Evolent Health, Inc. Q1 FY2026 earnings call

• New performance suite launches: Successful launch with Aetna on Jan 1st with encouraging initial indicators; launched with Highmark on May 1st. - New contracts: Existing Performance Suite client signed for advanced imaging solution for 4.5M lives, expected to go live in Q3; national payer client expanding oncology and cardiology solution in new markets, expected to generate over $200M annual revenue, live in Q3. - AI and automation: Added strong tech and data science players, testing automation initiatives with goal of auto-approving ~80% authorization volume; deployment of new AI models accelerated, especially in imaging solution. - Capital structure: Ended Q1 with unrestricted cash $142M and net debt $792M, no debt maturities until 2029. - Long-term opportunity: Two super cycles - oncology market growth as more plans outsource oncology management, and AI automation in specialty reviews.

Total revenue was $496 million, 9% sequential growth vs Q4 2025 (excluding ECP divestiture). Adjusted EBITDA was $22 million. Performance suite revenue was $323 million, up 26% sequentially (excluding ECP), driven by new launches but offset by exchange membership declines. Specialty tech and services revenue was $81 million, down 16% sequentially. Administrative services and cases revenue was $92 million, down 11% QoQ. MER for Q1 2026 was 93%, improving 150 basis points vs Q4 2025 (excluding ECP).

• Reiterating 2026 revenue guidance range $2.4 to $2.6 billion, adjusted EBITDA range $110 to $140 million, and MER ~93% for full year. - Performance suite revenue guidance assumes ramp of new launches offset by membership declines. - Specialty P&S revenue guidance assumes ~40% exchange membership decline. - MER expected to increase throughout year, peak in Q3, then improve steadily. - Adjusted cost of revenue plus adjusted SG&A expected ~$675M for year; cash flow from operations expected $10 to $20M after cash interest expense; software development and capital expenditures expected 25 to 30M for 2026.

Q: Big picture on standardization and prior authorizations, compare near-term demand and pipeline changes.

A: Big fans of standardization, Evelyn has vast growth in oncology but most approval volume in other specialties, oncology harder to standardize, AI for automation but human touch needed in oncology.

Q: 1Q MER better than estimate, oncology and cardiology perspective, weather impact.

A: Oncology and cardiology close to expectations except some markets with higher prevalence due to membership drop, weather not material.

Q: Early indicators good with Aetna launch, extrapolate to margin ramp.

A: Execution good, but not ready to say faster margin ramp yet.

Q: Two new contracts, earnings contribution ramp, prior auth changes.

A: Contracts have risk and gain share components, no change to guidance; prior auth standardization in simpler specialties, oncology needs human touch.

Q: Competitive landscape, elevated oncology trend, Medicare trends.

A: General trend of plans using third party specialists, elevated oncology trend isolated to some markets, Medicare trends consistent with expectations.

Q: New advanced imaging contract, client consolidation.

A: Highlights integration value, excited about partnership.

Q: Revenue true-up, causes.

A: Revenue true-up due to lower than expected claims in some markets, nets out with claims favorability.

Q: Actual revenue and remainder of year expectations.

A: Spread issue with launches like Highmark, no change to guidance, clearer on rest of year.

Q: Favorable PYD in quarter, focus and impact on EBITDA.

A: Net favorable impact, split a bit higher on oncology, consistent with prior commentary