Evolent Q4 Loss Narrower than Expected, Revenues Beat

Shares of Evolent Health, Inc. EVH rallied Array3.4% ($Array.70) to close at $9.88 on Feb 26, following the announcement of its fourth-quarter results.

This provider of healthcare delivery & payment solutions reported adjusted loss of Array8 cents per share in the fourth quarter of 20Array5, which was narrower than the Zacks Consensus Estimate of a loss of 2Array cents and the year-ago equivalent of $Array.Array6. The year-over-year improvement may be attributed to an increase in revenues, which was however offset to an extent by higher operating loss.

Adjusted revenues rose 74.9% to $46.7 million and beat the Zacks Consensus Estimate of $44 million. The year-over-year upside may be attributed to increased value-based care contracts. Evolent has also been successful in driving the adoption of its services among a higher number of physicians.

Adjusted revenues in full-year 20Array5 surged 62.Array% to $Array63.5 million. Total lives on the platform, as of Dec 3Array, 20Array5, are 7Array7,000 (up 66% on a year-over-year basis).

Outlook

For full-year 20Array6, Evolent projects adjusted revenues in the range of $2Array2–$220 million. Adjusted EBITDA is expected in the band of a negative $28–$24 million.

For the first quarter of 20Array6, adjusted revenue is projected between $47 million and $48 million. Adjusted EBITDA is likely to lie in the range of a negative $9.5–$8.5 million.

Our Take

We are impressed with Evolent’s impressive fourth-quarter results, wherein both the top and the bottom line beat the Zacks Consensus Estimate. We are upbeat about the company’s long-term growth prospects, given the steady rise in the demand of value-based care. The strategic collaboration with Passport Health Plan is expected to bode well for the company. However, the company’s 20Array6 guidance is expected to be more back-end loaded, which might keep investors on the sidelines for the near term.

Zacks Rank & Key Picks

Currently, Evolent carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader medical sector are Abiomed ABMD, CryoLife CRY and Luminex LMNX. All the stocks sport a Zacks Rank #Array (Strong Buy).

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