Evolent Health, Inc 10-Q for FY2026 Q3
Evolent Health, Inc. (EVH)
10-Q
2026-11-05
For: 2026-09-30
View Original
Added on
November 05, 2026
About this 10-Q
Evolent Health, Inc filed this 10-Q on November 5, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $725.37M
- up 51.3% from $479.53M a year earlier
- Net loss
- $23.57M
- compared with a net loss of $20.86M a year earlier
- Diluted EPS
- -$0.21
- compared with -$0.24 a year earlier
OPEN FOR POTENTIAL ARES CREDIT AGREEMENT DISCLOSURE
| UNITED STATES | ||
SECURITIES AND EXCHANGE COMMISSION | ||
WASHINGTON, D.C. 20549 | ||
_________________________
FORM 10-Q
_________________________
(Mark One)
For the quarterly period ended September 30, 2026
OR
For the transition period from to
Commission File Number: 001-37415
_________________________
(Exact name of registrant as specified in its charter)
_________________________
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||||||||||||||||||||
| , | , | , | ||||||||||||||||||||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||||||||||||||||||||
(571 ) 389-6000
Registrant’s telephone number, including area code
_________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes S No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes S No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No S
As of October 30, 2026, there were 113,105,519 shares of the registrant’s Class A common stock outstanding.
Evolent Health, Inc.
Table of Contents
| Item | Page | |||||||
Explanatory Note
In this Quarterly Report on Form 10-Q, unless the context otherwise requires, “Evolent,” the “Company,” “we,” “our” and “us” refer to Evolent Health, Inc. and its consolidated subsidiaries. Evolent Health LLC, a subsidiary of Evolent Health, Inc. through which we conduct our operations, has owned all of our operating assets and substantially all of our business since inception. Evolent Health, Inc. is a holding company and its principal asset is all of the Class A common units of Evolent Health LLC.
FORWARD-LOOKING STATEMENTS - CAUTIONARY LANGUAGE
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 not a historical fact and, without limitation, includes any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like: “believe,” “anticipate,” “expect,” “intend,” “estimate,” “aim,” “predict,” “potential,” “continue,” “plan,” “project,” “will,” “should,” “shall,” “may,” “might” and other words or phrases with similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to our ability to weather current dynamics, continue to expand our footprint, future actions, trends in our businesses, prospective services, new partner additions/expansions, our guidance and business outlook and future performance or financial results, the closing of pending transactions and the outcome of contingencies, such as legal proceedings and our intention to deploy up to $50 million toward reducing outstanding indebtedness by the end of the year. We claim the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA.
These statements are only predictions based on our current expectations and projections about future events. Forward-looking statements involve risks and uncertainties that may cause actual results, level of activity, performance or achievements to differ materially from the results contained in the forward-looking statements. Risks and uncertainties that may cause actual results to vary materially, some of which are described within the forward-looking statements, include, among others:
•the significant portion of revenue we derive from our largest partners, and the potential loss, termination or renegotiation of our relationship or contract with any significant partner, or multiple partners in the aggregate;
•the increasing number of risk-sharing arrangements we enter into with our partners;
•the growth and success of our partners and certain revenues from our engagements, which are difficult to predict and are subject to factors outside of our control, including governmental funding reductions and other policy changes;
•our ability to accurately predict our exposure under performance-based contracts;
•failure by our customers to provide us with accurate and timely information;
•our ability to recover the upfront costs in our partner relationships and develop our partner relationships over time;
•our ability to attract new partners and successfully capture new opportunities;
•our ability to offer new and innovative products and services and our ability to keep pace with industry standards, technology and our partners’ needs;
•our ability to maintain and enhance our reputation and brand recognition;
•our dependency on our key personnel, and our ability to attract, hire, integrate and retain key personnel;
•risks related to completed and future acquisitions, investments, alliances and joint ventures, which could divert management resources, result in unanticipated costs or dilute our stockholders;
•our ability to effectively manage our growth and maintain an efficient cost structure;
•risks related to managing our offshore operations and cost reduction goals;
•our ability to estimate the size of our target markets for our services;
•consolidation in the health care industry;
•competition which could limit our ability to maintain or expand market share within our industry;
•risks related to audits by CMS and other governmental payers and actions, including whistleblower claims under the False Claims Act;
•evolution of the healthcare regulatory and political framework;
•restrictions on the manner in which we access personal data and penalties as a result of privacy and data protection laws;
•data loss or corruption due to failures or errors in our systems and service disruptions at our data centers;
•liabilities and reputational risks related to our ability to safeguard the security and privacy of confidential data;
•our ability to obtain, maintain and enforce intellectual property rights and protect our trademarks and trade names, including from third parties alleging that we are infringing or violating their intellectual property rights;
•our ability to protect the confidentiality of our trade secrets;
•risks associated with our use of artificial intelligence (“AI”) and machine learning models;
•our use of “open-source” software;
•our reliance on third parties and licensed technologies;
•restrictions on our ability to use, disclose, de-identify or license data and to integrate third-party technologies;
•our reliance on Internet infrastructure, bandwidth providers, data center providers, other third parties and our own systems for providing services to our partners and operating our business;
•our ability to achieve profitability in the future;
•the impact of additional goodwill and intangible asset impairments on our results of operations;
•our obligations to make material payments to certain of our pre-IPO investors for certain tax benefits we may claim in the future;
•our obligations to make payments under the tax receivables agreement that may be accelerated or may exceed the tax benefits we realize;
•our ability to utilize benefits under the tax receivables agreement described herein;
•the terms of agreements between us and certain of our pre-IPO investors may contain different terms than comparable agreements we may enter into with unaffiliated third parties;
•our inability to obtain financing may result in a reduction in the ownership of our stockholders;
•the conditional conversion features, and changes in accounting treatment of the 2029 Notes and the 2031 Notes (as defined below), which, if triggered, may adversely affect our financial condition and operating results;
•our ability to raise funds necessary to settle conversions of our notes in cash, to repurchase our notes for cash upon a fundamental change or to pay the redemption price for any notes we redeem;
•interest rate risk and other restrictive covenants under our First Lien Credit Agreement (as defined below) and the second lien credit agreement, by and among the Company, Evolent Health LLC, as borrower (the “Borrower”), certain subsidiaries of the Company, as guarantors, the lenders from time to time party thereto, and Ares Capital Corporation, as administrative agent and collateral agent (the “Second Lien Credit Agreement” and, together with the First Lien Credit Agreement, the “Credit Agreements”);
•our indebtedness, our ability to service our indebtedness, and our ability to obtain additional financing on favorable terms or at all;
•interference with our ability to access the first and second lien credit facilities under our Credit Agreements;
•the potential volatility of our Class A common stock price;
•provisions in our certificate of incorporation and by-laws and provisions of Delaware law that discourage or prevent strategic transactions, including a takeover of us;
•provisions in our certificate of incorporation which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees;
•our intention not to pay cash dividends on our Class A common stock;
•the impact of litigation proceedings, government inquiries, reviews, audits or investigations;
•public health emergencies, epidemics, pandemics or contagious diseases;
•the cost of compliance with sustainability or other environmental, social responsibility or governance law and regulations;
•the impact of increasing inflationary pressures and rising consumer costs on our business; and
•our ability to utilize our net operating loss carry forwards and certain other tax attributes may be limited.
The risks included here are not exhaustive. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. More information on potential factors that could affect our businesses and financial performance is included in “Forward-Looking Statements - Cautionary Language,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” or similarly captioned sections of our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”) and the other periodic and current reports we make from time to time with the U.S. Securities and Exchange Commission (“SEC”). Moreover, we operate in a rapidly changing and competitive environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors.
Further, it is not possible to assess the effect of all risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. In addition, we undertake no obligation to publicly update any forward-looking statements to reflect events or circumstances that occur after the date of this report except to the extent expressly required by law.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
EVOLENT HEALTH, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
| September 30, 2026 | December 31, 2025 | |||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Current assets: | ||||||||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||||||||
| Restricted cash | ||||||||||||||||||||
Accounts receivable, net (1) | ||||||||||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||||||||
| Total current assets | ||||||||||||||||||||
| Restricted cash | ||||||||||||||||||||
| Investments and equity method investees | ||||||||||||||||||||
| Property and equipment, net | ||||||||||||||||||||
| Right-of-use assets - operating | ||||||||||||||||||||
Prepaid expenses and other noncurrent assets (1) | ||||||||||||||||||||
| Contract cost assets | ||||||||||||||||||||
| Intangible assets, net | ||||||||||||||||||||
| Goodwill | ||||||||||||||||||||
| Total assets | $ | $ | ||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
| Liabilities | ||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||
Accounts payable (1) | $ | $ | ||||||||||||||||||
Accrued liabilities (1) | ||||||||||||||||||||
| Operating lease liability - current | ||||||||||||||||||||
| Accrued compensation and employee benefits | ||||||||||||||||||||
Deferred revenue (1) | ||||||||||||||||||||
| Reserve for claims and performance-based arrangements | ||||||||||||||||||||
| Total current liabilities | ||||||||||||||||||||
| Long-term debt, net | ||||||||||||||||||||
| Other long-term liabilities | ||||||||||||||||||||
| Tax receivables agreement liability | ||||||||||||||||||||
| Operating lease liabilities - noncurrent | ||||||||||||||||||||
| Deferred tax liabilities, net | ||||||||||||||||||||
| Total liabilities | ||||||||||||||||||||
| Shareholders' Equity | ||||||||||||||||||||
Class A common stock - $ | ||||||||||||||||||||
| Additional paid-in-capital | ||||||||||||||||||||
| Accumulated other comprehensive loss | ( | ( | ||||||||||||||||||
| Retained earnings (accumulated deficit) | ( | ( | ||||||||||||||||||
Treasury stock, at cost; | ( | ( | ||||||||||||||||||
| Total shareholders’ equity | ||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||||||||||||||
(1)See Note 17 for amounts attributable to unconsolidated related parties included in these line items.
See accompanying Notes to Consolidated Financial Statements.
1
EVOLENT HEALTH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands, except per share data)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands, except per share data)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||
Revenue (1) | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||||||||
Cost of revenue (1) | |||||||||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses (1) | |||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization expenses | |||||||||||||||||||||||||||||||||||||||||
| Loss (gain) on lease termination | ( | ||||||||||||||||||||||||||||||||||||||||
| Change in fair value of contingent consideration | ( | ||||||||||||||||||||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||||||||||||||
| Operating income (loss) | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
| Income from equity method investees | |||||||||||||||||||||||||||||||||||||||||
| Gain on extinguishment of short-term debt | |||||||||||||||||||||||||||||||||||||||||
| Loss on option exercise | ( | ||||||||||||||||||||||||||||||||||||||||
| Extinguishment of Series A Preferred Stock and other refinancing fees | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Other income (expense), net | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||||||||||||||||||||
| Loss before preferred dividends and accretion of Series A Preferred Stock including excise tax | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
| Dividends and accretion of Series A Preferred Stock including excise tax | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Net loss attributable to common shareholders of Evolent Health, Inc. | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||
| Loss per common share | |||||||||||||||||||||||||||||||||||||||||
| Basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||
| Weighted-average common shares outstanding | |||||||||||||||||||||||||||||||||||||||||
| Basic and diluted | |||||||||||||||||||||||||||||||||||||||||
| Comprehensive loss | |||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to common shareholders of Evolent Health, Inc. | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of taxes, related to: | |||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
| Total comprehensive loss attributable to common shareholders of Evolent Health, Inc. | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||
————————
(1)See Note 17 for amounts attributable to unconsolidated related parties included in these line items.
See accompanying Notes to Consolidated Financial Statements.
2
EVOLENT HEALTH, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE AND SHAREHOLDERS’ EQUITY
(unaudited, in thousands)
| For the Three Months Ended September 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mezzanine Equity | Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock | Class A Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) | Treasury Stock | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock units vested, net of shares withheld for taxes | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Cancellation of treasury stock | — | — | ( | ( | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to common shareholders of Evolent Health, Inc. | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balance as of September 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
| For the Three Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mezzanine Equity | Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock | Class A Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) | Treasury Stock | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock units vested, net of shares withheld for taxes | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Treasury share repurchase, including excise tax | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Exchange of mezzanine equity | ( | ( | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to common shareholders of Evolent Health, Inc. | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Balance as of September 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
See accompanying Notes to Consolidated Financial Statements.
3
EVOLENT HEALTH, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE AND SHAREHOLDERS’ EQUITY
(unaudited, in thousands)
| For the Nine Months Ended September 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mezzanine Equity | Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock | Class A Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) | Treasury Stock | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock units vested, net of shares withheld for taxes | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Performance stock units vested, net of shares withheld for taxes | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Cancellation of treasury stock | — | — | ( | ( | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to common shareholders of Evolent Health, Inc. | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balance as of September 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
| For the Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mezzanine Equity | Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock | Class A Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) | Treasury Stock | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock units vested, net of shares withheld for taxes | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Performance stock units vested, net of shares withheld for taxes | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Treasury share repurchase, including excise tax | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Exchange of mezzanine equity | ( | ( | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
See accompanying Notes to Consolidated Financial Statements.
4
| Net loss attributable to common shareholders of Evolent Health, Inc. | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Balance as of September 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
See accompanying Notes to Consolidated Financial Statements.
5
EVOLENT HEALTH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
| For the Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Cash Flows Provided By (Used In) Operating Activities | ||||||||||||||||||||||||||
| Loss before preferred dividends and accretion of Series A Preferred Stock including excise tax | $ | ( | $ | ( | ||||||||||||||||||||||
| Adjustments to reconcile net loss to net cash and restricted cash provided by (used in) operating activities: | ||||||||||||||||||||||||||
| Change in fair value of contingent consideration | ||||||||||||||||||||||||||
| Income from equity method investees | ( | ( | ||||||||||||||||||||||||
| Extinguishment of Series A Preferred Stock and other refinancing fees | ||||||||||||||||||||||||||
| Gain on extinguishment of short-term debt | ( | |||||||||||||||||||||||||
| Loss on option exercise | ||||||||||||||||||||||||||
| Depreciation and amortization expenses | ||||||||||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||||
| Deferred tax provision | ||||||||||||||||||||||||||
| Amortization of contract cost assets | ||||||||||||||||||||||||||
| Amortization of deferred financing costs | ||||||||||||||||||||||||||
| Loss on lease termination | ||||||||||||||||||||||||||
| Right-of-use operating assets | ||||||||||||||||||||||||||
| Changes in assets and liabilities, net of acquisitions: | ||||||||||||||||||||||||||
| Accounts receivable, net and contract assets | ( | |||||||||||||||||||||||||
| Prepaid expenses and other current and noncurrent assets | ( | |||||||||||||||||||||||||
| Contract cost assets | ( | ( | ||||||||||||||||||||||||
| Accounts payable | ( | |||||||||||||||||||||||||
| Accrued liabilities | ( | ( | ||||||||||||||||||||||||
| Operating lease liabilities | ( | ( | ||||||||||||||||||||||||
| Accrued compensation and employee benefits | ( | |||||||||||||||||||||||||
| Deferred revenue | ( | ( | ||||||||||||||||||||||||
| Reserve for claims and performance-based arrangements | ( | |||||||||||||||||||||||||
| Other long-term liabilities | ||||||||||||||||||||||||||
| Net cash and restricted cash provided by (used in) operating activities | ( | |||||||||||||||||||||||||
| Cash Flows Used In Investing Activities | ||||||||||||||||||||||||||
| Cash paid for asset acquisitions and business combinations | ( | |||||||||||||||||||||||||
| Return of equity method investments | ||||||||||||||||||||||||||
| Purchases of investments and contributions to equity method investees | ( | |||||||||||||||||||||||||
| Investments in internal-use software and purchases of property and equipment | ( | ( | ||||||||||||||||||||||||
| Net cash and restricted cash used in investing activities | ( | ( | ||||||||||||||||||||||||
| Cash Flows (Used In) Provided By Financing Activities | ||||||||||||||||||||||||||
| Changes in working capital balances related to claims processing services | ( | ( | ||||||||||||||||||||||||
| Payment of contingent consideration | ( | |||||||||||||||||||||||||
| Proceeds from issuance of long-term debt, net of offering costs | ||||||||||||||||||||||||||
| Repayment of debt | ( | ( | ||||||||||||||||||||||||
| Repurchase of common stock | ( | |||||||||||||||||||||||||
| Payment of preferred dividends | ( | |||||||||||||||||||||||||
| Taxes withheld and paid for vesting of equity awards | ( | ( | ||||||||||||||||||||||||
| Net cash and restricted cash (used in) provided by financing activities | ( | |||||||||||||||||||||||||
| Effect of exchange rate on cash and cash equivalents and restricted cash | ( | ( | ||||||||||||||||||||||||
See accompanying Notes to Consolidated Financial Statements.
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| Net decrease in cash and cash equivalents and restricted cash | ( | ( | ||||||||||||||||||||||||
| Cash and cash equivalents and restricted cash as of beginning-of-period | ||||||||||||||||||||||||||
| Cash and cash equivalents and restricted cash as of end-of-period | $ | $ | ||||||||||||||||||||||||
See accompanying Notes to Consolidated Financial Statements.
7
EVOLENT HEALTH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Organization
Evolent Health, Inc. was incorporated in December 2014 in the state of Delaware and through its subsidiaries is a market leader in connecting care for people with complex conditions like cancer, cardiovascular disease, and musculoskeletal diagnoses. We work on behalf of health plans and other risk-bearing entities and payers (our customers) to support physicians and other healthcare providers (our users) in providing the best evidence-based care to their patients. We believe adherence to the best evidence supports better outcomes for patients, a better experience for physicians, and lower costs for the healthcare system overall.
As of September 30, 2026, the Company had unrestricted cash and cash equivalents of $148.3 million. The Company believes it has sufficient liquidity to meet its working capital and capital expenditure requirements for at least the next twelve months as of the date the financial statements were issued.
We have one operating segment and one reportable segment as our chief operating decision maker (“CODM”), who is our Chief Executive Officer, assesses the performance of our operations, develops strategy and reviews financial information on a consolidated basis for purposes of evaluating financial performance and allocating resources.
The Company’s headquarters is located in Arlington, Virginia.
Evolent Health LLC Governance
Note 2. Basis of Presentation, Summary of Significant Accounting Policies and Change in Accounting Principles
Basis of Presentation
In our opinion, the accompanying unaudited interim consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to fairly state our financial position, results of operations and cash flows. The interim consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been omitted pursuant to instructions, rules and regulations prescribed by the SEC. The disclosures provided herein should be read in conjunction with the audited financial statements and notes thereto included in our 2025 Form 10-K.
Summary of Significant Accounting Policies
Certain GAAP policies that significantly affect the determination of our financial position, results of operations and cash flows, are summarized below. See “Part II - Item 8. Financial Statements and Supplementary Data - Note 2” in our 2025 Form 10-K for a complete summary of our significant accounting policies.
Accounting Estimates and Assumptions
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses for the reporting period. Those estimates are inherently subject to change and actual results could differ from those estimates. In the accompanying unaudited interim consolidated financial statements, estimates are used for, but not limited to, the valuation of assets (including intangible assets, goodwill and long-lived assets), liabilities, consideration related to business combinations and asset acquisitions, revenue recognition (including variable consideration), estimated selling prices for performance obligations in contracts with multiple performance obligations, reserves for claims and performance-based arrangements, credit losses, depreciable lives of assets, impairment of long-lived assets, stock-based compensation, deferred income taxes and valuation allowance, purchase price allocation in taxable stock transactions and useful lives of intangible assets.
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Principles of Consolidation
The unaudited interim consolidated financial statements include the accounts of Evolent Health, Inc. and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation.
Cash and Cash Equivalents
Restricted Cash
Restricted cash includes cash and investments used to collateralize various contractual obligations (in thousands) as follows:
| September 30, 2026 | December 31, 2025 | ||||||||||
Collateral for letters of credit for facility leases (1) | $ | $ | |||||||||
Collateral with financial institutions (2) | |||||||||||
Claims processing services (3) | |||||||||||
| Total restricted cash | $ | $ | |||||||||
| Current restricted cash | $ | $ | |||||||||
| Total current restricted cash | $ | $ | |||||||||
| Non-current restricted cash | $ | $ | |||||||||
| Total non-current restricted cash | $ | $ | |||||||||
————————
(1)Represents restricted cash related to collateral for letters of credit required in conjunction with lease agreements. The Company’s lease in Edison, NJ expired during the three months ended September 30, 2026 and the Company was no longer party to irrevocable standby letter of credit as of September 30, 2026.
(2)Represents collateral held with financial institutions for risk-sharing and other arrangements which are held in a FDIC participating bank account.
(3)Represents cash held by the Company related to claims processing services on behalf of partners. These are pass-through amounts and can fluctuate materially from period to period depending on the timing of when the claims are processed.
The following table provides a reconciliation of cash and cash equivalents and current and noncurrent restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows (in thousands):
| September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows | $ | $ | |||||||||
Goodwill
We recognize the excess of the purchase price, plus the fair value of any non-controlling interests in the acquiree, over the fair value of identifiable net assets acquired as goodwill. Goodwill is not amortized, but is reviewed at least annually for indications of impairment, with consideration given to financial performance and other relevant factors. We perform impairment tests of goodwill at a reporting unit level on October 31 of each year. We perform impairment tests between annual tests if an event occurs, or circumstances change, that we believe would more likely than not reduce the fair value of a reporting unit below its carrying amount.
