Welcome to Evolent Health's Earnings Conference Call for the first quarter ended March 30, 2022. As a reminder, this conference call is being recorded. Your hosts for the call today from Evolent Health are Seth Blackley, Chief Executive Officer, and John Johnson, Chief Financial Officer. This call will be archived and available beginning later this evening via the webcast on the company's Investor Relations website, which can be found at ir.evolenthealth.com. I will now hand the call to Seth Frank, Evolent's Vice President of Investor Relations. Please go ahead.

Thank you and good evening. This conference call will contain forward-looking statements under U.S. federal laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. A description of some of the risks and uncertainties can be found in the Company's reports that are filed with the Securities and Exchange Commission, including cautionary statements included in our current and periodic filings. For additional information on the Company's results and outlook, please refer to its first quarter press release issued earlier today. Finally, reconciliations of non-GAAP measures discussed during today's call to the most direct comparable GAAP measures are available in the summary presentation available in the Investor Relations section of our website, or in the Company's press release issued today and posted on the Investor Relations section of the Company's website, ir.evolenthealth.com, and the Form 8-K filed by the company with the SEC earlier today. During management's presentation and discussion, we will reference certain GAAP and non-GAAP figures and metrics that can be found in our earnings release, as well as a summary presentation available on the Events section of Evolent's website, ir.evolenthealth.com. And now I'd like to turn the call over to Evolent's CEO, Seth Blackley.

