration in these exchanges outside of an aggregate cash payment of $2.5 million paid to exchanging noteholders. These exchanges were accounted for as an extinguishment resulting in a net loss on extinguishment of debt of $4.8 million, including an aggregate cash payment of $2.5 million paid to exchanging noteholders. In August 2020, we also repurchased $14.0 million of the 2021 Notes with $13.9 million of cash and recorded an immaterial gain on extinguishment of debt. Upon maturity of the 2021 Notes on December 1, 2021, outstanding 2021 Notes with a principal amount of $26.7 million were settled, at the option of the holders, by converting $26.3 million aggregate principal amount of 2021 Notes to common shares and cash repayment of $0.4 million aggregate principal amount of 2021 Notes. Shares issued were valued based on the quoted trading prices on the conversion date for a total fair value of $28.5 million resulting in a loss on debt extinguishment of $2.2 million which was recorded in loss on repayment of debt on our consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2021. Convertible Senior Notes Carrying Value The 2024 Notes and 2025 Notes are recorded on our accompanying consolidated balance sheets at their net carrying values as of June 30, 2022. However, the 2024 Notes and 2025 Notes are privately traded by qualified institutional buyers (within the meaning of Rule 144A under the Securities Act) and their fair values are Level 2 inputs. The 2024 Notes and 2025 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 as of June 30, 2022 and December 31, 2021 (in thousands): June 30, 2022 December 31, 2021 2024 Notes Carrying value $ 114,893 $ 89,361 Unamortized debt discount and issuance costs 2,158 27,690 Principal amount $ 117,051 $ 117,051 Remaining amortization period (years) 2.4 2.9 Fair value (1) $ 197,477 $ 195,445 2025 Notes Carrying value $ 168,245 $ 126,315 Unamortized debt discount and issuance costs 4,255 46,185 Principal amount $ 172,500 $ 172,500 Remaining amortization period (years) 3.3 3.8 Fair value (1) $ 195,434 $ 177,251 ———————— (1) Fair values for notes are derived from available trading prices closest to the respective balance sheet date. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Commitments Letters of Credit As of June 30, 2022 and December 31, 2021, the Company was party to irrevocable standby letters of credit with a bank for $13.8 million and $15.4 million, respectively, for the benefit of regulatory authorities, real estate and risk-sharing agreements. As such, we held $13.8 million and $15.4 million, respectively, in restricted cash and restricted investments as collateral as of June 30, 2022 and December 31, 2021. The letters of credit have current expiration dates between June 2022 and March 2032 and will automatically extend without amendment for an additional one-year period and will continue to automatically extend after each one-year term from the expiry date unless the bank elects not to extend beyond the initial or any extended expiry date. 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. 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, state law or otherwise. We did not incur any expenses related to secondary offerings or other sales of shares by our investor stockholders during the three and six months ended June 30, 2022, respectively. Guarantees On July 16, 2020, EVH Passport, Evolent Health LLC and Molina Healthcare, Inc. (“Molina”) entered into an Asset Purchase Agreement (the “Molina APA”), which contemplated the sale by EVH Passport to Molina of certain assets, including certain intellectual property rights of EVH Passport and EVH Passport’s rights under the Passport Medicaid Contract. On September 1, 2020, EVH Passport and Molina consummated the transactions contemplated by the Molina APA (the “Molina Closing”) and the Passport Medicaid Contract was novated to Molina. In connection with the Molina Closing, the Company continued to provide administrative support services relating to the Passport Medicaid Contract to Molina through the end of 2020. Following the Molina Closing, EVH Passport began working with regulatory authorities including the Kentucky Department of Insurance (“KY DOI”) regarding the wind down of its operations throughout 2021. As part of that wind down process, the Company, as the parent of EVH Passport, entered into a guarantee for the benefit of the KY DOI to satisfy any EVH Passport liability or obligation in the event EVH Passport is not able to meet its wind down liabilities or obligations. As of June 30, 2022, no amounts have been funded under this guarantee. Reinsurance Agreements On December 30, 2019, UHC, PHS I, the Company and EVH Passport consummated the transactions contemplated by the Passport APA (the “Passport Closing”). As part of the Passport Closing, EVH Passport and UHC entered into an agreement that provided for the administration and assumption of the financial risks by EVH Passport of the D-SNP Business until such time as EVH Passport became certified as a Medicare Advantage Organization and the D-SNP Business could be transferred to EVH Passport. On October 1, 2020, the D-SNP Business was transferred from UHC to EVH Passport. At the Molina Closing, Molina and EVH Passport entered into an agreement that provided for the assumption of the financial risks by Molina of the D-SNP Business until such time as Molina’s Kentucky health plan becomes certified as a Medicare Advantage Organization and the D-SNP Business is transferred to Molina. The Company and EVH Passport continued to administer the D-SNP Business until January 1, 2021, at which time Molina became responsible for its administration until the D-SNP Business was officially transferred to Molina effective September 1, 2021. The following summarizes premiums and claims assumed under the Reinsurance Agreements (in thousands): For the Six Months Ended June 30, 2022 2021 Reinsurance premiums assumed $ (2) $ 17,576 Claims assumed 149 16,863 Claims-related administrative expenses — 545 Increase (decrease) in reserves for claims and performance-based arrangements attributable to the Reinsurance Agreement (151) 168 Reserves for claims and performance-based arrangements attributable to the Reinsurance Agreement at the beginning of the period 90 4,002 Impact of consolidation on payable for claims and performance-based arrangements attributable to the Reinsurance Agreement — — Reinsurance payments paid (received) (328) 7,506 Payable (receivable) for claims and performance-based arrangements attributable to the Reinsurance Agreement at the end of the period $ 267 $ (3,336) UPMC Reseller Agreement The Company and UPMC are parties to a reseller, services and non-competition agreement, dated August 31, 2011, which was amended and restated by the parties on June 27, 2013 (as amended through the date hereof, the “UPMC Reseller Agreement”). Under the terms of the UPMC Reseller Agreement, UPMC has appointed the Company as a non-exclusive reseller of certain services, subject to certain conditions and limitations specified in the UPMC Reseller Agreement. In consideration for the Company’s obligations under the UPMC Reseller Agreement and subject to certain conditions described therein, UPMC has agreed not to sell certain products and services directly to a defined list of 20 of the Company’s customers. Contingencies Tax Receivables Agreement In connection with the Offering Reorganization, the Company entered into the 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. 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, a second amended complaint was filed on June 8, 2020, and a third amended complaint, now titled Plymouth County Retirement System v. Evolent Health, Inc., Frank Williams, Nicholas McGrane, Seth Blackley , was filed on December 2, 2021. On July 13, 2022, the parties to the class action executed a term sheet for settlement of the litigation, subject to documentation of the settlement and approval of the court after notice to class members. On August 2, 2022, the lead plaintiff in the case filed an unopposed motion seeking preliminary approval of the settlement and related exhibits, including draft notice to class members and a proposed final order. The settlement stipulation is subject to preliminary and final approval by the court. If the settlement is approved, we expect that the agreed-upon settlement payment of $23.5 million will be funded entirely by applicable directors’ and officers’ liability insurance. As such, we do not expect to incur a significant net loss or cash outflow as a result of the settlement of this matter. On June 8, 2021, a shareholder of the Company filed a derivative action in the Delaware Chancery Court against some current and former Board members and against the Company as a nominal defendant, alleging that the Company’s Board was negligent in its oversight of the Company’s relationship with Passport Health Plan. The case is Lincolnshire Police Pension Fund, derivatively on behalf o f Evolent Health, Inc., v. Blackley, Williams, Scott, Holder, Farner, D’Amato, Duffy, Felt, Samet, Hobart, and Payson, and Evolent Health, Inc . (“Derivative Action”). The Company and the Director-Defendants filed a motion to dismiss the complaint on August 27, 2021, and Plaintiffs responded by filing an amended complaint on October 26, 2021. Defendants filed a motion to dismiss the amended complaint on December 17, 2021. Plaintiffs have not yet responded to the motion to dismiss and there is not currently a briefing schedule on file with the Delaware Chancery Court. Based on the Company’s investigation, we believe the case has little legal or factual merit. However, the outcome of any litigation is uncertain. 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 June 30, 2022, approximately 98.6% of our $280.4 million of cash and cash equivalents, restricted cash and restricted investments were held in bank deposits with FDIC participating banks and approximately 0.9% 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 partners who represented at least 10.0% of our consolidated short-term trade accounts receivable, excluding pharmacy claims receivable and premiums receivable, as of June 30, 2022 and December 31, 2021: June 30, 2022 December 31, 2021 Cook County Health and Hospitals System 24.5% * Florida Blue Medicare, Inc. * 46.4% Molina Healthcare 10.3% 10.4% The Centers for Medicare and Medicaid Services 12.0% * Bright Health Management, Inc. 11.4% * ———————— * Represents less than 10.0% of the respective balance. In addition, the Company is subject to significant concentration of revenue risk as a substantial portion of our revenue is derived from a small number of contractual relationships with our operating partners. The following table summarizes those partners who represented at least 10.0% of our consolidated revenue for the three and six months ended June 30, 2022 and 2021: For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 Cook County Health and Hospitals Systems 24.1% 29.6% 24.0% 29.2% Florida Blue Medicare, Inc. 11.7% 14.2% 11.8% 14.5% Blue Cross and Blue Shield of North Carolina 10.2% * * * ———————— * Represents less than 10.0% of the respective balance. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2022 | |
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. Immaterial 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 $2.3 million and $3.8 million in letters of credit as of June 30, 2022 and December 31, 2021. As of June 30, 2022 and December 31, 2021, the Company held $2.3 million and $3.8 million in restricted cash and restricted investments on the consolidated balance sheet as collateral for the letters of credit, respectively. The following table summarizes our primary office leases as of June 30, 2022 (in thousands, other than term): Location Lease Termination Term (in years) Future Minimum Lease Commitments Letter of Credit Amount Required Arlington, VA 9.6 $ 34,014 $ 1,579 Riverside, IL 8.8 39,712 232 Edison, NJ 3.8 1,981 222 Pune, India 1.3 864 — Brea, CA 4.9 4,304 — The following table summarizes the components of our lease expense (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 Operating lease cost $ 2,231 $ 2,437 $ 4,505 $ 7,255 Variable lease cost 1,171 1,192 2,497 2,513 Total lease cost $ 3,402 $ 3,629 $ 7,002 $ 9,768 Maturity of lease liabilities (in thousands) as of June 30, 2022, is as follows: Operating lease expense 2022 $ 5,196 2023 10,271 2024 10,025 2025 9,651 2026 8,987 Thereafter 40,377 Total lease payments 84,507 Less: Interest 19,537 Present value of lease liabilities $ 64,970 Our weighted-average discount rate and our weighted remaining lease terms (in years) are as follows: June 30, 2022 Weighted average discount rate 6.30 % Weighted average remaining lease term 8.3 |
Loss Per Common Share
Loss Per Common Share | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
Loss Per Common Share | Loss Per Common Share The following table sets forth the computation of basic and diluted earnings per share available for common stockholders (in thousands, except per share data): For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 Loss from continuing operations $ (4,125) $ (9,107) $ (9,475) $ (20,297) Income (loss) from discontinued operations, net of tax (463) — (463) 1,383 Net loss attributable to common shareholders of Evolent Health, Inc. $ (4,588) $ (9,107) $ (9,938) $ (18,914) Weighted-average common shares outstanding - basic and diluted 90,071 85,448 89,792 85,056 Loss per common share Basic and diluted Continuing operations $ (0.05) $ (0.11) $ (0.11) $ (0.24) Discontinued operations — — — 0.02 Basic and diluted loss per share attributable to common shareholders of Evolent Health, Inc. $ (0.05) $ (0.11) $ (0.11) $ (0.22) Anti-dilutive shares excluded from the calculation of weighted-average common shares presented above are presented below (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 Restricted stock units ("RSUs"), performance-based RSUs (“PSUs”) and leveraged stock units ("LSUs") 1,642 2,052 1,817 1,793 Stock options 1,852 1,801 1,807 1,833 Convertible senior notes 11,582 12,696 11,582 12,696 Total 15,076 16,549 15,206 16,322 |
Stock-based Compensation
Stock-based Compensation | 6 Months Ended |
Jun. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-based Compensation | Stock-based Compensation Total compensation expense by award type and line item in our consolidated financial statements was as follows (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 Award Type Stock options $ 91 $ 267 $ 253 $ 671 RSUs 4,647 2,427 7,948 4,401 LSUs 382 222 1,157 1,307 PSUs 1,892 737 3,000 980 Total compensation expense by award type $ 7,012 $ 3,653 $ 12,358 $ 7,359 Line Item Cost of revenue $ 1,162 $ 892 $ 1,962 $ 1,487 Selling, general and administrative expenses 5,850 2,761 10,396 5,872 Total compensation expense by financial statement line item $ 7,012 $ 3,653 $ 12,358 $ 7,359 No stock-based compensation was capitalized as software development costs for the three and six months ended June 30, 2022 and 2021. Stock-based awards were granted as follows (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 RSUs 63 89 980 1,028 PSUs — — 479 319 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For interim periods, we recognize an income tax provision (benefit) based on our estimated annual effective tax rate expected for the full year. An income tax expense (benefit) of $(0.2) million and $1.0 million and was recognized for the three and six months ended June 30, 2022, respectively, which resulted in effective tax rates of 3.9% and (11.4)%, respectively. An income tax expense (benefit) of $0.1 million and $0.7 million was recognized for the three and six months ended June 30, 2021, respectively, which resulted in effective tax rates of (1.0)% and (3.6)%, respectively. The Company and its U.S. subsidiaries continue to record a valuation allowance against its net deferred tax assets, with the exception of indefinite lived components. The income tax expense recorded during the three and six months ended June 30, 2022 and 2021 primarily relates to foreign taxes. As of December 31, 2021, the Company had unrecognized tax benefits of $0.6 million that, if recognized, would not affect the effective tax rate due to the valuation allowance against its net deferred tax asset. As of June 30, 2022, there are no changes to the unrecognized tax benefits. The Company is not currently subject to income tax audits in any U.S., state, or foreign jurisdictions for any tax year. Tax Receivables Agreement In connection with the Offering Reorganization, the Company entered into the TRA with certain of its investors, which provides for the payment by the Company to these investors of 85% of the amount of the tax benefits, if any, that the Company is deemed to realize as a result of increases in our tax basis related to exchanges of Class B common units as well as tax benefits attributable to the future utilization of pre-IPO NOLs. See Note 11 above for discussion of our TRA. |
