EVH

MKT CAP $546.1MP/E —DIV YIELD —FCF YIELD —REV TTM $2.1B −4.5%NET INCOME −$505MNET DEBT $169.5M52W 2.17 – 8.18SEC XBRL · TTM TO Invalid Date

How EVH rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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Risk Factors.” INTRODUCTION Business Overview We are a market leader in connecting care for people with complex conditions like cancer, cardiovascular disease, and musculoskeletal diagnoses.
Disposal During the third quarter, the Company entered into the ECP Purchase Agreement pursuant to which the Company agreed to sell all of the outstanding shares of capital stock of Evolent Care Partners for a purchase price of $100.0 million, subject to customary closing purchase price adjustments, and a contingent payment of up to $13.0 million, subject to the achievement of certain metrics following the closing.
The Company consummated the transaction on December 5, 2025.
The Company previously recorded its operations from Evolent Care Partners in its total cost of care management solution.
The Company determined that the transaction met the held for sale criteria and ceased recording amortization of provider network contract intangibles at that time.
The Company received cash proceeds of $ 91.3 million after net working capital adjustments.
The carrying value of net assets and liabilities of $ 76.4 million, inclusive of allocated goodwill, was disposed resulting in a gain on disposal of $ 14.9 million recorded in (gain) loss on disposal of non-strategic assets for the year ended December 31, 2025.
The Company allocated $ 44.8 million of goodwill to the transaction based on the value of the transaction compared to the estimated business enterprise value on the closing date.
Financial Statements and Supplementary Data - Note 4” for additional discussion regarding our disposal. 2031 Notes Issuance, 2025 Notes Repayment and Common Stock Repurchase On August 18, 2025, the Company entered into a purchase agreement to sell $145.0 million aggregate principal amount of its 2031 Notes in a private placement to the Purchasers within the meaning of Rule 144A under the Securities Act.
The Company granted the Purchasers an option to purchase up to an additional $ 21.8 million aggregate principal amount of the 2031 Notes, which the Purchasers exercised in full on August 19, 2025.
The closing of the 2031 Notes occurred on August 21, 2025 and a total of $166.8 million aggregate principal amount of 2031 Notes were issued at an issue price of 100.00% of par for net proceeds of approximately $161.0 million, after deducting fees and estimated expenses.
On August 21, 2025, using proceeds from the sale of the 2031 Notes plus available liquidity, the Company repurchased approximately $ 167.4 million aggregate principal amount of its 2025 Notes for $ 166.8 million in cash in note repurchases entered into concurrently with the pricing of the sale of the 2031 Notes.
The Company also repurchased $ 40.0 million of shares of the Company’s Class A common stock concurrently with the sale of the 2031 Notes in privately negotiated transactions effected with or through one of the Purchasers or its affiliate at a purchase price per share equal to the last reported sale price of the Company’s Class A common stock on August 18, 2025.
Credit Agreement Activity On December 6, 2024 (the “Amendment No. 3 Effective Date”), the Company entered into Amendment No. 3 (“Amendment No. 3”) to its credit agreement, by and among the Company, the Borrower, certain subsidiaries of the Company, as co-borrowers and guarantors, the lenders from time to time party thereto, and Ares Capital Corporation (“Ares”) (as amended, the “First Lien Credit Agreement”) that provided new secured debt financing in the form of (i) additional commitments under the Company’s existing asset-based revolving credit facility in an aggregate principal amount equal to $50.0 million (the “2024 Revolver Increase”, and together with the initial asset-based revolving credit commitments in an aggregate principal amount of $50.0 million obtained by the Company in 2022 (the “Initial Revolving Facility”) and the additional commitments in an aggregate amount equal to $25.0 million obtained by the Company in 2023, the “Revolving Facility”), (ii) a new delayed draw term loan facility in an aggregate principal amount equal to $125.0 million (the “2024-A Delayed Draw Term Loan Facility”), and (iii) a new delayed draw term loan facility in an aggregate principal amount equal to $75.0 million (the “2024-B Delayed Draw Term Loan Facility” and together with the 2024 Revolver Increase and the 2024-A Delayed Draw Term Loan Facility, the “2024 Incremental Facilities”; the initial term loan facility obtained by the Company in 2022 under the First Lien Credit Agreement and the additional term loans entered into by the Company in 2023, the 2024-A Delayed Draw Term Loan Facility and the 2024-B Delayed Draw Term Loan Facility, as amended, are collectively referred to herein as the “Term Loan Facility”; the Revolving Facility and the Term Loan Facility are collectively referred to herein as the “First Lien Credit Facilities”).