Good evening, everyone. Thank you for joining the call. I'll start by summarizing our first quarter results and discussing progress on our three core operating priorities. John will discuss the numbers in more detail and share our updated guidance. As always, we will close with the Q&A. Turning to our results, the first quarter marks a strong beginning of the year for the Company on the heels of a successful 2021 with continued growth, margin expansion, and strategic product innovation. For the first quarter of 2022, Evolent reported total revenue of $297.1 million, a growth of 38% over Q1 2021. Adjusted EBITDA for Q1 2022 was $24.3 million, a 63% growth over Q1 2021. Significant flow-through of revenue growth resulted in adjusted EBITDA margin expansion of 130 basis points to 8.2%, compared to 6.9% in the first quarter of 2021. Our guidance for the quarter was also successful. We exceeded the high end of our revenue outlook range for the quarter of $280 to $295 million, and we delivered at the high end of our outlook for first quarter adjusted EBITDA, which was $20 million to $25 million. We ended the quarter covering 20.3 million lives on all platforms compared to 11.6 million one year ago. Growth is 74% driven primarily by New Century Health and Evolent Care Partners, which together constitute our Clinical Solutions from a segment reporting perspective. Revenue from New Century Health and Evolent Care Partners combined grew 46% year-over-year, while Evolent Health Services, our administrative segment, grew 26%. This highlights balanced growth across the enterprise with continued outsized growth from the clinical segment. I want to take a moment to delve a little bit deeper into New Century Health, specifically, given our strong continued growth in that area and what we believe to be significant potential growth ahead in that business. There are two dynamics driving the strong growth at New Century. The first one is the addition of new lives to the platform. New Century today only touches approximately 6% of the U.S. population, so there remains a large opportunity to add revenue and margin through both the addition of new client logos and geographic and product expansion with existing partners. For example, New Century's largest clients cover approximately 40 million lives across the country, but New Century only serves approximately 10 million of those lives today. The second growth dynamic is the up-sell from our New Century Tech and Services suite to our risk-based performance suite in one or more specialty areas. With almost 17 million lives on the Tech and Services platform today, this up-sell represents a significant ongoing opportunity for future growth. I want to turn now to our continued progress across our core operating priorities: one, strong organic growth; two, expanding margins; and three, optimal capital allocation. Looking at the first priority of organic growth, I'll highlight a few of the new opportunities we recently signed that help continue to drive our growth trajectory in 2022 and 2023. Today, we're pleased to announce two new operating partnerships in the Clinical segment and a significant life expansion in 2023 with an existing EHS client. In February, we announced four new partnerships, so these two new announcements take us to six thus far for the current year versus our annual target of six to eight. So we're on track for 2022 and increasingly well set up for 2023. As a reminder, we include new Performance suite wins with existing clients towards our annual operating partner count given the financial size and buying dynamics of these relationships. Turning to the detail on the partner announcements, we're delighted to announce the expansion of our relationship with Avnet to add our New Century Health Performance suite for oncology. Headquartered in Miami, Avnet is a highly respected not-for-profit health plan that has been in operation for more than 50 years, providing its approximately 230,000 members with high-quality, cost-effective care. Avnet has been a valued client for our Technology and Services and our cardiology solution, and we're excited to now add Avnet's Medicare members to our Performance suite for oncology. In addition, we have placed another vendor to help Avnet manage radiation oncology quality for a majority of their commercially insured membership through our Tech and Services platform. Our second announcement today is our new Evolent Care Partners agreement with a significant independent physician group headquartered in California. This organization has over 200 physicians and is the largest in the county where it operates. The physician group is looking for opportunities to improve care for their members within the Medicare fee-for-service population. After evaluating different options, including the direct contracting model, they elected to collaborate with Evolent Care Partners through our Medicare Shared Savings Program, ACO. We've already begun working with this group for a portion of their primary care practices and expect to expand this relationship over time. Based on our years of experience facilitating independent practices' transition from fee-for-service to value, we think the Medicare Shared Savings Program-enhanced track ACO often provides the best initial value-based care opportunities for providers, payers, and patients. As said, we are increasingly adding private payer Performance suite contracts, as illustrated with our recently announced Blue Cross Blue Shield North Carolina arrangement. We also continue to evaluate the ACO reach program and other models as they mature. Turning to Evolent Health Services, today we announced that following the successful implementation of 330,000 new individual family plan commercial lives and Bright HealthCare on January 1 of this year, we anticipate an expansion to include all of Bright's IFP commercial membership in 2023. Across all of our solutions, we believe the macro environment continues to be a tailwind for growth across our enterprise with elevated medical expenses and inflationary pressures across the country creating increased urgency for health plans and other risk-bearing entities to drive quality of care while lowering their overall cost burden — which is the core proposition of our value-based care solutions. With strong revenue growth and new business opportunities progressing, let's talk about our progress towards continued margin expansion, which is the second core operating priority for Evolent Health. Going forward, we anticipate continued strong revenue growth in our Clinical Solutions, specifically from a higher number of lives on our Evolent Care Partners and New Century Health Performance suite solutions, both from net new logos and from Technology and Services suite upsells. As discussed previously, growth of our Performance suite solutions across New Century Health and Evolent Care Partners typically will drive higher growth rates, solid year one dollar adjusted EBITDA contribution, slightly lower year one adjusted EBITDA margin percentages, and higher annual adjusted EBITDA margin dollars and percent as contracts mature. As shared last quarter, we continue to believe that adjusted EBITDA dollars are the best indicator to measure success relative to our margin expansion targets, and we continue to feel good about our progress towards our medium-term margin goals. Let's turn to our third core operating priority, optimizing shareholder capital allocation. When we talk about investment, we aim to drive innovation, value, and market leadership within our performance-based solutions while maintaining appropriate leverage and a flexible balance sheet to support incremental long-term growth. Our first priority for capital deployment is always building and strengthening internal capabilities. In addition to organic development, we also consider M&A as an avenue to address assets that make sense financially and strategically. Our primary goal for acquisitions is to create shareholder value by adding capabilities to support our core strategic and operating objectives. The acquisition of Vital Decisions, which closed in October, and successfully integrated into Evolent Health, we believe is illustrative of the types of accretive M&A opportunities available. Through this transaction, we added important capabilities in both, increasing the value creation in New Century Health and expanded our portfolio by adding a technology-enabled advanced care planning solution. In the early stages of post-integration, we're seeing positive indications that pairing New Century’s core expertise in managing highly complex, chronic, and acute illnesses with Vital Decisions' offerings is very compelling to our Performance suite line. Two quarters after closing the acquisition, the reception of the solution in the market has been positive. We believe payers will see the value and economic benefits of incorporating these services into their approach to managing health populations. For example, Vital Decisions went live with a pilot program over the last few weeks with one of New Century's largest Performance suite clients, potentially unlocking significant clinical and financial benefits. We look forward to expanding Vital Decisions' advanced care planning solutions across several of our other New Century clients later this year. When we speak with our payer and risk-based provider clients, we often hear them say that they prefer fewer partners or vendor touch points in value-based care generally. That is, they would prefer fewer partners who can each provide more comprehensive services, especially in the specialty care areas where there is significant fragmentation in the vendor ecosystem. But we often have our clients asking us directly if we can cover additional specialties or capabilities within our existing specialties. Given that dynamic and considering our market leadership within New Century Health, we continue to see opportunities to expand our platform through accretive, targeted M&A. Over time, we also see a significant opportunity to drive additional, profitable, long-term growth as we build a durable leadership position as a top independent specialty platform in the market while adhering to our principles around disciplined capital allocation. To conclude, we see continued strength across the business in terms of operational success, growth, and long-term market leadership. The three core operating priorities for managing the company continue to guide me, the management team, and our Board of Directors. By executing on these priorities, we believe we'll be able to invest in product innovation, which will extend our market leadership, enhance our financial results, improve our shareholder returns, and ultimately, help us achieve our mission of using value-based care to help change the way healthcare is delivered in the United States. I'll now ask John to give some detail on the numbers this quarter and provide our outlook for 2022 in the second quarter.

