Evolent Health (EVH) TD Cowen 45th Annual Healthcare Conference summary

Performance Suite model evolution

• Transitioned three-quarters of Performance Suite revenue to a capped model, reducing downside risk and sharing more upside with partners.

• Enhanced model aligns value creation with economic outcomes, especially in oncology, by capping both gains and losses.

• 2025 guidance midpoint assumes $150 million EBITDA, with sensitivity to oncology trend changes; a 2% better trend adds $12 million, while a 2% worse trend subtracts $9 million.

• Medicaid and exchange revenue represents about 50% of total, with a hypothetical 25% membership cut equating to a 12.5% revenue hit, but manageable EBITDA impact.

• Recent contract changes narrowed scope for two non-core clients, impacting revenue recognition but isolated to those contracts.

Claims management and operational improvements

• 2024 audit found $1 million in claims outside scope; most claims were within scope.

• Strengthened contracts to limit liability for late claim submissions and increased direct collaboration with partners' medical economics teams.

• Enhanced review processes and partner engagement have reduced the likelihood of repeat claims issues.

Technology, AI, and efficiency initiatives

• Integration of Auth Intelligence and AI aims to streamline administrative tasks, targeting $20 million in annualized benefit by year-end, with $10 million net investment in 2024.

• Long-term goal is up to $50 million in annualized benefits from AI, with a multi-year trajectory and potential for both margin improvement and growth.

• Gross margin in Tech and Services expected to rise above current 50% as efficiencies are realized, with pricing flexibility to drive share growth.