On June 13, 2025, the Company entered into Amendment No. 4 to the First Lien Credit Agreement (“Amendment No. 4”) to modify the definition of “Maturity Date.” On June 19, 2025, the Company entered into Amendment No. 5 to the First Lien Credit Agreement (“Amendment No. 5”) (which superseded Amendment No. 4) to (i) include amounts committed under a new Incremental Facility for purposes of testing “Liquidity” under the definition of “Maturity Date,” (ii) provide that failure to consummate the Exchange in certain circumstances would constitute an event of default, (iii) include certain transactions to the mandatory prepayment requirement, and (iv) provide additional flexibility to make certain restricted payments in respect of the 2025 Notes prior to maturity thereof.
On June 19, 2025, in connection with the Company’s entry into Amendment No. 5, the Company and the Borrower entered into a Commitment Letter with Ares which provided the Company additional available non-dilutive debt capital of up to $ 150.0 million (the “Incremental Facility”) to retire its 2025 Notes on or before October 15, 2025 (the maturity date of the 2025 Notes) and for working capital and required that the Company would, in the event the Incremental Facility is drawn and in certain other circumstances, exchange its existing Series A Preferred Stock for a second lien term loan facility (the “Second Lien Term Loan Facility” and, together with the First Lien Credit Facilities, the “Credit Facilities”) in the amount of the Liquidation Preference of the Series A Preferred Stock ($ 175.0 million) (the “Exchange”).
On August 7, 2025, the Company completed the Exchange.
The Company paid $ 9.3 million of deferred financing costs, of which $ 3.3 million was related to amending the existing 2024 Incremental Facilities.
The Company did not draw on the Incremental Facility due to the retirement of the 2025 Notes.
As such, we recorded a $ 6.0 million loss related to the Incremental Facility in extinguishment of Series A Preferred Stock and other refinancing fees on the consolidated statement of operations.
On December 31, 2025, the Company repaid $ 82.8 million under its 2024-A Delayed Draw Term Loan Facility using proceeds from its sale of Evolent Care Partners.
As a result of the repayment on the 2024-A Delayed Draw Term Loan Facility, the Company recorded a loss of $ 3.9 million in loss on extinguishment and repayment of debt, net, comprised of $ 0.8 million of contractual prepayment penalty in accordance with the Credit Agreement and $ 3.1 million of acceleration of amortization of deferred financing fees.
As of December 31, 2025, there was $ 117.2 million, $ 72.5 million and $ 175.0 million principal balance subject to interest under the Company’s Term Loan Facility, Revolving Facility and Second Lien Term Loan Facility, respectively.
Financial Statements and Supplementary Data - Note 9” for additional discussion regarding our Credit Agreement.
Goodwill Impairment Subsequent to our 2024 goodwill impairment test through the end of 2025, the closing price per share of our Class A common stock declined from $23.35 per common share on October 31, 2024 to $6.67 at October 31, 2025.
As a result of the prolonged decline in our stock price, the Company elected to forego the qualitative assessment and proceed directly to the quantitative assessment of the goodwill impairment test for our sole reporting unit.
This analysis required us to make judgments about revenues, expenses, fixed asset and working capital requirements, capital market assumptions and cash flows, as well as discount rates to reconcile to our market capitalization.
As a result of the decrease in our Class A common stock since our 2024 goodwill impairment test, the market capitalization reconciliation indicated that the carrying amount of our reporting unit exceeded its fair value.
Therefore, the Company recorded a $ 398.0 million non-cash and non-tax-deductible impairment charge, reflected within operating expenses in the consolidated statements of operation for the year ended December 31, 2025.
We monitor for events or changes in circumstances that would more likely than not reduce the fair value of our goodwill below its carrying amount and require an additional impairment test.
If we determine there are circumstances that may be indicators of potential impairment triggers, including further decreases in the share price of our Class A common stock, we may be required to perform an interim goodwill impairment test which could result in additional impairment charges which could be material to our results of operations.
Industry Climate During 2024, the medical claims costs in our Performance Suite grew at a significantly faster rate than historical norms, negatively impacting our financial results.
This growth was driven in part by higher disease prevalence, as well as higher cost per active patient.
Based on commentary from other market participants, we believe these cost increases were industry-wide and not specific to Evolent.
Our results for 2025 were also impacted by growth in medical claims cost that continued to grow faster than our historical averages.
Changes in Medicaid, and the ACA Health Exchanges, including but not limited to those caused by the passage of the One Big Beautiful Bill Act during 2025, created industry expectations for higher member acuity and lower membership in future years.