Good afternoon, everyone. We're pleased with our first quarter results, with our key metrics coming in ahead or near the high end of the guidance we communicated in February. We are building upon the momentum we carried into 2022. In total, our quality and cost management solutions covered 20.3 million lives during Q1, and we're well situated to grow that reach both across the remainder of this year and into 2023. We outperformed the high end of our revenue range for the quarter due to stronger-than-projected performance payments within both our Clinical Solutions and Evolent Health Services segments. Our adjusted EBITDA was likewise driven by continued strong outcomes in our Performance-based arrangements. With typical seasonality in working capital during the first quarter, our operating cash flow declined versus the beginning of the year in line with our expectations. We anticipate during the remainder of 2022 to build upon our cash flow momentum from 2021 with continued focus on our disciplined capital allocation strategy. Now, let me take you through consolidated results before turning to segment-specific results and ending with an update on guidance. Revenue in the quarter was $297.1 million, a 38% increase compared to the same period in the prior year. This was due to growth from new partner additions, as well as same-store sales growth across our enterprise. Adjusted EBITDA for the quarter was $24.3 million, compared to $14.9 million in the same quarter of the prior year. This represents year-over-year adjusted EBITDA growth of 62.7% and margin expansion of 123 basis points. Turning to our segment results. Within our Clinical Solutions segment, revenue in the first quarter increased 46.1% to $190.2 million, up from $130.2 million in the same period of the prior year. This strong revenue growth is due to continued same-store sales and new client growth, including the previously announced partnership with Blue Cross Blue Shield of North Carolina, where we are now managing over 10,000 Blue Premier members on our Evolent Care Partners platform. Q1 adjusted EBITDA from Clinical Solutions was $22.2 million compared to $16 million in the prior year, driven by continued strong performance at New Century Health. As previously discussed, the growth at Evolent Care Partners is expected to have lower-than-average year one margin, progressively ramping to more meaningful profitability over approximately three years. Membership in our Performance suite for Clinical Solutions was 1.5 million compared to 1.4 million in Q1 of the prior year, with a PMPM fee of $38.07 versus $26.32. This increase in PMPM was principally driven by the addition of the Blue Cross Blue Shield of North Carolina lives where the full revenue premium is recognized. Membership in our Technology and Services suite for Clinical Solutions was $16.7 million relative to $8.2 million in Q1 of the prior year, with a PMPM fee of $0.38 versus $0.43 in Q1 of the prior year. Within our Evolent Health Services segments, first quarter revenue net of intercompany eliminations increased 25.9% to $106.9 million, up from $84.8 million in the same period of the prior year. Growth in this segment was driven by new client go-lives, including the previously mentioned addition of approximately 330,000 incremental Bright HealthCare lives. We also benefited from higher-than-projected performance-based revenue in the quarter, which was largely offset by certain pass-through and one-time costs. Membership in our Performance suite for Evolent Health Services was 2.1 million compared to 2.0 million in Q1 of 2021, with a PMPM fee at $19.17 versus $14.60. Adjusted EBITDA from our Evolent Health Services segment for the quarter was $8.2 million compared to $5.9 million in the prior year, demonstrating the progress we have made in driving significant unit cost reductions across our operating model. Finally, corporate costs decreased 12.2% to $6.2 million from $7.0 million in the same period of the prior year. The steps we have taken to lower overhead costs and become more efficient continue to benefit our consolidated adjusted EBITDA margin even in the face of continued growth. Turning to the balance sheet, we finished the quarter with $210.2 million in cash, cash equivalents, and investments, including $53.9 million in cash held in regulated accounts related to the wind-down of Passport. Excluding cash held for Passport, we have $156.3 million of available cash, a decrease of $59.3 million versus the end of the fourth quarter. As I mentioned, this decrease was principally driven by seasonality in working capital, including year-end incentive compensation. We expect to be meaningfully cash flow positive across the remainder of the year. Cash deployed for capitalized software developments in the quarter was $6.4 million. Finally, turning to guidance based on continued strong performance, we now expect total revenue for the year to be in the range of $1.16 to $1.21 billion. We're raising our outlook for adjusted EBITDA to between $85 and $95 million for the year. For the second quarter specifically, we are forecasting adjusted revenue of $290 million to $305 million, and we are forecasting adjusted EBITDA at $18 million to $23 million. As a reminder, you can continue to expect quarters one and three to be high points for adjusted EBITDA this year, based on the timing of Performance revenue. We continue to forecast between $25 and $30 million in annual capitalized software development expenses. With that, I will turn the call back to the Operator to take your questions.