Investments in Equity Method In
Investments in Equity Method Investees | 6 Months Ended |
Jun. 30, 2022 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments in Equity Method Investees | Investments in 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. As of June 30, 2022 and December 31, 2021, the Company’s economic interests in its equity method investments ranged between 4% and 38% and 4% and 39%, respectively, and voting interests in its equity method investments ranged between 25% 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 gain from these investments was approximately $2.0 million and $2.5 million for the three and six months ended June 30, 2022, respectively, and $4.9 million and $12.7 million for the three and six months ended June 30, 2021, 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 were $3.9 million and $7.5 million for the three and six months ended June 30, 2022, respectively, and $2.3 million and $8.6 million for the three and six months ended June 30, 2021, respectively. |
Fair Value Measurement
Fair Value Measurement | 6 Months Ended |
Jun. 30, 2022 | |
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): June 30, 2022 Level 1 Level 2 Level 3 Total Liabilities Contingent consideration (1) $ — $ — $ 33,400 $ 33,400 Total fair value of liabilities measured on a recurring basis $ — $ — $ 33,400 $ 33,400 December 31, 2021 Level 1 Level 2 Level 3 Total Liabilities Contingent consideration (1) $ — $ — $ 28,700 $ 28,700 Total fair value of liabilities measured on a recurring basis $ — $ — $ 28,700 $ 28,700 (1) Represents the fair value of earn-out consideration related to the Vital Decisions transaction as described in Note 4. The Company recognizes any transfers between levels within the hierarchy as of the beginning of the reporting period. There were no transfers between fair value levels during the three and six months ended June 30, 2022 and 2021, respectively. In the absence of observable market prices, the fair value is based on the best information available and involves a significant degree of judgment, taking into consideration a combination of internal and external factors, including the appropriate risk adjustments for non-performance and liquidity risks. As discussed in Note 4, the acquisition of Vital Decisions includes a provision for additional equity consideration contingent upon the Company obtaining certain annualized performance metrics during the three months ending December 31, 2022. 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 Vital Decisions contingent consideration are the risk-neutral (probability weighted) earnout consideration and the applicable discount rate. A significant increase in the risk-neutral (probability weighted) earnout consideration or decrease in discount rate in isolation would result in a significantly higher fair value of the contingent consideration. The changes in our liabilities measured at fair value for which the Company uses Level 3 inputs to determine fair value are as follows (in thousands): For the Six Months Ended June 30, 2022 2021 Balance as of beginning of period $ 28,700 $ 13,730 Settlements — (13,730) Unrealized losses 4,700 — Balance as of end of period $ 33,400 $ — 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: June 30, 2022 Fair Valuation Significant Assumption or Value Technique Unobservable Inputs Input Ranges Contingent consideration $ 33,400 Real options approach Risk-neutral expected earnout consideration $ 36,277 Discount rate 10.83 % December 31, 2021 Fair Valuation Significant Assumption or Value Technique Unobservable Inputs Input Ranges Contingent consideration $ 28,700 Real options approach Risk-neutral expected earnout consideration $ 30,935 Discount rate 6.04 % 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 10 for information regarding the fair value of the 2024 Notes and 2025 Notes. |
Related Parties
Related Parties | 6 Months Ended |
Jun. 30, 2022 | |
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 16, the Company had economic interests in several entities that are accounted for under the equity method of accounting. The Company has allocated its proportional share of the investees’ earnings and losses each reporting period. In addition, Evolent has entered into services agreements with certain of the entities to provide certain management, operational and support services to help the entities manage elements of their service offerings. The Company also works 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. This relationship is currently in wind-down. The following table presents assets and liabilities attributable to our related parties (in thousands): June 30, 2022 December 31, 2021 Assets Accounts receivable, net $ 4,191 $ 2,719 Prepaid expenses and other current assets — 15 Prepaid expenses and other noncurrent assets 5,038 4,877 Liabilities Accounts payable $ 323 $ 1,967 Accrued liabilities 972 1,120 Reserve for claims and performance-based arrangements — 734 The following table presents revenues and expenses attributable to our related parties (in thousands): For the Three Months Ended June 30, 2022 For the Six Months Ended June 30, 2022 2021 2022 2021 Revenue $ 42,810 $ 10,368 $ 74,874 $ 25,943 Expenses Cost of revenue (exclusive of depreciation and amortization expenses) 36,684 606 63,145 1,099 Selling, general and administrative expenses 236 81 302 112 |
Repositioning and Other Changes
Repositioning and Other Changes | 6 Months Ended |
Jun. 30, 2022 | |
Restructuring and Related Activities [Abstract] | |
Repositioning and Other Changes | Repositioning and Other Changes We continually assess opportunities to improve operational effectiveness and efficiency to better align our expenses with revenues, while continuing to make investments in our solutions, systems and people that we believe are important to our long-term goals. Across 2020, we divested or agreed to divest a majority of our health plan assets, including certain assets of EVH Passport, which represented a significant revenue stream for the Company. In parallel with these divestitures, we contracted with a third-party vendor to review our operating model and organizational design in order to improve our profitability, create value through our solutions and invest in strategic opportunities in future periods. In the fourth quarter of 2020, we committed to certain operational efficiency and profitability actions that we are taking in order to accomplish these objectives (“Repositioning Plan”). These actions included making organizational changes across our business as well as other profitability initiatives expected to result in reductions in force, re-aligning of resources as well as other potential operational efficiency and cost-reduction initiatives that will provide future benefit to the Company. The Repositioning Plan concluded in the fourth quarter of 2021. The following table provides a summary of our total costs associated with the Repositioning Plan by major type of cost (in thousands): Cumulative Costs Incurred through December 31, 2021 Incurred For the Three Months Ended June 30, 2021 Incurred For the Six Months Ended June 30, 2021 Severance and termination benefits $ 185 $ 76 $ 185 Office space consolidation 2,742 — 2,071 Professional services 5,666 587 3,787 Total $ 8,593 $ 663 $ 6,043 |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2022 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment ReportingWe define our reportable segments based on the way the CODM, 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: • Evolent Health Services, which houses our Administrative Simplification solution and certain supporting population health infrastructure; and • Clinical Solutions, which includes our specialty care management and physician-oriented total cost of care solutions, along with the New Century Health and Evolent Care Partners brands. 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 defined as net loss attributable to common shareholders of Evolent Health, Inc. before interest income, interest expense, provision for income taxes, depreciation and amortization expenses, adjusted to exclude gain on transfer of membership, loss on repayment of debt, net, gain from equity method investees, changes in fair value of contingent consideration, other income (expense), net, repositioning costs, stock-based compensation expense, severance costs, amortization of contract cost assets, strategy and shareholder advisory services, acquisition-related costs and gain from discontinued operations. 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): Evolent Health Services Clinical Solutions Intersegment Subtotal Corporate (1) Consolidated Total Revenue For the Three Months Ended June 30, 2022 Total revenue $ 92,796 $ 227,603 $ (460) $ 319,939 $ — $ 319,939 For the Three Months Ended June 30, 2021 Total revenue $ 75,323 $ 147,194 $ (460) $ 222,057 $ — $ 222,057 Evolent Health Services Clinical Solutions Subtotal Corporate (1) Consolidated Total For the Three Months Ended June 30, 2022 Adjusted EBITDA $ 15,129 $ 13,492 $ 28,621 $ (6,882) $ 21,739 For the Three Months Ended June 30, 2021 Adjusted EBITDA $ 6,531 $ 13,597 $ 20,128 $ (6,782) $ 13,346 Evolent Health Services Clinical Solutions Intersegment Subtotal Corporate (1) Consolidated Total Revenue For the Six Months Ended June 30, 2022 Total revenue $ 200,114 $ 417,802 $ (920) $ 616,996 $ — $ 616,996 For the Six Months Ended June 30, 2021 Total revenue $ 160,609 $ 277,417 $ (898) $ 437,128 $ — $ 437,128 Evolent Health Services Clinical Solutions Subtotal Corporate (1) Consolidated Total For the Six Months Ended June 30, 2022 Adjusted EBITDA $ 23,346 $ 35,688 $ 59,034 $ (13,040) $ 45,994 For the Six Months Ended June 30, 2021 Adjusted EBITDA $ 12,473 $ 29,573 $ 42,046 $ (13,793) $ 28,253 ———————— (1) Corporate includes various finance, human resources, legal, executive and other corporate infrastructure expenses. The following table presents our reconciliation of consolidated segments total Adjusted EBITDA to net loss attributable to common shareholders of Evolent Health, Inc. (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 Net loss attributable to common shareholders of Evolent Health, Inc. $ (4,588) $ (9,107) $ (9,938) $ (18,914) Less: Interest income 223 68 340 191 Interest expense (2,148) (6,274) (4,389) (12,611) Benefit from (provision for) income taxes 184 (91) (1,018) (702) Depreciation and amortization expenses (15,112) (14,916) (30,218) (30,103) Gain on transfer of membership — — — 22,969 Loss on repayment of debt, net — — — (19,158) Gain from equity method investees 1,952 4,879 2,548 12,662 Change in fair value of contingent consideration (800) — (6,878) 594 Other income (expense), net 297 (18) 475 (32) Repositioning costs — (663) — (6,043) Stock-based compensation expense (7,012) (3,653) (12,358) (7,359) Severance costs — — (39) (52) Amortization of contract cost assets (27) (196) (54) (323) Strategy and shareholder advisory expenses — (1,513) — (6,513) Acquisition costs (3,421) (76) (3,878) (2,070) Gain (loss) from discontinued operations (1) (463) — (463) 1,383 Adjusted EBITDA $ 21,739 $ 13,346 $ 45,994 $ 28,253 ———————— (1) Includes $(0.5) million loss on disposal of discontinued operations for the three and six months ended June 30, 2022 and $1.9 million gain on disposal of discontinued operations for the six months ended June 30, 2021, respectively. 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 | 6 Months Ended |
Jun. 30, 2022 | |
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 total cost of care and specialty care management services. Reserves for claims and performance-based arrangements for our EHS and Clinical Solutions 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 under the reinsurance agreements, as discussed further in Note 11. 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 total cost of care and specialty care management services 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 total cost of care and specialty care management services 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 was as follows (in thousands): For the Six Months Ended June 30, 2022 2021 EHS (1) Clinical Solutions (1) Total EHS (1) Clinical Solutions (1) Total Beginning balance $ 25,618 $ 145,676 $ 171,294 $ 56,295 $ 122,532 $ 178,827 Incurred costs related to current period — 246,955 246,955 8,669 219,343 228,012 Incurred costs related to prior period (10,289) 32,727 22,438 6,293 215 6,508 Less: Paid costs related to current period (1,239) 202,747 201,508 20,801 73,379 94,180 Paid costs related to prior period 436 100,709 101,145 20,673 71,392 92,065 Change during the year (9,486) (23,774) (33,260) (26,512) 74,787 48,275 Impact of consolidation on reserves for claims and performance-based arrangements — — — — — — Other adjustments (2) — (12,074) (12,074) 3,721 7,282 11,003 Ending balance $ 16,132 $ 109,828 $ 125,960 $ 33,504 $ 204,601 $ 238,105 ———————— (1) Costs incurred to provide specialty care management and EVH Passport are recorded within cost of revenue in our statement of operations. (2) Other adjustments to reserves for claims and performance-based arrangements reflect changes in accrual for amounts payable to facilities and amounts owed to our payer partners for claims paid on our behalf. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 6 Months Ended |