These expectations are exacerbated by the aggregate medical trend experienced by our customers across all lines of business, which has lead those customers to exit markets, adjust their benefits and take other actions that are likely to contribute to lower membership in the future.
Regulatory Uncertainty and Changes On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted into law.
The OBBBA amends U.S. tax law, including provisions related to research and development and interest expense.
The OBBBA also makes significant changes to the Medicaid, Medicare and ACA Health Exchanges.

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INTRODUCTION Business Overview We are a market leader in connecting care for people with complex conditions like cancer, cardiovascular disease, and musculoskeletal diagnoses.
Acquisitions On August 1, 2024, the Company completed its acquisition of certain assets of Machinify, Inc. and the exclusive, perpetual and royalty-free license of Machinify Auth.
The acquisition consideration was $ 28.5 million which included $ 19.5 million of cash, $ 11.0 million which was paid upon closing and $ 8.5 million which was paid on November 1, 2024, as well as an earn-out consisting of additional consideration of up to $ 12.5 million payable in cash or shares of the Company’s Class A common stock at the election of the Company in the second quarter of 2025.
On January 20, 2023, we consummated the acquisition of NIA for $387.8 million in cash consideration, which was financed in part with $265.0 million in debt borrowed from affiliates of Ares and the proceeds from the sale of an aggregate 175,000 shares of the Company’s Series A Preferred Stock, resulting in gross proceeds of $168.0 million, and stock consideration of 8.5 million shares of Class A common stock issued to the seller.
NIA is part of Evolent’s Specialty Technology and Services Suite.
Credit Agreement Activity On December 6, 2024 (the “Amendment No. 3 Effective Date”), the Company entered into Amendment No. 3 (“Amendment No. 3”) to the Credit Agreement (as defined below) that provides new secured debt financing in the form of (i) additional commitments under the Company’s existing asset-based revolving credit facility in an aggregate principal amount equal to $50.0 million (the “2024 Revolver Increase”, and together with the Initial Revolving Facility (as defined below) and the 2023 Revolver Increase (as defined below, the “Revolving Facility”), (ii) a new delayed draw term loan facility in an aggregate principal amount equal to $125.0 million (the “2024-A Delayed Draw Term Loan Facility”), and (iii) a new delayed draw term loan facility in an aggregate principal amount equal to $75.0 million (the “2024-B Delayed Draw Term Loan Facility” and together with the 2024 Revolver Increase and the 2024-A Delayed Draw Term Loan Facility, the “2024 Incremental Facilities”; the Initial Term Loan Facility (as defined below), the 2023 Additional Term Loans (as defined below), the 2024-A Delayed Draw Term Loan Facility and the 2024-B Delayed Draw Term Loan Facility are collectively referred to herein as the “Term Loan Facility”; the Revolving Facility and the Term Loan Facility are collectively referred to herein as the “Credit Facilities”).
Financial Statements and Supplementary Data - Note 9 for a discussion of Amendment No. 3.
On January 29, 2025, the Company borrowed $125.0 million under its 2024-A Delayed Draw Term Loan and $75.0 million under its 2024-B Delayed Draw Term Loan.
As of February 14, 2025, there was $262.5 million outstanding under the Company’s Credit Facilities, consisting of $125.0 million outstanding under 2024-A Delayed Draw Term Loan, $75.0 million outstanding under its 2024-B Delayed Draw Term Loan and $62.5 million outstanding under its Revolving Facility.
Series A Preferred Stock In connection with the consummation of the acquisition of NIA, on January 20, 2023, we entered into a Securities Purchase Agreement pursuant to which the Company offered and sold an aggregate 175,000 shares of Series A Preferred Stock, at a purchase price of $960.00 per share, resulting in total gross proceeds to us of $168.0 million.
The proceeds from the offer and sale of the Series A Preferred Stock were used, together with the proceeds from the Incremental Revolving Facility and Incremental Term Loan Facility, to finance the cash consideration payable for the acquisition of NIA and pay transaction fees and expenses.
Financial Statements and Supplementary Data - Note 12” for additional discussion regarding the sale of Series A Preferred Stock.
Redemption of 2024 Notes On August 2, 2023, the Company issued a notice of redemption to the holders of its outstanding 3.50% Convertible Senior Notes due 2024 (the “2024 Notes”), pursuant to which it redeemed the outstanding 2024 Notes for cash at a price of 100% of the principal amount of the 2024 Notes, plus accrued and unpaid interest, if any, on October 13, 2023 (the “Redemption Date”).
Prior to the Redemption Date, holders of the 2024 Notes were entitled to convert to shares of the Company’s Class A common stock at a rate of 55.6153 shares per $1,000 principal amount of 2024 Notes.