Thank you. We will now start the question-and-answer session. At this time, we will take a brief pause to gather our participant list. Our first question comes from Richard Close with Canaccord Genuity. Please proceed.

Great. Thanks for the questions and the time today, and congratulations on the progress. Seth, could you discuss the Oncology Care Partners relationship and also the recently announced Strive Health? I would like you to outline the structure of each of those relationships, what the opportunities are, and from a financial standpoint, how relevant are they for 2022 or how should we view their contributions for 2023?

Yes. Great, Richard. Thanks for the question. So I think the way we think about this part of our business is it's around innovation, right? Across all three parts of the business, Evolent Care Partners, Evolent Health Services, New Century, we think about innovation in three buckets: one is, things we can build internally, and that we do build internally, software development and the like. Second is M&A, accretive M&A that we utilize, and then in the third bucket, we have partnerships from time to time, like the couple that you mentioned, they may be in Evolent Care Partners, they may be in New Century, they may be in Evolent Health Services. They tend to be very capital-light or zero capital deployed but add some sort of innovation. In the case of Evolent Care Partners, particularly, oncology Care Partners that you mentioned, we see certain markets where there needs to be new oncology capacity, and having a separate company that you mentioned can help us in those markets adds value without taking our capital. It's really part of our broader innovation methodology that we leverage.

I believe the financial aspect of your question is centered around market leadership, which helps us maintain strong growth rates over time and meet our earnings targets and expectations. Therefore, I wouldn't necessarily view it as an additional financial factor in the short term.

Okay. But I'm trying to understand if oncology Care Partners, which I believe is a joint venture, would involve a revenue share. And how does Strive relate to that? It seems similar to your performance in cardiology or oncology regarding kidney care. Is that also a revenue share?

Hey, Richard, this is John. I will take some of those. On both, think of them as partners in our networks. So just like we partner with a number of oncology groups across the country in New Century. Oncology and Care Partners will be part of our network as they grow, and so we're happy to support them in that way. As Seth mentioned, it's not an investment that we've made. On Strive, think of that as a classic sub-capitation agreement where for the Evolent Care Partners lives, which as you know, are mostly in the Medicare Shared Savings Program, we were seeking a partner to help us manage the costs of kidney care, and we selected Strive to do that. We're excited to roll that out as a pilot with them in a couple of markets and see what kind of savings they can drive on our population.

Okay. Thank you.

