Evolent Health’s first quarter results for 2025 were met with a significant negative market reaction, reflecting investor concerns over a sharp drop in revenue and lower-than-expected profitability. Management attributed the 24.4% year-on-year revenue decline primarily to previously disclosed contract transitions and true-ups in its Performance Suite business. CEO Seth Blackley emphasized that the company’s core operating model remains intact, with ongoing strength in specialty condition management and a number of new customer agreements spanning oncology, surgical, and cardiac care. Meanwhile, CFO John Johnson pointed to a mix shift away from higher-margin Medicare Advantage contracts as a factor impacting per-member profitability.
Is now the time to buy EVH? Find out in our full research report (it’s free).
Evolent Health (EVH) Q1 CY2025 Highlights:
- Revenue: $483.6 million vs analyst estimates of $461.2 million (24.4% year-on-year decline, 4.9% beat)
- Adjusted EPS: $0.06 vs analyst expectations of $0.10 (33% miss)
- Adjusted EBITDA: $36.86 million vs analyst estimates of $33.82 million (7.6% margin, 9% beat)
- The company reconfirmed its revenue guidance for the full year of $2.09 billion at the midpoint
- EBITDA guidance for the full year is $150 million at the midpoint, in line with analyst expectations
- Operating Margin: -0.3%, up from -2.1% in the same quarter last year
- Sales Volumes rose 6.6% year on year (19.5% in the same quarter last year)
- Market Capitalization: $1.37 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Evolent Health’s Q1 Earnings Call
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Kevin Caliendo (UBS): Asked if the current performance suite per-member-per-month (PMPM) level is a good baseline. CFO John Johnson replied that it should remain stable until a major Medicare Advantage contract goes live later in the year.
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Matthew Gillmor (KeyBanc): Inquired about visibility on oncology cost trends. Johnson explained that leading indicators, such as authorization volumes, are modestly below forecast, and claims data completion is about 55% to 60% for the quarter.
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Ryan Daniels (William Blair): Probed the value impact of the new oncology navigation solution. CEO Seth Blackley estimated it could increase client savings opportunities by 10% to 20% and enhance deal conversion rates.
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Jessica Tassan (Piper Sandler): Sought clarity on the cadence of performance suite lives and the timing of contract repricing. Johnson clarified that 600,000 lives were converted to technology-only contracts and that capitation rates are typically reset annually.
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Daniel Grosslight (Citi): Asked about the competitive environment and risk model changes. Blackley stated that win rates remain steady, with the new risk corridors not dampening demand for the Performance Suite.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the adoption and performance of Evolent Health’s new oncology navigation platform across payer segments, (2) evidence that AI automation is translating into measurable margin improvement, and (3) the effects of contract mix shifts and annual repricing on per-member profitability. Progress in commercial and employer markets, as well as the renewal pipeline, will also be key indicators of sustainable growth.
Evolent Health currently trades at $12.01, up from $10.77 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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