One-glance verdict
Undervalued
$11.06 our estimate vs market $4.19
Wall Street consensus: $5.77 (-47.9% lower than our fair-value estimate)
62% below our estimate, below the bear case
Fundamentals snapshot
Evolent Health, Inc.
EVH · NYQ · Healthcare · Health Information Services
Current price
$4.19
52-week range
$2.10 - $9.63
Market cap
$473.72M
Balance sheet
Distressed
-0.35x Concerning
Net debt $854.73M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
3 Risks
2 rewards · 3 risks
- Reward Revenue grew 11.8% last year.
- Reward Free cash flow was positive in 2/10 years.
- Risk Net debt grew 191.0% over 3 years.
- Risk Return on equity was -67.0% last year — the company lost money on shareholders' equity.
What this company does
Evolent Health, Inc.
Evolent Health provides software and services to help insurance companies and hospitals manage patient care for complex and expensive conditions like cancer or heart disease. The company primarily makes money by helping these organizations shift to "value-based care" (a model where doctors get paid for making patients healthier, not just for the number of services they provide). This is important because it aims to lower the overall cost of healthcare while improving results for patients.
How the company got here
Evolent Health was founded in 2011 to help hospitals and doctors' groups adapt to a new way of getting paid, focusing on the quality of care rather than the quantity of services. [2, 5] The company went public in 2015, selling its stock to the public to raise money for growth. [2, 5] Over the years, it acquired other companies to add new capabilities, including a major 2023 deal for New Century Health that deepened its expertise in managing expensive cancer and cardiology treatments. [2] More recently, the company has narrowed its focus by selling off its primary care business to concentrate on the complex and costly specialty areas of healthcare. [18, 20]
What it actually does
Evolent Health is not an insurance company; instead, it's a partner that health insurance companies and healthcare providers hire to help control costs and improve patient care. [2] It provides technology and services that manage the treatment of patients with complex and expensive conditions, like heart disease or cancer. [4, 6, 12] For example, Evolent helps decide if a requested medical service is necessary (a process called prior authorization) and works with doctors to use the most effective, evidence-based treatment plans. [2, 22] The company's main customers are health plans, who pay Evolent to help make healthcare more affordable and effective for their members. [2]
Specialty Care Management
This is Evolent's main and most important business, where it focuses on managing the most expensive areas of healthcare for its clients. [2, 12] The company has special programs for cancer (oncology), heart disease (cardiology), and muscle and joint conditions (musculoskeletal). [6, 7] Health insurance companies pay Evolent to work with doctors to ensure patients get high-quality, cost-effective care, which helps the insurer save money on claims. [8] This part of the business is the company's primary engine for growth and represents its core strategy. [2]
Administrative Services
This part of the company acts like a back-office support team for health insurance plans. [7, 21] Evolent handles essential but complicated operational tasks like processing medical bills (known as claims), managing member enrollment, and running customer service call centers. [21] Health plans pay Evolent to take over these administrative burdens, allowing them to operate more efficiently. [2] This creates a strong partnership, as Evolent becomes deeply integrated into its clients' day-to-day business operations. [21]
What management is betting on now
The company's leadership is betting heavily on its specialty care business, believing that managing the highest-cost medical conditions is a growing and essential need for health insurers. [18, 20] They recently sold their primary care division to focus resources on complex areas like oncology and cardiology. [18, 23] Management is also focused on improving the company's financial health by paying down its debt (a process called deleveraging). [19] Finally, they are using artificial intelligence (AI) to make their administrative work more efficient and less costly. [19]
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
Revenue
$652.52M
Net income
$-28.36M
Diluted EPS
-0.25
Operating cash flow
$-9.31M
Free cash flow
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Sources
Revenue
$496.25M
Net income
$-26.63M
Diluted EPS
-0.24
Operating cash flow
$-984.00K
Free cash flow
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Sources
Revenue
$468.72M
Net income
$-429.13M
Diluted EPS
-3.84
Operating cash flow
$48.80M
Free cash flow
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Sources
Revenue
$479.53M
Net income
$-20.86M
Diluted EPS
-0.24
Operating cash flow
$15.81M
Free cash flow
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Sources
Revenue
$444.33M
Net income
$-19.90M
Diluted EPS
-0.44
Operating cash flow
$-30.33M
Free cash flow
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Sources
Revenue
$483.65M
Net income
$-64.62M
Diluted EPS
-0.63
Operating cash flow
$4.57M
Free cash flow
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Sources
Revenue
$646.54M
Net income
$-22.80M
Diluted EPS
-0.27
Operating cash flow
$-26.23M
Free cash flow
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Sources
Revenue
$621.40M
Net income
$-23.14M
Diluted EPS
-0.27
Operating cash flow
$18.67M
Free cash flow
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Sources
Is it cheap or expensive?
Fair value $11.06 vs current price $4.19
Wall Street consensus is the average analyst price target: $5.77 (-47.9% lower than our fair-value estimate).
Our most-likely fair value is $11.06 a share — about 164.0% above today's price of $4.19, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Distressed
Net debt $854.7M. Interest coverage -0.3x.
Net debt
$854.73M
Interest coverage
-0.35x
Evolent Health, Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 3 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Distressed
Worse cushion
Baseline
Better cushion
EVH
BASELINE
Evolent Health, Inc.
Total debt $970.43M Interest coverage -0.35x This is the baseline the peer rows are being compared against.
Total debt $33.45M Interest coverage -64.32x Neither company has much profit cushion over interest right now.
Total debt $8.73M Interest coverage 32.00x This peer still has a real interest-payment cushion, while EVH does not.
Total debt $169.98M Interest coverage -1.76x Neither company has much profit cushion over interest right now.
Total debt $67.95M Interest coverage -0.95x Neither company has much profit cushion over interest right now.
What you should know
The case for and against EVH
2 Rewards
3 Risks
Rewards
-
Revenue grew 11.8% last year.
-
Free cash flow was positive in 2/10 years.
Risks
-
Net debt grew 191.0% over 3 years.
-
Return on equity was -67.0% last year — the company lost money on shareholders' equity.
-
Insider ownership is only 3.1% (peer median: 5.8%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
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Forward P/E
10.72x
P/B
1.23x
P/S
0.23x
EV/EBITDA
21.77x
PEG ratio
1.93x
Profitability
How much profit each dollar creates
Gross margin
17.2%
Operating margin
-1.3%
Net margin
-24.1%
ROE
-67.0%
ROA
-0.8%
Health
Liquidity and balance-sheet strength
Debt / equity
2.53x
Current ratio
1.24x
Quick ratio
1.15x
Total debt
$970.43M
Total cash
$115.70M
Growth
How the business has been compounding
Revenue TTM
$2.10B
Revenue 5Y CAGR
19.9%
EPS TTM
-4.49
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$54.32M
Free CF TTM
$4.75M
FCF margin
0.2%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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