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Jun 30, 2024
Evolent Health Q2 2024 Earnings Report
Evolent Health's Q2 2024 financial results were announced, featuring revenue growth and consistent profitability.
Key Takeaways
Evolent Health reported a 37.9% increase in revenue to $647.1 million compared to the same quarter last year. The company experienced a net loss of $(6.4) million, with an adjusted EBITDA of $52.0 million. Evolent has narrowed its revenue outlook for the full year 2024 and provided updated Adjusted EBITDA guidance, while reiterating confidence in achieving $300 million in Adjusted EBITDA run rate exiting 2024.
Revenue increased by 37.9% year-over-year, reaching $647.1 million.
Net loss attributable to common shareholders was $(6.4) million.
Adjusted EBITDA was $52.0 million, resulting in an 8.0% margin.
Company narrows revenue outlook and provides updated Adjusted EBITDA guidance for full year 2024.
Evolent Health
Evolent Health
Forward Guidance
For Q3 2024, revenue is expected to be between $615.0 million and $635.0 million, and Adjusted EBITDA is expected to be between $60.0 million and $68.0 million. For the full year 2024, revenue is expected to be approximately $2.56 billion to $2.60 billion, and Adjusted EBITDA is expected to be between $230.0 million and $245.0 million.
Positive Outlook
- Disease prevalence and acuity to remain stable at the average levels of the first half of 2024.
- The capture of anticipated rate increases expected to go live in the third quarter.
- Continuing to successfully execute as expected on the underlying maturation of the Performance Suite revenue portfolio.
- The go-live of announced new business.
- Company continues to forecast greater than $150 million in operating cash flow for 2024.
Challenges Ahead
- Revenue outlook for Q3 2024 is impacted by an expected one-time true-down related to the narrower risk scope in certain markets.
- Beginning in August, the company is reallocating certain engineering expenses towards the Machinify roll out, which will have a temporary effect of lowering the software capitalization rate and increasing operating expenses by $5 million, primarily in the fourth quarter of 2024.
- This temporary shift of dollars from capitalized expenses to operating expenses is expected to reduce Adjusted EBITDA.
- The company prioritized setting the appropriate rates for the balance of 2024 and for 2025 over retrospective rate increases based on the partnership dynamics with payers under pressure.
- Actual results may differ materially due to various risks and uncertainties.