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EVH, Evolent Health

Health Care Technology diversified UnprofitableDistress / turnaroundSerial acquirer

Evolent is a market leader in connecting care for people with complex conditions like cancer, cardiovascular disease, and musculoskeletal diagnoses.

Our acquisitions have been focused on companies with extensive experience assisting customers in managing the large and complex specialties of oncology, cardiology, radiology, musculoskeletal, physical medicine, and genetics care.

The majority of our revenues derive from our primary solution, Specialty Care Management Services, however we also offer additional administrative services to our customers.

Latest annual: FY2025 10-K

EVH · Evolent Health

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$1.9B

−26.6% YoY · 15% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $1.9B 5-yr avg $1.7B

Gross margin 20% 5-yr avg 22%

Operating margin −22.2% 5-yr avg −6.3%

ROIC −27% 5-yr avg −9%

Owner-earnings margin −0%

Free cash flow margin −0%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

Situation: Unprofitable. No sustained operating profit across the record; an earnings multiple has nothing to rest on. What the record does show is revenue, the gross-margin trajectory, and the burn against the cash on hand. Distress / turnaround. Thin interest coverage, or operating cash burned against real debt, across the record. The balance sheet carries this situation; the debt schedule sets the clock. Serial acquirer. Goodwill and acquired intangibles are 67% of assets, with meaningful acquisition spending in 5 of the record's 10 years; much of what this business is was bought, at prices the record carries.
What moves the needle: Operating margin has run around −17% through the cycle on a 23% gross margin, the operating line deeply negative — so the lever is the path to a margin at all: revenue growth against the cost curve and the cash runway, not the level of a margin that isn't there yet. On its own account, the filing leans hardest on pricing power & competition, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has rarely cleared the cost of capital (median −6%, above 15% in 0 of 9 years). Owner earnings, the cash-based check, have been thin too. This is price-taker territory, where the balance sheet and the cycle matter more than any multiple; the rest is in the 10-K.

Every line is arithmetic on the company's filings, shown in full in the sections below.

The record

Ten years of arithmetic, read across the cycle.

