Evolent Health, Inc. (NYSE:EVH) Q3 2023 Earnings Call Transcript

John Johnson: Hey, Kevin, it’s a good question. I think as you look at our risk business, right, it is relatively narrow versus a sort of total cost of care model in an MCO. And as we look at acuity or other factors within oncology, for example, we’ve not seen that dynamic. That’s not to say we won’t see it in the next year, right? But relative to that commentary from the big MCO, it’s not something that we’ve seen in our risk.

Kevin Caliendo: Okay. That’s helpful and good to know. This is more of a broad question, more of a strategic question, I guess. When we initiated and picked up coverage, I was kind of surprised at sort of the way the stock is valued and the way it’s been trading. And you guys again sort of hit your numbers, you’ve executed, and the like. I’m wondering if you’re contemplating anything strategic above and beyond what you can control, which is the operations, which you’ve done a fantastic job of hitting your targets. Is there a way to change capital allocation, or is there anything strategic you have contemplated that might be able to create shareholder value or get the investment community to understand sort of what you’ve built here with this business?

Seth Blackley: Yes, Kevin, I can take that. The easiest way to answer and say is we’re always open to anything that can be a catalyst and can create shareholder value. I think, in particular, for this year and kind of what you’re referencing with the stock over the last, say, six months, for instance, there have been, from our perspective, a couple unique things going on with utilization concern and redeterminations that have been concerns for people. And our view has been, hey, let’s get that data out there. I think this call is part of that, that we’re continuing to feel really confident about our plan. And if for some reason, that doesn’t begin to move the needle, then, our board would always consider things that helped us fully recognize the value.

We do think we have a really unique asset. We think we’re in early innings of a really big opportunity, and so it does need to get recognized one way or the other. And there’s obviously a couple of ways to get at that, to your point. Right now, I think we’re pretty focused on getting this data out there and continue to execute. And we’ll pull up on that question over time if it doesn’t work itself out.

Operator: The next question comes from Jack Wallace of Guggenheim Partners. Please go ahead.

Unidentified Analyst : Hi, this is Mitchell on for Jack. Thanks for taking my question. Would you be able to help us better understand what the go-get portion of the $300 million EBITDA run rate looks like now? And would that largely come from new tech and services deals? Thanks.

John Johnson: Hey, Mitchell. It’s John. It’s a good question. as we’ve laid out that path, there are three core items. One was growth, as you noted, mostly in the tech and services suite. The second was the realization of the cost and revenue synergies within the NIA acquisition. And the third was the maturation of our performance suite. On the first one, tech and services growth, announcements like the ones that we made today, expansion with Centene and so on, we feel it places us sort of nicely on track for filling up that bucket by the end of next year. On the second, we’ll have a – we’ve achieved, as we’ve talked about in previous calls, most of the cost work already within the NIA synergy bucket. The one that we’ve mentioned before that is still a work in progress is on the technology side and lots of work going on in that now with visibility to completing that in Q1.

The final piece, maturation of our performance suite, I mentioned again on the call here that is tracking according to our expectations. So, that feels pretty good. And we still have the opportunity to add more to that. For example, the Florida Blue announcement today, while it will go live, we expect, in the Q1 of next year, by the end of next year, we would expect it to be contributing some EBITDA here. So, feeling good overall.