EVH

Evolent's headline FY2025 numbers look catastrophic — revenue fell 26.6% to $1.88B, net loss ballooned to -$535M from -$61.6M, and EPS was -$5.07 — but the MD&A shows the revenue drop is largely mechanical rather than a collapse in demand. Management attributes $447.3M to moving one customer from the risk-bearing Performance Suite to the Specialty Technology and Services Suite and $267.4M to narrowing scope, both 'accompanied by significant reductions in medical claims expense.' In other words, Evolent shed low-margin claims-pass-through revenue: cost of revenue fell even faster (-32.5%), cost of revenue dropped to 78.7% of sales from 85.6%, and the ex-ECP Medical Expense Ratio improved sharply to 89.0% from 96.0%. Crucially, operating cash flow was actually positive $38.8M (up 107%), so the enormous GAAP loss is dominated by non-cash impairment/charges tied to the shrinking book, not cash burn.

That reframes EVH from 'dying' to 'distressed and de-risking,' but the risks are real and structural. The company has now lost money in each of the last five years (2021-2025), retained earnings sit at -$1.32B, stockholders' equity was halved to $415M, and long-term debt nearly doubled to $971M after the 2031 Notes issuance — against just $152M of cash. Liabilities/equity is 3.57x and ROE is -128.7%. With a $637M market cap and ~$1.45B enterprise value, debt exceeds the equity value; the balance sheet, not the P&L, is the binding constraint. The 2031 Notes refinanced the 2025 Notes, buying runway, but leverage remains the dominant risk if margins don't keep improving.