Earnings call transcript: Evolent Health’s Q2 2025 results miss forecasts

Evolent Health reported its second-quarter 2025 earnings, revealing a significant miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of -$0.10, falling short of the anticipated $0.08, marking a surprise of -225%. Revenue came in at $444 million, below the forecasted $459.4 million, a surprise of -3.28%. Despite these misses, the stock saw a slight increase of 2.98% in after-hours trading, closing at $9.69. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculation, with analysts maintaining a strong buy consensus and setting price targets up to $20.

Key Takeaways

• Evolent Health’s Q2 EPS missed expectations by a wide margin.
• Revenue was $11 million below the midpoint of guidance.
• The stock price rose by nearly 3% in after-hours trading.
• New partnerships and AI initiatives were highlighted as growth drivers.
• The company maintains a strong pipeline with a focus on Medicare Advantage.

Company Performance

Evolent Health’s Q2 2025 performance showed challenges in meeting financial expectations, with both EPS and revenue missing forecasts. Despite these setbacks, the company highlighted strategic partnerships and technological advancements, including AI integration, as key growth drivers. The healthcare sector’s complexity and evolving market dynamics continue to present both opportunities and challenges for Evolent Health.

Financial Highlights

• Revenue: $444 million, down from the forecasted $459.4 million.
• Earnings per share: -$0.10, compared to the expected $0.08.
• Adjusted EBITDA: $37.5 million, within the top half of the guidance range.
• Unrestricted cash: $151 million.

Earnings vs. Forecast

Evolent Health’s Q2 results revealed a significant deviation from forecasts, with an EPS surprise of -225% and revenue falling short by 3.28%. This marks a notable departure from previous quarters, where the company had generally met or exceeded expectations.

Market Reaction

Despite missing earnings and revenue forecasts, Evolent Health’s stock price increased by 2.98% in after-hours trading, closing at $9.69. This movement contrasts with the company’s 52-week high of $33.63 and low of $7.06. The stock’s resilience may reflect investor optimism about future growth prospects and strategic initiatives. However, InvestingPro data shows the stock has declined over 53% in the past year, with a beta of 0.81 indicating lower volatility than the broader market. The company’s EV/EBITDA ratio of 24.2x suggests a premium valuation compared to peers.

Outlook & Guidance

Looking ahead, Evolent Health provided full-year revenue guidance in the range of $1.850 billion to $1.880 billion and adjusted EBITDA guidance of $140 million to $165 million. The company projects significant growth in Medicare Advantage and anticipates a path to exceeding $2.5 billion in revenues by 2026.

Executive Commentary

CEO Seth Blackley emphasized the company’s role as an innovative clinical decision support partner, stating, "We see customers choosing us at an increasing rate." CFO John Johnson expressed confidence in achieving 2026 revenue targets, highlighting a "clear path to delivering 2026 revenues in excess of $2.5 billion."

Risks and Challenges

• Continued financial underperformance could affect investor confidence.
• The healthcare sector’s complexity and cost control challenges.
• Potential membership headwinds in ACA exchanges.
• Dependence on successful integration of AI and automation initiatives.
• Economic pressures and regulatory changes impacting healthcare markets.

Q&A

During the earnings call, analysts inquired about the Aetna partnership’s expansion potential and the impact of new contracts on managing specialty costs. The company highlighted its disciplined approach to data exchange and partnership launches, while acknowledging potential declines in exchange business for 2026 projections.

Full transcript - Evolent Health Inc (EVH) Q2 2025:

Conference Moderator: Welcome to the Earnings Conference Call for the Second Quarter Ended 06/30/2025. As a reminder, this conference call is being recorded. Your host for the call today from Evolent are Seth Blackley, Chief Executive Officer and John Johnson, Chief Financial Officer. This call will be archived and available later this evening and for the next week via the webcast on the company’s website in the section titled Investor Relations. This conference call will contain forward looking statements under The U.