During the year ended December 31, 2023, holders of the 2024 Notes converted $23.3 million in aggregate principal amount of such notes to 1.3 million shares of the Company’s Class A common stock and repaid the remaining $1.0 million balance in cash, satisfying all of the Company’s remaining obligations under the 2024 Notes on the Redemption Date.
Issuance of 2029 Notes In December 2023, the Company issued $402.5 million aggregate principal amount of its 2029 Notes in a private placement to qualified institutional buyers within the meaning of Rule 144A of the Securities Act.
The 2029 Notes were issued at an issue price of 100.00% of par for net proceeds of approximately $390.2 million, after deducting fees and expenses.
We incurred $11.6 million of debt issuance costs in connection with the 2029 Notes.
The Company used the net proceeds to prepay interest and prepayment premiums on outstanding borrowings and pay interest and prepayment premiums under its Term Loan Facility.
Financial Statements and Supplementary Data – Note 9” for additional discussion regarding the 2029 Notes.
Industry Climate Our results as of and for the year ended December 31, 2024 were impacted by higher-than-expected medical costs in our specialty Performance Suite business versus our previous expectations.
This included two key components: • Some of our partners submitted new claims data to us that we received and processed during the second half of 2024.
These data files included higher expenses for claims paid during the first two quarters of 2024 than what these partners had previously submitted to us. • The second half of 2024 saw an increase in specialty pharmacy costs industry-wide, particularly in oncology.
We believe high medical cost inflation in the second half of 2024 in our Performance Suite was driven by a confluence of factors, including significant increases in disease prevalence, Medicaid redetermination-based adverse selection, rapid increases in unit costs, post-COVID acuity increases and provider coding intensity.
We do not believe these impacts were material to our revenues or net income during the year ended December 31, 2024.
Customers The following table summarizes those partners who represented at least 10.0% of our consolidated revenue: For the Year Ended December 31, 2024 2023 2022 Cook County Health and Hospitals System 11.5% 15.7% 22.4% Florida Blue Medicare, Inc. 12.9% 10.4% 11.5% Humana Insurance Company 19.3% 12.0% * Molina Healthcare, Inc. 13.7% 13.5% * ———————— * Represents less than 10.0% of the respective balance.
Repositioning Costs During the second quarter of 2023, the Company implemented a broad set of repositioning initiatives designed to further align the Company’s assets and talent towards the value-based specialty care opportunity, with the intent of streamlining its operations and supporting the goal of realizing long-term sustainable earnings growth (the “2023 Repositioning Plan”).
Dedicated employee costs are limited to employees that will have no role in ongoing operations and have no planned role at Evolent once the repositioning activities are completed.
The following table provides a summary of our total costs associated with our repositioning plans for the years ended December 31, 2024 and 2023, respectively, by major type of cost (in thousands): For the Year Ended December 31, Cumulative Amount Incurred Through December 31, 2024 2024 2023 Severance and termination benefits $ 1,835 $ 8,564 $ 10,399 Dedicated employee costs 1,185 6,900 8,085 Professional services 4,128 12,910 17,038 Office space consolidation 3,452 6,862 10,314 Total $ 10,600 $ 35,236 $ 45,836 Segment Update The Company made organizational changes, including re-evaluating its reportable segments, as a result of growth in our value-based specialty care business, both organically and through acquisitions.
Effective during the three months ended March 31, 2023, the Company changed its reportable segments to reflect changes in the way its chief operating decision maker (“CODM”) evaluates the performance of its operations, develops strategy and allocates capital resources.
Specifically, the Company collapsed its previous two segments, Evolent Health Services and Clinical Solutions into one segment.
We have one operating segment and one reportable segment as our CODM, who is our Chief Executive Officer, reviews financial information on a consolidated basis for purposes of evaluating financial performance and allocating resources.
Financial Statements and Supplementary Data - Note 2.” 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.
We use both a discounted cash flow analysis and market multiple analysis in order to estimate the fair value of our reporting unit.
The discounted cash flow analysis relies on significant judgement and assumptions about expected future cash flows, weighted-average cost of capital, discount rates, expected long-term growth rates and operating margins.
Financial Statements and Supplementary Data - Note 8” in this Form 10-K for more information related to the 2024 goodwill impairment test.
Principal vs Agent We use third parties to assist in satisfying our performance obligations.
A significant piece of objective negative evidence evaluated for jurisdictions in a net deferred tax asset position was cumulative pre-tax losses over the three years ended December 31, 2023.
Our gross unrecognized benefits are $2.6 million as of December 31, 2024.
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.

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