Jun. 30, 2022 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | Supplemental Cash Flow Information The following represents supplemental cash flow information (in thousands): For the Six Months Ended June 30, 2022 2021 Supplemental Disclosure of Non-cash Investing and Financing Activities Accrued property and equipment purchases $ 1,118 $ 668 Effects of Leases Operating cash flows from operating leases 7,010 6,622 Leased assets disposed of (obtained in) exchange for operating lease liabilities 4,153 (2,157) |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Acquisition of IPG On June 24, 2022, the Company, Evolent Health LLC, and Endzone Merger Sub, Inc, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with TPG Growth Iceman Parent, Inc., and TPG Growth V Iceman, L.P. to acquire Implantable Provider Group, Inc. (“IPG”) for $250.0 million in cash and $125.0 million in Class A Common Stock of the Company, together with a potential earnout of up to $87.0 million payable in in cash and shares of Class A Common Stock of the Company in 2023. On August 1, 2022, the transactions contemplated by the Merger Agreement were consummated and the Company issued 3.7 million shares of Class A Common Stock in connection therewith. IPG will report into Evolent’s specialty care management offering, New Century Health, and will be consolidated into the Company’s Clinical Solutions segment. Ares Secured Credit Facilities On August 1, 2022 (the “Closing Date”), the Company entered into a Credit Agreement, by and among the Company, Evolent Health LLC (“Evolent”), Endzone Merger Sub, Inc. (“Endzone” or “Initial Borrower”), which upon consummation of the transactions contemplated by the Merger Agreement will be merged with and into TPG Growth Iceman Parent, Inc., Implantable Provider Group, Inc. (“Implantable”, collectively with Evolent, Endzone and TPG Growth Iceman Parent, the “Borrowers” and each a “Borrower”), certain subsidiaries of the Company, as guarantors, the lenders from time to time party thereto, Ares Capital Corporation, as administrative agent, and ACF Finco I LP, as collateral agent and as revolver agent (the “2022 Credit Agreement”), pursuant to which the lenders agreed to extend credit to the Borrowers in the form of (i) an initial term loan in the aggregate principal amount of $175.0 million (the “Initial Term Loan Facility”) and (ii) a revolving credit facility in the aggregate principal amount of up to $50.0 million, to be determined by reference to the lesser of $50.0 million, to be determined by reference to the lesser of $50.0 million and a borrowing base (the “Revolving Facility” and, together with the Initial Term Loan Facility, the “2022 Credit Facilities”), subject to the satisfaction of specified conditions. The Borrowers borrowed the loan under the Initial Term Loan Facility on August 1, 2022 (the “Initial Term Loan”), and also borrowed $50.0 million under the Revolving Facility on the Closing Date. In connection with the 2022 Credit Agreement, on August 1, 2022, the Company entered into a Security Agreement, by and among the Company, the Borrowers, 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. Use of Proceeds. The proceeds of the Initial Term Loan may be used to fund ongoing working capital needs and other growth capital expenditure investments, and to finance the transactions contemplated by the Merger Agreement and fund fees and expenses incurred in connection therewith. The proceeds of the Revolving Facility may be used to finance the transactions contemplated by the Merger Agreement and to pay fees and expenses incurred in connection therewith on the Closing Date and thereafter to fund acquisitions, ongoing working capital needs and other growth capital investments and to pay fees and expenses in connection therewith. Maturity. The Initial Term Loan and loans under the Revolving Facility will mature on the date that is the earliest of (a) August 1, 2027, (b) the date on which all amounts outstanding under the 2022 Credit Agreement have been declared or have automatically become due and payable under the terms of the 2022 Credit Agreement and (c) the date that is ninety-one (91) days prior to the maturity date of any Junior Debt (as defined in the 2022 Credit Agreement) unless certain liquidity conditions are satisfied. Interest and Fees. The interest rate for each loan under the 2022 Credit Facilities is calculated, at the option of the Borrowers, (a) in the case of a Term Loan, at either the Adjusted Term SOFR Rate (as defined in the 2022 Credit Agreement) plus 5.50%, or the base rate plus 4.50% and (b) in the case of a Revolving Loan, at either the Adjusted Term SOFR Rate plus 3.50%, or the base rate plus 2.50%. A commitment fee of (a) 2.00% per annum of the aggregate amount of the commitments in respect of the Term Loan Facility as of the Closing Date and (b) 2.00% of the aggregate amount of the commitments in respect of the Revolving Facility as of the Closing Date is payable by the Borrowers quarterly in arrears. Prepayment. Amounts outstanding under the Credit Facility may be prepaid at the option of the Company subject to applicable premiums and a call protection premium payable on the amount prepaid in certain instances as follows: (1) 3.00% of the principal amount so prepaid after the Closing Date but prior to the first anniversary of the Closing Date; (2) 2.00% of the principal amount so prepaid after the first anniversary of the Closing Date but prior to the second anniversary of the Closing Date; (3) 1.00% of the principal amount so prepaid after the second anniversary of the Closing Date but prior to the third anniversary of the Closing Date; and (4) 0.00% of the principal amount so prepaid on or after the third anniversary of the Closing Date. Amounts outstanding under the 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. Guarantees and Collateral. The 2022 Credit Facilities are guaranteed by the Company and the Company’s domestic subsidiaries, subject to certain exceptions. The 2022 Credit Facilities are secured by a first priority security interest in all of the capital stock of each borrower and guarantor (other than the Company) and substantially all of the assets of each borrower and guarantor, subject to certain exceptions. Covenants and Other Provisions. The 2022 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 liquidity test commencing upon closing of the 2022 Credit Facilities and a total secured leverage ratio commencing on the last day of the fiscal quarter ending September 30, 2022. 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 2022 Credit Facilities. |
Basis of Presentation, Summar_2
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of PresentationIn our opinion, the accompanying unaudited interim consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to fairly state our financial position, results of operations and cash flows. The interim consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain footnote disclosures normally included in financial statements prepared in accordance with United States of America generally accepted accounting principles (“GAAP”) have been omitted pursuant to instructions, rules and regulations prescribed by the United States Securities and Exchange Commission (“SEC”). The disclosures provided herein should be read in conjunction with the audited financial statements and notes thereto included in our 2021 Form 10-K. |
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 assets, goodwill 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, credit losses, depreciable lives of assets, impairment of long-lived assets, stock-based compensation, deferred income taxes and valuation allowance, contingent liabilities, 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. |
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. |
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 are recognized separately from the business combination and are expensed as incurred. |
Goodwill | Goodwill We recognize the excess of the purchase price, plus the fair value of any non-controlling interests in the acquiree, over the fair value of identifiable net assets acquired as goodwill. Goodwill is not amortized, but is reviewed at least annually for indications of impairment, with consideration given to financial performance and other relevant factors. We perform impairment tests of goodwill at a reporting unit level. Following the sale of True Health, the Company has three 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 we believe 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). |
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 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 3 - 5 years |
Research and Development Costs | Research and Development CostsResearch 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 was $3.8 million and $7.9 million for the three and six months ended June 30, 2022, respectively. |
Reserves for Claims and Performance-based Arrangements | Reserves for Claims and Performance-based Arrangements Reserves for claims and performance-based arrangements 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. The Company |
Right of Offset | Right of OffsetCertain customer arrangements give the Company the legal right to net payment for amounts due from customers and claims payable. |
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 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 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 immaterial and is offset against rent expense over the terms of the respective leases. |
Revenue Recognition | Revenue Recognition We derive 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 programs, or implement certain platform and operations services. 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 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 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 We derive revenue primarily from platform and operations services. Platform and operations services are typically multi-year arrangements with customers to provide various clinical and administrative solutions. In our Clinical Solutions segment, our solutions are designed to lower the medical expenses of our partners and include our total cost of care and specialty care management services. In our Evolent Health Services segment, our 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 third-party administration (“TPA”) services. Our performance obligation in these arrangements is to provide an integrated suite of services, including access to our platform that is customized to meet the specialized needs of our customers and members. Generally, we will apply the series guidance to the performance obligation as we have determined that each time increment is distinct. We primarily utilize a variable fee structure for these services that typically includes 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. In our Clinical Solutions segment, we enter into capitation arrangements that may include performance-based arrangements and/or gainshare features. We recognize capitation revenue on a gross basis when we have established control over the services within our scope and recognize capitation revenue on a net basis when we do not have control over the services within our scope. 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. As we integrate goods and services provided by third parties into our overall service, we control the goods and services provided to the customer prior to its delivery. As such, we are the principal and we will recognize revenue on a gross basis. In certain cases, we act as an agent and do not control the services from third parties before it is delivered to the customer thereby recognizing revenue on a net basis. |
Adoption of New Accounting Standards and Recent Accounting Pronouncements Not Yet Effective | Adoption of New Accounting Standards In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes. The amendments in the ASU remove certain exceptions to the intraperiod tax allocation of losses and gains from different financial statement components and to the method of recognizing income taxes on interim period losses and the recognition of deferred tax liabilities for outside basis differences. In addition, the new guidance simplifies aspects of the accounting for franchise taxes and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The Company adopted this standard starting in the first quarter of 2021, which did not have a material impact on our consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity . The ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Specifically, the ASU removes the separation models for convertible debt with a cash conversion feature or convertible instruments with a beneficial conversion feature and no longer permits the use of the treasury stock method from calculating earnings per share. As a result, after adopting the ASU’s guidance, we do not separately present in equity an embedded conversion feature of such debt. Instead, we account for a convertible debt instrument wholly as debt unless (i) a convertible instrument contains features that require bifurcation as a derivative or (ii) a convertible debt instrument was issued at a substantial premium. Additionally, the ASU removes certain conditions for equity classification related to contracts in an entity’s own equity (e.g., warrants) and amends certain guidance related to the computation of earnings per share for convertible instruments and contracts on an entity’s own equity. The Company adopted the standard using a modified retrospective method on January 1, 2022, with adjustments which increased retained earnings by $39.8 million, reduced additional paid-in capital by $106.2 million and increased the net carrying amount of the 2024 and 2025 Notes by $25.1 million and $41.3 million, respectively. Recent Accounting Pronouncements Not Yet Effective In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value. This new standard is effective for our interim and annual periods beginning after December 15, 2022, with early adoption permitted. We are currently evaluating the adoption impacts on our consolidated financial statements. |
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. 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 10 for information regarding the fair value of the 2024 Notes and 2025 Notes. |
Basis of Presentation, Summar_3
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
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: June 30, 2022 December 31, 2021 Collateral for letters of credit for facility leases (1) $ 2,269 $ 3,769 Collateral with financial institutions (2) 11,504 11,662 Claims processing services (3) 73,585 73,226 Other 5 5 Total restricted cash and restricted investments $ 87,363 $ 88,662 Current restricted cash 74,377 75,685 Total current restricted cash and restricted investments $ 74,377 $ 75,685 Non-current restricted cash 12,986 12,977 Total non-current restricted cash and restricted investments $ 12,986 $ 12,977 ———————— (1) Represents restricted cash related to collateral for letters of credit required in conjunction with lease agreements. See Note 12 for further discussion of our lease commitments. (2) Represents collateral held with financial institutions for risk-sharing and other arrangements. As of June 30, 2022 and December 31, 2021, approximately $11.5 million and $11.7 million, respectively, of the collateral amounts were held in a FDIC participating bank account. See Note 17 for discussion of fair value measurement and Note 11 for discussion of our risk-sharing arrangements. (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 consolidated statements of cash flows (in thousands): June 30, 2022 2021 Cash and cash equivalents $ 193,070 $ 207,273 Restricted cash and restricted investments 87,363 31,137 Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows (1) $ 280,433 $ 238,410 ———————— (1) As a result of the closing of the sale of True Health during the first quarter of 2021, the consolidated statement of operations and related financial information reflect the Company’s operations and assets and liabilities of True Health as discontinued operations. Cash flows and comprehensive income have not been adjusted and are included in the consolidated statements of cash flows and consolidated statements of comprehensive income (loss) for the six months ended June 30, 2021. See Note 5. |
Schedule of cash and cash equivalents | 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 consolidated statements of cash flows (in thousands): June 30, 2022 2021 Cash and cash equivalents $ 193,070 $ 207,273 Restricted cash and restricted investments 87,363 31,137 Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows (1) $ 280,433 $ 238,410 ———————— (1) As a result of the closing of the sale of True Health during the first quarter of 2021, the consolidated statement of operations and related financial information reflect the Company’s operations and assets and liabilities of True Health as discontinued operations. Cash flows and comprehensive income have not been adjusted and are included in the consolidated statements of cash flows and consolidated statements of comprehensive income (loss) for the six months ended June 30, 2021. See Note 5. |