S. Federal laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the company’s reports that are filed with the Securities and Exchange Commission, including cautionary statements included in our current and periodic filings. For additional information on the company’s results and outlook, please refer to our second quarter press release issued earlier today.

Finally, as a reminder, reconciliations of non GAAP measures discussed during today’s call to the most direct comparable GAAP measures are available in the summary presentation available in the Investor Relations section of our website or in the company’s press release issued today and posted on the Investor Relations website, ir.evolent.com, and the Form eight ks filed by the company with the SEC earlier today. In addition to reconciliations, we provide details on the numbers and operating metrics for the quarter in both our press release and supplemental investor presentation. And now, I will turn the call over to Evolent’s CEO, Seth Blackley.

Seth Blackley, Chief Executive Officer, Evolent: Good evening and thanks for joining the call. We’re pleased to announce another quarter of adjusted EBITDA performance ahead of expectations as well as four new partner announcements and an accelerated new business pipeline. We achieved these results through strong execution, but also because of the fit between our products and the top need in the industry, which we believe is balancing quality and cost for the most complex and expensive specialty conditions. We have a number of positive developments to share today across all three pillars of shareholder value creation of organic growth, margin expansion and capital allocation. So let me walk through the updates now on each of those three themes.

Starting with organic growth, we have four new revenue agreements across both Technology and Services and the Performance Suite bringing us to 11 new agreements year to date. On the Technology and Services side, we’re announcing three new agreements, which are one, our current partner in the Northeast will add our cardiology, radiation oncology and MSK services across multiple lines of business for more than 400,000 members. Two, a regional partner in New England will add MSK and cardiology services across multiple lines of business. And three, a national partner will add additional MSK services to its plans in the Northeast. In the Performance Suite, we’re pleased to expand our oncology and cardiology solution to a new Midwestern state for an existing national partner expected to go live later this year.

Also in the performance suite, you’ll recall that we previously announced a partnership with a national health plan for oncology services. We’re pleased to announce today that that partner is Aetna across 250,000 Medicare Advantage members in the state of Florida. Since that announcement, we’ve been working closely with Aetna to ensure we are well set up to scale to additional Aetna states over time by ensuring that key partnership components like data exchange processes are well honed. We’ve also been impressed with Aetna’s leadership position on innovation in this area, including leading the market on the new AHIP and CMS prior authorization commitments. Evolent’s roadmap is highly aligned with Aetna’s vision for ramping interoperability and clinical data exchange, improving member experience and reducing provider administrative burden.

We plan to launch together in Q1 twenty twenty six. We’re excited to partner with this national payer and look forward to earning the opportunity to expand additional states and specialties over time. Across all these partnerships, we expect total new revenue in excess of $250,000,000 by the time they are fully live in Q1 twenty twenty six. Furthermore, as our customers search for more ways to control cost, we are seeing our addressable market expand. Historically, our oncology performance suite offering has generally been limited to specialty pharmacy and professional spending.

We are now seeing some potential for Performance Suite customers to come to us seeking help managing select inpatient or Part A oncology cost. With our expanded capabilities provided by our partnership with Careology and the acquisition of Oncology Care Partners, we believe we can now meet this market opportunity while simultaneously limiting our risk through our enhanced performance suite contract structure. Finally, we continue to have a very strong late stage pipeline and expect to make additional growth announcements across the fall. As we mentioned earlier in this year, we are seeing the pipeline accelerate as health plans struggle with new pressures on their P and Ls including in risk adjustment shortfalls and medical utilization trends. Combining those issues with the membership pressure created by recent legislative developments, we expect the selling environment to be very strong across the next couple of years.

Next, I’m going to turn to margin expansion where we’re focusing our efforts in two areas, which are one, Performance Suite margin maturation and two, AI and automation in our Technology and Services Suite. On the first, we continue to see oncology expenses below our forecast for the year contributing to potential tailwinds as we move into the 2025. As John will outline in more depth, we are maintaining a conservative approach to reserving and forecasting for the guide for Q3 and Q4, but are currently encouraged by our performance so far this year. Our AI and automation work is on track to our plan for this year as well. Our principal goal with this effort is to get the yes faster for members and providers leaving our expert clinicians more time to intervene with treating physicians on complex cases.

