Evolent Health Inc (NYSE:EVH) presented its third-quarter 2025 financial results on November 6, 2025, revealing sequential revenue growth but facing investor skepticism amid profitability concerns. Following the earnings release, Evolent’s stock dropped 5.51% to $6.35, approaching its 52-week low of $5.98, as the company’s earnings per share of $0.05 missed analyst expectations of $0.11 by 54.55%.
The healthcare solutions provider highlighted its revenue growth and Adjusted EBITDA improvement in its presentation, but investors appeared more focused on the company’s rising leverage and shifting business mix, particularly the declining Medicare segment.
Quarterly Performance Highlights
Evolent reported Q3 2025 revenue of $479.5 million, representing 8% sequential growth and slightly exceeding market expectations by 2.58%. The company’s Adjusted EBITDA reached $39.0 million, a 23% year-over-year improvement, though this positive metric was overshadowed by the significant EPS miss.
The quarter saw Evolent secure two new revenue arrangements – one in its Performance Suite and another in its Technology and Services Suite – bringing the year-to-date total to 13 new signings. Management noted that normalized oncology trend was running favorably at just under 11%.
As shown in the following quarterly highlights:
Detailed Financial Analysis
A deeper examination of Evolent’s financials reveals significant shifts in the company’s business mix. Revenue by line of business shows Medicaid increasing from 35% to 47% of total revenue year-over-year, while Medicare decreased from 38% to 27%. This shift reflects broader challenges in the Medicare Advantage market that were acknowledged during the earnings call.
Similarly, the company’s Performance Suite revenue decreased from 70% to 60% of total revenue compared to Q3 2024, while other segments saw modest increases in their proportional contribution.
The following breakdown illustrates these shifts in revenue composition:
Evolent’s capital structure metrics reveal a concerning trend in the company’s leverage. Net Debt to Last Twelve Months (LTM) Adjusted EBITDA increased dramatically from 2.8x in Q3 2024 to 6.7x in Q3 2025, reflecting both higher debt levels and lower LTM Adjusted EBITDA. Total debt rose from $599.7 million in Q3 2024 to approximately $1.06 billion in Q3 2025.
These capital metrics are detailed in the following table:
The company’s reconciliation from net loss to Adjusted EBITDA shows a slight improvement in net loss attributable to common shareholders, from $(31.2) million in Q3 2024 to $(26.9) million in Q3 2025. However, the adjusted figures mask underlying profitability challenges that appear to concern investors.
The following reconciliation provides further context:
Strategic Initiatives
Despite financial headwinds, Evolent continues to pursue strategic initiatives to strengthen its market position. The company is on track to close its ECP divestiture by the end of 2025, with plans to use the $100 million in proceeds to repay senior term debt, which could help address leverage concerns.
During the quarter, Evolent also took several actions to manage its capital structure, including:
- Issuing $166.8 million of 4.50% 2031 Notes and repaying $167.4 million of 2025 Notes
- Repurchasing 4.4 million shares of common stock for $40.0 million
- Exchanging $175.0 million of Series A Preferred Stock for a second lien term loan
- CEO Seth Blackley emphasized during the earnings call that the company has "developed the leading specialty platform in the industry" and noted that challenges faced by customers in membership and utilization are creating "a very significant growth opportunity for Evolent."
The financial outlook is summarized in the following projection:
Evolent’s business drivers show relatively stable metrics for average lives on platform and pricing across recent quarters, though the company faces challenges in maintaining growth momentum amid shifting market dynamics.
The following table details these operational metrics:
While Evolent’s presentation emphasizes revenue growth and new business wins, the market reaction suggests investors remain concerned about the company’s profitability trajectory and increasing leverage. As Evolent approaches the end of 2025, its ability to successfully integrate new business, manage debt levels, and improve bottom-line performance will be critical factors for investor confidence moving forward.
Full presentation:
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