The record, 2016–2025

realized figures from each filing · older years to the left

2016’16	2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMar 2026
											Income statement
$254M	$435M	$627M	$846M	$925M	$908M	$1.4B	$2.0B	$2.6B	$1.9B	$1.9B	RevenueRevenue
—	—	—	—	—	28%	23%	23%	14%	21%	20%	Gross marginGross mgn
63%	47%	38%	28%	23%	24%	20%	18%	10%	16%	16%	SG&A / revenueSG&A/rev
4%	4%	3%	2%	2%	2%	—	—	—	—	1%	R&D / revenueR&D/rev
($237M)	($73M)	($47M)	($309M)	($263M)	($42M)	$4M	($71M)	($40M)	($410M)	($419M)	Operating incomeOp. inc.
−93.4%	−16.7%	−7.6%	−36.5%	−28.4%	−4.7%	0.3%	−3.6%	−1.6%	−21.9%	−22.2%	Operating marginOp. mgn
($160M)	($61M)	($53M)	($302M)	($334M)	($38M)	($19M)	($113M)	($62M)	($535M)	($497M)	Net incomeNet inc.
											Cash flow & returns
($36M)	($28M)	($21M)	($43M)	($16M)	$39M	($12M)	$143M	$19M	$39M	$33M	Operating cash flowOp. cash
$17M	$32M	$45M	$61M	$61M	$60M	$67M	$123M	$118M	$116M	$113M	DepreciationDeprec.
$88M	($20M)	($30M)	$183M	$242M	($400K)	($94M)	$92M	($78M)	$418M	$377M	Working capital & otherWC & other
$16M	$28M	$40M	$36M	—	—	—	—	—	—	$36M	CapexCapex
6.1%	6.4%	6.3%	4.2%	—	—	—	—	—	—	1.9%	Capex / revenueCapex/rev
($51M)	($56M)	($60M)	($78M)	—	—	—	—	—	—	($2M)	Owner earningsOwner earn.
−20.1%	−12.8%	−9.6%	−9.2%	—	—	—	—	—	—	−0.1%	Owner earnings marginOE mgn
($51M)	($56M)	($60M)	($78M)	—	—	—	—	—	—	($2M)	Free cash flowFCF
−20.1%	−12.8%	−9.6%	−9.2%	—	—	—	—	—	—	−0.1%	Free cash flow marginFCF mgn
—	$4M	$130M	$9M	$300K	$49M	$248M	$388M	$31M	$57M	$53M	AcquisitionsAcquis.
—	—	—	—	—	—	—	$0	$0	$40M	—	BuybacksBuybacks
-27%	-6%	-3%	-22%	-35%	-5%	—	-4%	-2%	-26%	-27%	ROICROIC
-23%	-6%	-5%	-33%	-54%	-5%	-2%	-11%	-6%	-129%	-125%	Return on equityROE
−23%	−6%	−5%	−33%	−54%	−5%	−2%	−11%	−6%	−129%	−125%	Retained to equityRetained/eq
											Balance sheet
$179M	$238M	$228M	$101M	$319M	$266M	$188M	$193M	$104M	$152M	$142M	Cash & investmentsCash+inv
$41M	$49M	$80M	$76M	$124M	$131M	$255M	$447M	$415M	$310M	$314M	ReceivablesReceiv.
$44M	$43M	$147M	$37M	$32M	$96M	$57M	$48M	$96M	$60M	$63M	Accounts payablePayables
($3M)	$6M	($67M)	$38M	$92M	$35M	$198M	$399M	$319M	$250M	$251M	Operating working capitalOper. WC
$265M	$378M	$488M	$229M	$548M	$524M	$478M	$684M	$607M	$506M	$502M	Current assetsCur. assets
$132M	$133M	$269M	$193M	$403M	$445M	$433M	$674M	$716M	$385M	$381M	Current liabilitiesCur. liab.
2.0×	2.8×	1.8×	1.2×	1.4×	1.2×	1.1×	1.0×	0.8×	1.3×	1.3×	Current ratioCurr. ratio
$627M	$628M	$768M	$566M	$349M	$426M	$723M	$1.1B	$1.1B	$694M	$694M	GoodwillGoodwill
$1.2B	$1.3B	$1.7B	$1.5B	$1.4B	$1.4B	$1.8B	$2.7B	$2.5B	$1.9B	$1.9B	Total assetsAssets
$120M	$121M	$221M	$294M	$290M	$216M	$413M	$597M	$491M	$971M	$973M	Total debtDebt
($59M)	($117M)	($7M)	$193M	($29M)	($51M)	$225M	$404M	$386M	$819M	$831M	Net debt / (cash)Net debt
-961.2×	-20.0×	-8.7×	-21.2×	-9.3×	-1.7×	0.2×	-1.3×	-1.6×	-7.1×	-6.6×	Interest coverageInt. cov.
$703M	$1.0B	$1.1B	$929M	$620M	$694M	$859M	$1.1B	$1.0B	$415M	$396M	Shareholders’ equityEquity
7.3%	4.7%	2.8%	1.8%	1.6%	1.8%	2.5%	2.1%	1.6%	2.1%	2.1%	Stock comp / revenueSBC/rev
$161M	—	—	$200M	$215M	—	—	—	—	$398M	$398M	Goodwill written downGW imp.
											Per share
45.0M	64.4M	77.3M	82.4M	84.9M	86.1M	93.7M	111M	115M	114M	112M	Shares out (diluted)Shares
$5.64	$6.76	$8.11	$10.28	$10.89	$10.55	$14.43	$17.65	$22.28	$16.43	$16.88	Revenue / shareRev/sh
$-3.55	$-0.94	$-0.68	$-3.67	$-3.94	$-0.44	$-0.20	$-1.02	$-0.54	$-4.68	$-4.44	EPS (diluted)EPS
$-1.13	$-0.87	$-0.78	$-0.95	—	—	—	—	—	—	$-0.02	Owner earnings / shareOE/sh
$-1.13	$-0.87	$-0.78	$-0.95	—	—	—	—	—	—	$-0.02	Free cash flow / shareFCF/sh
$0.34	$0.43	$0.51	$0.43	—	—	—	—	—	—	$0.32	Cap. spending / shareCapex/sh
$15.60	$15.71	$14.79	$11.28	$7.30	$8.06	$9.17	$9.60	$8.73	$3.64	$3.54	Book value / shareBVPS

The diluted share count moved ×1.43 into 2017 — shares issued, not a split the totals corroborate — and the per-share figures carry the counts as filed.