Many of you will recall the investment we made last year in the AI driven future of our business by acquiring the off intelligence solution from Machinify, a company that reviews over $200,000,000,000 in claims annually using AI. We believe the transaction allows us to more aggressively roll out AI capabilities given that we today process over 8,000,000 clinical reviews each year and drive the opportunity to bring the right talent and mindset into the organization. We believe the AI opportunity of Evolent represents the rare win win investment where we can both reduce costs while improving member experience and outcomes through efficiency, speed to answer and accuracy based on the latest clinical evidence. We’ve now integrated this technology into a number of our workflows, improving review efficiency by roughly 11% in the last quarter since starting to roll it out. More importantly, we’re striving to become a leading AI first company across the next twenty four months, targeting 80% of our current authorization volume to be auto approved, allowing our clinical talent to focus on cases where intervention is required.

We believe we’ll be able to do this while meaningfully improving the experience and health outcomes for our clients and members. We’ll have more details on this in the coming quarters as we roll out these solutions more broadly, but we believe this puts us in a leadership position in leveraging AI to improve quality of care for the 40,000,000 members we touch each year. As a reminder, we expect to exit the year with a net $20,000,000 annualized run rate EBITDA improvement across a number of AI and operational efficiency initiatives. But we believe the total addressable market expansion and EBITDA improvement opportunities from AI will be much larger over time. Finally, on capital allocation, our priorities remain the same.

First, investing in organic product development and deploying free cash to delever. We do not expect to pursue any M and A in the near or medium term and continue to believe we have the key assets and capabilities necessary to execute on our strategy. John will comment in his remarks on our cash flow expectations for the rest of the year. Before we go to the numbers, let me say a few words about the evolving macro environment. Our primary customers are navigating a very challenging confluence of events of elevated utilization, lagging premiums and a backlash against traditional methods of medical cost control.

Earlier in the summer, CMS and several health plan industry groups announced a series of commitments for streamlining prior authorization, all of which are highly aligned with our approach and future roadmap. We believe these new commitments will likely accelerate adoption of our solutions as health plans move away from in house solutions or legacy partners, both of which we believe will struggle to meet the new requirements. Later that same week, CMS introduced a new pilot called the WISER model to pilot new prior authorization requirements for certain specialty areas in traditional Medicare in attempt to balance affordability and quality. These twin announcements, one streamlining clinical oversight and the other expanding it encapsulates the moment that faces the industry. Against this backdrop, we believe Evolent is a durable and critical part of the healthcare ecosystem.

We see customers choosing us at an increasing rate as their clinical decision support partner because of our ability to improve clinical quality, reduce physician burden and improve member experience, all while also lowering cost. With multiple ways to grow the earnings of the business, including strong organic growth and margin expansion opportunities in both services and the performance suite, we remain confident in our ability to grow adjusted EBITDA at 20% per year despite industry volatility. I’ll now hand it over to John to go through our results in more detail.

John Johnson, Chief Financial Officer, Evolent: Thanks, Seth. Q2 adjusted EBITDA of $37,500,000 was in the top half of our range, driven by strong results across both our tech and services and performance suite models. In the performance suite, normalized oncology trend of approximately 10.5% continues to be modestly below our initial forecast for the year of 12%. As is typical, we have visibility into claims for about half the claims expense in Q2 with the rest comprising an actuarial reserve based in part on leading indicators. For oncology in Q2, our key leading indicator, which is authorizations per thousand was flat to down on a per capita basis versus Q1 for each line of business.