Our goodwill impairment analysis first assesses qualitative factors to determine whether events or circumstances existed that would lead the Company to conclude it is more likely than not that the fair value of its reporting unit is below its carrying amount. If the Company determines that it is more likely than not that the fair value of its reporting unit is below the carrying amount, a quantitative goodwill assessment is required. In the quantitative evaluation, the fair value of our reporting unit is determined and compared to the carrying value. If the fair value is greater than the carrying value, then the carrying value is deemed to be recoverable and no further action is required. If the fair value estimate is less than the carrying value, goodwill is considered impaired for the amount by which the carrying amount exceeds our reporting unit’s fair value and a charge is reported in goodwill impairment on our consolidated
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Intangible Assets, Net
The following summarizes the estimated useful lives by asset classification:
| Customer relationships | |||||
| Technology | |||||
Research and Development Costs
Research and development costs consist primarily of personnel and related expenses (including stock-based compensation and employee taxes and benefits) for employees engaged in research and development activities as well as third-party fees. All such costs are expensed as incurred. We focus our research and development efforts on activities that support our technology infrastructure, clinical program development, data analytics and network development capabilities. Research and development costs are recorded within selling, general and administrative expenses on our consolidated statements of operations and comprehensive income (loss).
Reserves for Claims and Performance-based Arrangements
Reserves for claims and performance-based arrangements reflect payments under performance-based arrangements and the ultimate cost of claims that have been incurred but not reported, including expected development on reported claims, those that have been reported but not yet paid (reported claims in process) and other medical care expenses and services payable that are primarily composed of accruals for incentives and other amounts payable to health care professionals and facilities. The Company uses actuarial principles and assumptions that are consistently applied in each reporting period and recognizes the actuarial best estimate of the ultimate liability along with a margin for adverse deviation. This approach is consistent with actuarial standards of practice that the liabilities be adequate under moderately adverse conditions.
Right of Offset
Certain customer arrangements give the Company the legal right to net payment for amounts due from customers and claims payable. As of September 30, 2026 and December 31, 2025, approximately 82 % and 75 %, respectively, of gross accounts receivable has been netted against claims payable in lieu of cash receipt. Furthermore, as of September 30, 2026 and December 31, 2025, approximately 74 % and 63 %, respectively, of our accounts receivable, net could ultimately be settled on a net basis, once the criteria for netting have been met.
Debt
Convertible notes and amounts borrowed under our Credit Agreements are carried at cost, net of debt discounts and issuance costs, as long-term debt or short-term debt on the consolidated balance sheets based on remaining time to maturity. The debt discounts and issuance costs are amortized to interest expense on the consolidated statements of operations and comprehensive income (loss) using the effective interest rate method. Cash interest payments are due either quarterly or semi-annually in arrears and we accrue interest
10
Revenue Recognition
Our revenue contracts are typically multi-year arrangements with customers to provide solutions designed to lower the medical expenses of our partners and include our total cost of care management and specialty care management services solutions, provide comprehensive health plan operations and claims processing services, and also include transition or run-out services to customers.
We use the following 5-step model, outlined in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), to determine revenue recognition from our contracts with customers:
• Identify the contract(s) with a customer
• Identify the performance obligations in the contract
• Determine the transaction price
• Allocate the transaction price to performance obligations
• Recognize revenue when (or as) the entity satisfies a performance obligation
Note 3. Recently Issued Accounting Standards
In November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”). ASU 2024-03 requires additional disclosure of specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. ASU 2024-03 may be applied prospectively with the option for retrospective application for all prior periods presented. The Company is currently evaluating the impact of adopting this guidance on the Company’s current financial position, results of operations or financial statement disclosures.
In November 2024, the FASB issued ASU 2024-04, Debt with Conversion and Other Options (Subtopic 470-20) “Induced Conversions of Convertible Debt Instruments” to clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. Under the amendments, to account for a settlement of a convertible debt instrument as an induced conversion, an inducement offer is required to provide the debt holder with, at a minimum, the consideration (in form and amount) issuable under the conversion privileges provided in the terms of the instrument. An entity should assess whether this criterion is satisfied as of the date the inducement offer is accepted by the holder. If, when applying this criterion, the convertible debt instrument had been exchanged or modified (without being deemed substantially different) within the one-year period leading up to the offer acceptance date, an entity should compare the terms provided in the inducement offer with the terms that existed one year before the offer acceptance date. The amendments in this update also clarify that the induced conversion guidance applies to a convertible debt instrument that is not currently convertible as long as it had a substantive conversion feature as of both its issuance date and the date the inducement offer is accepted. The amendments are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The Company adopted ASU 2024-04 effective January 1, 2026. The adoption of this ASU did not have an immediate impact and is not expected to have a significant impact in future periods on the Company’s condensed consolidated financial statements and related disclosures.
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810) “Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity” to improve the requirements for identifying the accounting acquirer in Topic 805, Business combinations. It is a revision of the current guidance for determining the accounting acquirer for a transaction affected primarily by exchanging equity interest in which the legal acquiree is a variable interest entity (VIE) that meets the definition of a business. The amendment in this update requires an entity involved in an acquisition transaction to consider additional factors in ASC 805 to determine which entity is the accounting acquirer thus improving comparability between business combinations and consequently focusing at enhancing financial statements. In a business combination, the accounting acquiree’s assets and liabilities are generally required to be initially measured at fair value, subject to specific exceptions in Topic 805 and the accounting acquirer’s existing assets and liabilities are not remeasured under the business combinations guidance. ASU 2025-03 expands the factors to consider when determining the accounting acquirer and acquiree as it can significantly affect the carrying amounts of the combined entity’s assets and liabilities thus affecting post combination net income. This amendment is different than current GAAP because for certain transactions, they replace the requirement that the primary beneficiary always is the acquirer by inducing the reporting entity to use an assessment to examine the factors in ASC 805-10-55-12 through 55-15 to determine which entity is the accounting acquirer. Application of this revision is prospectively to any acquisition transaction that occurs after the initial
11
application date. The amendments are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The Company is examining the impact this guidance may have on the Company’s consolidated financial statements.
In May 2025, the FASB issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606) “Clarifications to Share-Based Consideration Payable to a Customer” to provide context in share-based considerations payable to a customer. The update reduces diversity in practice and improves the decision usefulness of the guidance for share-based consideration payable to a customer in conjunction with selling goods or services. Amendments in Accounting Standards Update No. 2019-08, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606) require that if share-based consideration payable to a customer contains vesting conditions, the grantor must determine whether the vesting conditions represent service conditions or performance conditions. That determination can affect when the grantor recognizes revenue because it is required to estimate the probable outcome of a performance condition and also consider forfeitures. For instance, when the grantor elects to account for forfeitures as they occur, revenue recognition may be delayed for awards that are not probable of vesting. ASU 2025-04 revises the definition of a “performance condition” and eliminates a forfeiture policy election for service conditions associated with share-based consideration payable to a customer. The amendments in this Update permit a grantor to apply the new guidance on either a modified retrospective or a retrospective basis. The amendments in this Update are effective for all entities for annual reporting periods (including interim reporting periods within annual reporting periods) beginning after December 15, 2026. Early adoption is permitted for all entities. The Company is examining the impact this guidance may have on the Company’s consolidated financial statements.
Note 4. Transactions
Disposals
During the third quarter of 2025, the Company entered into a Stock Purchase Agreement (the “ECP Purchase Agreement”) pursuant to which the Company agreed to sell all of the outstanding shares of capital stock of Evolent Care Partners for a purchase price of $100.0 million, subject to customary closing purchase price adjustments, and a contingent payment of up to $13.0 million, subject to the achievement of certain metrics following the closing. The Company consummated the transaction on December 5, 2025. The Company previously recorded its operations from Evolent Care Partners in its total cost of care management solution.
The Company determined that the transaction met the held for sale criteria and ceased recording amortization of provider network contract intangibles at closing of the transaction. The Company received cash proceeds of $91.3 million after net working capital adjustments. The carrying value of net assets and liabilities of $76.4 million, inclusive of allocated goodwill, was disposed resulting in a gain on disposal of $14.9 million recorded in (gain) loss on disposal of non-strategic assets for the three months ended December 31, 2025. The Company allocated $44.8 million of goodwill to the transaction based on the value of the transaction compared to the estimated business enterprise value on the closing date.
Note 5. Revenue Recognition
Our revenue contracts are typically multi-year arrangements with customers to provide solutions designed to lower the medical expenses of our partners and include our total cost of care management and specialty care management services solutions, provide comprehensive health plan operations and claims processing services, and also include transition or run-out services to customers.
Our performance obligation in these arrangements is to provide an integrated suite of services, including access to our platform that is customized to meet the specialized needs of our partners and providers. Generally, we will apply the series guidance to the performance obligation as we have determined that each time increment is distinct. We primarily utilize a variable fee structure for these services that typically includes a monthly payment that is calculated based on a specified per member per month rate, multiplied by the number of members that our partners are managing under a value-based care arrangement or a percentage of plan premiums. Our arrangements may also include other variable fees related to service level agreements, shared medical savings arrangements and
12
other performance measures. Variable consideration is estimated using the most likely amount based on our historical experience and best judgment at the time. Due to the nature of our arrangements, certain estimates may be constrained if it is probable that a significant reversal of revenue will occur when the uncertainty is resolved. We recognize revenue over time using the time elapsed output method. Fixed consideration is recognized ratably over the contract term. In accordance with the series guidance, we allocate variable consideration to the period to which the fees relate. Our revenue includes certain services which are billed on a per-case basis.
Contracts with Multiple Performance Obligations
Our contracts with customers may contain multiple performance obligations, primarily when the partner has requested both administrative services and other services such as our specialty care management or total cost of care management services as these services are distinct from one another. When a contract has multiple performance obligations, we allocate the transaction price to each performance obligation based on the relative standalone selling price using the expected cost margin approach. This approach requires estimates regarding both the level of effort it will take to satisfy the performance obligation as well as fees that will be received under the variable pricing model. We also take into consideration customer demographics, current market conditions, the scope of services and our overall pricing strategy and objectives when determining the standalone selling price.
Principal vs. Agent
We use third parties to assist in satisfying our performance obligations. In order to determine whether we are the principal or agent in the arrangement, we review each third-party relationship on a contract-by-contract basis. As we integrate goods and services provided by third parties into our overall service, we control the services provided to the customer prior to its delivery. As such, we are the principal and we will recognize revenue on a gross basis. In certain cases, we do not control the services from third parties before it is delivered to the customer, thereby recognizing revenue on a net basis.
Disaggregation of Revenue
The following table represents Evolent’s revenue disaggregated by line of business and product type (in thousands):
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Medicaid | $ | $ | $ | $ | |||||||||||||||||||||||||
| Medicare | |||||||||||||||||||||||||||||
| Commercial and other | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||||||||
Performance Suite (1) | $ | $ | $ | $ | |||||||||||||||||||||||||
| Specialty Technology and Services Suite | |||||||||||||||||||||||||||||
| Administrative Services | |||||||||||||||||||||||||||||
| Cases | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||||||||
(1)Performance Suite revenue related to our specialty care management solution were $564.3 million and $1.4 billion for the three and nine months ended September 30, 2026, respectively, and $265.4 million and $763.1 million for the three and nine months ended September 30, 2025, respectively.
Transaction Price Allocated to the Remaining Performance Obligations
For contracts with a term greater than one year, we have allocated approximately $6.0 million of transaction price to performance obligations that are unsatisfied as of September 30, 2026. We do not include variable consideration that is allocated entirely to a wholly unsatisfied performance obligation accounted for under the series guidance in the calculation. As a result, the balance represents the value of the fixed consideration in our long-term contracts that we expect will be recognized as revenue in a future period and excludes the majority of our revenue, which is primarily derived based on variable consideration. We expect to recognize revenue on approximately 70 % and 85 % of these remaining performance obligations by December 31, 2026 and 2027, respectively, based on signed contracts as of the balance sheet date. However, because our existing contracts may be canceled or renegotiated including for reasons outside our control, the amount of revenue that we actually receive may be more or less than this estimate and the timing of recognition may not be as expected.
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Contract Balances
Contract balances consist of accounts receivable, contract assets and deferred revenue. Contract assets are recorded when the right to consideration for services is conditional on something other than the passage of time. Contract assets relating to unbilled receivables are transferred to accounts receivable when the right to consideration becomes unconditional. We classify contract assets as current or non-current based on the timing of our rights to the unconditional payments. Our contract assets are generally classified as current and recorded within prepaid expenses and other current assets on our consolidated balance sheets. Our current accounts receivables are classified within accounts receivable, net on our consolidated balance sheets and our non-current accounts receivable are classified within prepaid expenses and other non-current assets on our consolidated balance sheets.
Deferred revenue includes advance customer payments and billings in excess of revenue recognized. We classify deferred revenue as current or non-current based on the timing of when we expect to recognize revenue. Our current deferred revenue is recorded within deferred revenue on our consolidated balance sheets and non-current deferred revenue is recorded within other long-term liabilities on our consolidated balance sheets.
The following table provides information about receivables, contract assets and deferred revenue from contracts with customers (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
Short-term receivables (1) | $ | $ | |||||||||
| Short-term deferred revenue | |||||||||||
| Long-term deferred revenue | |||||||||||
————————
(1)Excludes pharmacy rebate receivable and pharmacy claims receivable.
Changes in deferred revenue for the nine months ended September 30, 2026 are as follows (in thousands):
| Deferred revenue | |||||
| Balance as of beginning-of-period | $ | ||||
| Reclassification to revenue, as a result of performance obligations satisfied | ( | ||||
| Cash received in advance of satisfaction of performance obligations | |||||
| Balance as of end of period | $ | ||||
The amount of revenue, excluding customer discounts of $1.9 million and $5.4 million for the three and nine months ended September 30, 2026 , respectively, recognized from performance obligations satisfied (or partially satisfied) in a previous year was $7.2 million and $8.3 million for the three and nine months ended September 30, 2026, respectively, due primarily to retroactive contract amendments offset by net gain share as well as changes in other estimates.
Contract Cost Assets
Certain bonuses and commissions earned by our sales team are considered incremental costs of obtaining a contract with a customer that we expect to be recoverable. The capitalized contract acquisition costs are classified as non-current assets and recorded within contract cost assets on our consolidated balance sheets. Amortization expense is recorded within selling, general and administrative expenses on the accompanying consolidated statements of operations and comprehensive income (loss). As of September 30, 2026 and December 31, 2025, the Company had $4.1 million and $4.5 million of contract acquisition cost assets, net of accumulated amortization recorded in contract cost assets on the consolidated balance sheets. In addition, the Company recorded amortization expense of $0.3 million and $1.0 million for the three and nine months ended September 30, 2026, respectively, and $0.3 million and $0.8 million for the three and nine months ended September 30, 2025, respectively.
In our revenue contracts, we incur certain costs related to the implementation of our platform before we begin to satisfy our performance obligation to the customer. The costs, which we expect to recover, are considered costs to fulfill a contract. Our contract fulfillment costs primarily include our employee labor costs and third-party vendor costs. The capitalized contract fulfillment costs are classified as non-current and recorded within contract cost assets on our consolidated balance sheets. Amortization expense is recorded within cost of revenue on the accompanying consolidated statements of operations and comprehensive income (loss). As of September 30, 2026 and December 31, 2025, the Company had $10.6 million and $9.0 million, respectively, of contract fulfillment cost assets, net of accumulated amortization recorded in contract cost assets on the consolidated balance sheets. In addition, the Company recorded amortization expense including the acceleration of amortization of contract costs for certain customers of $0.7
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million and $2.1 million for the three and nine months ended September 30, 2026, respectively, and $2.9 million and $4.9 million for the three and nine months ended September 30, 2025, respectively.
These costs are deferred and then amortized on a straight-line basis over a period of benefit that we have determined to be the shorter of the contract term or five years . The period of benefit is based on our technology, the nature of our partner arrangements and other factors.
Note 6. Credit Losses
We are exposed to credit losses primarily through our accounts receivable from revenue transactions, investments held at amortized cost and other notes receivable. We estimate expected credit losses based on past events, current conditions and reasonable and supportable forecasts. Expected credit losses are measured over the remaining contractual life of these assets. As part of our consideration of current and forward-looking economic conditions, current inflationary pressures on our customers’ and other third parties’ ability to pay, we observed an increase in our current trade accounts receivable due primarily to new Performance Suite contracts offset by a modestly higher provision for certain customers due to their credit risk profile and timing of payments during the nine months ended September 30, 2026.
Accounts Receivable from Revenue Transactions
Accounts receivable represent the amounts owed to the Company for goods or services provided to customers or third parties. Current accounts receivables are classified within accounts receivable, net on the Company’s consolidated balance sheets, while non-current accounts receivables are classified within prepaid expenses and other noncurrent assets on the Company’s consolidated balance sheets.
We monitor our ongoing credit exposure through active review of counterparty balances against contract terms, due dates and business strategy. Our activities include timely account reconciliation, dispute resolution and payment confirmation. In addition, the Company will establish a general reserve based on delinquency rates. Historical loss rates are determined for each delinquency bucket in 30-day past-due intervals and then applied to the composition of the reporting date balance based on delinquency. The allowance implied from application of the historical loss rates is then adjusted, as necessary, for current conditions and reasonable and supportable forecasts.
The following table compiles the percentages of outstanding accounts receivable based on our aging analysis of our trade accounts receivable, non-trade accounts receivable and contract assets (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Current | % | % | |||||||||
| Past due 1-60 days | % | % | |||||||||
| Past due 61+ days | % | % | |||||||||
| Accounts receivable, net of allowance | $ | $ | |||||||||
The following table summarizes the changes in allowance for credit losses on our accounts receivables, certain non-trade accounts receivable and contract assets (in thousands):
| For the Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Balance as of beginning of period | $ | ( | $ | ( | |||||||
| Provision for credit losses | ( | ( | |||||||||
Charge-offs(1) | |||||||||||
| Balance as of end of period | $ | ( | $ | ( | |||||||
————————
(1) Charge-offs for the nine months ended September 30, 2026 and 2025 are primarily related to balances written-off that were previously reserved.
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Note 7. Property and Equipment, Net
The following summarizes our property and equipment (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Computer hardware | $ | $ | |||||||||
| Furniture and equipment | |||||||||||
| Internal-use software development costs | |||||||||||
| Leasehold improvements | |||||||||||
| Total property and equipment | |||||||||||
| Accumulated depreciation expense | ( | ( | |||||||||
| Total property and equipment, net | $ | ||||||||||
The Company capitalized $6.8 million and $20.3 million for the three and nine months ended September 30, 2026, respectively, and $8.5 million and $25.6 million for the three and nine months ended September 30, 2025, respectively, of internal-use software development costs. The net book value of capitalized internal-use software development costs was $80.6 million and $77.8 million as of September 30, 2026 and December 31, 2025, respectively.
Depreciation expense related to property and equipment was $6.2 million and $18.8 million for the three and nine months ended September 30, 2026, respectively, and $6.3 million and $20.0 million for the three and nine months ended September 30, 2025, respectively, of which amortization expense related to capitalized internal-use software development costs was $5.9 million and $17.4 million for the three and nine months ended September 30, 2026, respectively and $5.6 million and $17.5 million for the three and nine months ended September 30, 2025, respectively.
Note 8. Goodwill and Intangible Assets, Net
Goodwill
Goodwill has an estimated indefinite life. It is reviewed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
Our annual goodwill impairment review occurs on October 31 of each fiscal year. We evaluate qualitative factors that could cause us to believe the estimated fair value of our reporting unit may be lower than the carrying value and trigger a quantitative assessment, including, but not limited to (i) macroeconomic conditions, (ii) industry and market considerations, (iii) our overall financial performance, including an analysis of our current and projected cash flows, revenues and earnings, (iv) a sustained decrease in share price and (v) other relevant entity-specific events including changes in management, strategy, partners, or litigation.
2025 Annual Goodwill Impairment Test
Subsequent to our 2024 goodwill impairment test through the end of 2025, the closing price per share of our Class A common stock declined from $23.35 per common share on October 31, 2024 to $6.67 at October 31, 2025. As a result of the prolonged decline in our stock price, the Company elected to forego the qualitative assessment and proceed directly to the quantitative assessment of the goodwill impairment test for our sole reporting unit. To determine the implied fair value for our single reporting unit, we used a discounted cash flow valuation approach (“income approach”). In determining the estimated fair value using the income approach, we projected future cash flows based on management’s estimates and long-term plans and applied a discount rate based on the Company’s weighted average cost of capital. This analysis required us to make judgments about revenues, expenses, fixed asset and working capital requirements, capital market assumptions and cash flows, as well as discount rates to reconcile to our market capitalization. As a result of the decrease in our Class A common stock since our 2024 goodwill impairment test, the market capitalization reconciliation indicated that the carrying amount of our reporting unit exceeded its fair value. Therefore, the Company recorded a $398.0 million non-cash and non-tax-deductible impairment charge, reflected within operating expenses in the consolidated statements of operations for the year ended December 31, 2025.
As of September 30, 2026, Evolent assessed whether there were events or changes in circumstances that would more likely than not reduce the fair value of its goodwill below its carrying amount and require an interim impairment test. The Company determined there
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had been no such indicators. Therefore, the Company did not perform a quantitative goodwill impairment assessment as of September 30, 2026.
Change in Goodwill
The following table summarizes the changes in the carrying amount of goodwill, for the periods presented (in thousands):
| For the Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| Balance, beginning of period | $ | $ | |||||||||||||||
Goodwill disposal (1) | ( | ||||||||||||||||
| Foreign currency translation | ( | ( | |||||||||||||||
| Balance, end of period | $ | $ | |||||||||||||||
————————
(1)During the three months ended September 30, 2025, the Company allocated goodwill to the agreed-upon sale of ECP Holding Company based on the value of the transaction compared to the estimated business enterprise value on the date which the transaction met the held for sale criteria. See Note 4 for further discussion.
Intangible Assets, Net
Details of our intangible assets (in thousands, except weighted-average useful lives) are presented below:
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Weighted- Average Remaining Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | Weighted- Average Remaining Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||||||||||||||||||||||||
| Corporate trade name | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Customer relationships | |||||||||||||||||||||||||||||||||||||||||||||||
| Technology | |||||||||||||||||||||||||||||||||||||||||||||||
| Below market lease, net | |||||||||||||||||||||||||||||||||||||||||||||||
Provider network contracts | |||||||||||||||||||||||||||||||||||||||||||||||
| Total intangible assets, net | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
Amortization expense related to intangible assets was $15.3 million and $45.8 million for the three and nine months ended September 30, 2026, respectively, and $17.3 million and $50.8 million for the three and nine months ended September 30, 2025, respectively.