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 3 - 5 years Details of our intangible assets (in thousands, except weighted-average useful lives) as of June 30, 2022 and December 31, 2021 are presented below: June 30, 2022 December 31, 2021 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 11.9 $ 25,800 $ 8,466 $ 17,334 12.4 $ 25,800 $ 7,693 $ 18,107 Customer relationships 14.4 311,019 81,125 229,894 14.9 311,019 72,697 238,322 Technology 1.7 87,922 77,041 10,881 2.0 87,922 73,378 14,544 Below market lease, net 0.8 1,218 1,050 168 1.3 1,218 950 268 Provider network contracts (1) 1.7 16,236 9,667 6,569 2.2 16,417 7,874 8,543 Total intangible assets, net $ 442,195 $ 177,349 $ 264,846 $ 442,376 $ 162,592 $ 279,784 |
Transactions (Tables)
Transactions (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Business Combination and Asset Acquisition [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, 2021, as follows (in thousands): Purchase consideration: Cash $ 46,500 Fair value of Class A common stock issued 56,626 Fair value of contingent consideration 14,600 Total consideration $ 117,726 Tangible assets acquired: Cash and cash equivalents $ 1,430 Accounts receivable 3,301 Prepaid expenses and other current assets 78 Other non-current assets 2,564 Total tangible assets acquired 7,373 Identifiable intangible assets acquired: Customer relationships 32,500 Technology 5,000 Corporate trade name 2,500 Total identifiable intangible assets acquired 40,000 Liabilities assumed: Accounts payable 93 Accrued liabilities 661 Accrued compensation and employee benefits 970 Deferred tax liabilities, net 499 Deferred revenue 2,000 Operating lease liabilities 2,712 Total liabilities assumed 6,935 Goodwill 77,288 Net assets acquired $ 117,726 |
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 October 1, 2021, as follows (in thousands): Purchase consideration: Cash $ 46,500 Fair value of Class A common stock issued 56,626 Fair value of contingent consideration 14,600 Total consideration $ 117,726 Tangible assets acquired: Cash and cash equivalents $ 1,430 Accounts receivable 3,301 Prepaid expenses and other current assets 78 Other non-current assets 2,564 Total tangible assets acquired 7,373 Identifiable intangible assets acquired: Customer relationships 32,500 Technology 5,000 Corporate trade name 2,500 Total identifiable intangible assets acquired 40,000 Liabilities assumed: Accounts payable 93 Accrued liabilities 661 Accrued compensation and employee benefits 970 Deferred tax liabilities, net 499 Deferred revenue 2,000 Operating lease liabilities 2,712 Total liabilities assumed 6,935 Goodwill 77,288 Net assets acquired $ 117,726 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of discontinued operations | The following table summarizes the results of operations of the Company’s True Health business, which are included in income from discontinued operations in the consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2021: For the Three Months Ended June 30, 2021 For the Six Revenue Platform and operations $ — $ 38 Premiums — 44,795 Total revenue — 44,833 Expenses Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) (1) — 5,885 Claims expenses — 33,954 Selling, general and administrative expenses (2) — 5,764 Depreciation and amortization expenses — 160 Total operating expenses — 45,763 Operating loss — (930) Interest income — 112 Interest expense — (4) Other loss — (25) Loss before income taxes and non-controlling interests — (847) Provision for income taxes — (326) Net loss $ — $ (521) ———————— (1) Cost of revenue includes intercompany expenses between the Company and True Health that are recorded in income from continuing operations in the consolidated statements of operations and comprehensive income (loss) related to an existing services agreement for claims processing and other health plan administrative functions of $2.8 million for the six months ended June 30, 2021. (2) Selling, general and administrative expenses includes intercompany expenses between the Company and True Health that are recorded in income from continuing operations on the consolidated statements of operations and comprehensive income (loss) related to an existing services agreement for claims processing and other health plan administrative functions of $1.1 million for the six months ended June 30, 2021. Cash flows provided by operating activities $ 5,002 Cash flows used in investing activities (2,494) |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | The following table represents Evolent’s revenue disaggregated by segment and end-market for (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 2022 2021 2022 2021 Evolent Health Services Clinical Solutions Evolent Health Services Clinical Solutions Medicaid $ 55,422 $ 52,064 $ 86,080 $ 53,648 $ 122,336 $ 112,993 $ 156,967 $ 96,987 Medicare 9,863 6,346 101,529 90,761 14,696 14,684 193,796 176,544 Commercial and other 27,051 16,453 39,994 2,785 62,162 32,023 67,039 3,897 Total $ 92,336 $ 74,863 $ 227,603 $ 147,194 $ 199,194 $ 159,700 $ 417,802 $ 277,428 |
Contract with customer, asset and liability | The following table provides information about receivables, contract assets and deferred revenue from contracts with customers as of June 30, 2022 and December 31, 2021 (in thousands): June 30, 2022 December 31, 2021 Short-term receivables (1) $ 116,580 $ 129,012 Long-term receivables (1) 5,038 4,877 Short-term deferred revenue 8,711 11,944 Long-term deferred revenue 3,605 4,437 ———————— (1) Excludes pharmacy claims receivable and premiums receivable. Changes in deferred revenue for the six months ended June 30, 2022 are as follows (in thousands): Deferred revenue Balance as of beginning-of-period $ 16,381 Reclassification to revenue, as a result of performance obligations satisfied (10,796) Cash received in advance of satisfaction of performance obligations 6,731 Balance as of end of period $ 12,316 |
Credit Losses (Tables)
Credit Losses (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Credit Loss [Abstract] | |
Accounts receivable, allowance for credit loss | The following table summarizes the changes in allowance for credit losses on our accounts receivables, certain non-trade accounts receivable and contract assets (in thousands): For the Six Months Ended June 30, 2022 2021 Balance as of beginning of period $ (3,374) $ (7,056) Provision for credit losses 322 (611) Balance as of end of period $ (3,052) $ (7,667) |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment | The following summarizes our property and equipment (in thousands): June 30, 2022 December 31, 2021 Computer hardware $ 26,452 $ 21,970 Furniture and equipment 4,021 3,581 Internal-use software development costs 173,099 159,587 Leasehold improvements 23,112 15,325 Total property and equipment 226,684 200,463 Accumulated depreciation and amortization expenses (134,057) (119,098) Total property and equipment, net $ 92,627 $ 81,365 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, Net (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
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): EHS Clinical Solutions Consolidated Balance as of December 31, 2021 (1) $ 214,334 $ 211,963 $ 426,297 Foreign currency translation (69) — (69) Balance as of June 30, 2022 $ 214,265 $ 211,963 $ 426,228 Balance as of December 31, 2020 (1) $ 214,354 $ 134,675 $ 349,029 Foreign currency translation (20) — (20) Balance as of June 30, 2021 $ 214,334 $ 134,675 $ 349,009 ———————— (1) Net of cumulative inception to date impairment of $575.5 million as of both December 31, 2021 and 2020. |
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 3 - 5 years Details of our intangible assets (in thousands, except weighted-average useful lives) as of June 30, 2022 and December 31, 2021 are presented below: June 30, 2022 December 31, 2021 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 11.9 $ 25,800 $ 8,466 $ 17,334 12.4 $ 25,800 $ 7,693 $ 18,107 Customer relationships 14.4 311,019 81,125 229,894 14.9 311,019 72,697 238,322 Technology 1.7 87,922 77,041 10,881 2.0 87,922 73,378 14,544 Below market lease, net 0.8 1,218 1,050 168 1.3 1,218 950 268 Provider network contracts (1) 1.7 16,236 9,667 6,569 2.2 16,417 7,874 8,543 Total intangible assets, net $ 442,195 $ 177,349 $ 264,846 $ 442,376 $ 162,592 $ 279,784 |
Schedule of future estimated amortization of intangible assets | Future estimated amortization of intangible assets (in thousands) as of June 30, 2022, is as follows: 2022 $ 14,375 2023 26,760 2024 20,875 2025 19,330 2026 19,153 Thereafter 164,353 Total future amortization of intangible assets $ 264,846 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of convertible debt | The following table summarizes the carrying value of the long-term convertible debt as of June 30, 2022 and December 31, 2021 (in thousands): June 30, 2022 December 31, 2021 2024 Notes Carrying value $ 114,893 $ 89,361 Unamortized debt discount and issuance costs 2,158 27,690 Principal amount $ 117,051 $ 117,051 Remaining amortization period (years) 2.4 2.9 Fair value (1) $ 197,477 $ 195,445 2025 Notes Carrying value $ 168,245 $ 126,315 Unamortized debt discount and issuance costs 4,255 46,185 Principal amount $ 172,500 $ 172,500 Remaining amortization period (years) 3.3 3.8 Fair value (1) $ 195,434 $ 177,251 ———————— (1) Fair values for notes are derived from available trading prices closest to the respective balance sheet date. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of premiums and claims assumed | The following summarizes premiums and claims assumed under the Reinsurance Agreements (in thousands): For the Six Months Ended June 30, 2022 2021 Reinsurance premiums assumed $ (2) $ 17,576 Claims assumed 149 16,863 Claims-related administrative expenses — 545 Increase (decrease) in reserves for claims and performance-based arrangements attributable to the Reinsurance Agreement (151) 168 Reserves for claims and performance-based arrangements attributable to the Reinsurance Agreement at the beginning of the period 90 4,002 Impact of consolidation on payable for claims and performance-based arrangements attributable to the Reinsurance Agreement — — Reinsurance payments paid (received) (328) 7,506 Payable (receivable) for claims and performance-based arrangements attributable to the Reinsurance Agreement at the end of the period $ 267 $ (3,336) |
Summary of major customers | The following table summarizes the partners who represented at least 10.0% of our consolidated short-term trade accounts receivable, excluding pharmacy claims receivable and premiums receivable, as of June 30, 2022 and December 31, 2021: June 30, 2022 December 31, 2021 Cook County Health and Hospitals System 24.5% * Florida Blue Medicare, Inc. * 46.4% Molina Healthcare 10.3% 10.4% The Centers for Medicare and Medicaid Services 12.0% * Bright Health Management, Inc. 11.4% * ———————— * Represents less than 10.0% of the respective balance. The following table summarizes those partners who represented at least 10.0% of our consolidated revenue for the three and six months ended June 30, 2022 and 2021: For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 Cook County Health and Hospitals Systems 24.1% 29.6% 24.0% 29.2% Florida Blue Medicare, Inc. 11.7% 14.2% 11.8% 14.5% Blue Cross and Blue Shield of North Carolina 10.2% * * * ———————— * Represents less than 10.0% of the respective balance. |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Leases [Abstract] | |
Schedule of primary office leases and maturity of lease liabilities | The following table summarizes our primary office leases as of June 30, 2022 (in thousands, other than term): Location Lease Termination Term (in years) Future Minimum Lease Commitments Letter of Credit Amount Required Arlington, VA 9.6 $ 34,014 $ 1,579 Riverside, IL 8.8 39,712 232 Edison, NJ 3.8 1,981 222 Pune, India 1.3 864 — Brea, CA 4.9 4,304 — Maturity of lease liabilities (in thousands) as of June 30, 2022, is as follows: Operating lease expense 2022 $ 5,196 2023 10,271 2024 10,025 2025 9,651 2026 8,987 Thereafter 40,377 Total lease payments 84,507 Less: Interest 19,537 Present value of lease liabilities $ 64,970 |
Schedule of components of lease expense, weighted-average discount rate and weighted-remaining lease terms | The following table summarizes the components of our lease expense (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 Operating lease cost $ 2,231 $ 2,437 $ 4,505 $ 7,255 Variable lease cost 1,171 1,192 2,497 2,513 Total lease cost $ 3,402 $ 3,629 $ 7,002 $ 9,768 Our weighted-average discount rate and our weighted remaining lease terms (in years) are as follows: June 30, 2022 Weighted average discount rate 6.30 % Weighted average remaining lease term 8.3 |
Loss Per Common Share (Tables)
Loss Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
Computation of basic and diluted earnings per share | The following table sets forth the computation of basic and diluted earnings per share available for common stockholders (in thousands, except per share data): For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 Loss from continuing operations $ (4,125) $ (9,107) $ (9,475) $ (20,297) Income (loss) from discontinued operations, net of tax (463) — (463) 1,383 Net loss attributable to common shareholders of Evolent Health, Inc. $ (4,588) $ (9,107) $ (9,938) $ (18,914) Weighted-average common shares outstanding - basic and diluted 90,071 85,448 89,792 85,056 Loss per common share Basic and diluted Continuing operations $ (0.05) $ (0.11) $ (0.11) $ (0.24) Discontinued operations — — — 0.02 Basic and diluted loss per share attributable to common shareholders of Evolent Health, Inc. $ (0.05) $ (0.11) $ (0.11) $ (0.22) |
Schedule of antidilutive securities excluded from computation of earnings per share | Anti-dilutive shares excluded from the calculation of weighted-average common shares presented above are presented below (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 Restricted stock units ("RSUs"), performance-based RSUs (“PSUs”) and leveraged stock units ("LSUs") 1,642 2,052 1,817 1,793 Stock options 1,852 1,801 1,807 1,833 Convertible senior notes 11,582 12,696 11,582 12,696 Total 15,076 16,549 15,206 16,322 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-based compensation expense | Total compensation expense by award type and line item in our consolidated financial statements was as follows (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 Award Type Stock options $ 91 $ 267 $ 253 $ 671 RSUs 4,647 2,427 7,948 4,401 LSUs 382 222 1,157 1,307 PSUs 1,892 737 3,000 980 Total compensation expense by award type $ 7,012 $ 3,653 $ 12,358 $ 7,359 Line Item Cost of revenue $ 1,162 $ 892 $ 1,962 $ 1,487 Selling, general and administrative expenses 5,850 2,761 10,396 5,872 Total compensation expense by financial statement line item $ 7,012 $ 3,653 $ 12,358 $ 7,359 |
Schedule of share-based awards granted | Stock-based awards were granted as follows (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 RSUs 63 89 980 1,028 PSUs — — 479 319 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
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): June 30, 2022 Level 1 Level 2 Level 3 Total Liabilities Contingent consideration (1) $ — $ — $ 33,400 $ 33,400 Total fair value of liabilities measured on a recurring basis $ — $ — $ 33,400 $ 33,400 December 31, 2021 Level 1 Level 2 Level 3 Total Liabilities Contingent consideration (1) $ — $ — $ 28,700 $ 28,700 Total fair value of liabilities measured on a recurring basis $ — $ — $ 28,700 $ 28,700 (1) Represents the fair value of earn-out consideration related to the Vital Decisions transaction as described in Note 4. |