Recall that we closed Q1 with an elevated level of conservatism in our reserves compared to what we saw in the authorization data. With claims for Q1 now about 90% complete and reflecting expenses in line with what our leading indicators suggested, we have released the majority of that conservatism. That favorability from Q1 claims development was offset by a similarly conservative approach to Q2 for a net neutral impact on our year to date results. Prior year claims development was a favorable $11,700,000 in the quarter, partially offset by $4,600,000 in revenue updates for a net benefit of approximately $7,100,000 This was in line with our expectations. Given the level of focus on medical trends across the managed care industry, I want to go deeper on what we are seeing.

Make no mistake, the last nine months represents the highest per member per month trend that we have seen in oncology in the history of our company, driven both by elevated prevalence and cost per active case. Despite this, we are currently favorable to our forecast year to date for two reasons. First, we were intentionally conservative in our outlook for this year, including a provision in our guidance for continued deterioration in the environment beyond the elevated levels seen exiting Q4 of last year. And while medical trend has remained elevated in 2025 to date, we have not seen this further deterioration in trend that was contemplated in our guidance. Second, we continue to deliver on the core goal of our platform, lower cost by increasing adherence to best evidence medicine.

This enables us to consistently deliver below market trend. On the top line, Q2 revenue is $444,000,000 $11,000,000 below the midpoint of our guide. Dollars 4,600,000.0 of this deviation was driven by the lower revenue for 2024 that I just referenced, with the rest attributable to go live timing for one performance fleet market where our planned partner was working through a local regulatory matter. This issue is now cleared and that market is scheduled to go live in September. As a reminder, our Q1 results included $55,000,000 in gross revenue from one contract that switched to net revenue in Q2.

Adjusting for that item, we saw a $16,000,000 sequential step up from Q1, driven principally by new launches and recognition of revenue from the Medicare Shared Savings Program. Looking out across the year, our revised revenue outlook incorporates our latest estimates go live timing with performance suite partners, including the national partnership Seth referenced. As you know, the first few months of a performance fee contract are typically neutral to adjusted EBITDA. So there is no flow through of that change to our bottom line this year. Importantly, since this is a timing related adjustment, our view of our 2026 opportunity has not changed.

While it is too early to provide formal top line guidance for next year, based on our weighted pipeline and current market dynamics, we see a clear path to delivering 2026 revenues in excess of $2,500,000,000 with continued strong growth thereafter. This pipeline is across both technology and services and performance suite opportunities. And importantly, all prospective performance suite deals are under our new risk model, which includes enhanced protections against unfavorable changes in our risk pools, standardized data flows and hard limits to our liability for gaps in historical data. Turning to the balance sheet, we ended the quarter with unrestricted cash of $151,000,000 Cash used in operations of $26,000,000 was driven by two factors. First, performance reconciliations for twenty twenty four contracts that have since been restructured consistent with our expectations.

And second, a collection slowdown during the second quarter, similar to what we saw during the fourth quarter of last year. Since the quarter closed, we received $24,000,000 in catch up payments from these customers bringing us back in line with overall expectations. In response to this variability, we have recently experienced in our working capital. We have taken important steps that we believe will improve the timeliness of payments, including working with our partners to amend the payment terms in our contracts to ensure more predictable cash flows for Evolent. With those improvements and the catch up collections in July, we expect DSO to remain normalized for the rest of the year, allowing us to generate approximately $40,000,000 in cash from operations in the April through December period, consistent with prior expectations.

Note that included within our operating cash flow this year are several non recurring cash items, including reconciliations for performance suite losses from 2024 that have since been restructured and lease termination fees together totaling approximately $84,000,000 for the 2025. After this year, we would expect to return to our normal range of EBITDA to cash flow conversion, which would result in significant year over year growth in cash flow. There are a number of updates on the policy and macro front that inform our outlook for the rest of the year and into 2026. So let’s go through these and our current view on impacts organized by line of business. First, about a quarter of our Q2 revenue and more than 80% of the new business thus far announced for 2026 is in Medicare.