Future estimated amortization of intangible assets is as follows (in thousands):
| 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total future amortization of intangible assets | $ | ||||
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Note 9. Debt
Convertible Senior Notes
Terms of the Convertible Senior Notes
The Company issued $172.5 million aggregate principal amount of its 1.5 % Convertible Senior Notes due 2025 in October 2018 (the “2025 Notes”), $402.5 million aggregate principal amount of its 3.5 % Convertible Senior Notes due 2029 in December 2023 (the “2029 Notes”) and $166.8 million aggregate principal amount of its 4.5 % Convertible Senior Notes due 2031 in August 2025 (the “2031 Notes” and together with the 2025 Notes and the 2029 Notes, the “Convertible Senior Notes”), in private placements to qualified institutional buyers within the meaning of Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The 2025 Notes matured on October 15, 2025. The 2029 Notes and 2031 Notes will mature on the date in the table below, unless earlier repurchased, redeemed or converted in accordance with their respective terms prior to such date.
The Convertible Senior Notes are recorded on our accompanying consolidated balance sheets at their net carrying values. All of our Convertible Senior Notes also have embedded conversion options and contingent interest provisions, which have not been recorded as separate financial instruments and their fair values are Level 2 inputs.
The 2029 Notes and 2031 Notes are convertible into cash, shares of the Company’s Class A common stock, or a combination of cash and shares of the Company’s Class A common stock, at the Company’s election, based on an initial conversion rate of Class A common stock per $1,000 principal amount of the 2029 Notes and 2031 Notes, which is equivalent to an initial conversion price of the Company’s Class A common stock. In the aggregate, the 2029 Notes and 2031 Notes are initially convertible into 22.9 million shares of the Company’s Class A common stock excluding any shares issuable by the Company upon a conversion in connection with a make-whole fundamental change or a notice of redemption. The conversion rate may be adjusted under certain circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash or shares of the Company’s Class A common stock, or a combination of cash and shares of the Company’s Class A common stock, at the Company’s election.
Holders of the Convertible Senior Notes may require the Company to repurchase all or part of their notes upon the occurrence of a fundamental change at a price equal to 100.0 % of the principal amount of the notes being repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
The Company may not redeem the 2029 Notes prior to December 6, 2026. The Company may redeem for cash all or any portion of the 2029 Notes, at its option, on or after December 6, 2026, if the last reported sale price of the Company’s Class A common stock has been at least 130.0 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100.0 % of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. Prior to the close of business on the business day immediately preceding September 1, 2029, the 2029 Notes will be convertible at the option of the holders only upon the satisfaction of certain conditions. At any time on or after September 1, 2029, until the close of business on the business day immediately preceding the maturity date, holders of the 2029 Notes may convert, at their option, all or any portion of their 2029 Notes at the conversion rate.
On or after August 20, 2026, the Company may terminate the conversion rights of the 2031 Notes if (i) for any conversion rights termination date occurring on or after August 20, 2026 and prior to, but not including, August 21, 2028, the last reported sale price of the Company’s Class A common stock has been at least 150.0 % of the conversion price for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period (including the last trading day of such period) prior to the Company’s delivery of notice of such termination of conversion rights or (ii) for any conversion rights termination date occurring on or after August 21, 2028, the last reported sale price of the Company’s Class A common stock has been at least 130.0 % of the conversion price for at least 20 days during the 30 consecutive trading day period (including the last trading day of such period) prior to the Company’s delivery of notice of such termination of conversion rights.
The Company may not redeem the 2031 Notes unless and until holders’ conversion rights have been terminated at its election. However, if holders’ conversion rights have been terminated, the Company may redeem for cash all or a portion of the 2031 Notes, at its option, at a redemption price equal to 100.0 % of the principal amount of the notes being redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date.
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2031 Notes Issuance, 2025 Notes Repayment and Common Stock Repurchase
On August 18, 2025, the Company entered into a purchase agreement to sell $145.0 million aggregate principal amount of the 2031 Notes in a private placement to qualified institutional buyers (the “Purchasers”) within the meaning of Rule 144A under the Securities Act of 1933. The Company granted the Purchasers an option to purchase up to an additional $21.8 million aggregate principal amount of the 2031 Notes, which the Purchasers exercised in full on August 19, 2025. The closing of the 2031 Notes occurred on August 21, 2025 and a total of $166.8 million aggregate principal amount of 2031 Notes were issued at an issue price of 100.00 % of par. On August 21, 2025, using proceeds from the sale of the 2031 Notes plus available liquidity, the Company repurchased approximately $167.4 million aggregate principal amount of its 2025 Notes for $166.8 million in cash in note repurchases entered into concurrently with the pricing of the sale of the 2031 Notes. The Company also repurchased $40.0 million of shares of the Company’s Class A common stock concurrently with the sale of the 2031 Notes in privately negotiated transactions effected with or through one of the Purchasers or its affiliate at a purchase price per share equal to the last reported sale price of the Company’s Class A common stock on August 18, 2025. As a result of the repurchase of the 2025 Notes, the Company recorded a $0.4 million gain on extinguishment of short-term debt for the three months ended September 30, 2025.
Summary of Convertible Senior Notes
The following table summarizes the terms of our Convertible Senior Notes outstanding as of September 30, 2026 (in thousands, except per share conversion rates and prices):
| 2029 Notes | 2031 Notes | ||||||||||||||||||||||
| Aggregate principal amount at issuance | $ | $ | |||||||||||||||||||||
| Coupon interest rate per annum | |||||||||||||||||||||||
| Debt issuance costs | $ | $ | |||||||||||||||||||||
| Net proceeds | $ | $ | |||||||||||||||||||||
| Issuance date | December 8, 2023 | August 21, 2025 | |||||||||||||||||||||
| Maturity date | December 1, 2029 | August 15, 2031 | |||||||||||||||||||||
| Interest payment dates | June 1 and December 1 | February 15 and August 15 | |||||||||||||||||||||
| Conversion rate per $1,000 of principal | 26.3125 | 73.9098 | |||||||||||||||||||||
| Conversion price | $ | $ | |||||||||||||||||||||
Shares issuable upon conversion (1) | |||||||||||||||||||||||
| Carrying value | $ | $ | |||||||||||||||||||||
| Unamortized debt discount and issuance costs | |||||||||||||||||||||||
| Outstanding principal | $ | $ | |||||||||||||||||||||
| Remaining amortization period (years) | |||||||||||||||||||||||
Fair value (2) | $ | $ | |||||||||||||||||||||
————————
(1)Measured in shares of the Company’s Class A common stock and represents the number of shares of the Company’s Class A common stock that the Convertible Senior Notes are convertible into as of September 30, 2026. Upon conversion, the Company will pay or deliver, as the case may be, cash or shares of the Company’s Class A common stock, or a combination of cash and shares of the Company’s Class A common stock, at the Company’s election.
(2)Fair values for notes are derived from available trading prices closest to the respective balance sheet date.
Credit Agreement
Terms of the Credit Agreement
On August 1, 2022 (the “IPG Closing Date”), the Company entered into a credit agreement, by and among the Company, Evolent Health LLC, as administrative borrower (the “Borrower”), certain subsidiaries of the Company, as co-borrowers and guarantors, the lenders from time to time party thereto, and Ares Capital Corporation (“Ares”), as administrative agent, collateral agent and revolver agent (as modified by Amendment No. 1, Amendment No. 2, Amendment No. 3, Amendment No. 4 and Amendment No. 5 (each, as defined below), the “Existing Credit Agreement” and as amended through the date hereof, the “First Lien Credit Agreement”), pursuant to which the lenders agreed to extend credit to the Borrower in the form of (i) initial term loans in an aggregate principal
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amount of $175.0 million (the “Initial Term Loan Facility”) and (ii) asset-based revolving credit commitments in an aggregate principal amount of $50.0 million (the “Initial Revolving Facility”), the availability of which shall be determined by reference to the lesser of $50.0 million and a borrowing base calculation. The Borrowers borrowed the full amount under the Initial Term Loan Facility and the Initial Revolving Facility on the IPG Closing Date. A closing fee of (a) 2.00 % of the aggregate amount of the commitments in respect of the Initial Term Loan Facility and (b) 2.00 % of the aggregate amount of the commitments in respect of the Initial Revolving Facility was paid as of the IPG Closing Date.
On January 20, 2023 (the “NIA Closing Date”), the Company entered into Amendment No. 1 to the First Lien Credit Agreement (“Amendment No. 1”), pursuant to which the lenders agreed to extend credit to the Borrower in the form of (i) additional commitments under the Company’s existing asset-based revolving credit facility in an aggregate principal amount equal to $25.0 million (the “2023 Revolver Increase”), and (ii) additional term loans in an aggregate principal amount equal to $240.0 million, (the “2023 Additional Term Loans”). The Borrowers borrowed the full amount under the Incremental Term Loan Facility and the Incremental Revolving Facility on the NIA Closing Date to finance, together with the proceeds from the sale of the Series A Preferred Stock, the cash consideration payable in connection with the NIA acquisition on the NIA Closing Date and pay transaction fees and expenses. A closing fee of (a) 3.00 % of the aggregate amount of the commitments in respect of the Incremental Term Loan Facility and (b) 3.00 % of the aggregate amount of the commitments in respect of the Incremental Revolving Facility was paid as of the NIA Closing Date.
On December 5, 2023, the Company entered into Amendment No. 2 (“Amendment No. 2”) to the First Lien Credit Agreement pursuant to which the lenders agreed to certain mechanical changes necessary to permit issuance by the Company of additional unsecured convertible notes.
During the year ended December 31, 2023, the Company prepaid $415.0 million of the Term Loan Facility that was utilized to acquire IPG and NIA.
On December 6, 2024 (the “Amendment No. 3 Effective Date”), the Company entered into Amendment No. 3 (“Amendment No. 3”) to the First Lien Credit Agreement that provides new secured debt financing in the form of (i) additional commitments under the Company’s existing asset-based revolving credit facility in an aggregate principal amount equal to $50.0 million (the “2024 Revolver Increase”, and together with the Initial Revolving Facility and the 2023 Revolver Increase, the “Revolving Facility”), (ii) a new delayed draw term loan facility in an aggregate principal amount equal to $125.0 million (the “2024-A Delayed Draw Term Loan Facility”), and (iii) a new delayed draw term loan facility in an aggregate principal amount equal to $75.0 million (the “2024-B Delayed Draw Term Loan Facility” and together with the 2024 Revolver Increase and the 2024-A Delayed Draw Term Loan Facility, the “2024 Incremental Facilities”; the Initial Term Loan Facility, the 2023 Additional Term Loans, the 2024-A Delayed Draw Term Loan Facility and the 2024-B Delayed Draw Term Loan Facility are collectively referred to herein as the “Term Loan Facility”; the Revolving Facility and the Term Loan Facility are collectively referred to herein as the “First Lien Credit Facilities”), and effected certain amendments to the Existing Credit Agreement. The Borrower paid closing fees equal to 1.00 % of the aggregate commitments provided in respect of the 2024 Incremental Facilities on the date the commitment letter in respect of the 2024 Incremental Facilities was executed. The Borrowers borrowed the full amount under the 2024-A Delayed Draw Term Loan Facility and the 2024-B Delayed Draw Term Loan Facility on January 29, 2025 to fund general corporate purposes, including working capital and the management of future liabilities. The Borrower paid upfront fees equal to 1.00 % of the aggregate commitments of the 2024 Revolver Increase Facility on the Amendment No. 3 Effective Date and upfront fees equal to 2.00 % of the aggregate principal amount of the loans funded under the 2024-A Delayed Draw Term Loan Facility and the 2024-B Delayed Draw Term Loan Facility on the applicable funding date.
On June 13, 2025, the Company entered into Amendment No. 4 to the First Lien Credit Agreement (“Amendment No. 4”) to modify the definition of “Maturity Date.”
On June 19, 2025, the Company entered into Amendment No. 5 to the First Lien Credit Agreement (“Amendment No. 5”) (which superseded Amendment No. 4) to (i) include amounts committed under a new Incremental Facility (as defined below) for purposes of testing “Liquidity” under the definition of “Maturity Date,” (ii) provide that failure to consummate the Exchange in certain circumstances would constitute an event of default, (iii) include certain transactions to the mandatory prepayment requirement, and (iv) provide additional flexibility to make certain restricted payments in respect of the 2025 Notes prior to maturity thereof.
On June 19, 2025, in connection with the Company’s entry into Amendment No. 5, the Company and the Borrower entered into a Commitment Letter with Ares which provided the Company additional available non-dilutive debt capital of up to $150.0 million (the “Incremental Facility”) to retire its 2025 Notes on or before October 15, 2025 (the maturity date of the 2025 Notes) and for working capital and required that the Company would, in the event the Incremental Facility is drawn and in certain other circumstances, exchange its existing Series A Preferred Stock for a second lien term loan facility (the “Second Lien Term Loan Facility” and, together with the First Lien Credit Facilities, the “Credit Facilities”) in the amount of the Liquidation Preference of the Series A Preferred Stock ($175.0 million) (the “Exchange”). On August 7, 2025, the Company completed the Exchange. The Company paid $9.3 million of deferred financing costs, of which $3.3 million was related to amending the existing 2024 Incremental Facilities. The Company did
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not draw on the Incremental Facility due to the retirement of the 2025 Notes. As such, we recorded a $6.0 million loss related to the Incremental Facility in extinguishment of Series A Preferred Stock and other refinancing fees on the consolidated statement of operations during the three months ended September 30, 2025.
All loans under the First Lien Credit Agreement will mature on the date that is the earliest of (a) December 6, 2029, (b) the date on which all commitments are voluntarily terminated or amounts outstanding under the First Lien Credit Agreement have been declared or have automatically become due and payable under the terms of the First Lien Credit Agreement, (c) the date that is one hundred eighty (180 ) days prior to the maturity date of the Company’s Convertible Senior Notes due 2029 and (d) the date that is ninety-one (91 ) days prior to the maturity date of any other Junior Debt (as defined in the First Lien Credit Agreement) unless certain liquidity conditions are satisfied. All loans under the Second Lien Credit Agreement will mature on the date that is the earliest of (a) December 6, 2029, (b) the date on which all amounts outstanding under the Second Lien Credit Agreement have been declared or have automatically become due and payable under the terms of the Second Lien Credit Agreement, (c) the date that is one hundred eighty (180 ) days prior to the maturity date of the Company’s Convertible Senior Notes due 2029 and (d) the date that is ninety-one (91 ) days prior to the maturity date of any other Junior Debt (as defined in the Second Lien Credit Agreement) unless certain liquidity conditions are satisfied.
The interest rate for all Loans will be calculated, at the option of the borrowers, (a) in the case of the Revolving Facility, at either the adjusted term Secured Overnight Funding Rate (“SOFR”) plus 4.00 %, or the base rate plus 3.00 % and (b) in the case of the Term Loan Facility, at either the adjusted term SOFR plus 5.50 % or the base rate plus 4.50 %, subject to step downs based on a total secured leverage ratio.
The interest rate for the Second Lien Term Loan Facility will be calculated, (a) in the case of Second Lien Term Loan Facility that bear interest at ABR, as the Applicable Margin plus the ABR and (b) in the case of Term SOFR Loans, the Applicable Margin plus the relevant Adjusted Term SOFR Rate, in each case subject to step downs based on a total secured leverage ratio. The interest rate for the Second Lien Term Loan will be calculated (a) in the case of loans that bear interest at ABR, 5.00 % plus the ABR and (b) in the case of Term SOFR Loans, 6.00 % plus the relevant Adjusted Term SOFR Rate, in each case subject to step downs based on a total secured leverage ratio.
The Credit Facilities are guaranteed by the Company and the Company’s domestic subsidiaries, subject to certain customary exceptions. The Credit Facilities are secured by a first priority security interest in all of the capital stock of each borrower and guarantor (other than the Company) and substantially all of the assets of each borrower and guarantor, subject to certain customary exceptions.
The Second Lien Term Loan Facility is guaranteed on a senior secured second lien basis by the same entities that guarantee the obligations of the Borrower under the First Lien Credit Agreement on substantially the same terms (only as modified to reflect their second lien nature). The Second Lien Term Loan Facility is secured by a second priority security interest in substantially all of the assets of each borrower and guarantor, subject to certain customary exceptions, on substantially the same terms as set forth in the First Lien Credit Agreement.
Loans in respect of the Term Loan Facility outstanding under the First Lien Credit Agreement may be prepaid and commitments in respect of the Revolving Facility outstanding under the First Lien Credit Agreement may be terminated at the option of the Borrower subject to applicable premiums and a call protection premium payable on the amount prepaid or terminated, as applicable, in certain instances as follows: (1) 2.00 % of the principal amount so prepaid or terminated after the Amendment No. 3 Effective Date but prior to the first anniversary of the Amendment No. 3 Effective Date; (2) 1.00 % of the principal amount so prepaid or terminated after the first anniversary of the Amendment No. 3 Effective Date but prior to the second anniversary of the Amendment No. 3 Effective Date; and (3) 0.00 % of the principal amount so prepaid or terminated on or after the second anniversary of the Amendment No. 3 Effective Date.
The Borrowers will pay an unused line fee equal to 0.50 % times the result of (i) the aggregate amount of the Revolving Facility, less (ii) the average Revolving Facility usage during the immediately preceding month (or portion thereof), which fee shall be due and payable quarterly in arrears, on the first day of each calendar quarter from and after the IPG Closing Date and on the date on which (X) the Credit Facilities are paid in full in cash and (y) the Revolving Facility is otherwise terminated in accordance with the terms of the First Lien Credit Agreement.
Loans under the 2024 Incremental Facilities are subject to the same security and guarantee arrangements and affirmative and negative covenants, mandatory prepayment provisions and events of default as loans outstanding under the Existing Credit Agreement, in each case, subject to certain modifications agreed by the parties.
As of September 30, 2026, there was $117.2 million, $62.5 million and $175.0 million principal balance subject to interest under the Company’s Term Loan Facility, Revolving Facility and Second Lien Term Loan Facility, respectively.
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Summary of Credit Agreement
The following table summarizes the terms of our Credit Agreement as of September 30, 2026 (in thousands, except per share conversion rates and prices):
| First Lien Term Loan | Second Lien Term Loan | Revolving Facility | |||||||||||||||
| Aggregate principal amount at issuance | $ | $ | $ | ||||||||||||||
Coupon interest rate per annum (1) | SOFR + | SOFR + | SOFR + | ||||||||||||||
| Debt issuance costs | $ | $ | $ | ||||||||||||||
| Net proceeds at issuance | $ | N/A (2) | $ | ||||||||||||||
| Issuance date | January 29, 2025 | August 7, 2025 | August 1, 2022 | ||||||||||||||
| Interest payment dates | January 1, April 1, July 1 and October 1 | January 1, April 1, July 1 and October 1 | January 1, April 1, July 1 and October 1 | ||||||||||||||
| Carrying value | $ | $ | $ | ||||||||||||||
| Unamortized debt discount and issuance costs | |||||||||||||||||
| Outstanding principal | $ | $ | $ | ||||||||||||||
| Remaining amortization period (years) | |||||||||||||||||
Fair value (3) | $ | $ | $ | ||||||||||||||
————————
(1)Interest rate per annum for the First Lien Term Loan, Second Lien Term Loan and Revolving Facility include a 15 basis point Term SOFR Adjustment in accordance with the agreement. Interest rate per annum for the Revolving Facility does not include a 50 basis point unused line fee.
(2)The Second Lien Term Loan was converted from our Series A Preferred Stock on August 7, 2025.
(3)Fair values for the First Lien Term Loan and Second Lien Term Loan considered the expected future cash flows associated with the debt instruments, including contractual interest and principal repayments. These projected cash flows were discounted to present value using a rate reflective of the Company’s credit profile and the risk characteristics of the instruments. Fair value of the Revolving Facility was determined to equal the outstanding principal value because the Revolving Facility is over collateralized and can be repaid anytime.
Interest Expense
Interest expense and amortization of debt issuance costs activity were as follows (in thousands):
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| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||
| 2025 Notes | ||||||||||||||||||||||||||||||||||||||
| Coupon interest expense | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Amortization of debt issuance costs | ||||||||||||||||||||||||||||||||||||||
| Interest expense for 2025 Notes | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| 2029 Notes | ||||||||||||||||||||||||||||||||||||||
| Coupon interest expense | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Amortization of debt issuance costs | ||||||||||||||||||||||||||||||||||||||
| Interest expense for 2029 Notes | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| 2031 Notes | ||||||||||||||||||||||||||||||||||||||
| Coupon interest expense | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Amortization of debt issuance costs | ||||||||||||||||||||||||||||||||||||||
| Interest expense for 2031 Notes | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Credit Agreement | ||||||||||||||||||||||||||||||||||||||
| Term Loans | ||||||||||||||||||||||||||||||||||||||
| Coupon interest expense | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Amortization of debt issuance costs | ||||||||||||||||||||||||||||||||||||||
| Interest expense for Term Loans | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Revolver Facility | ||||||||||||||||||||||||||||||||||||||
| Coupon interest expense | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Amortization of debt issuance costs | ||||||||||||||||||||||||||||||||||||||
| Interest expense for Revolver Facility | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Note 10. Commitments and Contingencies
Commitments
Letters of Credit
As of September 30, 2026 and December 31, 2025, the Company was party to irrevocable standby letters of credit with a bank for $1.1 million and $14.9 million, respectively, for the benefit of regulatory authorities and risk-sharing agreements. As such, we held $1.1 million and $15.9 million, respectively, in restricted cash as collateral as of September 30, 2026 and December 31, 2025, respectively, inclusive of accrued interest. The letters of credit have current expiration dates beginning in November 2026 and will automatically extend without amendment for an additional one-year period and will continue to automatically extend after each one-year term from the expiry date unless the bank elects not to extend beyond the initial or any extended expiry date.
