Evolent Health Reports 24.4% Revenue Decline and Increased Net Loss in Q1 2025

Evolent Health, Inc. reported a significant decline in financial performance for the first quarter of 2025, with total revenue falling to $483.6 million, a decrease of 24.4% from $639.7 million in the same period of 2024. The decline was attributed to several factors, including a transition of a major customer from the Performance Suite to the Specialty Technology and Services Suite, which accounted for a loss of $127.4 million in revenue. Additionally, the company experienced a narrowing of scope with another customer, resulting in a $25.7 million reduction, and a $16 million decrease in gain share revenue. Despite these challenges, Evolent noted a $15.6 million increase in revenue from other contracts within the Performance Suite and Specialty Technology and Services Suite.

The company's operating loss improved to $1.6 million for the quarter, compared to a loss of $13.4 million in the prior year. Total operating expenses decreased to $485.3 million from $653.1 million, primarily due to a reduction in cost of revenue, which fell by 28.8% to $381.2 million. This decrease was largely driven by lower claims costs associated with the transition of certain services and a reduction in personnel costs. Selling, general, and administrative expenses remained relatively stable at $78.4 million, reflecting a slight decrease from $79.1 million in the previous year.

Evolent Health's operational metrics showed a decline in average lives on platform, with the Performance Suite reporting 6.5 million lives compared to 7.1 million in the prior year. The average per member per month (PMPM) fee for the Performance Suite also decreased to $15.57 from $21.19. The company reported a net loss attributable to common shareholders of $72.3 million, compared to a loss of $25.2 million in the same quarter of 2024. This resulted in a loss per share of $0.63, compared to a loss of $0.22 per share in the prior year.

In terms of strategic developments, Evolent Health completed the acquisition of certain assets from Machinify, Inc. in August 2024, which included a software platform leveraging artificial intelligence. The acquisition consideration was $28.5 million, with additional contingent consideration based on performance metrics. The company also reported a loss of $52.3 million related to the exercise of a put option on an equity method investment, reflecting the challenges faced in its joint ventures.

Looking ahead, Evolent Health expressed cautious optimism regarding its liquidity, with $246.5 million in cash and cash equivalents as of March 31, 2025. The company believes it has sufficient resources to meet its working capital and capital expenditure requirements for at least the next twelve months. However, it acknowledged ongoing challenges related to rising medical claims costs and inflationary pressures, which could impact future financial performance. The company remains focused on aligning its operations with the value-based specialty care opportunity to drive long-term sustainable growth.