Our view of this line of business is the trend has largely stabilized with a favorable rate notice for 2026, we anticipate a return to normal macro membership growth within MA, which averaged about 8% between 2020 and 2024. We expect this to be a tailwind for our membership. Second, roughly 10% of our Q2 revenue is in the commercial fully insured line of business in technology and services, which we expect to be stable over time. Third, about 45% of our Q2 revenue and about 10% of the new business we’ve announced for 2026 is in Medicaid. Absent policy changes, the Medicaid population typically grows between 2% to 3% annually.

While there remains uncertainty on how states will implement the provisions of the One Big Beautiful Bill, we do not currently anticipate meaningful impacts until 2027. We continue to estimate that a 5% membership reduction would result in an EBITDA headwind of approximately 8,000,000 to $10,000,000 Finally, about 20% of our Q2 revenue and less than 10% of the new business we’ve announced for 2026 is in the Affordable Care Act exchanges. While this has been a fast growing line of business across the country over the last two years, driven in part by Medicaid disenrollment and enhanced subsidies, membership in 2026 is likely to face headwinds from the potential expiration of those subsidies and other impacts. Our updated guidance for 2025 incorporates a modest pull forward of medical utilization within the approximately $180,000,000 of annualized performance fee revenue in the exchanges during the 2025. So to sum up from a line of business perspective, we currently have the least exposure to exchanges and the majority of our booked revenue growth for next year is in Medicare Advantage.

We feel the macro trends on the horizon are reflected in our guidance for 2025 and our targets for 2026 and beyond. Now let me go through guidance before we open it up for questions. With continued successful execution, we are updating our outlook for adjusted EBITDA to be between $140,000,000 and $165,000,000 and initiating Q3 adjusted EBITDA between $34,000,000 and 42,000,000 This outlook incorporates our strong performance year to date, while remaining prudently conservative for the second half given the volatility experienced by managed care. On the revenue line, we are updating our full year outlook to be between $1,850,000,000 to $1,880,000,000 with a corresponding Q2 outlook of between $460,000,000 and $480,000,000 This update principally reflects the Aetna go live timing Seth referenced earlier. With that, we’ll open it up for your questions.

Conference Moderator: Thank you. We’ll now begin the question and answer session. If you’re using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. Please limit yourself to one question.

If time allows, we may take follow-up questions afterwards. The first question comes from Jared Haas at William Blair.

Jared Haas, Analyst, William Blair: Hey guys, good afternoon and thanks for taking our questions. I wanted to ask one on the Aetna announcement. I think you mentioned 250,000 MA lives in Florida. I know Florida has been a big market for you. So maybe you could talk a little bit about just kind of the power of density.

How much did the existing relationships that you have in that market kind of lead to that win? And any framing you could share in terms of how we should expect the margin profile in that market to ramp with Aetna?

Seth Blackley, Chief Executive Officer, Evolent: Yes, Jared, it’s Seth. I’ll take it initially. Let me just first comment on Aetna generally, which is obviously we’re honored to be partnering with them. It’s an innovative marquee partnership opportunity for us. And I think it really is set up for it to be the first of multiple states, have to earn that right by doing a great job for them.

But that is certainly the intent. To your point, Florida is a logical place to start. But I think to be honest, I think it’s a little bit less about us. And I think we are able to do some slightly different things in Florida, but it’s not the biggest driver of this. A lot of it’s just about the opportunity with this partner where they have membership and need.

And so that’s where we’re starting, but I would expect this to be able to go to additional states over time, assuming we execute and deliver for the partner.

John Johnson, Chief Financial Officer, Evolent: And the margin ramp, Jared, we’d expect it right now to be consistent with our normal performance suite margin ramp to getting to that target 10% margin over the course of the first two years.

Conference Moderator: The next question comes from Kevin Caliendo at UBS.

Kevin Caliendo, Analyst, UBS: Hi, guys. Thanks for taking my question. I want to talk about your new contracts. But in the context of given all that changed last year, the way you’re structuring your contracts and all that’s happened with some of your customers and the trends that they’re seeing. Can you just talk about how the conversations are different now?