As of September 30, 2026, the Company maintained various surety bonds totaling $3.4 million for the benefit of regulatory authorities and risk-sharing agreements. The surety bonds have expiration dates between October 2026 and July 2027 and automatically extend for additional one-year periods.
Indemnifications
The Company’s customer agreements generally include a provision by which the Company agrees to defend its partners against third-party claims (a) for death, bodily injury, or damage to personal property caused by Company negligence or willful misconduct, (b) by former or current Company employees arising from such managed service agreements, (c) for intellectual property infringement under specified conditions and (d) for Company violation of applicable laws, and to indemnify them against any damages and costs awarded in connection with such claims. To date, the Company has not incurred any material costs as a result of such indemnities and has not accrued any liabilities related to such obligations in the accompanying consolidated financial statements.
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Tax Receivables Agreement
In connection with the Offering Reorganization, the Company entered into the Tax Receivables Agreement (the “TRA”) with certain of its investors, which provides for the payment by the Company to these investors of 85 % of the amount of the tax benefits, if any, that the Company is deemed to realize as a result of increases in our tax basis related to exchanges of Class B common units as well as tax benefits attributable to the future utilization of pre-IPO NOLs.
The Company recognized a TRA liability of $108.9
Contingencies
Litigation Matters
We are engaged from time to time in certain legal disputes arising in the ordinary course of business, including employment claims. When the likelihood of a loss contingency becomes probable and the amount of the loss can be reasonably estimated, we accrue a liability for the loss contingency. We continue to review accruals and adjust them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel, and other relevant information. To the extent new information is obtained, and our views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in our accrued liabilities would be recorded in the period in which such determination is made.
On June 8, 2021, a shareholder of the Company filed a derivative action in the Delaware Chancery Court against some current and former Board members and against the Company as a nominal defendant, alleging that the Company’s Board was negligent in its oversight of the Company’s relationship with University Healthcare, Inc d/b/a Passport Health Plan. The case is Lincolnshire Police Pension Fund, derivatively on behalf of Evolent Health, Inc., v. Blackley, Williams, Scott, Holder, Farner, D’Amato, Duffy, Felt, Samet, Hobart, and Payson, and Evolent Health, Inc. (the “Derivative Action”). The Company and the Director-Defendants filed a motion to dismiss the complaint on August 27, 2021, and Plaintiffs responded by filing an amended complaint on October 26, 2021. Defendants filed a motion to dismiss the amended complaint on December 17, 2021. Plaintiffs filed a motion to dismiss the case without prejudice, which was granted by the Delaware Chancery Court on January 5, 2023. On April 6, 2023, a shareholder of the Company sent a letter to the Company’s Board (the “Demand”) requesting that the Company’s Board of Directors (the “Board”), among other things, investigate alleged wrongdoing and commence litigation for breach of fiduciary duty against the individuals named as defendants in the Derivative Action. The Board considered it appropriate to investigate, evaluate, and consider the issues and matters raised in the Demand, and are working with outside counsel to do so. On February 15, 2024, the Board, following careful deliberation, responded that it was in the best interests of the Company and its shareholders to refuse to take the actions, including commencing litigation, that were made in the Demand. The Company cannot currently estimate the loss or the range of possible losses it may experience in connection with this request.
On August 12, 2025, the Company received a Civil Investigative Demand (“CID”) from the Department of Justice pursuant to a False Claims Act investigation concerning allegations that a former customer of the Company and/or certain other parties may have submitted, or caused the submission of, unsupported diagnosis codes in connection with Medicare Advantage beneficiaries. The CID covers the period since January 1, 2016, and the former customer has not been a customer of the Company since 2021. The Company is cooperating with the government in the investigation. The Company cannot predict the scope, duration or outcome of this investigation, and cannot currently estimate the loss or the range of possible losses it may experience in connection with this investigation.
In the ordinary course of business, we periodically receive civil investigative demands, subpoenas and other formal requests for information from attorneys general, regulatory bodies, and government agencies, at federal and state levels. Our general policy is to cooperate and respond fully to such requests as required by law. We are not aware of any such matters that, individually or in the aggregate, are expected to have a material adverse effect on the Company’s financial position.
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Credit and Concentration Risk
The Company is subject to significant concentrations of credit risk related to cash and cash equivalents and accounts receivable. As of September 30, 2026, approximately 93 % of our $155.9 million of cash and cash equivalents and restricted cash were held in either bank deposits with FDIC participating banks or overnight sweep accounts invested in money-market funds and approximately 7 % were held in international banks. While the Company maintains its cash and cash equivalents with financial institutions with high credit ratings, it often maintains these deposits in federally insured financial institutions in excess of federally insured limits. The Company is closely monitoring ongoing events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally. The Company has not experienced any realized losses on cash and cash equivalents to date; however, no assurances can be provided.
The Company is also subject to significant concentration of accounts receivable risk as a substantial portion of our trade accounts receivable is derived from a small number of our partners. The following table summarizes the partners who represented at least 10.0% of our consolidated short-term trade accounts receivable, excluding pharmacy claims receivable and premiums receivable:
| September 30, 2026 | December 31, 2025 | ||||||||||
| Aetna | * | ||||||||||
| Cook County Health and Hospitals System | |||||||||||
| Florida Blue | * | ||||||||||
| Highmark | * | ||||||||||
| Molina Healthcare, Inc. | |||||||||||
————————
* Represents less than 10.0 % of the respective balance.
In addition, the Company is subject to significant concentration of revenue risk as a substantial portion of our revenue is derived from a small number of contractual relationships with our partners.
The following table summarizes those partners who represented at least 10.0% of our consolidated revenue:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Aetna | * | * | |||||||||||||||||||||||||||
| Centene Corporation | * | * | |||||||||||||||||||||||||||
| Cook County Health and Hospitals System | |||||||||||||||||||||||||||||
| Florida Blue | * | * | |||||||||||||||||||||||||||
| Highmark | * | * | |||||||||||||||||||||||||||
| Molina Healthcare, Inc. | |||||||||||||||||||||||||||||
————————
* Represents less than 10.0% of the respective balance.
25
Note 11. Leases
The Company leases office space and computer and other equipment under operating lease agreements expiring at various dates. Under the lease agreements, in addition to base rent, the Company is generally responsible for operating and maintenance costs and related fees. Several of these agreements include tenant improvement allowances, rent holidays or rent escalation clauses. When such items are included in a lease agreement, we record such items in right-of-use assets and operating lease liabilities on our consolidated balance sheets equal to the difference between rent expense and future minimum lease payments due. The rent expense related to these items is recognized on a straight-line basis over the terms of the leases.
The following table summarizes our primary office leases as of September 30, 2026 (in thousands, other than term):
| Location | Lease Termination Term (in years) | Future Minimum Lease Commitments | Letter of Credit Amount Required | |||||||||||||||||
| Arlington, VA | $ | $ | ||||||||||||||||||
| Makati City, Philippines | ||||||||||||||||||||
| Pune, India | ||||||||||||||||||||
| Brea, CA | ||||||||||||||||||||
Loss on Lease Termination
During the year ended December 31, 2024, the Company terminated its Chicago, IL lease effective October 31, 2024. The Company paid $6.4
The following table summarizes the components of our lease expense (in thousands):
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Operating lease cost, net of sublease income | $ | $ | $ | $ | |||||||||||||||||||||||||
| Variable lease cost | |||||||||||||||||||||||||||||
| Total lease cost | $ | $ | $ | $ | |||||||||||||||||||||||||
Maturity of lease liabilities including future lease termination payments (in thousands) is as follows:
| Operating Lease Expense | |||||
| 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total lease payments | |||||
| Less: | |||||
| Interest | |||||
| Present value of lease liabilities | $ | ||||
Our weighted-average discount rate and our weighted remaining lease terms (in years) are as follows:
| September 30, 2026 | December 31, 2025 | ||||||||||||||||
| Weighted average discount rate | % | % | |||||||||||||||
| Weighted average remaining lease term | |||||||||||||||||
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Note 12. Convertible Preferred Equity
In connection with the NIA closing, on January 20, 2023, the Company entered into a Securities Purchase Agreement (Series A Convertible Preferred Stock) with the Purchasers listed on Schedule I thereto (the “Securities Purchase Agreement”) pursuant to which the Company offered and sold to the Purchasers an aggregate 175,000 shares of the Series A Preferred Stock, par value $0.01 (the “Series A Preferred Stock”), at a purchase price of $960.00 per share, resulting in total gross proceeds to the Company of $168.0 million. The proceeds from the offer and sale of the Series A Preferred Stock were used, together with the proceeds from the Incremental Revolving Facility and Incremental Term Loan Facility, to finance the cash consideration payable at the NIA Closing Date and pay transaction fees and expenses.
On June 19, 2025, the Company entered into Amendment No. 5 which provided, in part, that failure to consummate the Exchange of our Series A Preferred Stock for the new Second Lien Term Loan Facility in certain circumstances would constitute an event of default under the First Lien Credit Agreement. Amendment No. 5 was accounted for as an extinguishment and reissuance of the Series A Preferred Stock. The Series A Preferred Stock post-amendment was recorded at fair value, including a $9.0 million charge to extinguishment of Series A Preferred Stock and other refinancing fees on the consolidated statement of operations and comprehensive income (loss) and the remainder as a deemed dividend.
Additionally, on August 7, 2025, the Company completed the exchange of its existing Series A Preferred Stock for the new Second Lien Term Loan Facility on substantively similar economic terms to the existing Series A Preferred Stock, with no common stock conversion feature, pursuant to an Exchange Agreement (the “Exchange”). See Note 9 for further details regarding our Second Lien Term Loan Facility.
Regular dividends on the Series A Preferred Stock were paid quarterly in cash in arrears at a rate per annum equal to Adjusted Term SOFR (as defined in the Certificate of Designation of the Series A Preferred Stock filed by the Company with the Delaware Secretary of State on January 19, 2023 (the “Certificate of Designation”)) plus 6.00 %.
Prior to the exchange, the Company accreted redemption value in excess of par at a redemption price per share equal to 150.00 % of the then-current liquidation preference per share of the Series A Preferred Stock.
The Inflation Reduction Act of 2022 imposed a non-deductible 1% excise tax on the net value of certain equity transactions made after December 31, 2022. We recorded the applicable excise tax in additional paid-in-capital as part of the Exchange and a corresponding liability for the excise tax payable in accrued liabilities on our consolidated balance sheet. The excise tax was paid in April 2026.
The Company paid dividends and recorded accretion of deferred issuance costs and redemption value related to the Series A Preferred Stock and excise tax as presented below (in thousands):
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Cash dividends on Series A Preferred Stock | $ | $ | $ | $ | |||||||||||||||||||||||||
| Accretion of deferred financing costs and redemption value in excess of par excluding extinguishment of Series A Preferred Stock, net of tax benefit | |||||||||||||||||||||||||||||
| Excise tax on exchange of Series A Preferred Stock | |||||||||||||||||||||||||||||
| Dividends and accretion of Series A Preferred Stock including excise tax | $ | $ | $ | $ | |||||||||||||||||||||||||
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Note 13. Loss Per Common Share
The following table sets forth the computation of basic and diluted earnings per share available for common stockholders (in thousands, except per share data):
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Loss before preferred dividends and accretion of Series A Preferred Stock including excise tax | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||
| Dividends and accretion of Series A Preferred Stock including excise tax | ( | ( | |||||||||||||||||||||||||||
| Net loss attributable to common shareholders of Evolent Health, Inc. | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||
| Weighted-average common shares outstanding - basic and diluted | |||||||||||||||||||||||||||||
| Loss per common share | |||||||||||||||||||||||||||||
| Basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||
Basic net loss per common share is calculated using the weighted average number of common shares outstanding during the period. Diluted net earnings per common share, if any, gives effect to diluted stock options (calculated based on the treasury stock method), shares issuable upon debt conversion (calculated using an as-if converted method).
Anti-dilutive shares excluded from the calculation of weighted-average common shares presented above are presented below (in thousands):
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Restricted stock units and performance-based RSUs | |||||||||||||||||||||||||||||
| Series A Preferred Stock | |||||||||||||||||||||||||||||
| Convertible senior notes | |||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||
Note 14. Stock-based Compensation
Total compensation expense by award type and line item in our consolidated financial statements was as follows (in thousands):
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Award Type | |||||||||||||||||||||||
| RSUs | |||||||||||||||||||||||
| PSUs | |||||||||||||||||||||||
| Total compensation expense by award type | $ | $ | $ | $ | |||||||||||||||||||
| Line Item | |||||||||||||||||||||||
| Cost of revenue | $ | $ | $ | $ | |||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Total compensation expense by financial statement line item | $ | $ | $ | $ | |||||||||||||||||||
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Stock-based awards were granted as follows (in thousands):
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| RSUs | |||||||||||||||||||||||
| PSUs | |||||||||||||||||||||||
Note 15. Income Taxes
For interim periods, we recognize an income tax provision or benefit based on our estimated annual effective tax rate expected for the full year, adjusted for discrete items recognized during the interim period. Discrete items (e.g., significant or unusual items) are separately recognized in the quarter during which they occur and can cause the effective tax rate to vary from quarter to quarter.
Note 16. Investments and Equity Method Investees
The Company holds ownership interests in joint ventures and other entities which are accounted for under the equity method. Our joint ventures and other investments from time to time may, and some do, include put or call features under which we could be contractually required to purchase interests from our joint venture partner at an exercise price determined in reference to a multiple of the dollar amount of our joint venture partner’s total capital contributions, the performance of the joint venture, and other factors. The Company evaluates its interests in these entities to determine whether they meet the definition of a VIE and whether the Company is required to consolidate these entities. A VIE is consolidated by its primary beneficiary, which is the party that has both (i) the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) a variable interest that could potentially be significant to the VIE. To determine whether or not a variable interest the Company holds could potentially be significant to the VIE, the Company considers both qualitative and quantitative factors regarding the nature, size and form of the Company’s involvement with the VIE. The Company has determined that its interests in these entities meet the definition of a variable interest, however, the Company is not the primary beneficiary since it does not have the power to direct activities, therefore, the Company did not consolidate the VIEs.
As of both September 30, 2026 and December 31, 2025, the Company’s economic interests in its equity method investments were 4 11 0.1 million and $3.0 thousand for the three and nine months ended September 30, 2026, respectively, and $0.2 million and $0.3 million for the three and nine months ended September 30, 2025, respectively.
The Company signed services agreements with certain of the aforementioned entities to provide certain management, operational and support services to help manage elements of their service offerings. Revenue related to these services agreements were $2.7 million and $11.1 million for the three and nine months ended September 30, 2026, respectively, and $3.9 million and $8.3 million for the three and nine months ended September 30, 2025, respectively.
Loss on Option Exercise
During the year ended December 31, 2025, we completed the purchase of a portion of one of our equity method investments that we did not own from our joint venture partner for the price of $51.5 million. The purchase price was fixed based on a previously negotiated put/call structure. The loss of $52.5 million represents the difference between the purchase price under the put option and the estimated fair value of the interests acquired. The joint venture was primarily focused on a portfolio of oncology clinics, a member navigation platform and practice alignment arm. The oncology clinics in the joint venture were shut down or otherwise disposed of prior to the payment of the put option, and the joint venture will have no continuing operations.
29
Note 17. Related Parties
As discussed in Note 16, the Company had economic interests in several entities that are accounted for under the equity method of accounting. The Company has allocated its proportional share of the investees’ income and losses each reporting period. In addition, Evolent has entered into services agreements with certain of the entities to provide certain management, operational and support services to help the entities manage elements of their service offerings.
The following table presents assets and liabilities attributable to our related parties (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Accounts receivable, net | $ | $ | |||||||||
| Prepaid expenses and other current assets | |||||||||||
| Liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued liabilities | |||||||||||
| Deferred revenue | |||||||||||
The following table presents revenues and expenses attributable to our related parties (in thousands):
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||||||||
Note 18. Segment Reporting
We have one operating segment and one reportable segment as our CODM assesses the performance of our operations, develops strategy and reviews financial information on a consolidated basis for purposes of evaluating financial performance and allocating resources. The performance measure closest to U.S. GAAP used by our CODM to evaluate the performance of the Company’s ongoing operations on a consolidated basis and as part of the Company’s internal planning and forecasting activities is net loss attributable to common shareholders of Evolent Health, Inc. The CODM does not evaluate performance or allocate resources based on segment assets, and therefore such information is not presented in the notes to the financial statements.
30
The following table presents our revenue and significant expenses reviewed by our CODM, other segment items and net loss attributable to common shareholders of Evolent Health, Inc. (in thousands):
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
Medical expense and device costs (1) | |||||||||||||||||||||||||||||
Cost of revenue excluding medical expense and device costs and other segment items (2) | |||||||||||||||||||||||||||||
Selling, general and administrative expenses excluding other segment items (3) | |||||||||||||||||||||||||||||
| Depreciation and amortization expenses | |||||||||||||||||||||||||||||
| Interest income | ( | ( | ( | ( | |||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||
| Income from equity method investees | ( | ( | ( | ( | |||||||||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||||||||
Other segment items (4) | |||||||||||||||||||||||||||||
| Net loss attributable to common shareholders of Evolent Health, Inc. | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||
————————
(1)Medical expenses and device costs include $525.0 million and $1.3 billion for the three and nine months ended September 30, 2026, respectively, and $243.9 million and $664.1 million for the three and nine months ended September 30, 2025, respectively, of total claims incurred related to our specialty care management services solution.
(2)Other segment items excluded from cost of revenue excluding medical expense and device costs include $1.8 million and $3.1 million for the three and nine months ended September 30, 2026, respectively, and $1.2 million and $2.9 million for the three and nine months ended September 30, 2025, respectively, of stock compensation.
(3)Other segment items excluded from selling, general and administrative expenses include the following (in thousands):
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Stock-based compensation | $ | $ | $ | $ | |||||||||||||||||||||||||
| Severance costs | |||||||||||||||||||||||||||||
| Transaction-related costs | |||||||||||||||||||||||||||||
Note 19. Reserve for Claims and Performance-Based Arrangements
The Company maintains reserves for its liabilities related to payments to providers and pharmacies under performance-based arrangements related to its specialty care management services solutions.
Reserves for claims and performance-based arrangements reflect payments under performance-based arrangements and the ultimate cost of claims that have been incurred but not reported, including expected development on reported claims, those that have been reported but not yet paid (reported claims in process), and other medical care expenses and services payable that are primarily composed of accruals for incentives and other amounts payable to health care professionals and facilities.
The Company uses actuarial principles and assumptions that are consistently applied each reporting period and recognizes the actuarial best estimate of the ultimate liability along with a margin for adverse deviation. This approach is consistent with actuarial standards of practice that the liabilities be adequate under moderately adverse conditions.
This liability predominately consists of incurred but not reported amounts and reported claims in process including expected development on reported claims. The liability for reserves related to its specialty care management services is calculated using “completion factors” developed by comparing the claim incurred date to the date claims were paid. Completion factors are impacted by several key items including changes in: 1) electronic (auto-adjudication) versus manual claim processing, 2) provider claims submission rates, 3) membership and 4) the mix of products.
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The Company’s policy for reserves related to its specialty care management services solutions is to use historical completion factors combined with an analysis of current trends and operational factors to develop current estimates of completion factors. The Company estimates the liability for claims incurred in each month by applying the current estimates of completion factors to the current paid claims data. This approach implicitly assumes that historical completion rates will be a useful indicator for the current period.
For more recent months, and for newer lines of business where there is not sufficient paid claims history to develop completion factors, the Company expects to rely more heavily on medical cost trend and expected loss ratio analysis that reflects expected claim payment patterns and other relevant operational considerations, or authorization analysis. Medical cost trend is primarily impacted by medical service utilization and unit costs that are affected by changes in the level and mix of medical benefits offered, including inpatient, outpatient and pharmacy, the impact of copays and deductibles, changes in provider practices and changes in consumer demographics and consumption behavior. Authorization analysis projects costs based on authorizations per thousand members and assumptions on average costs per authorization. This is also adjusted for the impact of copays, deductibles, unit cost and historic discontinuation rates for treatment.
For each reporting period, the Company compares key assumptions used to establish the reserves for claims and performance-based arrangements to actual experience. When actual experience differs from these assumptions, reserves for claims and performance-based arrangements are adjusted through current period net income. Additionally, the Company evaluates expected future developments and emerging trends that may impact key assumptions. The process used to determine this liability requires the Company to make critical accounting estimates that involve considerable judgment, reflecting the variability inherent in forecasting future claim payments. These estimates are highly sensitive to changes in the Company’s key assumptions, specifically completion factors and medical cost trends.
Activity in reserves for claims and performance-based arrangements related to our specialty care management services solution was as follows (in thousands):
| For the Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Balance, beginning of period | $ | $ | |||||||||
| Incurred health care costs: | |||||||||||
| Current year to date period | |||||||||||
| Prior year to date period | ( | ( | |||||||||
| Total claims incurred | |||||||||||
| Claims paid related to: | |||||||||||
| Current year to date period | ( | ( | |||||||||
| Prior year to date period | ( | ( | |||||||||
| Total claims paid | ( | ( | |||||||||
| Balance, end of period | $ | $ | |||||||||
Note 20. Supplemental Cash Flow Information
The following represents supplemental cash flow information (in thousands):
| For the Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| Supplemental disclosure of non-cash investing and financing activities | |||||||||||||||||
| Accrued property and equipment purchases | $ | ( | $ | ( | |||||||||||||
| Accrued excise tax on Series A Preferred Stock | |||||||||||||||||
| Exchange of Series A Preferred Stock | |||||||||||||||||
| Cancellation of Treasury Stock | ( | ||||||||||||||||
| Accrued excise tax on repurchase of common stock | |||||||||||||||||
| Effects of leases | |||||||||||||||||
| Operating cash outflows from operating leases | |||||||||||||||||
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the Company’s financial condition and results of operations. The MD&A is provided as a supplement to, and should be read in conjunction with, our interim consolidated financial statements and the accompanying notes to our interim consolidated financial statements presented in “Part I – Item 1. Financial Statements” of this Form 10-Q; our 2025 Form 10-K, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; and our current reports on Form 8-K filed in 2026.
