Evolent Health, Inc · NYSE:EVH
Evolent Health — 40th Annual J.P. Morgan Healthcare Conference (January 2022)
31 slides from Evolent Health's conference presentation, Jan 11, 2022
Slide 1: 40th Annual J.P. Morgan Healthcare Conference Investor Presentation
0 40th Annual J.P. Morgan Healthcare Conference Investor Presentation January 12, 2022
Slide 2: Safe Harbor Statement
1 Safe Harbor Statement Certain statements made in this report and in other written or oral statements made by us or on our behalf are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). A forward-looking statement is a statement that is
Slide 3: Agenda
2 AGENDA Investment Considerations Financial Model, Capital Allocation, and Outlook Evolent Health Overview Segment Overviews
Slide 4: Financial Overview / Who We Are
3 FINANCIAL OVERVIEW (as of 9/30/21)WHO WE ARE • Technology-Driven Solutions For Health Plans and Providers That Improve Health Outcomes and Lower Costs • Fast Growing, Seasoned Leader in Value Based Care with positive cashflow YTD 2021 (as of 9/30/21) • Focus on Driving Healthcare Value For Populat
Slide 5: Our Mission: To change the way health care is delivered
4 Our Mission: To change the way health care is delivered 1) “Value-based programs reward health care providers with incentive payments for the quality of care they give to people with Medicare. Value-based programs also support our three-part aim: (1) Better care for individuals, (2) Better health
Slide 6: Evolent Value Proposition: Enabling Success in Value-Based Care
5 Evolent Value Proposition Enabling Success in Value-Based Care PATIENTS PAYERS PROVIDERS ✓ Lower Costs ✓ Better Outcomes ✓ Better Access Evolent partners with payers to enable ✓ Stronger Cost Control (i.e., lower Medical Loss Ratio) ✓ Lower Premium Costs and Higher Quality To Members Evolent partn
Slide 7: Providing Intelligent Clinical and Administrative Technology Services
6 Providing Intelligent Clinical and Administrative Technology Services Value-Based Care Ecosystem Next-Generation Payers Independent Physician Groups Risk Bearing Ambulatory Providers Traditional Payers Oncology / Cardiology Specialty Benefit Management Companies Primary Care Non-Employed Primary C
Slide 8: Why Evolent Health? Investment Considerations
7 Why Evolent Health? Investment Considerations Execution Drives Shareholder Value Efficient Capital Allocation Strong and Expanding Margins Compelling Long-Term Organic Growth Commitment to Shareholder Value
Slide 9: Investment Considerations: Compelling Long-Term Organic Growth
8 Investment Considerations >30% Non-GAAP Revenue CAGR1 Since 2019 • Anticipate $884M-$900M in total revenue in 20212 – annual growth over 30% since 2019 excluding revenue from divested assets1 • Target of mid-teens annual growth on revenue by 20243 • Revenue mix of approximately 60% new customers a
Slide 10: Multifold Growth Opportunity Within Existing Partnership Base
9 Multifold Growth Opportunity Within Existing Partnership Base Illustrates Long-Term Growth Potential New Century Health Example Evolent Care Partners Example $5 $10 $50+ $210+ MSSP Shared Savings MSSP Network Expansion New Line of Business: Capitation 25% Capture of Total Market Potential Single M
Slide 11: Investment Considerations: Strong and Expanding Margins
10 Investment Considerations Mix Shift, Scale, Operating Leverage Drive Margin Expansion • Adjusted EBITDA margin 6.4%1 YTD 9/30/21, target of growth in mid-teens2 during 2024 • Adjusted EBITDA and cash flow positive through Q3 2021 with multiple opportunities for growth and expansion • Mix shift to
Slide 12: Investment Considerations: Efficient Capital Allocation
11 Investment Considerations Relatively Low Capital Intensity + Cash Flow = Enhanced Returns Efficient Capital Allocation • Generate sufficient cash flow from operations to support organic growth • Capital expenditures1 equal approximately 2.5% of year-to-date 2021 revenue • Selective, accretive M&A
Slide 13: Agenda
12 AGENDA Investment Considerations Financial Model, Capital Allocation, and Outlook Evolent Health Overview Segment Overviews
Slide 14: Evolent's leading technology platforms drive proven results
13 With over a decade of experience creating value-based care models, Evolent’s leading technology platforms drive proven results The Evolent Clinical Solutions Value Model PREDICTIVE MODELING: ✓ Actuarial Science ✓ Machine Learning ✓ Expert Medical Panels DATA AGGREGATION: ✓ Collection of healthcar
Slide 15: The Evolent Clinical Solutions Value Model: Proven Results
14 The Evolent Clinical Solutions Value Model Proven Results 7-10% first year savings to payer for each specialty1 >20% savings for payer in long-term1 $25,000 first year income increase for ECP PCPs2 7:1 savings for every dollar of direct ECP cost invested2 Proven ResultsClinical Technology Platfor
Slide 16: Clinical Solutions Segment Value Model: New Century Health Example