When did they come back to you and reengage? Or what are they looking for now that might be different from in the past? I’m really just trying to understand how you fit into the ecosystem now given your changes and given what’s going on with a lot of them who are clearly seeing higher trends.

Seth Blackley, Chief Executive Officer, Evolent: Yes. Yes, great question, Kevin. So look, on the pipeline in general, let me just say a couple of things and I’ll get into the protections. We have about $1,000,000,000 in our weighted pipe right now. And that’s across tech services and performance suite within the performance suite, it does have this enhanced version of the performance suite contract.

I think the reason we’ve been able to generate that that’s weighted, as I mentioned, that’s sort of what we expect to happen. The reason that has gone up so much is while we’re having enhanced contract terms is I think the challenges in the industry have grown, right? So our payer partners across the country are feeling pain around trying to manage these high cost specialty categories, and they’re trying to do it in the context of a world where you don’t want to burden the patient or the provider unduly. So you need an innovative way to do it. And that is a perfect fit for who we are.

And so I think we’ve been saying this, I know for a while, there’s a countercyclical nature to our business, meaning when the payers are looking around for solutions, I think we fit very well into that. A lot of the costs are in oncology, cardiology and MSK2. And to put a very fine point on it, everything we have in our pipeline has enhanced contract terms for the performance suite that we’ve talked about, that’s corridors, that’s around data and historical statute of limitations on old claims and all the adjusters that we’ve talked about. That does give up some of the upside that we historically would have had in exchange for more protection. So I think it’s a fair trade for our partners.

And as the pipeline size and our indication around ’26 and revenue for ’26 indicate, I think we feel really good about those coming to fruition and creating a lot of value for our partners and for us

Conference Moderator: The next question is from Daniel Galsight at Citi.

Daniel Galsight/Matthew Shea, Analyst, Citi/Needham: Hi, guys. Thanks for taking the question. I want to go back to the Aetna contract. Great to see the new logo there. I’m just curious, though, if maybe you can go into a little bit more detail on kind of the push out to the 2026.

What needs to happen there before you’re comfortable launching in and why kind of the more drawn out process?

Seth Blackley, Chief Executive Officer, Evolent: Yeah, Daniel. So we’re very confident it’s going to launch on that timeframe. So that I’ll just say that first. In terms of why it’s delayed a little bit from initial, I think this is a case of a couple of things. One, being extremely disciplined about making sure everything we need under an enhanced partnership is in place, the things that I just mentioned.

But secondly, I think there’s a concept of slow down to speed up, which is getting the data feeds and the data exchange well honed, such that you have an excellent go live and you can have a faster follow for additional states. And in this environment, we chose to be a little more disciplined around the speed. And there’s a trade off on that, but I think that will have a payoff with respect to the opportunity to go to additional states over time. So that’s summary of it.

Conference Moderator: The next question is from John Stansell at JPMorgan.

Jared Haas, Analyst, William Blair: Know the exchanges are a smaller portion of your book, I think 20% of 2Q revenue and 180% in the back half. Can you just talk about qualitatively how you’re thinking about 26% given the expectation of increased morbidity in the ACA risk pools and how your payer discussions have gone in that space? Thanks.

John Johnson, Chief Financial Officer, Evolent: Yes. It’s 20% of our revenue overall, about half in tech and services, half in the performance suites. So as we think about that margin on that book of business overall in 2026, because of the composition of that business, it tends to trend towards lower margin services. There’s a fair bit of surgical management business in there, for example, that has lower gross margin than average on the tech and services side, etcetera. And then on the Performance Suite side, as we look out to next year prior to any changes that might come from demographic movements, we project them to be a little less than our target 10% based on where they are in their maturation curve.