INTRODUCTION
Business Overview
We are a market leader in connecting care for people with complex conditions like cancer, cardiovascular disease, and musculoskeletal diagnoses. We work on behalf of health plans and other risk-bearing entities and payers (our customers) to support physicians and other healthcare providers (our users) in providing high quality evidence-based care to their patients. We believe adherence to evidence-based clinical pathways supports better outcomes for patients, a better experience for physicians, and lower costs for the healthcare system overall.
Specialty care represents a significant and fast-growing portion of healthcare costs in the United States, driven in part by the pace of development of new therapies and treatments. To manage these increasing costs, some health plans and other risk-bearing entities historically deployed cost containment strategies that can limit access to care and operate in narrow silos (for example, prior authorization for radiological studies being considered independently from a comprehensive chemotherapy regimen). We believe Evolent can bring an integrated approach to a patient’s condition across multiple specialties, using technology to recommend our evidence-based clinical pathways in a way that provides rapid feedback to the provider, seeks to remove barriers to care, and aligns financial incentives with the best evidence.
We were an early innovator in value-based care, founded in 2011 by members of our management team, UPMC, an integrated delivery system based in Pittsburgh, Pennsylvania, and The Advisory Board Company.
All of our revenue is recognized in the United States and substantially all of our long-lived assets are located in the United States.
Recent Events
Industry Climate
During 2024, the medical claims costs in our Performance Suite grew at a significantly faster rate than historical norms, negatively impacting our financial results. This growth was driven in part by higher disease prevalence, as well as higher cost per active patient. Based on commentary from other market participants, we believe these cost increases were industry-wide and not specific to Evolent. Our results for 2025 were also impacted by growth in medical claims cost that continued to grow faster than our historical averages.
Changes in Medicaid, and the ACA Health Exchanges, including but not limited to those caused by the passage of the One Big Beautiful Bill Act during 2025, created industry expectations for higher member acuity and lower membership in future years. These expectations are exacerbated by the aggregate medical trends experienced by our customers across all lines of business, which has led those customers to exit markets, adjust their benefits and take other actions that are likely to contribute to lower membership in the future. During the quarter ended September 30, 2026, our customers reported membership declines in Medicaid and Health Exchanges consistent with our expectations.
We are unable to predict how these broader dynamics will impact our business and results of operations in the future, but they could continue to impact our financial condition and results of operations and such future impacts could be material.
Impact of Inflation
We experience pricing pressures in the form of competitive prices in addition to rising costs for certain inflation-sensitive operating expenses such as labor, employee benefits and facility leases. We do not believe these impacts were material to our revenues or net loss for the three and nine months ended September 30, 2026. However, significant sustained inflation driven by the macroeconomic environment or other factors could negatively impact our margins, profitability and results of operations in future periods.
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Customers
The following table summarizes those partners who represented at least 10.0% of our consolidated revenue:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Aetna | 12.8% | * | 15.4% | * | |||||||||||||||||||||||||
| Centene Corporation | * | 13.8% | * | 12.1% | |||||||||||||||||||||||||
| Cook County Health and Hospitals System | 11.4% | 17.6% | 12.8% | 16.9% | |||||||||||||||||||||||||
| Florida Blue | * | 14.4% | * | 14.4% | |||||||||||||||||||||||||
| Highmark | 28.1% | * | 18.5% | * | |||||||||||||||||||||||||
| Molina Healthcare, Inc. | 23.1% | 25.7% | 23.0% | 24.6% | |||||||||||||||||||||||||
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* Represents less than 10.0% of the respective balance.
Segment Reporting
We have one operating segment and one reportable segment as our CODM, who is our Chief Executive Officer, assesses the performance of our operations, develops strategy and reviews financial information on a consolidated basis for purposes of evaluating financial performance and allocating resources.
Critical Accounting Policies and Estimates
Certain GAAP policies that significantly affect the determination of our financial position, results of operations and cash flows, are summarized below. See “Part II - Item 8. Financial Statements and Supplementary Data - Note 2” in our 2025 Form 10-K for a complete summary of our significant accounting policies.
Goodwill and Intangible Assets, Net
We recognize the excess of the purchase price plus the fair value of any non-controlling interests in the acquiree over the fair value of identifiable net assets acquired as goodwill. Goodwill is not amortized, but is reviewed at least annually for indications of impairment, with consideration given to financial performance and other relevant factors. We perform impairment tests of goodwill at a reporting unit level. We perform impairment tests between annual tests if an event occurs, or circumstances change, that we believe would more likely than not reduce the fair value of a reporting unit below its carrying amount.
Our goodwill impairment analysis first assesses qualitative factors to determine whether events or circumstances existed that would lead the Company to conclude it is more likely than not that the fair value of our reporting unit is below its carrying amount. Qualitative factors include macroeconomic, industry and market considerations, overall financial performance, industry, legal and other relevant events and factors affecting the reporting unit. Additionally, as part of this assessment, we may perform a quantitative analysis to support the qualitative factors above by applying sensitivities to assumptions and inputs used in measuring our reporting unit’s fair value.
If the Company determines that it is more likely than not that the fair value of our reporting unit is below the carrying amount, a quantitative goodwill assessment is required. In the quantitative evaluation, the fair value is determined and compared to the carrying value. If the fair value is greater than the carrying value, then the carrying value is deemed to be recoverable and no further action is required. If the fair value estimate is less than the carrying value, goodwill is considered impaired for the amount by which the carrying amount exceeds the reporting unit’s fair value and a charge is reported in goodwill impairment on our consolidated statements of operations and comprehensive income (loss). We use a discounted cash flow analysis in order to estimate the fair value of our reporting unit. The discounted cash flow analysis relies on significant judgment and assumptions about expected future cash flows, weighted-average cost of capital, discount rates, expected long-term growth rates and operating margins. These assumptions are based on estimates of future revenue and earnings after considering such factors as general economic and market conditions which drive key assumptions of revenue growth rates, operating margins, capital expenditures and working capital requirements. The weighted average cost of capital is based on market-based factors/inputs but also considers the specific risk characteristics of the reporting unit’s cash flow forecast. A significant change to these estimates and assumptions could cause the estimated fair values of our reporting unit and intangible assets to decline and increase the risk of an impairment charge to earnings. Intangible assets with finite lives are assessed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
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See “Part I - Item 1. Financial Statements - Note 8” in this Form 10-Q for more information related to the 2025 goodwill impairment test. As of September 30, 2026, Evolent assessed whether there were events or changes in circumstances that would more likely than not reduce the fair value of its goodwill below its carrying amount and require an interim impairment test. The Company determined there had been no such indicators. Therefore, the Company did not perform a quantitative goodwill impairment assessment as of September 30, 2026.
RESULTS OF OPERATIONS
Evolent Health, Inc. is a holding company and its principal asset is all of the Class A common units in Evolent Health LLC, which has owned all of our operating assets and substantially all of our business since inception. The financial results of Evolent Health LLC are consolidated in the financial statements of Evolent Health, Inc.
Key Components of our Results of Operations
Revenue
Our revenue contracts are typically multi-year arrangements with customers to provide solutions designed to lower the medical expenses of our partners and include our total cost of care management and specialty care management services solutions, provide comprehensive health plan operations and claims processing services, and also include transition or run-out services to customers.
Our performance obligation in these arrangements is to provide an integrated suite of services, including access to our platform that is customized to meet the specialized needs of our partners and providers. Generally, we will apply the series guidance to the performance obligation as we have determined that each time increment is distinct. We primarily utilize a variable fee structure for these services that typically includes a monthly payment that is calculated based on a specified per member per month rate, multiplied by the number of members that our partners are managing under a value-based care arrangement or a percentage of plan premiums. Our arrangements may also include other variable fees related to service level agreements, shared medical savings arrangements and other performance measures. Variable consideration is estimated using the most likely amount based on our historical experience and best judgment at the time.
We also deploy our services in capitation arrangements under our specialty care management solution and total cost of care solution, which we call the “Performance Suite.” Capitation arrangements under the Performance Suite may include performance-based arrangements and/or gainshare features. We occasionally use third parties to assist in satisfying our performance obligations. In order to determine whether we are the principal or agent in the arrangement, we review each third-party relationship on a contract-by- contract basis. As we integrate goods and services provided by third parties into our overall service, we control the services provided to the customer prior to its delivery. As such, we are the principal and we will recognize revenue on a gross basis. In certain cases, we act as an agent and do not control the services from third parties before it is delivered to the customer, thereby recognizing revenue on a net basis.
Due to the nature of our arrangements, certain estimates may be constrained if it is probable that a significant reversal of revenue will occur when the uncertainty is resolved. We recognize revenue from services over time using the time elapsed output method. Fixed consideration is recognized ratably over the contract term. In accordance with the series guidance, we allocate variable consideration to the period to which the fees relate.
Cost of Revenue (exclusive of depreciation and amortization)
Our cost of revenue includes direct expenses and shared resources that perform services in direct support of our partners. Costs consist primarily of claims expense, employee-related expenses (including compensation, benefits and stock-based compensation), as well as other professional fees. In certain cases, our cost of revenue also includes claims and capitation payments to providers and payments for pharmaceutical treatments and other health care expenditures through performance-based arrangements.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses consist of employee-related expenses (including compensation, benefits and stock-based compensation) for selling and marketing, corporate development, finance, legal, human resources, corporate information technology, professional fees and other corporate expenses associated with these functional areas. Selling, general and administrative expenses also include costs associated with our centralized infrastructure and research and development activities to support our network development capabilities, technology infrastructure, clinical program development and data analytics.
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Depreciation and Amortization Expense
Depreciation and amortization expenses consist of the amortization of intangible assets associated with the step up in fair value of Evolent Health LLC’s assets and liabilities for the Offering Reorganization, amortization of intangible assets recorded as part of our various business combinations and asset acquisitions and depreciation of property and equipment, including internal-use software development costs.
Lives on Platform and PMPM Fees
Performance Suite Lives on Platform are calculated by summing monthly members covered for specialty care services for contracts not under ASO arrangements divided by the number of months in the period. Specialty Technology and Services Suite Lives on Platform are calculated by summing monthly members covered for oncology, cardiology, musculoskeletal, advanced imaging and other diagnostics specialty care services for contracts under ASO arrangements divided by the number of months in the period. Administrative Services Lives on Platform are calculated by summing monthly members covered for administrative services implementation and core performance services divided by the number of months in the period. Cases are calculated by summing the number of individuals receiving services through our surgery management and advanced care planning programs in a given period. Members covered for more than one category are counted in each category.
Performance Suite Average PMPM fee is defined as revenue pertaining to our Performance Suite during the period reported divided by Performance Suite Lives on Platform for the period divided by the number of months in the period. Specialty Technology and Services Suite Average PMPM fee is defined as revenue pertaining to the Specialty Technology and Services Suite during the period reported divided by Specialty Technology and Services Suite Lives on Platform for the period divided by the number of months in the period. Administrative Services Average PMPM fee is defined as revenue pertaining to the Administrative Services during the period reported divided by the Administrative Services Lives on Platform for the period divided by the number of months in the period. Revenue per Case is calculated by the revenue pertaining to our surgery management and advanced care planning programs divided by the number of cases for a given period.
Average Unique Members are calculated by summing members covered by our Performance Suite, Specialty Technology and Services Suite and Administrative Services. In cases where partners cross between multiple solutions, we only capture members from the solution with the maximum number of members.
Management uses Lives on Platform, PMPM fees, Cases, Revenue per Case and Average Unique Members because we believe that they provide insight into the unit economics of our services. We believe that these measures are also useful to investors because they allow further insight into the period over period operational performance.
Medical Expense Ratio
Medical Expense Ratio (“MER”) is a key performance indicator used by management for purposes of monitoring operating performance and is calculated as GAAP total claims incurred related to our specialty care management services solution divided by GAAP revenue related to our Performance Suite. Management believes MER is useful to investors because it provides insight into the efficiency with which medical costs are managed relative to revenue and helps identify trends in the underlying performance. For periods prior to the consummation of the sale of Evolent Care Partners (“ECP”) in December 2025, we present non-GAAP MER excluding revenues from ECP because it is not indicative of ongoing operations. See “Part I - Item 1. Financial Statements - Note 5 - Disaggregation of Revenue” in this Form 10-Q for more information related to GAAP revenue by product type and “Part I - Item 1. Financial Statements - Note 19 in this Form 10-Q for more information related to GAAP total claims incurred.
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Consolidated Results
| (in thousands, except percentages) | For the Three Months Ended September 30, | Change Over Prior Period | For the Nine Months Ended September 30, | Change Over Prior Period | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 725,367 | $ | 479,533 | $ | 245,834 | 51.3% | $ | 1,874,133 | $ | 1,407,510 | $ | 466,623 | 33.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of revenue | 636,946 | 379,759 | 257,187 | 67.7% | 1,621,102 | 1,104,880 | 516,222 | 46.7 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 73,116 | 77,592 | (4,476) | (5.8)% | 214,765 | 231,210 | (16,445) | (7.1) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization expenses | 21,493 | 23,615 | (2,122) | (9.0)% | 64,614 | 70,814 | (6,200) | (8.8) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loss (gain) on lease termination | — | (1,230) | 1,230 | 100.0% | — | 676 | (676) | (100.0) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Change in fair value of contingent consideration | — | (1,089) | 1,089 | 100.0% | — | 1,837 | (1,837) | (100.0) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | 731,555 | 478,647 | 252,908 | 52.8% | 1,900,481 | 1,409,417 | 491,064 | 34.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss) | $ | (6,188) | $ | 886 | $ | (7,074) | (798.4)% | $ | (26,348) | $ | (1,907) | $ | (24,441) | (1,281.6) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of revenue as a percentage of revenue | 87.8% | 79.2% | 86.5% | 78.5% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses as a percentage of revenue | 10.1% | 16.2% | 11.5% | 16.4% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comparison of the Results for the Three Months Ended September 30, 2026 to 2025
Revenue
Total revenue increased by $245.8 million, or 51.3%, to $725.4 million for the three months ended September 30, 2026, as compared to 2025. The increase was primarily from $280.1 million of new Performance Suite contract go-lives and expanded oncology services to an existing customer during the three months ended September 30, 2026, net of $22.3 million from reductions in membership at certain of our health plan clients due to changes in exchange enrollment, eligibility verification rules and subsidy eligibility for some populations and rate adjustments within certain customer contracts.
The following table represents Evolent’s revenue disaggregated by line of business (in thousands):
| For the Three Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Medicaid | $ | 204,506 | $ | 227,535 | |||||||
| Medicare | 300,430 | 128,714 | |||||||||
| Commercial and other | 220,431 | 123,284 | |||||||||
| Total | $ | 725,367 | $ | 479,533 | |||||||
Performance Suite | $ | 564,293 | $ | 286,935 | |||||||
| Specialty Technology and Services Suite | 72,837 | 93,263 | |||||||||
| Administrative Services | 48,286 | 57,811 | |||||||||
| Cases | 39,951 | 41,524 | |||||||||
| Total | $ | 725,367 | $ | 479,533 | |||||||
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| Revenue from Evolent Care Partners | — | 21,550 | |||||||||
Performance Suite revenue excluding revenue from Evolent Care Partners (1) | $ | 564,293 | $ | 265,385 | |||||||
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(1)Performance Suite revenue excluding revenue from Evolent Care Partners is non-GAAP and used in calculating MER excluding Evolent Care Partners. Refer to “Comparison of the Results for the Three Months Ended September 30, 2026 to 2025 - Cost of Revenue” for additional information on MER excluding Evolent Care Partners.
The following table represents the Company’s Lives on Platform, Cases, PMPM fees and revenue per case for the three months ended September 30, 2026 and 2025 (Average Lives on Platform/Cases in thousands) by product type:
| Average Lives on Platform/ Cases | Average PMPM Fees / Revenue per Case | ||||||||||||||||||||||
| For the Three Months Ended September 30, | For the Three Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Performance Suite | 7,195 | 6,474 | $ | 26.14 | $ | 14.77 | |||||||||||||||||
| Specialty Technology and Services Suite | 74,733 | 78,050 | 0.32 | 0.40 | |||||||||||||||||||
| Administrative Services | 1,163 | 1,222 | 13.84 | 15.77 | |||||||||||||||||||
| Cases | 11 | 13 | 3,605 | 3,236 | |||||||||||||||||||
| Average Unique Members | 39,804 | 40,781 | |||||||||||||||||||||
Cost of Revenue
Cost of revenue increased by $257.2 million, or 67.7%, to $636.9 million for the three months ended September 30, 2026, as compared to 2025, principally as a result of the 51.3% increase in our revenue compared to year ended September 30, 2025. The increase included approximately $281.1 million of higher claims cost compared to the prior year period, which is primarily attributable to new Performance Suite contract go-lives in 2026 and expansion in oncology services to an existing customer offset by $14.6 million from lower personnel costs compared to the prior year driven by reduced headcount and changes to benefits and bonus structure for employees.
The following table represents the Company’s MER for its specialty care management services solution:
| For the Three Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
Total claims incurred related to our specialty care management services solution (1) | $ | 524,970 | $ | 243,908 | |||||||
| Performance Suite revenue | 564,293 | 286,935 | |||||||||
Performance Suite revenue excluding revenue from Evolent Care Partners (2) | 564,293 | 265,385 | |||||||||
| MER | 93.0 | % | 85.0 | % | |||||||
MER excluding Evolent Care Partners (3) | N/A | 91.9 | % | ||||||||
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(1)Refer to the discussion in “Part I - Item 1. Financial Statements - Note 19” for additional information on total claims incurred.
(2)Refer to “Comparison of the Results for the Three Months Ended September 30, 2026 to 2025 - Revenue” for additional information on Performance Suite revenue less revenue from Evolent Care Partners.
(3)Refer to “Key Components of our Results of Operations - Medical Expense Ratio” for additional information on Non-GAAP MER excluding Evolent Care Partners.
The increase in MER for three months ended September 30, 2026 compared to 2025 is driven primarily by the disposition of Evolent Care Partners in December 2025.
Approximately $1.8 million and $1.2 million of total cost of revenue was attributable to stock-based compensation expense for the three months ended September 30, 2026, and 2025 respectively. Cost of revenue represented 87.8% and 79.2% of total revenue for the
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three months ended September 30, 2026, and 2025 respectively. Our cost of revenue increased as a percentage of our total revenue due to the maturation profile of two new Performance Suite contracts that went live during the first half of 2026 We anticipate continued growth in the cost of treatment for cancer and cardiovascular patients over time, which we expect to be offset by contractual protections within our Performance Suite and the impact of our clinical interventions.
Selling, General and Administrative Expenses
Selling, general, and administrative expenses decreased by $4.5 million, or 5.8%, to $73.1 million for the three months ended September 30, 2026, as compared to 2025. The decrease was primarily driven by lower technology services of $2.5 million due primarily to a change in services received from certain vendors, lower personnel costs of $0.2 million from reduced headcount and changes to benefits and bonus structure for employees offset by higher severance of $1.8 million, lower stock compensation of $0.5 million and lower lease expense of $1.4 million due to the termination of certain real estate leases.
Approximately $13.0 million and $13.4 million of total selling, general and administrative costs were attributable to stock-based compensation expense for the three months ended September 30, 2026, and 2025, respectively. Acquisition and severance costs accounted for approximately $4.1 million and $2.1 million of total selling, general and administrative expenses for the three months ended September 30, 2026 and 2025, respectively. Selling, general and administrative expenses represented 10.1% and 16.2% of total revenue for the three months ended September 30, 2026, as compared to 2025, respectively.
Depreciation and Amortization Expenses
Depreciation and amortization expenses decreased $2.1 million, or 9.0%, to $21.5 million for the three months ended September 30, 2026, as compared to 2025 due primarily to lower amortization on ECP provider network contracts which were sold in December 2025 and lower amortization of certain customer relationships and technology intangibles reaching their useful life.
Depreciation and amortization expenses include $12.5 million and $13.4 million for the three months ended September 30, 2026, and 2025, respectively, of amortization expense on intangible assets such as corporate trade names, customer relationships, provider network contracts and existing technology related to acquisitions and business combinations.
Gain on Lease Termination
During the year ended December 31, 2024, the Company terminated its Chicago, IL lease effective October 31, 2024. We recorded an additional $1.2 million gain on lease termination related to negotiated termination payments and real estate commissions during the three months ended September 30, 2025.
Change in Fair Value of Contingent Consideration
We recorded a gain on change in fair value of contingent consideration of $1.1 million for the three months ended September 30, 2025 primarily related to our Machinify earnout offset by our ECP contingent consideration.
Comparison of the Results for the Nine Months Ended September 30, 2026 to 2025
Revenue
Total revenue increased $466.6 million, or 33.2%, to $1.9 billion for the nine months ended September 30, 2026, compared to the same period in 2025. The increase was driven primarily by $579.9 million from new Performance Suite contract go-lives and expanded oncology services to an existing customer during the nine months ended September 30, 2026 offset by a reduction of $63.5 million from the ECP disposition and $82.5 million from reductions in membership at certain of our health plan clients due to changes in exchange enrollment, eligibility verification rules and subsidy eligibility for some populations and rate adjustments within certain customer contracts.
The following table represents Evolent’s revenue disaggregated by line of business and product type (in thousands):
| For the Nine Months Ended September 30, | ||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||
| Medicaid | $ | 640,132 | $ | 608,677 | ||||||||||||||||
| Medicare | 688,532 | 353,074 | ||||||||||||||||||
| Commercial and other | 545,469 | 445,759 | ||||||||||||||||||
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| Total | $ | 1,874,133 | $ | 1,407,510 | ||||||||||||||||
| Performance Suite | $ | 1,372,099 | $ | 857,873 | ||||||||||||||||
| Specialty Technology and Services Suite | 231,797 | 257,485 | ||||||||||||||||||
| Administrative Services | 145,862 | 170,882 | ||||||||||||||||||
| Cases | 124,375 | 121,270 | ||||||||||||||||||
| Total | $ | 1,874,133 | $ | 1,407,510 | ||||||||||||||||
| Revenue from Evolent Care Partners | — | 94,818 | ||||||||||||||||||
Performance Suite revenue excluding revenue from Evolent Care Partners (1) | $ | 1,372,099 | $ | 763,055 | ||||||||||||||||
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(1)Performance Suite revenue excluding revenue from Evolent Care Partners is non-GAAP and used in calculating MER excluding Evolent Care Partners. Refer to “Comparison of the Results for the Nine Months Ended September 30, 2026 to 2025 - Cost of Revenue” for additional information on MER excluding Evolent Care Partners.