Per-share growththe realized rate an owner's share compounded

	9-yr	5-yr
Revenue / share	+12.6%/yr	+8.6%/yr
Capital spending / share	+7.8%/yr (3-yr)	+7.8%/yr (3-yr)
Book value / share	−14.9%/yr	−13.0%/yr

The record, charted

FY2016–2025

Each measure over its full record; the current point and the worst year marked.

Share count

114Mpeak FY2024

ROIC

−26%low FY2020

Gross margin

21%low FY2024

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

($78M)owner earningsvs.($302M)net incomelow FY2019

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetainedBeyond op. cash

Each year's outlays against its operating cash: the mix, and how it drifts. The hatched cap is spending beyond that year's operating cash — financed from the balance sheet or borrowing, not operations.

FY2021FY2025

Owner-earnings bridge

FY2016–FY2019cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2019 the business turned a $302M loss into ($78M) of owner earnings: more cash than the profit line showed, after the non-cash charges and the capital it put back in.

	FY2019	FY2018	FY2017	FY2016
Reported net income	($302M)	($53M)	($61M)	($160M)
Depreciation & amortizationnon-cash charge added back	+$61M	+$45M	+$32M	+$17M
Stock-based compensationreal costnon-cash, but a real cost	+$16M	+$18M	+$20M	+$19M
Working capital & othertiming of cash in and out, other non-cash items	+$183M	−$30M	−$20M	+$88M
Cash from operations	($43M)	($21M)	($28M)	($36M)
Capital expenditurecash put back in to keep running and to grow	−$36M	−$40M	−$28M	−$16M
Owner earnings	($78M)	($60M)	($56M)	($51M)
Owner-earnings marginowner earnings ÷ revenue	-9%	-10%	-13%	-20%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $16M), owner earnings is nearer ($94M).

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? -7.1×

Does not cover its interest

Operating income ($410M) ÷ interest expense $57M

What this means
A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.
How heavy is the debt, net of cash? $819M

Net debt against an operating loss

Cash $152M − debt $971M

What this means
Netting $152M of cash and short-term investments against $971M of debt leaves $819M owed, with no operating profit this year to measure it against — understand that combination before anything else about the company. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? 46d

Tight

DSO 60 + DIO 0 − DPO 15 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash. (Little or no inventory, a services / asset-light model, so the inventory leg is ~0.)

Is it a good business?

Return on invested capital -6%

Below average through the cycle

9-yr median, range -35%–-2%; -26% latest = NOPAT ($324M) ÷ invested capital $1.2B

Industry peers: median 15%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 9 years (it ran -26% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin 0%

Positive this year, negative across the cycle

latest $3M = operating cash $39M − maintenance capex $36M (positive this year), after an earlier loss stretch (4-yr median -13%)

Industry peers: median 9%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 0% of revenue this year, a -13% median across 4 years. Treating stock comp as the real expense it is (less $40M of SBC) leaves ($36M).
Are earnings backed by cash? $39M

Loss, but cash-generative

Net income ($535M) · cash from operations $39M

What this means
The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did.

How is the cash used?