15 The Evolent Clinical Solutions Segment Value Model New Century Health (NCH) Example ROOTED IN CLINICAL EVIDENCE WITH SUBSTANTIAL COST SAVINGS Breast Lung Colorectal Level 1Level 2 Average Cost Per Treatment2 BASED FOREMOST ON QUALITY Advisory Board $ Practicing Physicians Physician Trade Organiza
Slide 17: NCH Performance Suite Generates Immediate and Ongoing Savings
16 $90 $93 $95 $98 $100 $81 $82 $82 $82 $83 Year 1 Year 2 Year 3 Year 4 Year 5 The Evolent Clinical Solutions Segment Value Model New Century Health Example: NCH Performance Suite Generates Immediate and Ongoing Savings Total Medical Expense on Oncology & Cardiology Illustrative Savings for Medicare
Slide 18: Evolent Care Partners (ECP) Example
17 Empower primary care physicians with a turnkey platform for accountable care Generate savings and income potential via the Medicare Shared Savings Program (MSSP) Increased compensation and higher efficiency for physicians and improved quality of care and health outcomes for patients The Evolent C
Slide 19: Evolent Health Services Value Model
18 End-to-end administrative and clinical platform to improve payer efficiency and grow value-based care success Evolent Health Services Value Model Back Office Plan design & promotion Provider network & clinical performance Claims intake & processing to resolution Health plan regulatory services &
Slide 20: Agenda
19 AGENDA Investment Considerations Financial Model, Capital Allocation, and Outlook Evolent Health Overview Segment Overviews
Slide 21: Evolent Health Financial Models
20 Evolent Health Financial Models1 Services Monetized In Two Ways MONTHLY RECURRING FEES MONTHLY CAPITATION FEES 40% of TTM Total Revenue • Fixed per member per month fee based on services provided • May include upside for shared savings based on performance • Margin driven by scale, product differ
Slide 22: Quarterly Non-GAAP Revenue Trend
21 $121.4 $113.5 $121.6 $136.8 $161.9 $153.2 $160.5 $176.0 $207.9 $218.0 $218.9 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Quarterly Revenue Excluding Divested Assets ($M)1 Quarterly Non-GAAP Revenue Trend Top Line Drivers ✓Historically ~60% of total growth driven by new custo
Slide 23: Margin Dynamics
22 Margin Dynamics NCH Performance & ECP Margins Mature By Partner Over 2-3 Years 1) Non-GAAP measure, see “Non-GAAP Financial Measures” for definition and Appendix A for reconciliation to GAAP. Consolidated net income margin for 2H 2019, 2020 and the nine months ended 9/30/21 were (59.2)%, (36.1)%,
Slide 24: Capital Allocation Priorities
23 Capital Allocation Priorities Disciplined Core Accelerating M&A Efficient Capital Structure • Ensuring that our products and teams are world-class, enabling strong customer satisfaction, retention, growth and profitability • Continued strong annual R&D investment • Disciplined use of M&A capital
Slide 25: Financial Outlook
24 Financial Outlook We will provide formal guidance on 2022 when we announce Q4 2021 results in late February 2022 Preliminary Outlook 2021 Outlook Reaffirm Total Revenue; Meet or Exceed Adjusted EBITDA We anticipate 2021 full year revenue of $884M - $900M1, 30%+ y/y growth, excluding revenue from
Slide 26: Execution Drives Shareholder Value: Key Takeaways
25 Execution Drives Shareholder Value Key Takeaways Efficient Capital Allocation Strong and Expanding Margins Compelling Long-Term Organic Growth Commitment to Shareholder Value
Slide 27: Appendix
26 Appendix
Slide 28: Non-GAAP Financial Measures
27 Non-GAAP Financial Measures In addition to disclosing financial results that are determined in accordance with GAAP, we present and discuss certain non-GAAP financial measures, as supplemental measures to help investors evaluate our fundamental operational performance. Revenue Excluding Divested
Slide 29: Appendix A – Adjusted EBITDA Reconciliation
28 Appendix A – Evolent Health, Inc. Adjusted EBITDA Reconciliation TTM 9/30/2021 Guidance ($ in millions) 2H 2019 2020 YTD Q3 2021 Consolidated Clinical Solutions Evolent Health Services Corporate Q4 2021 YTD Q4 2021 Net loss attributable to common shareholders of Evolent Health, Inc. $(223.6) $(33
Slide 30: Appendix B – Quarterly Revenue Excluding Divested Assets
29 Appendix B – Quarterly Revenue Excluding Divested Assets ($ in millions) Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 TTM Q3 2021 Total revenue $154.3 $149.7 $180.0 $205.0 $221.4 $217.3 $239.6 $246.5 $215.1 $222.1 $222.5 $906.2 Less: Divested assets 32.9
Slide 31: Appendix C – Net Leverage Ratio and Available Cash
30 Appendix C – Net Leverage Ratio and Available Cash ($ in millions) 9/30/20211 Short-term debt, net of discount $26.7 Long-term debt, net of discount 211.3 Total debt, net of discount 238.0 Net discount and deferred financing costs 78.3 Principal amounts of short-term and long-term debt 316.3 Less
Evolent Health — 40th Annual J.P. Morgan Healthcare Conference (January 2022) on 6ix