Piper says Evolent Health guidance may be at risk, but shares likely oversold

After Evolent Health’s largest client, Passport Health Plan, reportedly claimed in a lawsuit that Kentucky rate cuts have affected it so dramatically that the Medicaid managed care company could be insolvent by March, Piper Jaffray analyst Sean Wieland noted that Passport represents about $80M in revenues for Evolent. If it is assumed that Evolent loses Passport as a client, Wieland believes Evolent’s 2019 guidance is at risk. However, he also estimates that losing the contract entirely would amount to a $3 per share impact to valuation, stating that Evolent shares are likely oversold on the lawsuit news. Wieland keeps an Overweight rating on Evolent Health shares, which are down 7%, or $1.25, to $15.56 in afternoon trading.
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