Changes in contingent consideration measured at fair value | The changes in our liabilities measured at fair value for which the Company uses Level 3 inputs to determine fair value are as follows (in thousands): For the Six Months Ended June 30, 2022 2021 Balance as of beginning of period $ 28,700 $ 13,730 Settlements — (13,730) Unrealized losses 4,700 — Balance as of end of period $ 33,400 $ — |
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: June 30, 2022 Fair Valuation Significant Assumption or Value Technique Unobservable Inputs Input Ranges Contingent consideration $ 33,400 Real options approach Risk-neutral expected earnout consideration $ 36,277 Discount rate 10.83 % December 31, 2021 Fair Valuation Significant Assumption or Value Technique Unobservable Inputs Input Ranges Contingent consideration $ 28,700 Real options approach Risk-neutral expected earnout consideration $ 30,935 Discount rate 6.04 % |
Related Parties (Tables)
Related Parties (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Related Party Transactions [Abstract] | |
Schedule of related parties | The following table presents assets and liabilities attributable to our related parties (in thousands): June 30, 2022 December 31, 2021 Assets Accounts receivable, net $ 4,191 $ 2,719 Prepaid expenses and other current assets — 15 Prepaid expenses and other noncurrent assets 5,038 4,877 Liabilities Accounts payable $ 323 $ 1,967 Accrued liabilities 972 1,120 Reserve for claims and performance-based arrangements — 734 The following table presents revenues and expenses attributable to our related parties (in thousands): For the Three Months Ended June 30, 2022 For the Six Months Ended June 30, 2022 2021 2022 2021 Revenue $ 42,810 $ 10,368 $ 74,874 $ 25,943 Expenses Cost of revenue (exclusive of depreciation and amortization expenses) 36,684 606 63,145 1,099 Selling, general and administrative expenses 236 81 302 112 |
Repositioning and Other Chang_2
Repositioning and Other Changes (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Restructuring and Related Activities [Abstract] | |
Costs associated with the Repositioning Plan | The following table provides a summary of our total costs associated with the Repositioning Plan by major type of cost (in thousands): Cumulative Costs Incurred through December 31, 2021 Incurred For the Three Months Ended June 30, 2021 Incurred For the Six Months Ended June 30, 2021 Severance and termination benefits $ 185 $ 76 $ 185 Office space consolidation 2,742 — 2,071 Professional services 5,666 587 3,787 Total $ 8,593 $ 663 $ 6,043 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Segment Reporting [Abstract] | |
Reconciliation of revenue from segments to consolidated | The following tables present our segment information (in thousands): Evolent Health Services Clinical Solutions Intersegment Subtotal Corporate (1) Consolidated Total Revenue For the Three Months Ended June 30, 2022 Total revenue $ 92,796 $ 227,603 $ (460) $ 319,939 $ — $ 319,939 For the Three Months Ended June 30, 2021 Total revenue $ 75,323 $ 147,194 $ (460) $ 222,057 $ — $ 222,057 Evolent Health Services Clinical Solutions Subtotal Corporate (1) Consolidated Total For the Three Months Ended June 30, 2022 Adjusted EBITDA $ 15,129 $ 13,492 $ 28,621 $ (6,882) $ 21,739 For the Three Months Ended June 30, 2021 Adjusted EBITDA $ 6,531 $ 13,597 $ 20,128 $ (6,782) $ 13,346 Evolent Health Services Clinical Solutions Intersegment Subtotal Corporate (1) Consolidated Total Revenue For the Six Months Ended June 30, 2022 Total revenue $ 200,114 $ 417,802 $ (920) $ 616,996 $ — $ 616,996 For the Six Months Ended June 30, 2021 Total revenue $ 160,609 $ 277,417 $ (898) $ 437,128 $ — $ 437,128 Evolent Health Services Clinical Solutions Subtotal Corporate (1) Consolidated Total For the Six Months Ended June 30, 2022 Adjusted EBITDA $ 23,346 $ 35,688 $ 59,034 $ (13,040) $ 45,994 For the Six Months Ended June 30, 2021 Adjusted EBITDA $ 12,473 $ 29,573 $ 42,046 $ (13,793) $ 28,253 ———————— (1) Corporate includes various finance, human resources, legal, executive and other corporate infrastructure expenses. |
Reconciliation of Adjusted EBITDA to net loss | The following table presents our reconciliation of consolidated segments total Adjusted EBITDA to net loss attributable to common shareholders of Evolent Health, Inc. (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 Net loss attributable to common shareholders of Evolent Health, Inc. $ (4,588) $ (9,107) $ (9,938) $ (18,914) Less: Interest income 223 68 340 191 Interest expense (2,148) (6,274) (4,389) (12,611) Benefit from (provision for) income taxes 184 (91) (1,018) (702) Depreciation and amortization expenses (15,112) (14,916) (30,218) (30,103) Gain on transfer of membership — — — 22,969 Loss on repayment of debt, net — — — (19,158) Gain from equity method investees 1,952 4,879 2,548 12,662 Change in fair value of contingent consideration (800) — (6,878) 594 Other income (expense), net 297 (18) 475 (32) Repositioning costs — (663) — (6,043) Stock-based compensation expense (7,012) (3,653) (12,358) (7,359) Severance costs — — (39) (52) Amortization of contract cost assets (27) (196) (54) (323) Strategy and shareholder advisory expenses — (1,513) — (6,513) Acquisition costs (3,421) (76) (3,878) (2,070) Gain (loss) from discontinued operations (1) (463) — (463) 1,383 Adjusted EBITDA $ 21,739 $ 13,346 $ 45,994 $ 28,253 ———————— (1) Includes $(0.5) million loss on disposal of discontinued operations for the three and six months ended June 30, 2022 and $1.9 million gain on disposal of discontinued operations for the six months ended June 30, 2021, respectively. |
Reserves for Claims and Perfo_2
Reserves for Claims and Performance-Based Arrangements (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Insurance [Abstract] | |
Activity in claims reserves | Activity in reserves for claims and performance-based arrangements was as follows (in thousands): For the Six Months Ended June 30, 2022 2021 EHS (1) Clinical Solutions (1) Total EHS (1) Clinical Solutions (1) Total Beginning balance $ 25,618 $ 145,676 $ 171,294 $ 56,295 $ 122,532 $ 178,827 Incurred costs related to current period — 246,955 246,955 8,669 219,343 228,012 Incurred costs related to prior period (10,289) 32,727 22,438 6,293 215 6,508 Less: Paid costs related to current period (1,239) 202,747 201,508 20,801 73,379 94,180 Paid costs related to prior period 436 100,709 101,145 20,673 71,392 92,065 Change during the year (9,486) (23,774) (33,260) (26,512) 74,787 48,275 Impact of consolidation on reserves for claims and performance-based arrangements — — — — — — Other adjustments (2) — (12,074) (12,074) 3,721 7,282 11,003 Ending balance $ 16,132 $ 109,828 $ 125,960 $ 33,504 $ 204,601 $ 238,105 ———————— (1) Costs incurred to provide specialty care management and EVH Passport are recorded within cost of revenue in our statement of operations. (2) Other adjustments to reserves for claims and performance-based arrangements reflect changes in accrual for amounts payable to facilities and amounts owed to our payer partners for claims paid on our behalf. |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of cash flow, supplemental disclosures | The following represents supplemental cash flow information (in thousands): For the Six Months Ended June 30, 2022 2021 Supplemental Disclosure of Non-cash Investing and Financing Activities Accrued property and equipment purchases $ 1,118 $ 668 Effects of Leases Operating cash flows from operating leases 7,010 6,622 Leased assets disposed of (obtained in) exchange for operating lease liabilities 4,153 (2,157) |
Organization (Details)
Organization (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Cash and cash equivalents | $ 193,070 | $ 266,280 |
Basis of Presentation, Summar_4
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles - Restricted Cash and Restricted Investments (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | |
Restricted Cash and Cash Equivalents Items [Line Items] | |||||
Restricted funds | $ 88,662 | ||||
Current restricted cash | $ 74,377 | 75,685 | |||
Total current restricted cash and restricted investments | 74,377 | 75,685 | |||
Non-current restricted cash | 12,986 | 12,977 | |||
Total non-current restricted cash and restricted investments | 12,986 | 12,977 | |||
Cash and cash equivalents | 193,070 | $ 207,273 | |||
Restricted cash and restricted investments | 87,363 | 31,137 | |||
Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows | [1] | 280,433 | 354,942 | $ 238,410 | $ 361,581 |
Collateral for letters of credit for facility leases | |||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||
Restricted funds | 2,269 | 3,769 | |||
Collateral with financial institutions | |||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||
Restricted funds | 11,504 | 11,662 | |||
Claims processing services | |||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||
Restricted funds | 73,585 | 73,226 | |||
Other | |||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||
Restricted funds | 5 | 5 | |||
Bank time deposits | |||||
Restricted Cash and Cash Equivalents Items [Line Items] | |||||
Restricted funds | $ 11,500 | $ 11,700 | |||
[1]As a result of the closing of the sale of True Health during the first quarter of 2021, the consolidated statement of operations and related financial information reflect the Company’s operations and assets and liabilities of True Health as discontinued operations. Cash flows and comprehensive income have not been adjusted and are included in the consolidated statements of cash flows and consolidated statements of comprehensive income (loss) for the six months ended June 30, 2021. See Note 5. |
Basis of Presentation, Summar_5
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles - Goodwill (Details) - reportingUnit | 1 Months Ended | 6 Months Ended |
Oct. 31, 2021 | Jun. 30, 2022 | |
Accounting Policies [Abstract] | ||
Number of reporting units for goodwill testing | 3 | 3 |
Basis of Presentation, Summar_6
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles - Intangible Assets, Net (Details) | 6 Months Ended |
Jun. 30, 2022 | |
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 | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 3 years |
Provider network contracts | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 5 years |
Basis of Presentation, Summar_7
Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles - Additional Information (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) source | Dec. 31, 2021 | |
Accounting Policies [Abstract] | |||
Research and development costs | $ | $ 3.8 | $ 7.9 | |
Right of offset, percentage of accounts receivable netted against claims payable | 64% | 64% | 42% |
Right of offset, percentage of accounts receivable, net eligible for net basis settlement | 13% | 13% | |
Number of sources of revenue | source | 2 |
Recently Issued Accounting St_2
Recently Issued Accounting Standards (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Mar. 31, 2022 | Jan. 01, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Aug. 31, 2020 | Oct. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Stockholders' equity | $ 613,088 | $ 611,209 | $ 693,633 | $ 614,190 | $ 617,298 | $ 619,600 | |||
2024 Notes | Senior Notes | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Long-term debt, net | $ 78,900 | ||||||||
2025 Notes | Senior Notes | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Long-term debt, net | $ 100,700 | ||||||||
Cumulative Effect, Period of Adoption, Adjustment | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Stockholders' equity | (66,383) | ||||||||
Cumulative Effect, Period of Adoption, Adjustment | 2024 Notes | Senior Notes | Accounting Standards Update 2020-06 | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Long-term debt, net | $ 25,100 | ||||||||
Cumulative Effect, Period of Adoption, Adjustment | 2025 Notes | Senior Notes | Accounting Standards Update 2020-06 | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Long-term debt, net | 41,300 | ||||||||
Retained Earnings (Accumulated Deficit) | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Stockholders' equity | (596,928) | (592,340) | (626,779) | (608,092) | (598,985) | (589,178) | |||
Retained Earnings (Accumulated Deficit) | Cumulative Effect, Period of Adoption, Adjustment | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Stockholders' equity | 39,789 | ||||||||
Retained Earnings (Accumulated Deficit) | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Stockholders' equity | 39,800 | ||||||||
Retained Earnings (Accumulated Deficit) | Cumulative Effect, Period of Adoption, Adjustment | 2024 Notes | Senior Notes | Accounting Standards Update 2020-06 | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Stockholders' equity | (11,700) | ||||||||
Retained Earnings (Accumulated Deficit) | Cumulative Effect, Period of Adoption, Adjustment | 2025 Notes | Senior Notes | Accounting Standards Update 2020-06 | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Stockholders' equity | (28,100) | ||||||||
Additional Paid-In Capital | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Stockholders' equity | $ 1,231,005 | $ 1,224,250 | 1,340,989 | $ 1,242,900 | $ 1,236,847 | $ 1,229,320 | |||
Additional Paid-In Capital | Cumulative Effect, Period of Adoption, Adjustment | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Stockholders' equity | $ (106,172) | ||||||||
Additional Paid-In Capital | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Stockholders' equity | $ 106,200 |
Transactions - Vital Decisions
Transactions - Vital Decisions (Details) - USD ($) $ in Thousands, shares in Millions | 3 Months Ended | 6 Months Ended | ||||
Oct. 01, 2021 | Mar. 31, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Purchase consideration: | ||||||
Cash | $ 9,070 | $ 1,472 | ||||
Liabilities assumed: | ||||||
Goodwill | $ 426,228 | $ 349,009 | $ 426,297 | $ 349,029 | ||
Customer relationships | ||||||
Liabilities assumed: | ||||||
Useful life | 14 years 10 months 24 days | 14 years 4 months 24 days | ||||
Technology | ||||||
Liabilities assumed: | ||||||
Useful life | 2 years | 1 year 8 months 12 days | ||||
Corporate trade name | ||||||
Liabilities assumed: | ||||||
Useful life | 12 years 4 months 24 days | 11 years 10 months 24 days | ||||
Vital Decisions | ||||||
Business Acquisition [Line Items] | ||||||
Voting interests acquired | 100% | |||||
Equity interest issued or issuable, number of shares (in shares) | 1.8 | |||||
Contingent consideration arrangements (up to) | $ 45,000 | |||||
Fair value of contingent consideration | 14,600 | |||||
Purchase consideration: | ||||||
Cash | 46,500 | |||||
Fair value of Class A common stock issued | 56,626 | |||||
Fair value of contingent consideration | 14,600 | |||||
Total consideration | 117,726 | |||||
Tangible assets acquired: | ||||||
Cash and cash equivalents | 1,430 | |||||
Accounts receivable | 3,301 | |||||
Prepaid expenses and other current assets | 78 | |||||
Other non-current assets | 2,564 | |||||
Total tangible assets acquired | 7,373 | |||||
Identifiable intangible assets acquired: | ||||||
Identifiable intangible assets | 40,000 | |||||
Liabilities assumed: | ||||||
Accounts payable | 93 | |||||
Accrued liabilities | 661 | |||||
Accrued compensation and employee benefits | 970 | |||||
Deferred tax liabilities, net | 499 | |||||
Deferred revenue | 2,000 | |||||
Operating lease liabilities | 2,712 | |||||
Total liabilities assumed | 6,935 | |||||
Goodwill | 77,288 | |||||
Net assets acquired | 117,726 | |||||
Goodwill, expected tax deductible amount | 69,600 | |||||
Vital Decisions | Customer relationships | ||||||
Identifiable intangible assets acquired: | ||||||
Identifiable intangible assets | $ 32,500 | |||||
Liabilities assumed: | ||||||
Useful life | 13 years | |||||
Vital Decisions | Technology | ||||||
Identifiable intangible assets acquired: | ||||||
Identifiable intangible assets | $ 5,000 | |||||