Welcome.

Hi, guys. Thanks for taking the questions. I'll add, Mike, congratulations on another strong quarter. Seth, you've talked about in your prepared comments, the massive opportunity you have, both the up-sell, New Century, and then cross-sell solutions into that marketplace. So I'm curious if you can speak a little bit to specifically what you're seeing there with clients and with existing clients that are already using you and seeing such good results, how do you push the needle forward more rapidly there to drive growth in that segment from a sales or investment standpoint? Thanks.

Good question, Ryan. So I mean it is down to two factors, right? To your point, we've got across our biggest clients. We only have say, 10 million lives covered out of their 40, so this is an opportunity to go to different geographies or different specialties or something like that. We're not touching it all today. The other vector is out of the base of the Technology and Services lives up-selling them to the Performance suite even if they're already our lives that 50-fold increase that we talked about. Those are the two opportunities. They're each a little bit different, right? On the up-sell opportunity of going from Tech Services to Performance. We already have the data. We already are supporting the partner in some way, shape, or form. We can make very specific, credible data in front of them about the opportunity to up-sell to the Performance suite, and so those things are happening on an ongoing basis. We've obviously talked about several of those with a couple of our big national payers in the last few calls. They are going well, and it's really about increased savings for them in those markets. And particularly where they might have the biggest pain points within their business. With the other dimension where we're not touching a lot at all today to brand new markets or something like that, that same message is true, but the sales cycle is a little bit different. Because we don't yet perform services on those markets. Across both the opportunities, the common theme is, where is there a pain point for our customer? The good macro news for us is there's a lot of challenge in managing those segments, and I think we have a unique ability to help manage them at a lower rate than they can on their own. And so we're seeing a lot of strong progress across both dimensions.

I appreciate the additional information. You mentioned Vital Decisions, which involves an existing client conducting a pilot program. Can you provide more details on that? Is it a small initial engagement with the potential for growth, or is there something else we should know?

Yes. So this is one of our larger Performance suite relationships today, so we're already managing the population and the costs, and we have relationships with these physicians and their patients today. So it's only natural that we would be able to stitch in the capabilities that Vital brings to help manage that aspect of, say, cancer patient or a cardiology patient and our team and Vital's have the right abilities from an empathy perspective, getting in with the physician and the patient and their families to have those conversations. We're seeing a lot of positive receptivity in terms of the clinical leadership of these plans. Yes, that makes sense, let's bring it in, stitch it in. The pilot is with one of our bigger partners. It is rolling out pretty broadly across that population quickly. We don't really sell it; we're bringing the capabilities to bear because it's the right thing for the patient first and foremost. It often results in better care and longer lifespan for the patient but also has a savings opportunity that can accrue back to us over time, quality first always. That's how we do it, and it's working quite well.

Perfect. And then two more and I'll get off. One for John very quickly on the Performance-based fees. Were those generally in line with your expectations during the quarter or was there any pull-forward that helped drive the upside to sales and EBITDA?

Yeah, good question, Ryan. I would say they came in slightly ahead of our projections, but not from a pull-forward, but based on the final read of the data that we got to base those performance fees on. So nice to see those in the quarter.

Okay. And then the last one, Seth, you always talked about the third investment platform being M&A opportunity. I'm curious, with the weakness we've seen in the public equity markets, and in particular with the digital health companies of late, have you seen a reset in seller expectations such that you're seeing more attractive opportunities to enhance your product or service offering through M&A going forward, and might that cause a reallocation of capital from internal to external M&A opportunities going forward? Thanks.

Yeah, I think what we'd say about the M&A, we don't need to do it, Ryan. We've had this really good organic path ahead of us and we feel really confident in that path. The times when we will do it, Ryan, there need to be a couple of things present. One is we'd see a strategic fit. It needs to align with what we're doing at the core. It needs to provide a short-term win, so it needs to be accretive quickly. The third thing is it needs to build long-term strategic upside from the transactions. I think that's our main framework for it. When the prices of the assets go down a little bit, it can help on the short-term accretion thing. We are seeing a little bit of that right now, but the broader point is that especially within the specialty space, there are interesting opportunities to meet all three of those criteria, so it helps the business in both the short and long-term. We definitely see some opportunities out there. I think to your point, they should be more attractive even in the next 6 months to 12 months ahead as the markets adjust a little bit.