So that’s sort of your starting point. I think it’s too early to know exactly what happens. I think where we’re focused right now is one, protecting the downside as Seth noted, ensuring that we have the right protections in the contracts, we do around corridors and the like. And then focus on growing the business in a disciplined way to deliver on our target to grow EBITDA in a wide range of potential outcomes on the exchanges. That’s where we’re focused.

Conference Moderator: The next question is from Jeff Garo at Stephens.

Jeff Garo, Analyst, Stephens: Yes, good afternoon. Thanks for taking the question. Maybe return to the pipeline and ask you to drill down a little bit on the pipeline for Performance Suite from net new clients. I think you already hit the specialty vector with a focus on oncology, but maybe you could add to it on where you’re seeing potential interest there from a line of business? And then what type of plan, more national accounts or regional or blues, where are you seeing those different vectors of opportunity play out in the pipeline for Performance Suite?

Seth Blackley, Chief Executive Officer, Evolent: Yes, Jeff, I’d say on the Performance Suite side, it’s shaded towards oncology. I’d say that’s where the biggest need in the marketplace is right now. It’s not just oncology, but it is certainly shaded in that direction. There are a mix of national plans, regional and blue plans in that pipeline. And, look, I think the dynamic is what I described earlier, which is two things.

One, organizations looking around for new and different solutions. So, think there’s a higher mix of new logo in there than has ever been in the past. And it’s great. We’re excited about that. I think that’s great for the business and from a diversification perspective.

And so there’s a lot of new logo in there. And secondly, I do think where CMS is headed dramatically and specifically with the commitments they’ve pushed into the marketplace, with the new programs they’re launching, is going to create an environment where if you’re today in sourcing one of these specialties, which is maybe 30% to 50% of the market, depending on which specialty it is, I think it’s going to become very hard to in source over time as those commitments become required around clinical data exchange, sophistication of the timing. So that will be a tailwind. And then I think, again, I mentioned this before, I think some of the there are some vendors in the marketplace, I think will have a harder time meeting those commitments. So there’s a couple of different things driving this, shaded towards oncology and a lot of new logo in there.

Conference Moderator: The next question comes from Singh at Truist.

John Johnson, Chief Financial Officer, Evolent: Hi guys. This is Eduardo Ron on for Jalendra. Thanks for taking the question. Just on the I think John you made the comment that you see a path to an excess of $2,500,000,000 in 2026. Just given the Q4 run rate that’s like $1,900,000,000 or so, that’s a $600,000,000 step up to next year.

Just curious and the new contracts that you talked about $250,000,000 So just curious what line of sight you have into the incremental $350,000,000 or so that you’re talking about here. Yes. So that $350,000,000 Eduardo is based on the weighted pipeline that we have now that Seth referenced is over a billion with some expectations of when that pipeline might go live during 2026. So that’s the root of our confidence around that number.

Seth Blackley, Chief Executive Officer, Evolent: Yes. And just to put a finer point, I think the comment was at least 2.5. We obviously the $1,000,000,000 would take you well above that. And so to John’s point, it’s really around timing is the only question.

Conference Moderator: The next question comes from Charles Rhyee at TD Cowen.

Charles Rhyee, Analyst, TD Cowen: Yes. Thanks for taking the questions. I just wanted to follow-up on some of your answers here. Maybe first on the $2,500,000,000 sort of target, understanding that the pipeline your comments are on pipeline. But in relation to sort of your assumptions for Hicks, for individual exchange, does that assume because it seems like, John, you don’t have yet an estimate of what you think that might be for 2026.

Do you make any assumption for a decline in that business within that $2,500,000,000 And then secondly, obviously, Aetna signing for MA starting next year sounds great. Just curious about sort of the large customer that you had that was doing Performance Suite in oncology in Florida and another state, obviously, going to Tech and Suites. Any discussions now that trend, this kind of higher level utilization has stabilized of them coming back to kind of switch back to performance yet? Thanks.