Liabilities assumed: | ||||||
Useful life | 5 years | |||||
Vital Decisions | Corporate trade name | ||||||
Identifiable intangible assets acquired: | ||||||
Identifiable intangible assets | $ 2,500 | |||||
Liabilities assumed: | ||||||
Useful life | 15 years |
Discontinued Operations - Summa
Discontinued Operations - Summary of Results of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Expenses | ||||
Net loss | $ (463) | $ 0 | $ (463) | $ 1,383 |
Discontinued Operations, Disposed of by Sale | True Health | ||||
Revenue | ||||
Total revenue | 0 | 44,833 | ||
Expenses | ||||
Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) | 0 | 5,885 | ||
Claims expenses | 0 | 33,954 | ||
Selling, general and administrative expenses | 0 | 5,764 | ||
Depreciation and amortization expenses | 0 | 160 | ||
Total operating expenses | 0 | 45,763 | ||
Operating loss | 0 | (930) | ||
Interest income | 0 | 112 | ||
Interest expense | 0 | (4) | ||
Other loss | 0 | (25) | ||
Loss before income taxes and non-controlling interests | 0 | (847) | ||
Provision for income taxes | 0 | (326) | ||
Net loss | 0 | (521) | ||
Discontinued Operations, Disposed of by Sale | True Health | Platform and operations | ||||
Revenue | ||||
Total revenue | 0 | 38 | ||
Discontinued Operations, Disposed of by Sale | True Health | Premiums | ||||
Revenue | ||||
Total revenue | $ 0 | 44,795 | ||
Discontinued Operations, Disposed of by Sale | True Health | Services Agreements | ||||
Expenses | ||||
Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) | 2,800 | |||
Selling, general and administrative expenses | $ 1,100 |
Discontinued Operations - Sum_2
Discontinued Operations - Summary of Cash Flows (Details) - True Health - Discontinued Operations, Disposed of by Sale $ in Thousands | 6 Months Ended |
Jun. 30, 2021 USD ($) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Cash flows provided by operating activities | $ 5,002 |
Cash flows used in investing activities | $ (2,494) |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | ||
Disaggregation of Revenue [Line Items] | |||||
Revenue | [1] | $ 319,939 | $ 222,057 | $ 616,996 | $ 437,128 |
Evolent Health Services | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 92,336 | 74,863 | 199,194 | 159,700 | |
Evolent Health Services | Medicaid | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 55,422 | 52,064 | 122,336 | 112,993 | |
Evolent Health Services | Medicare | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 9,863 | 6,346 | 14,696 | 14,684 | |
Evolent Health Services | Commercial and other | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 27,051 | 16,453 | 62,162 | 32,023 | |
Clinical Solutions | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 227,603 | 147,194 | 417,802 | 277,428 | |
Clinical Solutions | Medicaid | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 86,080 | 53,648 | 156,967 | 96,987 | |
Clinical Solutions | Medicare | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | 101,529 | 90,761 | 193,796 | 176,544 | |
Clinical Solutions | Commercial and other | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue | $ 39,994 | $ 2,785 | $ 67,039 | $ 3,897 | |
[1]See Note 18 for amounts attributable to unconsolidated related parties included in these line items. |
Revenue Recognition - Transacti
Revenue Recognition - Transaction Price Allocated to the Remaining Performance Obligations (Details) $ in Millions | Jun. 30, 2022 USD ($) |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation | $ 139.6 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, percentage | 28% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, percentage | 60% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, percentage | 82% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months |
Revenue Recognition - Contract
Revenue Recognition - Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |||
Short-term receivables | $ 116,580 | $ 116,580 | $ 129,012 |
Long-term receivables | 5,038 | 5,038 | 4,877 |
Short-term deferred revenue | 8,711 | 8,711 | 11,944 |
Long-term deferred revenue | 3,605 | 3,605 | $ 4,437 |
Deferred revenue | |||
Balance as of beginning-of-period | 16,381 | ||
Reclassification to revenue, as a result of performance obligations satisfied | (10,796) | ||
Cash received in advance of satisfaction of performance obligations | 6,731 | ||
Balance as of end of period | 12,316 | 12,316 | |
Revenue recognized from performed obligations | $ 19,500 | $ 46,100 |
Revenue Recognition - Contrac_2
Revenue Recognition - Contract Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Capitalized Contract Cost [Line Items] | |||||
Contract cost amortization | $ 13,186 | $ 8,311 | |||
Capitalized contract cost, amortization period | 5 years | 5 years | |||
Bonuses and Commissions | |||||
Capitalized Contract Cost [Line Items] | |||||
Contract cost assets | $ 3,800 | $ 3,800 | $ 5,200 | ||
Contract cost amortization | 300 | $ 600 | 1,700 | 1,000 | |
Contract Fulfillment Costs | |||||
Capitalized Contract Cost [Line Items] | |||||
Contract cost assets | 18,900 | 18,900 | $ 27,400 | ||
Contract cost amortization | $ 1,200 | $ 4,600 | $ 11,500 | $ 7,300 |
Credit Losses - Accounts Receiv
Credit Losses - Accounts Receivable (Narrative) (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Accounts Receivable, Noncurrent, Past Due [Line Items] | ||||
Percentage of receivables, current | 90% | 90% | ||
Accounts receivable, net | $ 127,700 | $ 171,500 | ||
Allowance for doubtful accounts, current | $ 3,052 | $ 3,374 | $ 7,667 | $ 7,056 |
Past due less than 60 days | ||||
Accounts Receivable, Noncurrent, Past Due [Line Items] | ||||
Percentage of receivables, past due | 6% | 2% | ||
Past due less than 120 days | ||||
Accounts Receivable, Noncurrent, Past Due [Line Items] | ||||
Percentage of receivables, past due | 8% | 3% |
Credit Losses - Schedule of Cha
Credit Losses - Schedule of Changes in Allowance for Accounts Receivable (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance as of beginning of period | $ (3,374) | $ (7,056) |
Provision for credit losses | 322 | (611) |
Balance as of end of period | $ (3,052) | $ (7,667) |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Property and Equipment [Line Items] | |||||
Total property and equipment | $ 226,684 | $ 226,684 | $ 200,463 | ||
Accumulated depreciation and amortization expenses | (134,057) | (134,057) | (119,098) | ||
Total property and equipment, net | 92,627 | 92,627 | 81,365 | ||
Depreciation expense | 7,800 | $ 7,600 | 15,400 | $ 15,400 | |
Capitalized computer software, amortization | 6,500 | 6,600 | 13,200 | 13,300 | |
Computer hardware | |||||
Property and Equipment [Line Items] | |||||
Total property and equipment | 26,452 | 26,452 | 21,970 | ||
Furniture and equipment | |||||
Property and Equipment [Line Items] | |||||
Total property and equipment | 4,021 | 4,021 | 3,581 | ||
Internal-use software development costs | |||||
Property and Equipment [Line Items] | |||||
Total property and equipment | 173,099 | 173,099 | 159,587 | ||
Total property and equipment, net | 71,500 | 71,500 | 71,200 | ||
Capitalized computer software additions | 7,100 | $ 5,600 | 13,500 | $ 11,100 | |
Leasehold improvements | |||||
Property and Equipment [Line Items] | |||||
Total property and equipment | $ 23,112 | $ 23,112 | $ 15,325 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, Net - Impairment Testing (Details) - reportingUnit | 1 Months Ended | 6 Months Ended |
Oct. 31, 2021 | Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Number of reporting units for goodwill testing | 3 | 3 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets, Net - Schedule of Goodwill (Details) $ in Thousands | 1 Months Ended | 6 Months Ended | |||
Oct. 31, 2021 reportingUnit | Jun. 30, 2022 USD ($) reportingUnit | Jun. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Number of reporting units for goodwill testing | reportingUnit | 3 | 3 | |||
Goodwill [Roll Forward] | |||||
Balance as of beginning of period | $ 426,297 | $ 349,029 | |||
Foreign currency translation | (69) | (20) | |||
Balance as of end of period | 426,228 | 349,009 | |||
Cumulative inception to date impairment | $ 575,500 | $ 575,500 | |||
Evolent Health Services | |||||
Goodwill [Roll Forward] | |||||
Balance as of beginning of period | 214,334 | 214,354 | |||
Foreign currency translation | (69) | (20) | |||
Balance as of end of period | 214,265 | 214,334 | |||
Clinical Solutions | |||||
Goodwill [Roll Forward] | |||||
Balance as of beginning of period | 211,963 | 134,675 | |||
Foreign currency translation | 0 | 0 | |||
Balance as of end of period | $ 211,963 | $ 134,675 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets, Net - Intangible Assets, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||||||
Gross Carrying Amount | $ 442,195 | $ 442,195 | $ 442,376 | |||
Accumulated Amortization | 177,349 | 177,349 | 162,592 | |||
Total future amortization of intangible assets | 264,846 | 264,846 | 279,784 | |||
Amortization of intangible assets | 7,300 | $ 7,200 | $ 14,800 | $ 14,700 | ||
Corporate trade name | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Weighted- Average Remaining Useful Life | 12 years 4 months 24 days | 11 years 10 months 24 days | ||||
Gross Carrying Amount | 25,800 | $ 25,800 | 25,800 | |||
Accumulated Amortization | 8,466 | 8,466 | 7,693 | |||
Total future amortization of intangible assets | 17,334 | $ 17,334 | 18,107 | |||
Customer relationships | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Weighted- Average Remaining Useful Life | 14 years 10 months 24 days | 14 years 4 months 24 days | ||||
Gross Carrying Amount | 311,019 | $ 311,019 | 311,019 | |||
Accumulated Amortization | 81,125 | 81,125 | 72,697 | |||
Total future amortization of intangible assets | 229,894 | $ 229,894 | 238,322 | |||
Technology | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Weighted- Average Remaining Useful Life | 2 years | 1 year 8 months 12 days | ||||
Gross Carrying Amount | 87,922 | $ 87,922 | 87,922 | |||
Accumulated Amortization | 77,041 | 77,041 | 73,378 | |||
Total future amortization of intangible assets | 10,881 | $ 10,881 | 14,544 | |||
Below market lease, net | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Weighted- Average Remaining Useful Life | 1 year 3 months 18 days | 9 months 18 days | ||||
Gross Carrying Amount | 1,218 | $ 1,218 | 1,218 | |||
Accumulated Amortization | 1,050 | 1,050 | 950 | |||
Total future amortization of intangible assets | 168 | $ 168 | 268 | |||
Provider network contracts | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Weighted- Average Remaining Useful Life | 2 years 2 months 12 days | 1 year 8 months 12 days | ||||
Gross Carrying Amount | 16,236 | $ 16,236 | 16,417 | |||
Accumulated Amortization | 9,667 | 9,667 | 7,874 | |||
Total future amortization of intangible assets | $ 6,569 | $ 6,569 | $ 8,543 |
Goodwill and Intangible Asset_6
Goodwill and Intangible Assets, Net - Amortization of Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2022 | $ 14,375 | |
2023 | 26,760 | |
2024 | 20,875 | |
2025 | 19,330 | |
2026 | 19,153 | |
Thereafter | 164,353 | |
Total future amortization of intangible assets | $ 264,846 | $ 279,784 |
Long-term Debt - 2024 Notes (De
Long-term Debt - 2024 Notes (Details) $ / shares in Units, shares in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||||
Dec. 01, 2021 USD ($) | Aug. 31, 2020 USD ($) shares $ / shares | Dec. 31, 2016 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Mar. 31, 2022 USD ($) | Jan. 01, 2022 USD ($) | Dec. 31, 2021 USD ($) | Mar. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | $ (613,088,000) | $ (614,190,000) | $ (613,088,000) | $ (614,190,000) | $ (611,209,000) | $ (693,633,000) | $ (617,298,000) | $ (619,600,000) | ||||
Amortization of deferred financing costs | 1,079,000 | 8,837,000 | ||||||||||
Cumulative Effect, Period of Adoption, Adjustment | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | 66,383,000 | |||||||||||
Common Stock | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | (916,000) | (872,000) | (916,000) | (872,000) | (916,000) | (908,000) | (868,000) | (859,000) | ||||
Additional Paid-In Capital | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | (1,231,005,000) | (1,242,900,000) | (1,231,005,000) | (1,242,900,000) | (1,224,250,000) | (1,340,989,000) | (1,236,847,000) | (1,229,320,000) | ||||
Additional Paid-In Capital | Cumulative Effect, Period of Adoption, Adjustment | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | 106,172,000 | |||||||||||
Additional Paid-In Capital | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | $ (106,200,000) | |||||||||||
Retained Earnings (Accumulated Deficit) | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | 596,928,000 | 608,092,000 | 596,928,000 | 608,092,000 | $ 592,340,000 | 626,779,000 | $ 598,985,000 | $ 589,178,000 | ||||
Retained Earnings (Accumulated Deficit) | Cumulative Effect, Period of Adoption, Adjustment | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | (39,789,000) | |||||||||||
Retained Earnings (Accumulated Deficit) | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | (39,800,000) | |||||||||||
Senior Notes | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Payments of debt issuance costs | $ 2,500,000 | |||||||||||
2024 Notes | Senior Notes | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Face amount | $ 117,100,000 | 117,051,000 | 117,051,000 | $ 117,051,000 | ||||||||
Interest rate | 3.50% | |||||||||||
Debt conversion, converted instrument, amount | $ 84,200,000 | |||||||||||
Debt issuance costs | $ 3,000,000 | |||||||||||
Interest expense | 1,000,000 | 1,000,000 | 2,000,000 | 2,000,000 | ||||||||
Conversion price (in dollars per share) | $ / shares | $ 18.23 | |||||||||||
Initial conversion amount (in shares) | shares | 6.4 | |||||||||||
Long-term debt, net | $ 78,900,000 | |||||||||||
Debt issuance costs, net, debt component | $ 1,700,000 | |||||||||||
Amortization of deferred financing costs | $ 200,000 | $ 2,000,000 | $ 400,000 | $ 3,900,000 | ||||||||
Repurchase covenant, repurchase price due to fundamental change as percentage of principal amount | 100% | |||||||||||
Repurchase covenant, sale price as a percentage of conversion price | 130% | |||||||||||
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% | |||||||||||
2024 Notes | Senior Notes | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Long-term debt, net | 25,100,000 | |||||||||||
2024 Notes | Senior Notes | Common Stock | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt issuance costs | $ 1,300,000 | |||||||||||
Proceeds from issuance of debt | $ 38,100,000 | |||||||||||
2024 Notes | Senior Notes | Common Stock | Class A Common Stock | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Initial conversion rate per $ 1000 principal amount | 0.0548667 | |||||||||||
2024 Notes | Senior Notes | Additional Paid-In Capital | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | Equity Component of Long Term Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | 38,100,000 | |||||||||||
2024 Notes | Senior Notes | Additional Paid-In Capital | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | Deferred Financing Fees | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | (1,300,000) | |||||||||||
2024 Notes | Senior Notes | Retained Earnings (Accumulated Deficit) | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | $ 11,700,000 | |||||||||||
2021 Notes | Senior Notes | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Face amount | $ 125,000,000 | |||||||||||
Interest rate | 2% | |||||||||||
Debt conversion, converted instrument, amount | $ 26,700,000 | |||||||||||
Debt conversion, original debt, amount | 26,300,000 | $ 84,200,000 | ||||||||||
Payments of debt issuance costs | $ 400,000 | |||||||||||
Debt issuance costs | $ 4,600,000 | |||||||||||
Proceeds from issuance of debt | $ 120,400,000 | |||||||||||