Right. Great. Thank you so much, guys.

Thanks, Ryan.

Hi, guys. Thanks for taking the question. Maybe just a follow-up to Ryan's question. You talked about the opportunity to expand beyond your existing specialties. What areas are your customers asking for that might make sense for your portfolio?

So I think it's interesting, and we certainly thankfully hear a lot about oncology, cardiology, and end-of-life care. Those are definitely the ones that we're at are spot on. There are some other larger growing areas, such as musculoskeletal care. An example of that is helping the patient navigate the process more effectively, which is talked about and other higher-cost areas like neurology. There are certainly opportunities across the aforementioned areas, and I think the most important factor is we're getting a lot of our customers coming to us, saying they want us to do more. I think we're doing a good job delivering on what we've got in front of us, but there's also a dynamic where they prefer to consolidate services with fewer partners, and so our ability to add more is certainly part of the commentary around M&A, but also could be organic additions. We're quite excited about the opportunities around New Century in general.

That's great. You continue to add new partnerships at the rate you always have. But you've also got a nice base now of larger existing clients. So was just wondering, how should we think about that composition between same-store versus new growth going forward? And might that look different? Or is that supportive of maybe higher growth than you've seen in the past?

Hey, Anne. This is John. I'll take that one. Typically, 60% of our growth has come from new partner ads, and about 40% has come from same-store expansions. Given the dynamic you described regarding the opportunity to further penetrate our existing customer base, we expect that to shift a little more towards the same-store side. Now, if that's 50/50 or 60/40, or the other way, it's not going to go 80/20. We continue to believe that there's a lot of new flags out there to plant, but we do see that dynamic happening. Throughout this year, just to mention it, is that conversion of lives that are in the Tech and Services suite today to the Performance suite. So there may not be as much change on the total life count, but more of a change in the aggregate PMPM as we're able to drive more revenue, profitability, and ultimately, more value for the customer and the patient through that Performance suite.

That's really helpful. Thanks. And maybe just one more housekeeping. Perhaps I missed it, but was hoping maybe you could provide some color on the lives and PMPM of the new partnerships. And then also just how to think about the expansion at Bright Health and maybe the timing of that.

Let me address those in order. Regarding Bright Health, as we mentioned, we anticipate having all of their ISP lives on our platform by January of next year. They mentioned this morning about a million lives plus or minus their growth, that will be our membership. We are excited to continue to grow with them and provide really strong service. As for the new partnerships, the main focus of this Performance suite is in the Medicare Advantage book of business, which is a fraction of their lives. Think about revenue impact for next year where we see that anticipated.

That's great. You continue to add new partnerships at the rate you always have. But you've also got a nice base now of larger existing clients. So was just wondering, how should we think about that composition of same-store versus new growth going forward? And might that look different? Or is that supportive of maybe kind of higher growth than you've seen in the past?

Thanks for taking questions. Maybe just a follow-up question around Vital Decisions. Seth, with the pilot, maybe I missed it from Ryan's question: When and how long do you expect these pilots to last, and do you see pilots as the primary way you're going to get Vital Decisions into your existing client base or do you see maybe this one pilot being a reference site for other clients to start using Vital Decisions going forward?

Yes. This pilot will flip into a full relationship later this year and is rolling out fairly quickly. We expect a couple more of these within this year, so we're not having issues getting our partners to adopt it. We won't need to rely solely on a pilot methodology. This is just where we are with this first big one, given the timing of the integration. Generally speaking, they will roll in and become part of the operational platform that is New Century Health, and so it feels good. We’re not having issues in terms of adoption.

As we look ahead to potential new clients at New Century Health, will Vital Decisions be included as part of a package or can it be selected as an option?

Yes, I think it'll often be part of it. It will be a conversation. Sometimes they can opt out, but I think it'll be more of an opt-out than an opt-in in most cases. It makes sense, right? When you're contacting the oncologists or cardiologists already stitching the same platform. So I believe it will be a default relationship.