The following table represents the Company’s Lives on Platform/ Cases, Average PMPM fees, Revenue per Case and Average Unique Members (Average Lives on Platform/Cases in thousands) by product type:
| Average Lives on Platform/ Cases | Average PMPM Fees / Revenue per Case | ||||||||||||||||||||||
| For the Nine Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Performance Suite | 6,663 | 6,483 | $ | 22.88 | $ | 14.69 | |||||||||||||||||
| Specialty Technology and Services Suite | 75,492 | 77,382 | 0.34 | 0.37 | |||||||||||||||||||
| Administrative Services | 1,157 | 1,222 | 14.01 | 15.54 | |||||||||||||||||||
| Cases | 34 | 40 | 3,661 | 3,046 | |||||||||||||||||||
| Average Unique Members | 39,554 | 40,537 | |||||||||||||||||||||
Cost of Revenue
Cost of revenue increased by $516.2 million, or 46.7%, to $1.6 billion for the nine months ended September 30, 2026, as compared to 2025, principally as a result of the 33.2% increase in our revenue compared to nine months ended September 30, 2025. The increase included approximately $624.1 million of higher claims cost compared to the prior year period, which is primarily attributable to new Performance Suite contract go-lives in 2026 and expansion in oncology services to an existing customer, offset by a decrease of $59.3
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million of claims from the disposition of ECP in December 2025 and lower personnel costs of $35.8 million compared to the prior year driven by reduced headcount and changes to benefits and bonus structure for employees.
The following table represents the Company’s MER for its specialty care management services solution:
| For the Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
Total claims incurred related to our specialty care management services solution (1) | $ | 1,288,267 | $ | 664,147 | |||||||
| Performance Suite revenue | 1,372,099 | 857,873 | |||||||||
Performance Suite revenue excluding revenue from Evolent Care Partners (2) | 1,372,099 | 763,055 | |||||||||
| MER | 93.9 | % | 77.4 | % | |||||||
MER excluding Evolent Care Partners (3) | N/A | 87.0 | % | ||||||||
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(1)Refer to the discussion in “Part I - Item 1. Financial Statements - Note 19” for additional information on total claims incurred.
(2)Refer to “Comparison of the Results for the Nine Months Ended September 30, 2026 to 2025 - Revenue” for additional information on Performance Suite revenue less revenue from Evolent Care Partners.
(3)Refer to “Key Components of our Results of Operations - Medical Expense Ratio” for additional information on Non-GAAP MER excluding Evolent Care Partners.
The increase in MER for the nine months ended September 30, 2026 compared to 2025 is driven primarily by the disposition of Evolent Care Partners in December 2025 and the go-live of Performance Suite contracts during 2026.
Approximately $3.1 million and $2.9 million of total cost of revenue was attributable to stock-based compensation expense for the nine months ended September 30, 2026, and 2025, respectively. Cost of revenue represented 86.5% and 78.5% of total revenue for the nine months ended September 30, 2026, and 2025, respectively. Our cost of revenue increased as a percentage of our total revenue due to the maturation profile of two new Performance Suite contracts that went live during the first half of 2026. We anticipate continued growth in the cost of treatment for cancer and cardiovascular patients over time, which we expect to be offset in part by contractual protections within our Performance Suite and the impact of our clinical interventions.
Selling, General and Administrative Expenses
Selling, general, and administrative expenses decreased by $16.4 million, or 7.1%, to $214.8 million for the nine months ended September 30, 2026, as compared to 2025. The decrease was primarily driven by lower personnel costs of $9.1 million from reduced headcount and change to the 2026 bonus structure for certain employees and lower professional fees of $5.9 million driven by the ECP disposition in December 2025.
Approximately $37.6 million and $34.4 million of total selling, general and administrative expenses were attributable to stock-based compensation expense for the nine months ended September 30, 2026 and 2025, respectively. Acquisition and severance costs accounted for approximately $5.5 million and $4.6 million of total selling, general and administrative expenses for the nine months ended September 30, 2026 and 2025, respectively. Selling, general and administrative expenses represented 11.5% and 16.4% of total revenue for the nine months ended September 30, 2026, as compared to 2025, respectively.
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Depreciation and Amortization Expenses
Depreciation and amortization expenses decreased $6.2 million, or 8.8%, to $64.6 million, as compared to 2025 primarily due to lower amortization on ECP provider network contracts which was sold in December 2025 and lower amortization of certain customer relationships and technology intangibles reaching their useful life. Depreciation and amortization expenses include $37.5 million and $40.1 million for the nine months ended September 30, 2026 and 2025, respectively, of amortization expense on intangible assets such as corporate trade names, customer, relationships, provider network contracts and existing technology related to acquisitions and business combinations.
Loss on Lease Termination
During the year ended December 31, 2024, the Company terminated its Chicago, IL lease effective October 31, 2024. We recorded an additional $0.7 million loss on lease termination related to negotiated termination payments and real estate commissions during the nine months ended September 30, 2025.
Change in Fair Value of Contingent Consideration
We recorded a loss on change in fair value of contingent consideration of $1.8 million for the nine months ended September 30, 2025 primarily related to our ECP earnout.
Discussion of Non-Operating Results
Interest Expense
We recorded interest expense (including amortization of deferred financing costs) of $17.0 million and $50.7 million for the three and nine months ended September 30, 2026, respectively, and $16.5 million and $38.5 million for the three and nine months ended September 30, 2025, respectively. The increase in interest expense for the three and nine months ended September 30, 2026 compared to the three and nine months ended September 30, 2025 is driven primarily by interest incurred under First Lien Credit Agreement borrowings in January 2025 and the exchange of our Series A Preferred Stock for Second Lien Loan Facility combined with the issuance of our 2031 Notes in August 2025. See “Part I - Item 1. Financial Statements - Note 9” in this Form 10-Q for more information related to interest expense by debt issuance.
Gain on Extinguishment of Debt
On August 21, 2025, using proceeds from the sale of the 2031 Notes plus available liquidity, the Company repurchased approximately $167.4 million aggregate principal amount of its 2025 Notes for $166.8 million in cash in note repurchases entered into concurrently with the pricing of the sale of the 2031 Notes. As a result of the repurchase of the 2025 Notes, the Company recorded a $0.4 million gain on extinguishment of debt during the three and nine months ended September 30, 2025.
Loss on Option Exercise
During the year ended December 31, 2025, we completed the purchase of a portion of one of our equity method investments that we did not own from our joint venture partner for the price of $51.5 million. The purchase price was fixed based on a previously negotiated put/call structure. The loss of $52.5 million represents the difference between the purchase price under the put option and the estimated fair value of the interests acquired. The joint venture was primarily focused on a portfolio of oncology clinics, a member navigation platform and practice alignment arm. The oncology clinics in the joint venture were shut down or otherwise disposed of prior to the payment of the put option, and the joint venture will have no continuing operations.
Extinguishment of Series A Preferred Stock and Other Refinancing Fees
On June 19, 2025, the Company entered into Amendment No. 5 which provided, in part, that failure to consummate the Exchange of our Series A Preferred Stock for new Second Lien Term Loans in certain circumstances would constitute an event of default under the First Lien Credit Agreement. Amendment No. 5 was accounted for as an extinguishment and reissuance of the Series A Preferred Stock. The Series A Preferred Stock post-amendment was recorded at fair value, including a $9.0 million charge to extinguishment of Series A Preferred Stock on the consolidated statement of operations and comprehensive income (loss) and the remainder as a deemed dividend.
On June 19, 2025, in connection with the Company’s entry into Amendment No. 5, the Company and EVH LLC entered into a Commitment Letter with Ares which provided the Company additional available non-dilutive debt capital of up to $150.0 million. The Company paid $9.3 million of deferred financing costs related to the Incremental Facility, of which $3.3 million was related to
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amending the existing 2024 Incremental Facilities. The Company did not draw on the Incremental Facility due to the retirement of the 2025 Notes. As such, we recorded a $6.0 million loss related to the Incremental Facility. See Note 9 for additional information regarding the Exchange.
Provision for Income Taxes
A provision for income taxes of $1.1 million and $4.7 million for the three and nine months ended September 30, 2026, respectively, and $0.9 million and $1.6 million for the three and nine months ended September 30, 2025, respectively, which resulted in effective tax rates of (5.0)% and (6.4)%, respectively, and (4.5)% and (1.5)%, respectively. The income tax expense recorded for the three and nine months ended September 30, 2026, primarily relates to the change in the valuation allowance, non-deductible expenses and state and foreign taxes.
Dividends and Accretion of Series A Preferred Stock Including Excise Tax
During the year ended December 31, 2025, the Company completed the exchange of its existing Series A Preferred Stock for the new Second Lien Term Loan Facility on substantively similar economic terms to the existing Series A Preferred Stock, with no common stock conversion feature. Prior to the Exchange, we paid quarterly regular cash dividends during 2025 on the Series A Preferred Stock at a rate per annum equal to Adjusted Term SOFR (as defined in the Certificate of Designation) plus 6.00%. Prior to the Exchange, the Company accreted redemption value in excess of par at a redemption price per share equal to 150.00% of the then-current liquidation preference per share of the Series A Preferred Stock.
The Company paid dividends and recorded accretion of deferred issuance costs and redemption value related to the Series A Preferred Stock as presented below (in thousands):
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Cash dividends on Series A Preferred Stock | $ | — | $ | 1,929 | $ | — | $ | 11,127 | |||||||||||||||||||||
| Accretion of deferred financing costs and redemption value in excess of par excluding extinguishment of Series A Preferred Stock, net of tax benefit | — | 2,387 | — | 32,014 | |||||||||||||||||||||||||
| Excise tax on exchange of Series A Preferred Stock | — | 1,750 | — | 1,750 | |||||||||||||||||||||||||
| Dividends and accretion of Series A Preferred Stock including excise tax | $ | — | $ | 6,066 | $ | — | $ | 44,891 | |||||||||||||||||||||
REVIEW OF CONSOLIDATED FINANCIAL CONDITION
Liquidity and Capital Resources
The Company reported net loss attributable to common shareholders of Evolent Health, Inc. of $78.6 million and $150.3 million for the nine months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, the Company had $148.3 million of cash and cash equivalents and $7.6 million in restricted cash.
We believe our current cash and cash equivalents will be sufficient to meet our working capital and capital expenditure requirements for at least the next twelve months as of the date the financial statements were issued. Our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our sales and marketing activities and the timing and extent of our spending to support our investment efforts and expansion into other markets. We may also seek to invest in, or acquire complementary businesses, applications or technologies, which may require us to seek sources of financing.
We expect, from time to time, to seek to prepay, redeem, refinance, retire or purchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. We monitor market conditions and our capital structure, and may, from time to time, seek to refinance, amend or otherwise restructure our outstanding debt on an opportunistic basis.
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Cash Flows
The following summary of cash flows (in thousands) has been derived from our financial statements included in “Part I - Item 1. Financial Statements - Consolidated Statements of Cash Flows”:
| For the Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| Net cash and restricted cash provided by (used in) operating activities | $ | 16,082 | $ | (9,957) | |||||||||||||
| Net cash and restricted cash used in investing activities | (20,164) | (82,386) | |||||||||||||||
| Net cash and restricted cash (used in) provided by financing activities | (19,517) | 57,112 | |||||||||||||||
Operating Activities
Cash flows from operating activities primarily represent inflows and outflows associated with our operations. Primary activities include net loss from operations adjusted for non-cash transactions, working capital changes and changes in other assets and liabilities.
Cash flows provided by operating activities of $16.1 million for the nine months ended September 30, 2026 were driven primarily by an overall increase in accounts receivable and reserve for claims and performance-based arrangements of $51.0 million due to the timing of customer settlements and claims payments, offset in part by decreases in accrued liabilities of $27.1 million from timing of customer settlements, our partner and vendor payments, accrued compensation and benefits of $15.9 million due to the timing of 2025 bonus payments and changes to bonus structure for certain employees and operating lease liabilities of $15.6 million due to lease termination payments.
Cash flows used in operating activities of $10.0 million for the nine months ended September 30, 2025 were driven primarily by $67.5 million in payments to clients for reconciliations of performance suite contracts from prior years; these contracts have since been restructured. This was included in an overall reduction in reserve for claims and performance-based arrangements of $107.1 million due to the timing of claims payments, offset in part by decreases in accounts receivable of $7.4 million from timing of our partner and vendor payments and an increase in accrued compensation and benefits of $21.7 million due to the timing of 2024 bonus payments and severance of $3.3 million.
Investing Activities
Cash flows used in investing activities of $20.2 million for the nine months ended September 30, 2026 were primarily related to investments in internal-use software and purchases of property and equipment.
Cash flows used in investing activities of $82.4 million for the nine months ended September 30, 2025 were primarily attributable to cash paid for asset acquisitions and business combinations of $56.0 million and investments in internal-use software and purchases of property and equipment of $26.3 million.
Financing Activities
Cash flows used in financing activities of $19.5 million for the nine months ended September 30, 2026 were primarily related to a $10.0 million repayment under our Revolving Facility and $6.4 million related to changes in working capital balances related to claims processing.
Cash flows provided by financing activities of $57.1 million for the nine months ended September 30, 2025 were primarily related to $389.7 million of borrowings under our Term Loan Facility, offset, in part by $62.5 million of repayments under our Revolving Facility, $166.8 million of repayments of our 2025 Notes, $40.0 million related to repurchases of our common stock, net of taxes, $45.3 million related to changes in working capital balances related to claims processing and $11.1 million of preferred dividends paid on our Series A Preferred Stock.
Contractual and Other Obligations
We believe that the amount of cash and cash equivalents on hand and cash flows from operations, plus borrowings under our credit facilities and if necessary, additional funding through other forms of financing, will be adequate for us to execute our business strategy and meet anticipated requirements for lease obligations, capital expenditures working capital and debt service for the next twelve
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months and in the long-term. Our estimated known contractual and other obligations (in thousands) as of September 30, 2026, were as follows (including as discussed in the narrative below):
| 2026 | 2027-2028 | 2029-2030 | 2031+ | Total | |||||||||||||||||||||||||
| Operating leases for facilities | $ | 473 | $ | 2,107 | $ | 1,450 | $ | 114 | $ | 4,144 | |||||||||||||||||||
| Purchase obligations related to vendor contracts | 5,999 | 16,046 | 2,616 | — | 24,661 | ||||||||||||||||||||||||
Convertible notes interest payments (1) | 7,044 | 43,183 | 29,095 | 7,504 | 86,826 | ||||||||||||||||||||||||
| Convertible notes principal repayment | — | — | 402,500 | 166,750 | 569,250 | ||||||||||||||||||||||||
| Total | $ | 13,516 | $ | 61,336 | $ | 435,661 | $ | 174,368 | $ | 684,881 | |||||||||||||||||||
————————
(1)Refer to the discussion in “Part I - Item 1. Financial Statements - Note 9” for additional information on payment dates for our convertible notes interest.
As of September 30, 2026, there was $117.2 million, $62.5 million and $175.0 million principal balance subject to interest under the Company’s Term Loan Facility, Revolving Facility and Second Lien Term Loan Facility, respectively, all of which are subject to interest rates based on the SOFR. The interest rate for all Loans will be calculated, at the option of the borrowers, (a) in the case of the Revolving Facility, at either the Adjusted Term SOFR plus 4.00%, or the base rate plus 3.00% and (b) in the case of the Term Loan Facility, at either the Adjusted Term SOFR plus 5.50% or the base rate plus 4.50%, subject to step downs based on a total secured leverage ratio. The Company used the funds borrowed under its Committed Facilities for general corporate purposes, including working capital and management of future liabilities. The interest rate for the Second Lien Term Loan will be calculated (a) in the case of loans that bear interest at ABR, 5.00% plus the ABR and (b) in the case of Term SOFR Loans, 6.00% plus the relevant Adjusted Term SOFR Rate, in each case subject to step downs based on a total secured leverage ratio.
All loans under the First Lien Credit Agreement will mature on the date that is the earliest of (a) December 6, 2029, (b) the date on which all commitments are voluntarily terminated or amounts outstanding under the First Lien Credit Agreement have been declared or have automatically become due and payable under the terms of the First Lien Credit Agreement, (c) the date that is one hundred eighty (180) days prior to the maturity date of the Company’s Convertible Senior Notes due 2029 and (d) the date that is ninety-one (91) days prior to the maturity date of any other Junior Debt (as defined in the First Lien Credit Agreement) unless certain liquidity conditions are satisfied. All loans under the Second Lien Credit Agreement will mature on the date that is the earliest of (a) December 6, 2029, (b) the date on which all amounts outstanding under the Second Lien Credit Agreement have been declared or have automatically become due and payable under the terms of the Second Lien Credit Agreement, (c) the date that is one hundred eighty (180) days prior to the maturity date of the Company’s Convertible Senior Notes due 2029 and (d) the date that is ninety-one (91) days prior to the maturity date of any other Junior Debt (as defined in the Second Lien Credit Agreement) unless certain liquidity conditions are satisfied.
Accounts Receivable, Net
Accounts receivable are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. During the nine months ended September 30, 2026, accounts receivable, net, increased primarily due to new Performance Suite contract go-lives and expanded oncology services to an existing customer during the nine months ended September 30, 2026 and the timing of cash receipts from certain customers.
Restricted Cash
Restricted cash of $7.6 million is carried at cost and includes cash held on behalf of other entities for claims processing services of $6.5 million and amounts held with financial institutions for risk-sharing arrangements of $1.1 million as of September 30, 2026. See “Part I - Item 1. Financial Statements - Note 2” for further details of the Company’s restricted cash balances.
Uses of Capital
In the ordinary course of business, our principal uses of cash are in the operation and expansion of our business, payment of interest and other amounts payable in connection with financings, including on our convertible debt and secured borrowings, as well as potential tax obligations. The Company does not anticipate paying a cash dividend on our Class A common stock in the foreseeable future.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates.
Interest Rate Risk
As of September 30, 2026, the Company had cash and cash equivalents and restricted cash of $155.9 million, which consisted of bank deposits with FDIC participating banks of $145.5 million and bank deposits in international banks of $10.3 million.
Changes in interest rates affect the interest earned on our cash and cash equivalents (including restricted cash). We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.
As of September 30, 2026, there was $117.2 million, $62.5 million and $175.0 million principal balance subject to interest under the Company’s Term Loan Facility, Revolving Facility and Second Lien Term Loan Facility, respectively, all of which are subject to interest rates based on the SOFR. In the case of (a) the revolving loan, interest is calculated at either the Adjusted Term SOFR plus 4.00%, or the base rate plus 3.00%, (b) the 2024-A Delayed Draw Term Loan and 2024-B Delayed Draw Term Loan, interest is calculated at either the Adjusted Term SOFR plus 5.50% or the base rate plus 4.50% and (c) the second lien term loan facility, interest is calculated at the Adjusted Term SOFR plus 6.00%. For every 1% increase in SOFR, the Company would record additional interest expense of $3.5 million per annum.
As of September 30, 2026, we had $569.3 million of aggregate principal amount of convertible notes outstanding, which are fixed rate instruments and not subject to fluctuations in interest rates.
Refer to the discussion in “Part I - Item 1. Financial Statements - Note 9” for additional information on our long-term debt.
Foreign Currency Exchange Risk
We have de minimis foreign currency risks related to our operating expenses denominated in currencies other than the U.S. dollar, primarily the Indian Rupee and the Philippine Peso. In general, we are a net payer of currencies other than the U.S. dollar. Accordingly, changes in exchange rates, and in particular a strengthening of the U.S. dollar, may, in the future, negatively affect our operating results as expressed in U.S. dollars. In addition, our business could be adversely affected by changes in foreign currency exchange rates as a result of geopolitical conflicts or other macroeconomic events (or the perception that such events may occur). At this time, we have not entered into, but in the future, we may enter into, derivatives or other financial instruments in an attempt to hedge our foreign currency exchange risk. It is difficult to predict the effect hedging activities would have on our results of operations.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. The Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), with assistance from other members of management, have reviewed the effectiveness of our disclosure controls and procedures as of September 30, 2026, based on their evaluation, have concluded that the disclosure controls and procedures were effective as of such date.
Changes in Internal Control over Financial Reporting
Management has designed its internal controls over financial reporting under the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework (2013). There were no changes in our internal control over financial reporting during the quarter ended September 30, 2026 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Inherent Limitations of Internal Controls
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how
46
well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Although inherent limitations of internal controls will continue to be present, proper segregation of duties controls and a whistleblower hotline are in place across the organization to minimize these limitations.
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PART II
Item 1. Legal Proceedings
The discussion of legal proceedings included within “Part I – Item 1. Financial Statements - Note 10” - Commitments and Contingencies - Litigation Matters” is incorporated by reference into this Item 1.
Item 1A. Risk Factors
Our significant business risks are described in Part I, Item 1A. “Risk Factors” to our 2025 Form 10-K. There have been no material changes from the risk factors described in our 2025 Form 10-K for the quarter ended September 30, 2026.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Insider Trading Arrangements
During the three-month period ended September 30, 2026, no officer or director of the Company adopted terminated
Item 6. Exhibits
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Evolent Health, Inc. | ||||||||
| By: | /s/ Mario Ramos | |||||||
| Name: | Mario Ramos | |||||||
| Title: | Chief Financial Officer | |||||||
| By: | /s/ Aammaad Shams | |||||||
| Name: | Aammaad Shams | |||||||
| Title: | Chief Accounting Officer and Controller | |||||||
Dated: November 5, 2026
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Exhibit 10.1
AMENDMENT NO. 7 TO CREDIT AGREEMENT
AMENDMENT NO. 7 to CREDIT AGREEMENT, dated as of October 15, 2026 (this “Amendment”), by the Lenders party hereto, EVOLENT HEALTH LLC, a Delaware limited liability company, as the Administrative Borrower, the other Borrowers party hereto, EVOLENT HEALTH, INC., a Delaware corporation, as the Parent, each other Guarantor party hereto, ARES CAPITAL CORPORATION, as Administrative Agent, and ACF FINCO I LP, as Collateral Agent and Revolving Agent.