New Notes | Senior Notes | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt conversion, converted instrument, amount | $ 32,800,000 |
Long-term Debt - Credit Agreeme
Long-term Debt - Credit Agreement (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jan. 08, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 30, 2019 | |
Debt Instrument [Line Items] | ||||||
Loss on repayment of debt, net | $ 0 | $ 0 | $ 0 | $ (19,158) | ||
Initial Term Loan Facility | Secured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Face amount | $ 75,000 | |||||
Credit Agreement | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Loss on repayment of debt, net | $ 19,200 | |||||
Unamortized debt issuance cost | 9,500 | |||||
Legal expenses | 35 | |||||
Credit Agreement | Line of Credit | DDTL Facility | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 50,000 | |||||
Senior Credit Facilities | Secured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Repayments of long-term lines of credit | 98,600 | |||||
Payments of make-whole premium | 9,700 | |||||
Interest Paid, Excluding Capitalized Interest, Operating Activities | $ 200 |
Long-term Debt - Warrant Agreem
Long-term Debt - Warrant Agreement (Details) - Class A Common Stock - USD ($) $ / shares in Units, $ in Millions | Jan. 08, 2021 | Dec. 30, 2019 |
Class of Warrant or Right [Line Items] | ||
Warrants agreed to be sold (in shares) | 1,513,786 | |
Exercise price of warrants or rights (in dollars per share) | $ 8.05 | |
Period during which warrants or rights exercisable, after maturity of credit agreement | 30 days | |
Payments to settle outstanding warrants | $ 13.7 |
Long-term Debt - 2025 Notes (De
Long-term Debt - 2025 Notes (Details) $ / shares in Units, shares in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||||
Oct. 31, 2018 USD ($) shares $ / shares | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Mar. 31, 2022 USD ($) | Jan. 01, 2022 USD ($) | Dec. 31, 2021 USD ($) | Mar. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Oct. 24, 2018 USD ($) | Oct. 22, 2018 USD ($) | |
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | $ (613,088,000) | $ (614,190,000) | $ (613,088,000) | $ (614,190,000) | $ (611,209,000) | $ (693,633,000) | $ (617,298,000) | $ (619,600,000) | ||||
Amortization of deferred financing costs | 1,079,000 | 8,837,000 | ||||||||||
Cumulative Effect, Period of Adoption, Adjustment | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | 66,383,000 | |||||||||||
Common Stock | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | (916,000) | (872,000) | (916,000) | (872,000) | (916,000) | (908,000) | (868,000) | (859,000) | ||||
Additional Paid-In Capital | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | (1,231,005,000) | (1,242,900,000) | (1,231,005,000) | (1,242,900,000) | (1,224,250,000) | (1,340,989,000) | (1,236,847,000) | (1,229,320,000) | ||||
Additional Paid-In Capital | Cumulative Effect, Period of Adoption, Adjustment | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | 106,172,000 | |||||||||||
Additional Paid-In Capital | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | $ (106,200,000) | |||||||||||
Retained Earnings (Accumulated Deficit) | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | 596,928,000 | 608,092,000 | 596,928,000 | 608,092,000 | $ 592,340,000 | 626,779,000 | $ 598,985,000 | $ 589,178,000 | ||||
Retained Earnings (Accumulated Deficit) | Cumulative Effect, Period of Adoption, Adjustment | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | (39,789,000) | |||||||||||
Retained Earnings (Accumulated Deficit) | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | (39,800,000) | |||||||||||
2025 Notes | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt issuance costs | $ 5,900,000 | |||||||||||
Senior Notes | 2025 Notes | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Face amount | $ 172,500,000 | 172,500,000 | 172,500,000 | $ 172,500,000 | $ 22,500,000 | $ 150,000,000 | ||||||
Interest rate | 1.50% | |||||||||||
Interest expense | 700,000 | 1,300,000 | 700,000 | 1,300,000 | ||||||||
Conversion price (in dollars per share) | $ / shares | $ 33.43 | |||||||||||
Initial conversion amount (in shares) | shares | 5.2 | |||||||||||
Carrying amount | $ 100,700,000 | |||||||||||
Proceeds from issuance of debt | 166,600,000 | |||||||||||
Debt issuance costs | $ 3,400,000 | |||||||||||
Amortization of deferred financing costs | $ 300,000 | $ 2,400,000 | $ 600,000 | $ 4,800,000 | ||||||||
Repurchase covenant, repurchase price due to fundamental change as percentage of principal amount | 100% | |||||||||||
Repurchase covenant, sale price as a percentage of conversion price (at least) | 130% | |||||||||||
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% | |||||||||||
Senior Notes | 2025 Notes | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Carrying amount | 41,300,000 | |||||||||||
Senior Notes | 2025 Notes | Common Stock | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Proceeds from issuance of debt | $ 71,800,000 | |||||||||||
Debt issuance costs | $ 2,500,000 | |||||||||||
Senior Notes | 2025 Notes | Common Stock | Class A Common Stock | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Initial conversion rate per $ 1000 principal amount | 0.0299135 | |||||||||||
Senior Notes | 2025 Notes | Additional Paid-In Capital | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | Equity Component of Long Term Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | 71,800,000 | |||||||||||
Senior Notes | 2025 Notes | Additional Paid-In Capital | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | Deferred Financing Fees | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | (2,500,000) | |||||||||||
Senior Notes | 2025 Notes | Retained Earnings (Accumulated Deficit) | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stockholders' equity | $ 28,100,000 |
Long-term Debt - 2021 Notes (De
Long-term Debt - 2021 Notes (Details) - Senior Notes - USD ($) | 1 Months Ended | ||||
Dec. 01, 2021 | Aug. 31, 2020 | Dec. 31, 2016 | Jun. 30, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | |||||
Payments of debt issuance costs | $ 2,500,000 | ||||
Net loss on extinguishment of debt, including fees paid to lenders | 4,800,000 | ||||
2021 Notes | |||||
Debt Instrument [Line Items] | |||||
Face amount | $ 125,000,000 | ||||
Interest rate | 2% | ||||
Proceeds from issuance of debt | $ 120,400,000 | ||||
Debt issuance costs | $ 4,600,000 | ||||
Debt conversion, converted instrument, amount | $ 26,700,000 | ||||
Debt conversion, original debt, amount | 26,300,000 | 84,200,000 | |||
Payments of debt issuance costs | 400,000 | ||||
Net loss on extinguishment of debt, including fees paid to lenders | 2,200,000 | ||||
Face amount of debt repaid | 14,000,000 | ||||
Repayments of senior debt | 13,900,000 | ||||
Debt conversion, original debt, fair value | $ 28,500,000 | ||||
2024 Notes | |||||
Debt Instrument [Line Items] | |||||
Face amount | $ 117,100,000 | $ 117,051,000 | $ 117,051,000 | ||
Interest rate | 3.50% | ||||
Debt issuance costs | $ 3,000,000 | ||||
Debt conversion, converted instrument, amount | $ 84,200,000 |
Long-term Debt - Convertible Se
Long-term Debt - Convertible Senior Notes Carrying Value (Details) - Senior Notes - USD ($) | 6 Months Ended | ||||||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Aug. 31, 2020 | Oct. 31, 2018 | Oct. 24, 2018 | Oct. 22, 2018 | |
2024 Notes | |||||||
Debt Instrument [Line Items] | |||||||
Convertible Debt, Total | $ 114,893,000 | $ 89,361,000 | |||||
Unamortized debt discount and issuance costs | 2,158,000 | 27,690,000 | |||||
Principal amount | $ 117,051,000 | 117,051,000 | $ 117,100,000 | ||||
Remaining amortization period (years) | 2 years 4 months 24 days | 2 years 10 months 24 days | |||||
2024 Notes | Level 2 | |||||||
Debt Instrument [Line Items] | |||||||
Fair value | $ 197,477,000 | 195,445,000 | |||||
2025 Notes | |||||||
Debt Instrument [Line Items] | |||||||
Convertible Debt, Total | 168,245,000 | 126,315,000 | |||||
Unamortized debt discount and issuance costs | 4,255,000 | 46,185,000 | |||||
Principal amount | $ 172,500,000 | 172,500,000 | $ 172,500,000 | $ 22,500,000 | $ 150,000,000 | ||
Remaining amortization period (years) | 3 years 3 months 18 days | 3 years 9 months 18 days | |||||
2025 Notes | Level 2 | |||||||
Debt Instrument [Line Items] | |||||||
Fair value | $ 195,434,000 | $ 177,251,000 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands | Aug. 01, 2022 | Jun. 30, 2022 | Dec. 31, 2021 |
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted funds | $ 88,662 | ||
Percent of tax savings to be paid | 85% | ||
Forecast | Shareholder Class Action Complaint | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Litigation Settlement, Amount Awarded to Other Party | $ 23,500 | ||
Collateral with financial institutions | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted funds | $ 11,504 | 11,662 | |
Letter of Credit | Line of Credit | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Maximum borrowing capacity | 13,800 | 15,400 | |
Letter of Credit | Line of Credit | Collateral with financial institutions | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted funds | $ 13,800 | $ 15,400 |
Commitments and Contingencies_2
Commitments and Contingencies - Reinsurance Agreements (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Reinsurance premiums assumed | $ (2) | $ 17,576 |
Claims assumed | 149 | 16,863 |
Claims-related administrative expenses | 0 | 545 |
Increase (decrease) in reserves for claims and performance-based arrangements attributable to the Reinsurance Agreement | (151) | 168 |
Assumed Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Reserves for claims and performance-based arrangements attributable to the Reinsurance Agreement at the beginning of the period | 90 | 4,002 |
Impact of consolidation on payable for claims and performance-based arrangements attributable to the Reinsurance Agreement | 0 | 0 |
Reinsurance payments paid (received) | (328) | 7,506 |
Payable (receivable) for claims and performance-based arrangements attributable to the Reinsurance Agreement at the end of the period | $ 267 | $ (3,336) |
Commitments and Contingencies_3
Commitments and Contingencies - Concentration Risk (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Concentration Risk [Line Items] | |||||||
Percentage of cash and cash equivalents held with FDIC participating bank | 98.60% | 98.60% | |||||
Cash and cash equivalents (including restricted cash) | [1] | $ 280,433 | $ 238,410 | $ 280,433 | $ 238,410 | $ 354,942 | $ 361,581 |
Percentage of cash held in international banks (less than) | 0.90% | 0.90% | |||||
Cook County Health and Hospitals System | Customer Concentration Risk | Accounts Receivable | Trade Accounts Receivable | |||||||
Concentration Risk [Line Items] | |||||||
Concentration risk (in percent) | 24.50% | ||||||
Cook County Health and Hospitals System | Customer Concentration Risk | Revenues | |||||||
Concentration Risk [Line Items] | |||||||
Concentration risk (in percent) | 24.10% | 29.60% | 24% | 29.20% | |||
Florida Blue Medicare, Inc. | Customer Concentration Risk | Accounts Receivable | Trade Accounts Receivable | |||||||
Concentration Risk [Line Items] | |||||||
Concentration risk (in percent) | 46.40% | ||||||
Florida Blue Medicare, Inc. | Customer Concentration Risk | Revenues | |||||||
Concentration Risk [Line Items] | |||||||
Concentration risk (in percent) | 11.70% | 14.20% | 11.80% | 14.50% | |||
Molina Healthcare | Customer Concentration Risk | Accounts Receivable | Trade Accounts Receivable | |||||||
Concentration Risk [Line Items] | |||||||
Concentration risk (in percent) | 10.30% | 10.40% | |||||
The Centers for Medicare and Medicaid Services | Customer Concentration Risk | Accounts Receivable | Trade Accounts Receivable | |||||||
Concentration Risk [Line Items] | |||||||
Concentration risk (in percent) | 12% | ||||||
Bright Health Management, Inc. | Customer Concentration Risk | Accounts Receivable | Trade Accounts Receivable | |||||||
Concentration Risk [Line Items] | |||||||
Concentration risk (in percent) | 11.40% | ||||||
Blue Cross and Blue Shield of North Carolina | Customer Concentration Risk | Revenues | |||||||
Concentration Risk [Line Items] | |||||||
Concentration risk (in percent) | 10.20% | ||||||
[1]As a result of the closing of the sale of True Health during the first quarter of 2021, the consolidated statement of operations and related financial information reflect the Company’s operations and assets and liabilities of True Health as discontinued operations. Cash flows and comprehensive income have not been adjusted and are included in the consolidated statements of cash flows and consolidated statements of comprehensive income (loss) for the six months ended June 30, 2021. See Note 5. |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Lessee, Lease, Description [Line Items] | ||
Restricted funds | $ 88,662 | |
Lease Agreements | ||
Lessee, Lease, Description [Line Items] | ||
Letters of credit outstanding, amount | $ 2,300 | 3,800 |
Restricted funds | $ 2,300 | $ 3,800 |
Leases - Primary Office Leases
Leases - Primary Office Leases (Details) $ in Thousands | Jun. 30, 2022 USD ($) |
Lessee, Lease, Description [Line Items] | |
Future Minimum Lease Commitments | $ 84,507 |
Arlington, VA | |
Lessee, Lease, Description [Line Items] | |
Lease Termination Term (in years) | 9 years 7 months 6 days |
Future Minimum Lease Commitments | $ 34,014 |
Letter of Credit Amount Required | $ 1,579 |
Riverside, IL | |
Lessee, Lease, Description [Line Items] | |
Lease Termination Term (in years) | 8 years 9 months 18 days |
Future Minimum Lease Commitments | $ 39,712 |
Letter of Credit Amount Required | $ 232 |
Edison, NJ | |
Lessee, Lease, Description [Line Items] | |
Lease Termination Term (in years) | 3 years 9 months 18 days |
Future Minimum Lease Commitments | $ 1,981 |
Letter of Credit Amount Required | $ 222 |
Pune, India | |
Lessee, Lease, Description [Line Items] | |
Lease Termination Term (in years) | 1 year 3 months 18 days |
Future Minimum Lease Commitments | $ 864 |
Letter of Credit Amount Required | $ 0 |
Brea, CA | |
Lessee, Lease, Description [Line Items] | |
Lease Termination Term (in years) | 4 years 10 months 24 days |
Future Minimum Lease Commitments | $ 4,304 |
Letter of Credit Amount Required | $ 0 |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Leases [Abstract] | ||||
Operating lease cost | $ 2,231 | $ 2,437 | $ 4,505 | $ 7,255 |
Variable lease cost | 1,171 | 1,192 | 2,497 | 2,513 |
Total lease cost | $ 3,402 | $ 3,629 | $ 7,002 | $ 9,768 |
Leases - Maturity of Lease Liab
Leases - Maturity of Lease Liabilities (Details) $ in Thousands | Jun. 30, 2022 USD ($) |
Leases [Abstract] | |
2022 | $ 5,196 |
2023 | 10,271 |
2024 | 10,025 |
2025 | 9,651 |
2026 | 8,987 |
Thereafter | 40,377 |
Total lease payments | 84,507 |
Less: | |
Interest | 19,537 |
Present value of lease liabilities | $ 64,970 |
Leases - Weighted-average Disco
Leases - Weighted-average Discount Rate and Weighted-remaining Lease Terms (Details) | Jun. 30, 2022 |
Leases [Abstract] | |
Weighted average discount rate | 6.30% |
Weighted average remaining lease term | 8 years 3 months 18 days |
Loss Per Common Share - Computa
Loss Per Common Share - Computation of Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | ||
Earnings Per Share [Abstract] | |||||
Loss from continuing operations | $ (4,125) | $ (9,107) | $ (9,475) | $ (20,297) | |
Income (loss) from discontinued operations, net of tax | [1] | (463) | 0 | (463) | 1,383 |
Net loss attributable to common shareholders of Evolent Health, Inc. - Basic | (4,588) | (9,107) | (9,938) | (18,914) | |
Net loss attributable to common shareholders of Evolent Health, Inc. - Diluted | $ (4,588) | $ (9,107) | $ (9,938) | $ (18,914) | |
Weighted-average common shares outstanding - basic (in shares) | 90,071 | 85,448 | 89,792 | 85,056 | |