Great. And then for my last question, regarding the fourth-quarter call, you mentioned that lives from the Molina expansions would increase in the Performance suite lives. However, it seems we are still at 1.5 million sequentially. How should we expect the ramp of those lives to materialize? Will it be weighted more towards the back half of the year, and similarly for Blue Cross Blue Shield, I believe you may have mentioned that, but I think I missed it.

Yeah, no sweat. The Blue Cross Blue Shield lives are included in the number as of now. The Molina Performance suite contracts went live in April, and we expect the other two will phase in at some point this quarter.

Okay, so we should expect step-up of around 500,000 in the second quarter or some of that step-up in the third quarter.

I would expect that is the magnitude of the step-up in the second quarter.

Hi. Congratulations on a very good quarter. For the Molina $75 million, how much of that was actually in Q1 2022?

A very little bit, very little. The majority of the relationships went live on January 1 and are going live later this quarter.

Okay. So the revenue beat happened despite the fact that most of that Molina will be in future quarters. And then with the Bright lives, what exactly are you providing to measure the cardiology or is it the oncology service? I'm just trying to get a sense for the PMPM fee.

Of course, the core services that we're providing for Bright are out of the Evolent Health Services segment, and that's the administrative platform, claims payments, the utilization management component, etc., for a portion of those lives. PMPM will vary by markets, scope, services, etc. Obviously, the best relationships with a number of different pricing models; overall, I think we said in the last call that somewhere between $7 and $11 PMPM seems to be a decent place to start.

So if we assume $10 per member per month, that's like a $120 million annual? How much is it on an annual basis? Is that like $120 million?

A little less if you use the midpoint of my $7 to $11 range overall, but yes, it's a large contract, and we're excited to grow with them.

That's a very large contract. Okay. And then what were the performance fees in the quarter that you recognized? What was the dollar amount?

Yes. I recall in our Evolent Health; this is in our Evolent Health Services segment principally where we saw that outperformance in that line this quarter. Those are relationships where we have upside with our customers based on the value that we're able to drive for them. Typically, that is based on savings that we can drive relative to a benchmark. We got some final data in the quarter that allowed us to recognize that amount in those areas, contributing to the top-line beat. As I mentioned in my prepared remarks, that was offset by some one-time costs associated with that revenue.

Okay. That's very helpful. I think there's a little bit of a delay in some Performance revenue and like Q3 of 2021 or something like that. Was it related to the fact that you finally got updated data to collect all that?

Yes. It was not. I mentioned at the outset of the year and again today, we expect quarters one and three of this year to be high points for Performance revenue. The third quarter impact is largely driven by the timing of the Medicare Shared Savings settlement files we received for Evolent Care Partners.

And then just the last one, and I'll hop off. In terms of like your TAM or your in-cell potential, I heard the phrase 50-fold. Can you put a dollar amount on that? Is it $4 billion? Just what are we looking at in terms of dollars?

So the way that we've tried to paint that picture is if you assume that we could penetrate those top customers by 25% with both oncology and cardiology Performance suite products, that would represent revenue in excess of $4 billion. So a significant opportunity there that we are obviously highly focused on attacking.

Okay. Fantastic quarter. Congratulations. Thanks. I'll hop back in the queue.

Thank you.

Thanks, David.

Hey Sandy. Yeah. I think the short answer is it’s pretty much status-quo with respect to our business. The reason is that almost everything we’re talking about today and all of our opportunities are really oriented back to the private payer risk-bearing provider markets, and the dynamics that are driving them are just the core dynamics of managing care. Those have been around for a long time and will continue to be here for a long time. We use value-based care to solve it, but if policy changes a lot or a little, that opportunity is still going to be there. We believe that in the current environment — positive elements of Evolent from a profile perspective, don’t think the macroeconomic environment really affects it that much. Recession happens, people unfortunately still get cancer, that cancer needs to be managed. Health plans are still trying to meet their numbers and need assistance. We feel good about our pipeline being in a really nice place a year from now, two years from now, which is somewhat independent of what happens in the macro environment. Thank you for everybody's time. We look forward to connecting in the days ahead. Have a good evening.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.