WHEREAS, the Borrowers, the Parent, the Lenders from time to time party thereto, Ares Capital Corporation, as Administrative Agent, ACF Finco I LP, as Collateral Agent and Revolving Agent, and the other parties thereto are party to that certain Credit Agreement, dated as of August 1, 2022 (as amended by that certain Amendment No. 1, dated as of January 20, 2023, that certain Amendment No. 2, dated as of December 5, 2023, that certain Amendment No. 3, dated as of December 6, 2024, that certain Amendment No. 4, dated as of June 13, 2025, that certain Amendment No. 5, dated as of June 19, 2025, and that certain Amendment No. 6, dated as of August 7, 2025, and as further amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, the “Existing Credit Agreement”, and as amended by this Amendment and as further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; capitalized terms used and not defined herein shall have the meanings ascribed to them in the Credit Agreement unless the context otherwise requires);
WHEREAS, the Borrowers have requested certain amendments to the Existing Credit Agreement, which in each case will become effective on the Amendment No. 7 Effective Date (as defined below) on the terms and subject to the conditions set forth herein; and
WHEREAS, pursuant to and in accordance with Section 12.01 of the Credit Agreement, the Administrative Agent, the Revolving Agent, the Required Lenders and the Required Revolving Lenders party hereto agree to amend the Existing Credit Agreement as set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1.Amendments to the Credit Agreement. Each of the parties hereto agrees and consents that, effective on the Amendment No. 7 Effective Date, the Existing Credit Agreement shall be amended as follows:
(a)Section 1.01 of the Existing Credit Agreement shall be amended by adding the following defined terms in appropriate alphabetical order:
“Amendment No. 7” shall mean that certain Amendment No. 7 to Credit Agreement, dated as of October 15, 2026, by and among the Borrowers, the Parent, the other Guarantors party thereto, the Agents and the Lenders party thereto.
“Amendment No. 7 Fee Letter” shall mean that certain Fee Letter, dated as of October 15, 2026, by and among, inter alios, Parent, the Administrative Borrower, Ares Capital Management LLC, the
Administrative Agent and the Revolver Agent, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Amendment No. 7 Effective Date” shall have the meaning ascribed thereto in the Amendment No. 7.
(b)Section 1.01 of the Existing Credit Agreement shall be amended by amending and restating the definition of “Credit Documents” and “Fees”, respectively, to read as follows:
“Credit Documents” shall mean this Agreement, the Springing Control Agreements, the Fee Letter, the Amendment No. 1 Fee Letter, the Amendment No. 3 Fee Letter, the June 2025 Fee Letter, the Amendment No. 7 Fee Letter, the Guarantee Agreement, the Security Documents, the Intercompany Subordination Agreement, the Global Intercompany Note, any Notes issued by any Borrower hereunder, any intercreditor or subordination agreements in favor of the Administrative Agent with respect to this Agreement, and any other agreement entered into now, or in the future, by any Credit Party, on the one hand, and the Administrative Agent or Lender, on the other hand, in connection with this Agreement.
“Fees” shall mean all amounts payable pursuant to, or referred to in, Section 4.01, the Fee Letter, the Amendment No. 1 Fee Letter, the Amendment No. 3 Fee Letter, the June 2025 Fee Letter or the Amendment No. 7 Fee Letter.
(c)Section 4.01 of the of the Existing Credit Agreement shall be amended by amending and restating clause (a) thereof to read as follows:
“(a) Each Borrower, jointly and severally, agrees to pay to the Administrative Agent, all the Fees set forth in the Fee Letter, the Amendment No. 1 Fee Letter, the Amendment No. 3 Fee Letter, the June 2025 Fee Letter and the Amendment No. 7 Fee Letter.”
(d)Section 9.06 of the of the Existing Credit Agreement shall be amended by amending and restating such Section in its entirety to read as follows:
“SECTION 9.06 Restricted Payments, etc. No Credit Party shall, and no Credit Party shall permit any of its Subsidiaries to, make any Restricted Payment, or make any deposit for any Restricted Payment, other than:
(a) payments by any Subsidiary of a Borrower (i) to its direct parent or (ii) to a Borrower (and, in the case of a Restricted Payment by a non-wholly owned Subsidiary, to a Borrower and/or to any other Subsidiary that is a direct or indirect parent of such
2
non-wholly owned Subsidiary, and to each other owner of Capital Stock of such non-wholly owned Subsidiary based on their relative ownership interests of the relevant class of Capital Stock);
(b) Restricted Payments by any Credit Party or any of its Subsidiaries to pay dividends with respect to its Capital Stock payable solely in additional shares of its common stock (other than Disqualified Capital Stock);
(c) Restricted Payments by any Credit Party or any of its Subsidiaries to Parent to enable Parent to pay any applicable income or franchise Taxes then due and payable, to the extent such Taxes are attributable to the activities or income of the Borrowers and its Subsidiaries;
(d) (x) regularly scheduled, nonaccelerated payments with respect to Indebtedness subordinated to the Obligations (including, without limitation, seller notes and earnout obligations) to the extent expressly permitted by the applicable subordination agreement or such other subordination terms with respect thereto, and (y) subject to the terms of the Intercreditor Agreement, regularly scheduled, nonaccelerated payments of interest and fees with respect to Second Lien Credit Obligations, and the reimbursement of costs and expenses of the Second Lien Agents and the Second Lien Lenders, pursuant to customary reimbursement provisions set forth under the Second Lien Credit Documents;
(e) [reserved];
(f) redemptions, repurchases, retirements or other acquisitions of Capital Stock (i) deemed to occur on the exercise of options by the delivery of Capital Stock in satisfaction of the exercise price of such options or (ii) in consideration of withholding or similar taxes payable by any future, present or former officer, employee, director, member of management, or consultant (or their respective estates, executors, administrators, heirs, family members, legatees, distributees, spouses, former spouses, domestic partners and former domestic partners), including deemed repurchases in connection with the exercise of stock options or vesting of performance stock units or restricted stock units; provided, that, any Restricted Payments made pursuant to this clause (f) are not to be made in cash;
(g) to the extent no Event of Default has occurred and is continuing (both before and after giving effect thereto), the redemption, repurchase, retirement or other acquisition of Capital Stock in an amount not to exceed $15,000,000;
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(h) all mandatory or scheduled payments in respect of the Convertible Senior Notes, including any settlement of Convertible Senior Notes with cash in lieu of a conversion of Convertible Senior Notes into Qualified Capital Stock of Parent, in each case, in accordance with the terms of the applicable class of Convertible Senior Notes; provided that, Restricted Payments to consummate such cash settlements shall not exceed $17,500,000 in the aggregate during the term of the Agreement and shall be permitted solely to the extent no Event of Default has occurred and is continuing at the time of such conversion;
(i) to the extent constituting a Restricted Payment, any exchange, redemption, purchase, repurchase, retirement or other acquisition or conversion in respect of the Convertible Senior Notes solely for or into Qualified Capital Stock of Parent;
(j) [reserved];
(k) to the extent no Event of Default has occurred and is continuing at the time of such distribution (both before and after giving effect thereto), any Credit Party and any of its Subsidiaries may make distributions in an amount sufficient to make payments (with cash or Shareholder Redemption Notes) on account of the purchase, redemption, or other acquisition or retirement of any shares of the Capital Stock of a Credit Party or Subsidiary from former employees, officers, or directors of the Credit Parties and their Subsidiaries (or any spouses, ex-spouses, beneficiaries or estates of any of the foregoing) which may be in the form of forgiveness of Indebtedness, and Parent may make such payments (with cash or Shareholder Redemption Notes) on account of the purchase, redemption, or other acquisition or retirement of any shares of its Capital Stock, and, in each case, make distributions to satisfy any tax liabilities arising in connection with such transactions; provided that the amount of such distributions and repurchases (including any such distributions or repurchases in the form of forgiveness of Indebtedness) may not exceed the sum of (x) $3,000,000 in any Fiscal Year plus (y) the amount of the cash proceeds of any permitted issuance of Qualified Capital Stock received by the Parent or Evolent for the purpose of making such payments and used solely for such purpose plus (z) key man life insurance proceeds received by the Parent, Borrowers or any of their respective Subsidiaries during such Fiscal Year;
(l) [reserved];
(m) the making of any Restricted Payment within 60 days after the date of declaration thereof, if at the date of such declaration
4
such Restricted Payment would have complied with another provision of this Section 9.06; provided that the making of such Restricted Payment will reduce capacity for Restricted Payments pursuant to such other provision when so made;
(n) to the extent constituting Restricted Payments, the consummation of the Transactions and the Amendment No. 1 Transactions;
(o) (i) the redemption, repurchase, retirement or other acquisition of any Capital Stock (“Retired Capital Stock”) of Parent in exchange for, or out of the proceeds of, the substantially concurrent sale of, Capital Stock of Parent or contributions to the equity capital of Parent (other than any Disqualified Capital Stock) (collectively, including any such contributions, “Refunding Capital Stock”) and (ii) the declaration and payment of dividends on the Retired Capital Stock out of the proceeds of the substantially concurrent sale of Refunding Capital Stock;
(p) the Parent and its Subsidiaries may make any payments required by the terms of the TRA;
(q) the Parent or any of the Subsidiaries may pay cash in lieu of fractional Capital Stock in connection with any dividend, split or combination thereof, any Permitted Acquisition or any exercise of warrants, options or other securities convertible into or exchangeable for Capital Stock;
(r) to the extent no Event of Default has occurred or is continuing and to the extent not prohibited by the applicable subordination provisions applicable thereto, the Parent and its Subsidiaries may pay earn-outs, seller notes, deferred purchase price obligations, holdbacks or similar obligations that were incurred pursuant to Section 9.01(x);
(s) to the extent constituting Restricted Payments, the Borrowers and their respective Subsidiaries may enter into and consummate transactions permitted by Section 9.04 (other than Section 9.04(e)) and Section 9.05 (other than Section 9.05(l));
(t) [reserved]; or
(u) so long as no Event of Default has occurred or is continuing or would result therefrom, the repurchase on or prior to October 15, 2027, of 2029 Convertible Notes; provided that (x) the aggregate amount cash applied to make such Restricted Payments shall not exceed $50,000,000, and (y) such Restricted Payments
5
are financed solely with internally generated cash of the Borrower and its Subsidiaries.
To the extent that the Parent or its Subsidiaries are permitted to make any Restricted Payments pursuant to this Section 9.06, the same may be made as a loan or advance to the recipient thereof, and in such case the amount of such loan or advance so made shall reduce the amount of Restricted Payments that may be made by the Parent or its Subsidiaries in respect thereof.”
2.Representations and Warranties of the Credit Parties. Each of the Credit Parties represents and warrants to the Administrative Agent, the Revolving Agent and each of the Lenders party hereto that, on and as of the date hereof:
(a)Corporate Status. Each Credit Party is a duly organized or formed and validly existing corporation, limited liability company or other registered entity in good standing under the laws of the jurisdiction of its organization and has the corporate or other organizational power and authority to own its property and assets and to transact the business in which it is engaged.
(b)Corporate Power and Authority. Each Credit Party has the corporate or other organizational power and authority to execute and deliver this Amendment and carry out the terms and provisions of each of this Amendment and the Credit Agreement (as amended hereby) and has taken all necessary corporate or other organizational action to authorize the execution and delivery of this Amendment and the performance of each of this Amendment and the Credit Agreement (as amended hereby). Each Credit Party has duly executed and delivered this Amendment, and each of this Amendment and the Credit Agreement, as amended hereby, constitute the legal, valid and binding obligation of such Credit Party enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, moratorium, reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or law).
(c)No Violation. None of (a) the execution or delivery of this Amendment, or the performance by any Credit Party of this Amendment or the Credit Agreement (as amended hereby) or compliance with the terms and provisions hereof or thereof or (b) the consummation of the transactions contemplated hereby will violate any provision of the Organization Documents any Credit Party.
(d)Representations and Warranties. After giving effect to this Amendment and the transactions contemplated hereby, each of the representations and warranties made by the Borrowers in or pursuant to Article VII of the Credit Agreement and in any other Credit Document are true and correct in all material respects on and as of the date hereof (except to the extent (i) such representations and warranties are already subject to any materiality qualifier, in which case they are true and correct in all respects and (ii) such representations and warranties expressly relate to an earlier date, in which case they are true and correct in all material respects as of such earlier date).
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(e)No Default. No Default or Event of Default has occurred and is continuing.
3.Conditions Precedent. The amendments to the Existing Credit Agreement set forth in Section 1 above shall become effective as of the date upon which each of the following conditions precedent shall be satisfied or waived (such date, the “Amendment No. 7 Effective Date”):
(a)Execution of Credit Documents. The Administrative Agent shall have received this Amendment and the Amendment No. 7 Fee Letter, each duly executed by an Authorized Officer of each Credit Party party thereto and each other relevant party.
(b)Representations and Warranties. After giving effect to this Amendment and the transactions contemplated hereby, each of the representations and warranties made by the Borrowers in or pursuant to Section 2 shall be true and correct in all material respects on and as of the Amendment No. 7 Effective Date (except to the extent (i) such representations and warranties are already subject to any materiality qualifier, in which case they shall be true and correct in all respects and (ii) such representations and warranties expressly relate to an earlier date, in which case they shall have been true and correct in all material respects as of such earlier date).
(c)No Default. As of the Amendment No. 7 Effective Date, no Default or Event of Default shall have occurred and be continuing.
(d)Fees and Expenses. Each of the Administrative Agent and each Lender shall have received, for its own respective account, (i) all fees and expenses due and payable to such Person under the Amendment No. 7 Fee Letter and (ii) the reasonable fees, costs and expenses due and payable to such Person pursuant Section 12.05 of the Credit Agreement (including the reasonable and documented fees, disbursements and other charges of counsel) for which invoices have been presented at least two (2) Business Days prior to the date hereof.
4.Miscellaneous.
(a)Headings. Section headings in this Amendment are for convenience of reference only and shall not affect the interpretation of this Amendment.
(b)Counterparts; Facsimile Signature. This Amendment may be executed by one or more of the parties thereto on any number of separate counterparts (including by electronic transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Amendment signed by all the parties shall be lodged with the Administrative Borrower and the Administrative Agent.
(c)Entire Agreement. This Amendment, the Credit Agreement (as amended hereby) and the other Credit Documents represent the agreement of the Credit Parties, the Administrative Agent and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by any party hereto or
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thereto relative to the subject matter hereof not expressly set forth or referred to herein or in the other Credit Documents.
(d)Effects of Amendment. This Amendment shall be deemed a Credit Document for all purposes of the Credit Agreement and the other Credit Documents. On and after the date hereof, each reference in the Credit Agreement and the other Credit Documents to the “Credit Agreement,” “hereunder,” “thereunder,” “hereof”, “thereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement, as modified by this Amendment. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or any Lender under the Credit Agreement or any other Credit Document, nor constitute a waiver of any provision of the Credit Agreement or any other Credit Document, except as specifically set forth herein. Except as modified hereby, all of the terms and provisions of the Credit Documents shall remain in full force and effect.
(e)Reaffirmation of Obligations. Each Credit Party, to the extent it is a party to the Credit Agreement and certain of the Credit Documents, in each case as amended, supplemented or otherwise modified from time to time as of the date hereof, hereby (a) acknowledges and consents to all of the terms and conditions of this Amendment, (b) affirms all of its obligations under the Credit Documents and (c) agrees that this Amendment and all documents executed in connection herewith do not operate to reduce or discharge such Credit Party’s obligations under the Credit Documents.
(f)Reaffirmation of Security Interests. Each Credit Party, to the extent it is a party to the Credit Agreement and certain of the Credit Documents, in each case as amended, supplemented or otherwise modified from time to time as of the date hereof, hereby (a) affirms that each of the Liens granted in or pursuant to the Credit Documents are valid and subsisting and (b) agrees that this Amendment shall in no manner impair or otherwise adversely affect any of the Liens granted in or pursuant to the Credit Documents.
(g)Governing Law; Waiver of Right to Trial by Jury. The provisions of Sections 12.13 (Governing Law), 12.14 (Submission to Jurisdiction) and 12.16 (Waiver of Right to Trial by Jury) of the Credit Agreement shall be applicable mutatis mutandis to this Amendment.
(h)No Novation. By its execution of this Amendment, each of the parties hereto acknowledges and agrees that the terms of this Amendment do not constitute a novation, but, rather, a supplement of a pre-existing indebtedness and related agreement, as evidenced by the Credit Agreement (as amended hereby).
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written.
| BORROWERS: | EVOLENT HEALTH LLC, a Delaware limited liability company By: /s/Mario Ramos Name: Mario Ramos Title: Chief Financial Officer | ||||||||||
| PARENT: | EVOLENT HEALTH, INC., a Delaware corporation By: /s/Mario Ramos Name: Mario Ramos Title: Chief Financial Officer | ||||||||||
| OTHER GUARANTORS: | EH HOLDING COMPANY, INC., a Delaware corporation By: /s/Mario Ramos Name: Mario Ramos Title: Chief Financial Officer | ||||||||||
EVOLENT SPECIALTY SERVICES, INC., a California corporation By: /s/Mario Ramos Name: Mario Ramos Title: Treasurer | |||||||||||
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EVOLENT IPA OF NEW YORK, INC., a New York corporation By: /s/Mario Ramos Name: Mario Ramos Title: Treasurer | |||||||||||
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| ADMINISTRATIVE AGENT: | ARES CAPITAL CORPORATION, a Maryland corporation By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | ||||
| COLLATERAL AGENT: | ACF FINCO I LP, a Delaware limited partnership By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | ||||
| REVOLVING AGENT: | ACF FINCO I LP, a Delaware limited partnership By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | ||||
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| REQUIRED LENDERS AND REQUIRED REVOLVING LENDERS: | ARES CAPITAL CORPORATION By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | ||||
ACME PRIVATE CREDIT FUND LP By: Ares Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES DIRECT FINANCE I LP By: Ares Capital Management LLC, its Investment Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES CREDIT INVESTMENT PARTNERSHIP II (A), L.P. By: Ares SDL Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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ARES PRIVATE CREDIT SOLUTIONS II, L.P. By: Ares Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES PRIVATE CREDIT SOLUTIONS (DELAWARE) II, LLC By: Ares PCS Management II, L.P., its manager By: Ares PCS Management GP II LLC, its general partner By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
CION ARES DIVERSIFIED CREDIT FUND By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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ARES SENIOR CREDIT INVESTMENT PARTNERSHIP (CP) L.P. By: Ares SDL Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES JASPER FUND, LLC By: Private Credit Fund C-1 HoldCo, LLC – SERIES 1, its Sole Member By: Ares Capital Management LLC, its manage By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
PRIVATE CREDIT FUND C-1 HOLDCO, LLC – SERIES 1 By: Ares Capital Management LLC, its Asset Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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ACF FINCO I LP a Delaware limited partnership By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ACF FINCO II LLC a Delaware limited partnership By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES COMMERCIAL FINANCE LP By: Ares Commercial Finance Management LP, as Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES CENTRE STREET PARTNERSHIP, L.P. By: Ares Centre Street GP, Inc., as general partner By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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AG CREDIT STRATEGIES FUND By: Ares Capital Management LLC, as Investment Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ASH HOLDINGS II (U), L.P. By: Ares Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ASH HOLDINGS II (L), L.P. By: Ares Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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ARES SENIOR CREDIT INVESTMENT PARTNERSHIP (CP) FINANCE LLC By: Ares Senior Credit Investment Partnership (CP) LP, its sole member By: Ares SDL Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES CREDIT STRATEGIES INSURANCE DEDICATED FUND SERIES INTERESTS OF THE SALI MULTI-SERIES FUND, L.P. By: Ares Management LLC, its Investment Manager By: Ares Capital Management LLC, as Sub-Advisor By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES SENIOR DIRECT LENDING PARALLEL FUND (U) II, L.P. By: Ares SDL Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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ARES CREDIT INVESTMENT PARTNERSHIP III C FINANCE LLC By: Ares SDL Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES CREDIT INVESTMENT PARTNERSHIP III C LP By: Ares SDL Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
PRIVATE CREDIT FUND C-1 SPV 2, LLC By: Ares Capital Management LLC, its manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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CREDIT INVESTMENT PARTNERSHIP (G) LP By: Ares Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
NATIONWIDE LIFE INSURANCE COMPANY By: Ares Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
NATIONWIDE MUTUAL INSURANCE COMPANY By: Ares Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES ND CREDIT STRATEGIES FUND LLC By: Ares Capital Management LLC, its Account Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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PRIVATE CREDIT FUND O, LLC By: Ares Capital Management LLC, its Account Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES SENIOR DIRECT LENDING MASTER FUND II DESIGNATED ACTIVITY COMPANY By: Ares SDL Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES SENIOR DIRECT LENDING PARALLEL FUND (L) II, L.P. By: Ares SDL Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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ARES SENIOR CREDIT MASTER FUND (U) III LP By: Ares SDL Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES SENIOR CREDIT MASTER FUND III LP By: Ares SDL Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
SDL III CREDIT D LP By: Ares SDL Capital Management LLC, its servicer By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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ARES SFERS CREDIT STRATEGIES FUND LLC By : Ares Capital Management LLC, its Account Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
SC ACM PRIVATE DEBT FUND L.P. By: Ares Capital Management LLC, its Investment Advisor By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
SC ACM PRIVATE DEBT OFFSHORE SP By: Ares Capital Management, its Investment Advisor By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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VG ACM PRIVATE DEBT FUND L.P. By: Ares Capital Management LLC, its Investment Advisor By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
APC STAR FINANCE I, LLC By: Ares Capital Management LLC, its Servicer By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES CSIDF HOLDINGS, LLC By: Ares Capital Management LLC, as Servicer By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES DIRECT LENDING CLO 1 LLC By: Ares Capital Corporation, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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ARES DIRECT LENDING CLO 7 LLC By: Ares Capital Corporation, its manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES DIRECT LENDING CLO 9 L.P. By: Ares SDL Capital Management LLC, its Asset Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES ND CSF HOLDINGS LLC By: Ares Capital Management LLC, as Collateral Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ASH FINANCE II, LLC By: Ares Capital Management LLC, its Collateral Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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CADEX CREDIT FINANCING LLC By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
SDL II CREDIT E1 LP By: Ares SDL Capital Management LLC, its Servicer By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
SDL II CREDIT E2 LP By: Ares SDL Capital Management LLC, its Servicer By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
SDL III CREDIT C LP By: Ares SDL Capital Management LLC, its servicer By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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SDL III CREDIT F LP By: Ares SDL Capital Management LLC, its servicer By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ADLP FINCO A LLC By: ADLP LLC, its member By: Ares Capital Management LLC, as member representative By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
PRIVATE OPPORTUNITIES (A) CREDIT FINANCE LLC By: Private Opportunities (A) Credit Holdings LLC, its member By: Ares Private Opportunities (A) LP, its manager By: APO (A) GP LLC, its general partner By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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AO MIDDLE MARKET CREDIT FINANCING L.P., By: AO Middle Market Credit Financing GP Ltd., its general partner By: /s/K. Patel Name: M. Kort Schnabel Title: Director By: /s/Jeremy Ehrlich Name: Jeremy Ehrlich Title: Director | |||||
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ARES DIRECT LENDING CLO 6 LLC By: Private Credit Fund C-1 Holdco, LLC - Series 1 By: Private Credit Fund C-1 Holdco, LLC, on its behalf By: /s/M. Kort Schnabel Name: Donald J. Puglisi Title: Manager | |||||
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Exhibit 10.2
AMENDMENT NO. 1 TO CREDIT AGREEMENT
AMENDMENT NO. 1 to SECOND LIEN CREDIT AGREEMENT, dated as of October 15, 2026 (this “Amendment”), by the Lenders party hereto, EVOLENT HEALTH LLC, a Delaware limited liability company, as the Borrower, EVOLENT HEALTH, INC., a Delaware corporation, as the Parent, each other Guarantor party hereto, ARES CAPITAL CORPORATION, as Administrative Agent and Collateral Agent.