John Johnson, Chief Financial Officer, Evolent: Yes. Sounds good. I’ll take the first one. I’ll kick this off the second one around customer commentary. Yes, we have assumed in our build for next year at this point, some decline in the exchange population across both tech and services and performance suites.

Seth Blackley, Chief Executive Officer, Evolent: Yeah, and then on the other question you asked about specific partner, I’d say in general, I’ll answer generically, which is the Performance Suite solution is the best way to create value for our partners, for members, for providers. So, I think over time, if you’re tech services, you’re going to move some states to Performance Suite. I’m always timing based. There’s been a lot of volatility in membership, which does make it harder to price and go live with the market. And that’s one of the challenges that we had there.

But I do think because proposition, those things are likely to happen. And it’s a timing thing, which I don’t want to throw out specific timelines, but I do think those types of things will happen.

Conference Moderator: The next question is from Matthew Gillmor at KeyBanc.

Daniel Galsight/Matthew Shea, Analyst, Citi/Needham: Hey, guys. Thanks for the question. I wanted to ask a guidance question on the oncology trend. I think you said the trend was ten point five percent. John had mentioned that you closed 2Q conservatively similar to 1Q and then 1Q developed favorably.

Can you give us some sense for where the first quarter oncology trend is ultimately developing relative to the twelve percent guide? And then I think there was also a comment about an assumption about a pull forward of utilization maybe around the exchange business that you’ve incorporated in the guide. I was wondering if you could quantify that just so we understand if there’s an extra burden that you’re putting under the guide?

John Johnson, Chief Financial Officer, Evolent: Yes, good questions, Matt. So as you think about the first half, the 10.5 that I mentioned is the rate for the full first half of the year. And so the first quarter being more fully complete is a little lower than that and we closed the second quarter above that. As we think about our guide, as I mentioned, we’ve largely remained conservative. And so what does that look like?

It’s about 12% for the second half of the year. That’s composed of modestly better underlying expectations offset by, as I mentioned, this idea of a potential benefits rush in the exchange business, smallest part of the business, they’re ahead of potential changes in membership next year. So those two net out to we think is a relatively conservative 12% assumption at the midpoint of our guide for the back half of the year.

Conference Moderator: The next question is from Matthew Shea at Needham.

Daniel Galsight/Matthew Shea, Analyst, Citi/Needham: Hey, good evening. Thanks for taking the question. Nice to see the sales momentum year to date. I guess, total signings now at 11, looking at the guide for

Seth Blackley, Chief Executive Officer, Evolent: the remainder of the year. Is there much go get left in terms of new customers in the

Daniel Galsight/Matthew Shea, Analyst, Citi/Needham: full year guide or have you pretty much filled the bucket at this point?

John Johnson, Chief Financial Officer, Evolent: We have filled the bucket. So any new launches that we haven’t already announced for this year would be incremental for 2025. We’re really now focused on building up ’26.

Conference Moderator: The next question is from David Larson at BTIG. Hi. This is Jenny Shen on for Dave.

Jenny Shen, Analyst, BTIG: Thanks for taking the question. It’s encouraging to hear that the oncology cost trend is trending favorably. Just any of your thoughts on overall utilization? We’ve seen some of the hospitals report lighter volumes in areas like ortho and MSK, does that have any positive read through to you guys? What are you seeing in the other specialty areas?

Thanks.

John Johnson, Chief Financial Officer, Evolent: Yeah, so just going specialty by specialty, we’ve seen cardiology trend be quite consistent with our expectations this year. So it’s elevated relative to a ten year baseline, for example, but it’s pretty consistent with what we expected. On MSK, radiology, other specialties in our stable, we don’t take risk there. And so we’re less sensitive to volumes, but we haven’t seen a particularly significant shift in either direction in our particular book of business.

Conference Moderator: This concludes our question and answer session. I would like to turn the conference back over to Seth Brackley for any closing remarks.

Seth Blackley, Chief Executive Officer, Evolent: All right. Thanks for the time this evening. Look forward to connecting soon.

Conference Moderator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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