Evolent Health’s second quarter was marked by a negative market reaction after the company missed Wall Street’s revenue and earnings expectations. Management attributed the underperformance primarily to delays in partner contract go-lives and unfavorable revenue updates related to prior-year contracts. CEO Seth Blackley acknowledged the challenging macro environment, stating the company faced “the highest per member per month trend that we have seen in oncology in the history of our company,” underscoring industry headwinds and the need for disciplined execution.
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Evolent Health (EVH) Q2 CY2025 Highlights:
- Revenue: $444.3 million vs analyst estimates of $459.5 million (31.3% year-on-year decline, 3.3% miss)
- Adjusted EPS: -$0.10 vs analyst estimates of $0.08 (significant miss)
- Adjusted EBITDA: $37.55 million vs analyst estimates of $35.89 million (8.5% margin, 4.6% beat)
- The company dropped its revenue guidance for the full year to $1.87 billion at the midpoint from $2.09 billion, a 10.6% decrease
- EBITDA guidance for the full year is $152.5 million at the midpoint, in line with analyst expectations
- Operating Margin: -0.3%, down from 1.2% in the same quarter last year
- Sales Volumes rose 7.4% year on year (-1.7% in the same quarter last year)
- Market Capitalization: $1.04 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 From Evolent Health’s Q2 Earnings Call
- Jared Haase (William Blair) asked about the Aetna partnership and its implications for future multi-state expansion. CEO Seth Blackley replied that Florida is a starting point and success may lead to additional states, contingent on execution.
- Kevin Caliendo (UBS) questioned how contract terms and conversations with payer partners have evolved. Blackley explained that enhanced contract protections are now standard, reflecting increased partner demand for risk-sharing and value creation.
- Daniel Grosslight (Citi) probed the delayed go-live for Aetna’s contract. Blackley attributed the timing to “discipline around data exchange” and the need for a strong launch before scaling to other states.
- John Stansel (JPMorgan) inquired about the impact of rising morbidity in ACA exchange risk pools. CFO John Johnson emphasized downside protections and disciplined growth, noting that the exchange business carries lower margins and is being carefully managed.
- Charles Rhyee (TD Cowen) followed up on assumptions for 2026 revenue targets and exchange business exposure. Johnson confirmed that guidance assumes a decline in exchange population, while Blackley noted the likelihood of more states shifting to risk-based contracts over time.
Catalysts in Upcoming Quarters
In the coming quarters, our team will focus on (1) the pace at which new partner agreements, especially the Aetna Medicare Advantage contract, are onboarded and ramped; (2) measurable efficiency gains from expanded AI-driven automation initiatives; and (3) trends in medical utilization and contract profitability, particularly in oncology. Policy changes and the evolving regulatory environment for prior authorization will also be closely monitored for their potential impact on both revenue and margins.
Evolent Health currently trades at $8.97, down from $9.69 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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