Weighted-average common shares outstanding - diluted (in shares) | 90,071 | 85,448 | 89,792 | 85,056 | |
Loss per common share, Basic and diluted | |||||
Basic (in dollars per share) | $ (0.05) | $ (0.11) | $ (0.11) | $ (0.24) | |
Continuing operations, diluted (in dollars per share) | (0.05) | (0.11) | (0.11) | (0.24) | |
Discontinued operations, basic (in dollars per share) | 0 | 0 | 0 | 0.02 | |
Discontinued operations, diluted (in dollars per share) | 0 | 0 | 0 | 0.02 | |
Basic loss per share attributable to common shareholders of Evolent Health, Inc. (in dollars per share) | (0.05) | (0.11) | (0.11) | (0.22) | |
Diluted loss per share attributable to common shareholders of Evolent Health, Inc. (in dollars per share) | $ (0.05) | $ (0.11) | $ (0.11) | $ (0.22) | |
[1]Includes $(0.5) million loss on disposal for the three and six months ended June 30, 2022 and $1.9 million gain on disposal of discontinued operations for the six months ended June 30, 2021, respectively |
Loss Per Common Share - Antidil
Loss Per Common Share - Antidilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Number of antidilutive securities excluded from the calculation of earning per share (in shares) | 15,076 | 16,549 | 15,206 | 16,322 |
Restricted stock units ("RSUs"), performance-based RSUs (“PSUs”) and leveraged stock units ("LSUs") | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Number of antidilutive securities excluded from the calculation of earning per share (in shares) | 1,642 | 2,052 | 1,817 | 1,793 |
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Number of antidilutive securities excluded from the calculation of earning per share (in shares) | 1,852 | 1,801 | 1,807 | 1,833 |
Convertible senior notes | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Number of antidilutive securities excluded from the calculation of earning per share (in shares) | 11,582 | 12,696 | 11,582 | 12,696 |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation expense | $ 7,012 | $ 3,653 | $ 12,358 | $ 7,359 |
Cost of revenue | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation expense | 1,162 | 892 | 1,962 | 1,487 |
Selling, general and administrative expenses | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation expense | 5,850 | 2,761 | 10,396 | 5,872 |
Stock options | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation expense | 91 | 267 | 253 | 671 |
RSUs | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation expense | 4,647 | 2,427 | 7,948 | 4,401 |
LSUs | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation expense | 382 | 222 | 1,157 | 1,307 |
PSUs | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Share-based compensation expense | $ 1,892 | $ 737 | $ 3,000 | $ 980 |
Stock-based Compensation - Addi
Stock-based Compensation - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Share-Based Payment Arrangement [Abstract] | ||||
Stock-based compensation capitalized as software development costs | $ 0 | $ 0 | $ 0 | $ 0 |
Stock-based Compensation - Sche
Stock-based Compensation - Schedule of Share-based Awards Granted (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
RSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 63 | 89 | 980 | 1,028 |
PSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 0 | 0 | 479 | 319 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||||
Provision for (benefit from) income taxes | $ (184) | $ 91 | $ 1,018 | $ 702 | |
Effective rate | 3.90% | (1.00%) | (11.40%) | (3.60%) | |
Unrecognized tax benefits | $ 600 | ||||
Tax receivable agreement, percent of cash savings paid to shareholders | 85% |
Investments in Equity Method _2
Investments in Equity Method Investees (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Schedule of Equity Method Investments [Line Items] | |||||
Gain from equity method investees | $ 1,952 | $ 4,879 | $ 2,548 | $ 12,662 | |
Equity Method Investee | Services Agreements | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Income from long-term services agreement | $ 3,900 | $ 2,300 | $ 7,500 | $ 8,600 | |
Minimum | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Economic interest percentage | 4% | 4% | 4% | ||
Voting interest percentage | 25% | 25% | 25% | ||
Maximum | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Economic interest percentage | 38% | 38% | 39% | ||
Voting interest percentage | 40% | 40% | 40% |
Fair Value Measurement - Assets
Fair Value Measurement - Assets and Liabilities on Recurring Basis (Details) - Fair Value, Recurring - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Liabilities | ||
Fair value of contingent consideration | $ 33,400 | $ 28,700 |
Total fair value of liabilities measured on a recurring basis | 33,400 | 28,700 |
Level 1 | ||
Liabilities | ||
Fair value of contingent consideration | 0 | 0 |
Total fair value of liabilities measured on a recurring basis | 0 | 0 |
Level 2 | ||
Liabilities | ||
Fair value of contingent consideration | 0 | 0 |
Total fair value of liabilities measured on a recurring basis | 0 | 0 |
Level 3 | ||
Liabilities | ||
Fair value of contingent consideration | 33,400 | 28,700 |
Total fair value of liabilities measured on a recurring basis | $ 33,400 | $ 28,700 |
Fair Value Measurement - Change
Fair Value Measurement - Changes in Contingent Consideration and Other (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance as of beginning of period | $ 28,700 | $ 13,730 |
Settlements | 0 | (13,730) |
Unrealized losses | 4,700 | 0 |
Balance as of end of period | $ 33,400 | $ 0 |
Fair Value Measurement - Valuat
Fair Value Measurement - Valuation Techniques and Significant Unobservable Inputs (Details) - Fair Value, Recurring $ in Thousands | Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Fair Value | $ 33,400 | $ 28,700 |
Level 3 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Fair Value | $ 33,400 | $ 28,700 |
Level 3 | Risk-neutral expected earnout consideration | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Assumption or Input Ranges | 36,277 | 30,935 |
Level 3 | Discount rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Assumption or Input Ranges | 0.1083 | 0.0604 |
Related Parties - Assets and Li
Related Parties - Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | |
ASSETS | |||
Accounts receivable, net | [1] | $ 118,525 | $ 130,604 |
Prepaid expenses and other current assets | [1] | 37,173 | 51,391 |
Prepaid expenses and other noncurrent assets | [1] | 6,655 | 6,790 |
Liabilities | |||
Accounts payable | [1] | 96,565 | 96,084 |
Accrued liabilities | [1] | 75,846 | 107,241 |
Affiliated Entity | |||
ASSETS | |||
Accounts receivable, net | 4,191 | 2,719 | |
Prepaid expenses and other current assets | 0 | 15 | |
Prepaid expenses and other noncurrent assets | 5,038 | 4,877 | |
Liabilities | |||
Accounts payable | 323 | 1,967 | |
Accrued liabilities | 972 | 1,120 | |
Reserve for claims and performance-based arrangements | $ 0 | $ 734 | |
[1]See Note 18 for amounts attributable to related parties included in these line items. |
Related Parties - Revenues and
Related Parties - Revenues and Expenses (Details) - Affiliated Entity - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Related Party Transaction [Line Items] | ||||
Revenue | $ 42,810 | $ 10,368 | $ 74,874 | $ 25,943 |
Cost of revenue | ||||
Related Party Transaction [Line Items] | ||||
Expenses | 36,684 | 606 | 63,145 | 1,099 |
Selling, general and administrative expenses | ||||
Related Party Transaction [Line Items] | ||||
Expenses | $ 236 | $ 81 | $ 302 | $ 112 |
Repositioning and Other Chang_3
Repositioning and Other Changes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Restructuring Cost and Reserve [Line Items] | |||||
Repositioning costs incurred | $ 0 | $ 663 | $ 0 | $ 6,043 | |
Restructuring and Related Cost, Cost Incurred to Date | $ 8,593 | ||||
Severance and termination benefits | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Repositioning costs incurred | 76 | 185 | |||
Restructuring and Related Cost, Cost Incurred to Date | 185 | ||||
Office space consolidation | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Repositioning costs incurred | 0 | 2,071 | |||
Restructuring and Related Cost, Cost Incurred to Date | 2,742 | ||||
Professional services | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Repositioning costs incurred | $ 587 | $ 3,787 | |||
Restructuring and Related Cost, Cost Incurred to Date | $ 5,666 |
Segment Reporting - Additional
Segment Reporting - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2022 segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Segment Reporting - Revenue fro
Segment Reporting - Revenue from Segments to Consolidated (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | [1] | $ 319,939 | $ 222,057 | $ 616,996 | $ 437,128 |
Adjusted EBITDA | 21,739 | 13,346 | 45,994 | 28,253 | |
Evolent Health Services | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 92,336 | 74,863 | 199,194 | 159,700 | |
Clinical Solutions | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 227,603 | 147,194 | 417,802 | 277,428 | |
Intersegment Eliminations | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | (460) | (460) | (920) | (898) | |
Operating Segments | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 319,939 | 222,057 | 616,996 | 437,128 | |
Adjusted EBITDA | 28,621 | 20,128 | 59,034 | 42,046 | |
Operating Segments | Evolent Health Services | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 92,796 | 75,323 | 200,114 | 160,609 | |
Adjusted EBITDA | 15,129 | 6,531 | 23,346 | 12,473 | |
Operating Segments | Clinical Solutions | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 227,603 | 147,194 | 417,802 | 277,417 | |
Adjusted EBITDA | 13,492 | 13,597 | 35,688 | 29,573 | |
Corporate | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Revenues | 0 | 0 | 0 | 0 | |
Adjusted EBITDA | $ (6,882) | $ (6,782) | $ (13,040) | $ (13,793) | |
[1]See Note 18 for amounts attributable to unconsolidated related parties included in these line items. |
Segment Reporting - Reconciliat
Segment Reporting - Reconciliation of Adjusted EBITDA (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Segment Reporting [Abstract] | ||||
Net loss | $ (4,588) | $ (9,107) | $ (9,938) | $ (18,914) |
Interest income | 223 | 68 | 340 | 191 |
Interest expense | (2,148) | (6,274) | (4,389) | (12,611) |
Benefit from (provision for) income taxes | 184 | (91) | (1,018) | (702) |
Depreciation and amortization expenses | (15,112) | (14,916) | (30,218) | (30,103) |
Gain on transfer of membership | 0 | 0 | 0 | 22,969 |
Loss on repayment of debt, net | 0 | 0 | 0 | (19,158) |
Gain from equity method investees | 1,952 | 4,879 | 2,548 | 12,662 |
Change in fair value of contingent consideration | (800) | 0 | (6,878) | 594 |
Other income (expense), net | 297 | (18) | 475 | (32) |
Repositioning costs | 0 | (663) | 0 | (6,043) |
Stock-based compensation expense | (7,012) | (3,653) | (12,358) | (7,359) |
Severance costs | 0 | 0 | (39) | (52) |
Amortization of contract cost assets | (27) | (196) | (54) | (323) |
Strategy and shareholder advisory expenses | 0 | (1,513) | 0 | (6,513) |
Acquisition costs | (3,421) | (76) | (3,878) | (2,070) |
Gain from discontinued operations | (463) | 0 | (463) | 1,383 |
Adjusted EBITDA | 21,739 | $ 13,346 | 45,994 | 28,253 |
Gain on disposal of discontinued operations | $ (500) | $ (500) | $ 1,900 |
Reserves for Claims and Perfo_3
Reserves for Claims and Performance-Based Arrangements (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Beginning balance | $ 171,294 | $ 178,827 |
Incurred costs related to current period | 246,955 | 228,012 |
Incurred costs related to prior period | 22,438 | 6,508 |
Paid costs related to current period | 201,508 | 94,180 |
Paid costs related to prior period | 101,145 | 92,065 |
Change during the year | (33,260) | 48,275 |
Impact of consolidation on reserves for claims and performance-based arrangements | 0 | 0 |
Other adjustments | (12,074) | 11,003 |
Ending balance | 125,960 | 238,105 |
Evolent Health Services | ||
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Beginning balance | 25,618 | 56,295 |
Incurred costs related to current period | 0 | 8,669 |
Incurred costs related to prior period | (10,289) | 6,293 |
Paid costs related to current period | (1,239) | 20,801 |
Paid costs related to prior period | 436 | 20,673 |
Change during the year | (9,486) | (26,512) |
Impact of consolidation on reserves for claims and performance-based arrangements | 0 | 0 |
Other adjustments | 0 | 3,721 |
Ending balance | 16,132 | 33,504 |
Clinical Solutions | ||
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Beginning balance | 145,676 | 122,532 |
Incurred costs related to current period | 246,955 | 219,343 |
Incurred costs related to prior period | 32,727 | 215 |
Paid costs related to current period | 202,747 | 73,379 |
Paid costs related to prior period | 100,709 | 71,392 |
Change during the year | (23,774) | 74,787 |
Impact of consolidation on reserves for claims and performance-based arrangements | 0 | 0 |
Other adjustments | (12,074) | 7,282 |
Ending balance | $ 109,828 | $ 204,601 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Supplemental Disclosure of Non-cash Investing and Financing Activities | ||
Accrued property and equipment purchases | $ 1,118 | $ 668 |
Effects of Leases | ||
Operating cash flows from operating leases | 7,010 | 6,622 |
Leased assets disposed of (obtained in) exchange for operating lease liabilities | $ 4,153 | $ (2,157) |
Subsequent Events (Details)
Subsequent Events (Details) $ in Thousands, shares in Millions | 6 Months Ended | ||
Aug. 01, 2022 USD ($) day shares | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | |
Subsequent Event [Line Items] | |||
Payments to acquire businesses | $ 9,070 | $ 1,472 | |
Line of Credit | 2022 Credit Facilities | Subsequent event | |||
Subsequent Event [Line Items] | |||
Number of days prior to any junior debt maturity | day | 91 | ||
Prepayment penalty prior to first anniversary of closing date (in percent) | 3% | ||
Prepayment penalty after first anniversary of closing date but prior to second anniversary of closing date (in percent) | 2% | ||
Prepayment penalty after second anniversary of closing date but prior to third anniversary of closing date (in percent) | 1% | ||
Prepayment penalty on or after third anniversary of closing date (in percent) | 0% | ||
Line of Credit | Secured Debt | Subsequent event | |||
Subsequent Event [Line Items] | |||
Maximum borrowing capacity | $ 175,000 | ||
Commitment fee percentage | 2% | ||
Line of Credit | Revolving Credit Facility | Subsequent event | |||
Subsequent Event [Line Items] | |||
Maximum borrowing capacity | $ 50,000 | ||
Proceeds from issuance of debt | $ 50,000 | ||
Commitment fee percentage | 2% | ||
Secured Overnight Financing Rate (SOFR) | Line of Credit | Secured Debt | Subsequent event | |||
Subsequent Event [Line Items] | |||
Basis spread on variable rate | 5.50% | ||
Secured Overnight Financing Rate (SOFR) | Line of Credit | Revolving Credit Facility | Subsequent event | |||
Subsequent Event [Line Items] | |||
Basis spread on variable rate | 3.50% | ||
Base Rate | Line of Credit | Secured Debt | Subsequent event | |||
Subsequent Event [Line Items] | |||
Basis spread on variable rate | 4.50% | ||
Base Rate | Line of Credit | Revolving Credit Facility | Subsequent event | |||
Subsequent Event [Line Items] | |||
Basis spread on variable rate | 2.50% | ||
Implantable Provider Group, Inc. | Subsequent event | |||
Subsequent Event [Line Items] | |||
Payments to acquire businesses | $ 250,000 | ||
Fair value of Class A common stock issued | 125,000 | ||
Fair value of contingent consideration | $ 87,000 | ||
Implantable Provider Group, Inc. | Subsequent event | Common Stock | |||
Subsequent Event [Line Items] | |||
Shares issued for acquisition (in shares) | shares | 3.7 |