WHEREAS, the Borrower, the Parent, the Lenders from time to time party thereto, Ares Capital Corporation, as Administrative Agent and as Collateral Agent, and the other parties thereto are party to that certain Second Lien Credit Agreement, dated as of August 7, 2025 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, the “Existing Credit Agreement”, and as amended by this Amendment and as further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; capitalized terms used and not defined herein shall have the meanings ascribed to them in the Credit Agreement unless the context otherwise requires);
WHEREAS, the Borrower has requested certain amendments to the Existing Credit Agreement, which in each case will become effective on the Amendment No. 1 Effective Date (as defined below) on the terms and subject to the conditions set forth herein; and
WHEREAS, pursuant to and in accordance with Section 12.01 of the Credit Agreement, the Administrative Agent and the Required Lenders party hereto agree to amend the Existing Credit Agreement as set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1.Amendments to the Credit Agreement. Each of the parties hereto agrees and consents that, effective on the Amendment No. 1 Effective Date, the Existing Credit Agreement shall be amended as follows:
(a)Section 1.01 of the Existing Credit Agreement shall be amended by adding the following defined terms in appropriate alphabetical order:
“Amendment No. 1” shall mean that certain Amendment No. 1 to Credit Agreement, dated as of October 15, 2026, by and among the Borrower, the Parent, the other Guarantors party thereto, the Agents and the Lenders party thereto.
“Amendment No. 1 Fee Letter” shall mean that certain Fee Letter, dated as of October 15, 2026, by and among, inter alios, Parent, the Borrower and the Administrative Agent, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Amendment No. 1 Effective Date” shall have the meaning ascribed thereto in the Amendment No. 1.
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(b)Section 1.01 of the Existing Credit Agreement shall be amended by amending and restating the definition of “Credit Documents” and “Fees”, respectively, to read as follows:
“Credit Documents” shall mean this Agreement, the Springing Control Agreements, the June 2025 Fee Letter, the Amendment No. 1 Fee Letter, the Guarantee Agreement, the Security Documents, the Intercompany Subordination Agreement, the Global Intercompany Note, any Notes issued by the Borrower hereunder, the Intercreditor Agreement, any other intercreditor or subordination agreements in favor of the Administrative Agent with respect to this Agreement, and any other agreement entered into now, or in the future, by any Credit Party, on the one hand, and the Administrative Agent or Lender, on the other hand, in connection with this Agreement.
“Fees” shall mean all amounts payable pursuant to, or referred to in, Section 4.01, the June 2025 Fee Letter or the Amendment No. 1 Fee Letter.
(c)Section 4.01 of the of the Existing Credit Agreement shall be amended by amending and restating clause (a) thereof to read as follows:
“(a) The Borrower agrees to pay to the Administrative Agent all the Fees set forth in the June 2025 Fee Letter and the Amendment No. 1 Fee Letter.”
(d)Section 9.06 of the of the Existing Credit Agreement shall be amended by amending and restating such Section in its entirety to read as follows:
“SECTION 9.06 Restricted Payments, etc. No Credit Party shall, and no Credit Party shall permit any of its Subsidiaries to, make any Restricted Payment, or make any deposit for any Restricted Payment, other than:
(a)payments by any Subsidiary of the Borrower (i) to its direct parent or (ii) to the Borrower (and, in the case of a Restricted Payment by a non-wholly owned Subsidiary, to a Borrower and/or to any other Subsidiary that is a direct or indirect parent of such non-wholly owned Subsidiary, and to each other owner of Capital Stock of such non-wholly owned Subsidiary based on their relative ownership interests of the relevant class of Capital Stock);
(b)Restricted Payments by any Credit Party or any of its Subsidiaries to pay dividends with respect to its Capital Stock payable solely in additional shares of its common stock (other than Disqualified Capital Stock);
(c)Restricted Payments by any Credit Party or any of its Subsidiaries to Parent to enable Parent to pay any applicable income or franchise Taxes then due and payable, to the extent such Taxes are attributable to the activities or income of the Borrower and its Subsidiaries;
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(d)regularly scheduled, nonaccelerated payments with respect to Indebtedness subordinated to the Obligations (including, without limitation, seller notes and earnout obligations) to the extent expressly permitted by the applicable subordination agreement or such other subordination terms with respect thereto;
(e)[reserved];
(f)redemptions, repurchases, retirements or other acquisitions of Capital Stock (i) deemed to occur on the exercise of options by the delivery of Capital Stock in satisfaction of the exercise price of such options or (ii) in consideration of withholding or similar taxes payable by any future, present or former officer, employee, director, member of management, or consultant (or their respective estates, executors, administrators, heirs, family members, legatees, distributees, spouses, former spouses, domestic partners and former domestic partners), including deemed repurchases in connection with the exercise of stock options or vesting of performance stock units or restricted stock units; provided, that, any Restricted Payments made pursuant to this clause (f) are not to be made in cash;
(g)to the extent no Event of Default has occurred and is continuing (both before and after giving effect thereto), the redemption, repurchase, retirement or other acquisition of Capital Stock in an amount not to exceed $17,250,000;
(h)all mandatory or scheduled payments in respect of the Convertible Senior Notes, including any settlement of Convertible Senior Notes with cash in lieu of a conversion of Convertible Senior Notes into Qualified Capital Stock of Parent, in each case, in accordance with the terms of the applicable class of Convertible Senior Notes; provided that, Restricted Payments to consummate such cash settlements shall not exceed $20,125,000 in the aggregate during the term of the Agreement and shall be permitted solely to the extent no Event of Default has occurred and is continuing at the time of such conversion;
(i)to the extent constituting a Restricted Payment, any exchange, redemption, purchase, repurchase, retirement or other acquisition or conversion in respect of the Convertible Senior Notes solely for or into Qualified Capital Stock of Parent;
(j)[reserved];
(k)to the extent no Event of Default has occurred and is continuing at the time of such distribution (both before and after giving effect thereto), any Credit Party and any of its Subsidiaries may make distributions in an amount sufficient to make payments (with cash or Shareholder Redemption Notes) on account of the purchase, redemption, or other acquisition or retirement of any shares of the Capital Stock of a Credit Party or Subsidiary from former employees, officers, or directors of the Credit Parties and their Subsidiaries (or any spouses, ex-spouses, beneficiaries or estates of any of the foregoing) which may be in the form of forgiveness of Indebtedness, and Parent may make such payments (with cash or Shareholder Redemption Notes) on account of the purchase, redemption, or other acquisition or retirement of any shares of its Capital Stock, and, in each case, make distributions to satisfy any tax liabilities arising in connection with such transactions; provided that the amount of such distributions and
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repurchases (including any such distributions or repurchases in the form of forgiveness of Indebtedness) may not exceed the sum of (x) $3,450,000 in any Fiscal Year plus (y) the amount of the cash proceeds of any permitted issuance of Qualified Capital Stock received by the Parent or the Borrower for the purpose of making such payments and used solely for such purpose plus (z) key man life insurance proceeds received by the Parent, the Borrower or any of their respective Subsidiaries during such Fiscal Year;
(l)[reserved];
(m)the making of any Restricted Payment within 60 days after the date of declaration thereof, if at the date of such declaration such Restricted Payment would have complied with another provision of this Section 9.06; provided that the making of such Restricted Payment will reduce capacity for Restricted Payments pursuant to such other provision when so made;
(n)to the extent constituting Restricted Payments, the consummation of the Transactions;
(o)(i) the redemption, repurchase, retirement or other acquisition of any Capital Stock (“Retired Capital Stock”) of Parent in exchange for, or out of the proceeds of, the substantially concurrent sale of, Capital Stock of Parent or contributions to the equity capital of Parent (other than any Disqualified Capital Stock) (collectively, including any such contributions, “Refunding Capital Stock”) and (ii) the declaration and payment of dividends on the Retired Capital Stock out of the proceeds of the substantially concurrent sale of Refunding Capital Stock;
(p)the Parent and its Subsidiaries may make any payments required by the terms of the TRA;
(q)the Parent or any of the Subsidiaries may pay cash in lieu of fractional Capital Stock in connection with any dividend, split or combination thereof, any Permitted Acquisition or any exercise of warrants, options or other securities convertible into or exchangeable for Capital Stock;
(r)to the extent no Event of Default has occurred or is continuing and to the extent not prohibited by the applicable subordination provisions applicable thereto, the Parent and its Subsidiaries may pay earn-outs, seller notes, deferred purchase price obligations, holdbacks or similar obligations that were incurred pursuant to Section 9.01(x);
(s)to the extent constituting Restricted Payments, the Borrower and their respective Subsidiaries may enter into and consummate transactions permitted by Section 9.04 (other than Section 9.04(e)) and Section 9.05 (other than Section 9.05(l));
(t)[reserved]; or
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(u)so long as no Event of Default has occurred or is continuing or would result therefrom, the repurchase on or prior to October 15, 2027, of 2029 Convertible Notes; provided that (x) the aggregate amount of cash applied to make such Restricted Payments shall not exceed $57,500,000, and (y) such Restricted Payments are financed solely with internally generated cash of the Borrower and its Subsidiaries.
To the extent that the Parent or its Subsidiaries are permitted to make any Restricted Payments pursuant to this Section 9.06, the same may be made as a loan or advance to the recipient thereof, and in such case the amount of such loan or advance so made shall reduce the amount of Restricted Payments that may be made by the Parent or its Subsidiaries in respect thereof.”
2.Representations and Warranties of the Credit Parties. Each of the Credit Parties represents and warrants to the Administrative Agent and each of the Lenders party hereto that, on and as of the date hereof:
(a)Corporate Status. Each Credit Party is a duly organized or formed and validly existing corporation, limited liability company or other registered entity in good standing under the laws of the jurisdiction of its organization and has the corporate or other organizational power and authority to own its property and assets and to transact the business in which it is engaged.
(b)Corporate Power and Authority. Each Credit Party has the corporate or other organizational power and authority to execute and deliver this Amendment and carry out the terms and provisions of each of this Amendment and the Credit Agreement (as amended hereby) and has taken all necessary corporate or other organizational action to authorize the execution and delivery of this Amendment and the performance of each of this Amendment and the Credit Agreement (as amended hereby). Each Credit Party has duly executed and delivered this Amendment, and each of this Amendment and the Credit Agreement, as amended hereby, constitute the legal, valid and binding obligation of such Credit Party enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, moratorium, reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or law).
(c)No Violation. None of (a) the execution or delivery of this Amendment, or the performance by any Credit Party of this Amendment or the Credit Agreement (as amended hereby) or compliance with the terms and provisions hereof or thereof or (b) the consummation of the transactions contemplated hereby will violate any provision of the Organization Documents any Credit Party.
(d)Representations and Warranties. After giving effect to this Amendment and the transactions contemplated hereby, each of the representations and warranties made by the Borrowers in or pursuant to Article VII of the Credit Agreement and in any other Credit Document are true and correct in all material respects on and as of the date hereof (except to the extent (i) such representations and warranties are already subject to any materiality qualifier, in which case they are true and correct in all respects and
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(ii) such representations and warranties expressly relate to an earlier date, in which case they are true and correct in all material respects as of such earlier date).
(e)No Default. No Default or Event of Default has occurred and is continuing.
3.Conditions Precedent. The amendments to the Existing Credit Agreement set forth in Section 1 above shall become effective as of the date upon which each of the following conditions precedent shall be satisfied or waived (such date, the “Amendment No. 1 Effective Date”):
(a)Execution of Credit Documents. The Administrative Agent shall have received this Amendment and the Amendment No. 1 Fee Letter, each duly executed by an Authorized Officer of each Credit Party party thereto and each other relevant party.
(b)Representations and Warranties. After giving effect to this Amendment and the transactions contemplated hereby, each of the representations and warranties made by the Borrower in or pursuant to Section 2 shall be true and correct in all material respects on and as of the Amendment No. 1 Effective Date (except to the extent (i) such representations and warranties are already subject to any materiality qualifier, in which case they shall be true and correct in all respects and (ii) such representations and warranties expressly relate to an earlier date, in which case they shall have been true and correct in all material respe]cts as of such earlier date).
(c)No Default. As of the Amendment No. 1 Effective Date, no Default or Event of Default shall have occurred and be continuing.
(d)Fees and Expenses. Each of the Administrative Agent and each Lender shall have received, for its own respective account, (i) all fees and expenses due and payable to such Person under the Amendment No. 1 Fee Letter and (ii) the reasonable fees, costs and expenses due and payable to such Person pursuant Section 12.05 of the Credit Agreement (including the reasonable and documented fees, disbursements and other charges of counsel) for which invoices have been presented at least two (2) Business Days prior to the date hereof.
4.Miscellaneous.
(a)Headings. Section headings in this Amendment are for convenience of reference only and shall not affect the interpretation of this Amendment.
(b)Counterparts; Facsimile Signature. This Amendment may be executed by one or more of the parties thereto on any number of separate counterparts (including by electronic transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Amendment signed by all the parties shall be lodged with the Borrower and the Administrative Agent.
(c)Entire Agreement. This Amendment, the Credit Agreement (as amended hereby) and the other Credit Documents represent the agreement of the Credit Parties, the Administrative Agent and the Lenders with respect to the subject matter hereof, and there
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are no promises, undertakings, representations or warranties by any party hereto or thereto relative to the subject matter hereof not expressly set forth or referred to herein or in the other Credit Documents.
(d)Effects of Amendment. This Amendment shall be deemed a Credit Document for all purposes of the Credit Agreement and the other Credit Documents. On and after the date hereof, each reference in the Credit Agreement and the other Credit Documents to the “Credit Agreement,” “hereunder,” “thereunder,” “hereof”, “thereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement, as modified by this Amendment. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or any Lender under the Credit Agreement or any other Credit Document, nor constitute a waiver of any provision of the Credit Agreement or any other Credit Document, except as specifically set forth herein. Except as modified hereby, all of the terms and provisions of the Credit Documents shall remain in full force and effect.
(e)Reaffirmation of Obligations. Each Credit Party, to the extent it is a party to the Credit Agreement and certain of the Credit Documents, in each case as amended, supplemented or otherwise modified from time to time as of the date hereof, hereby (a) acknowledges and consents to all of the terms and conditions of this Amendment, (b) affirms all of its obligations under the Credit Documents and (c) agrees that this Amendment and all documents executed in connection herewith do not operate to reduce or discharge such Credit Party’s obligations under the Credit Documents.
(f)Reaffirmation of Security Interests. Each Credit Party, to the extent it is a party to the Credit Agreement and certain of the Credit Documents, in each case as amended, supplemented or otherwise modified from time to time as of the date hereof, hereby (a) affirms that each of the Liens granted in or pursuant to the Credit Documents are valid and subsisting and (b) agrees that this Amendment shall in no manner impair or otherwise adversely affect any of the Liens granted in or pursuant to the Credit Documents.
(g)Governing Law; Waiver of Right to Trial by Jury. The provisions of Sections 12.13 (Governing Law), 12.14 (Submission to Jurisdiction) and 12.16 (Waiver of Right to Trial by Jury) of the Credit Agreement shall be applicable mutatis mutandis to this Amendment.
(h)No Novation. By its execution of this Amendment, each of the parties hereto acknowledges and agrees that the terms of this Amendment do not constitute a novation, but, rather, a supplement of a pre-existing indebtedness and related agreement, as evidenced by the Credit Agreement (as amended hereby).
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written.
| BORROWER: | EVOLENT HEALTH LLC, a Delaware limited liability company By: /s/Mario Ramos Name: Mario Ramos Title: Chief Financial Officer | ||||||||||
| PARENT: | EVOLENT HEALTH, INC., a Delaware corporation By: /s/Mario Ramos Name: Mario Ramos Title: Chief Financial Officer | ||||||||||
| OTHER GUARANTORS: | EH HOLDING COMPANY, INC., a Delaware corporation By: /s/Mario Ramos Name: Mario Ramos Title: Chief Financial Officer | ||||||||||
EVOLENT SPECIALTY SERVICES, INC., a California corporation By: /s/Mario Ramos Name: Mario Ramos Title: Treasurer | |||||||||||
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EVOLENT IPA OF NEW YORK, INC., a New York corporation By: /s/Mario Ramos Name: Mario Ramos Title: Treasurer | |||||||||||
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| ADMINISTRATIVE AGENT, COLLATERAL AGENT AND A LENDER: | ARES CAPITAL CORPORATION, a Maryland corporation By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||||
| REQUIRED LENDERS: | ARES CAPITAL CORPORATION, a Maryland corporation By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||||
[Signature Page to Amendment No. 1]4917-6621-7680v5
ARES CENTRE STREET PARTNERSHIP, L.P. By: Ares Centre Street GP, Inc., as general partner By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES COMMERCIAL FINANCE LP By: Ares Commercial Finance Management LP, as Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES DIRECT FINANCE I LP By: Ares Capital Management LLC, its Investment Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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ARES CREDIT STRATEGIES INSURANCE DEDICATED FUND SERIES INTERESTS OF THE SALI MULTI-SERIES FUND, L.P. By: Ares Management LLC, its Investment Manager By: Ares Capital Management LLC, as Sub-Adviser By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
CION ARES DIVERSIFIED CREDIT FUND By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES JASPER FUND LLC By: Private Credit Fund C-1 HoldCo, LLC – SERIES 1, its Sole Member By: Ares Capital Management LLC, its manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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ARES ND CREDIT STRATEGIES FUND LLC By: Ares Capital Management LLC, its Account Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES PRIVATE CREDIT SOLUTIONS II, L.P. By: Ares Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES PRIVATE CREDIT SOLUTIONS (BVI) II, L.P. By: Ares PCS Management II, L.P., its general partner By: Ares PCS Management GP II, LLC, its general partner By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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ARES SENIOR DIRECT LENDING MASTER FUND II DESIGNATED ACTIVITY COMPANY By: Ares SDL Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES SENIOR DIRECT LENDING PARALLEL FUND (L) II, L.P. By: Ares SDL Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
ARES SENIOR DIRECT LENDING PARALLEL FUND (U) II, L.P. By: Ares SDL Capital Management LLC, its Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
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ARES SFERS CREDIT STRATEGIES FUND LLC By : Ares Capital Management LLC, its Account Manager By: /s/M. Kort Schnabel Name: M. Kort Schnabel Title: Authorized Signatory | |||||
[Signature Page to Amendment No. 1]4917-6621-7680v5
Exhibit 31.1
Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
I, Seth Blackley, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Evolent Health, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Dated: | November 5, 2026 | /s/ Seth Blackley | |||||||||
| Name: Seth Blackley | |||||||||||
| Title: Chief Executive Officer | |||||||||||
Exhibit 31.2
Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
I, Mario Ramos, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Evolent Health, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Dated: | November 5, 2026 | /s/ Mario Ramos | |||||||||
| Name: Mario Ramos | |||||||||||
| Title: Chief Financial Officer | |||||||||||
Exhibit 32.1
Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906
Of the Sarbanes-Oxley Act of 2002
I, Seth Blackley, Chief Executive Officer of Evolent Health, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
1.The Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2026 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Dated: | November 5, 2026 | /s/ Seth Blackley | |||||||||
| Name: Seth Blackley | |||||||||||
| Title: Chief Executive Officer | |||||||||||
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906
Of the Sarbanes-Oxley Act of 2002
I, Mario Ramos, Chief Financial Officer of Evolent Health, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
1.The Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2026 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Dated: | November 5, 2026 | /s/ Mario Ramos | |||||||||
| Name: Mario Ramos | |||||||||||
| Title: Chief Financial Officer | |||||||||||
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.