Where do the earnings go? 1209%

Returned more than it generated

Dividends + buybacks $40M ÷ Owner Earnings $3M

What this means
The company returned more than it generated: against $3M of Owner Earnings, $40M (1209%) went back to shareholders, $0 dividends, $40M buybacks — the excess came from the balance sheet or borrowing, not the year's operations. Net of $40M stock comp, the real buyback was about $257K. Sustained, that pattern draws down cash or adds debt; the net-debt line above shows where it stands.
Investing or harvesting? 0.31×

Harvesting

Capex $36M ÷ depreciation $116M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 0 of 5 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Near

Revenue ≥ $2B · $1.9B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Miss

Current ratio ≥ 2× · 1.31×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Miss

Debt ≤ working capital · $971M vs $121M WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Miss

A profit every year (10-yr record) · 10 loss years

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Miss

Uninterrupted dividends · none paid

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth —

Earnings +33% over the record · —

What this means
Earnings were negative early in the record, a growth rate isn't meaningful.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $-2.10/share (latest year $-4.75), the averaged base the calculator's gate runs on, and book value is $3.69/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 0 of 10

What this means
Lost money in 10 year(s), look at what happened there before trusting the average.
Return on capital ≥ 15% 0 of 10 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin −39% → −9% (3-yr avg ends)

What this means
Through the cycle the operating margin widened — about −39% early to −9% lately, median −17% — pricing power intact or improving.
Reinvestment, incremental ROIC −9%

What this means
Reinvested capital came back at a negative incremental return over this window — the invested base grew while operating profit did not. The filings show where it went.
Worst year 2016 · −93.4% op. margin

What this means
Operations went underwater in 2016, understand why before trusting the good years.
How management talks about it Owner’s terms

What this means
The record and the register agree: capital is compounding and the filing reasons in an owner’s terms — per-share value, return on capital, the long term — not a promoter’s.

Does AI threaten the moat?

Elevated contestability

The product is software or information, the very thing capable AI now produces more cheaply, so the moat is more contestable than the record alone implies.

In its own filing Framed as a capability

Despite the structural exposure, the filing positions AI as something it uses, not a threat to its product.

“In connection with the Machinify acquisition, the Company has sought to further enhance and accelerate its uses of AI through its AI-enabled tools, such as Auth Intelligence.”

The product is the kind capable AI most directly contests: when a substitute can be built cheaply, the incumbent's pricing power is the first thing at risk. The record cannot say whether the moat outlasts that; past durability is a starting point, not a promise.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 31, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$502M

Cash & short-term investments$142M
Receivables$314M
Other current assets$46M

Current liabilities$381M

Accounts payable$63M
Other current liabilities$318M

Current ratio1.32×all current assets ÷ what's due · Graham looked for 2×

Quick ratio1.32×stricter: inventory excluded

Cash ratio0.37×strictest: cash alone against what's due

Working capital$121Mthe cushion left after near-term bills

Revenue, latest quarter vs. a year ago+2.6%the freshest read on whether the business is still growing

Current ratio, recent quarters1.1× → 1.3×

Deeper floors

Tangible book value($868M)equity stripped of goodwill & intangibles

Net current asset value($980M)Graham's net-net: current assets less all liabilities

Debt incl. operating leases$985M$12M of it operating leases

Deferred revenue$1Mcustomer cash collected before delivery; operating float

From the company's latest filing.

Acquisitions & goodwill

from the balance sheet & the 10-year cash-flow record

Goodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.

Goodwill & intangibles$1.3B67% of all assets; the premium carried on the balance sheet for businesses acquired

Against book equityexceeds itgoodwill alone is larger than the company’s entire book equity; stripped of the acquisition premium, there is no net book worth

Cash spent acquiring$916Mover 10 years buying other businesses, against $118M of capital spent building

$974M written down across 4 years (2016, 2019, 2020, 2025): goodwill the company has already conceded it overpaid for, charged against earnings. A write-down costs no cash (the cash went out when the deal was signed), but it is management marking its own past judgment to market.

Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 10-year record, from the company's own filings.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Chief executive	Pay, as filed	“Actually paid”	Net income
2021	Seth Blackley	$6.5M	$21.9M	($38M)
2022	Seth Blackley	$7.7M	$11.8M	($19M)
2023	Seth Blackley	$8.9M	$20.1M	($113M)
2024	Seth Blackley	$11.1M	−$9.3M	($62M)
2025	Seth Blackley	$14.2M	$2.6M	($535M)

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Net income is the whole business's, as filed, for the same fiscal years.

Insider ownership1.5%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
Stock-based compensation$40M
The slice of the business handed to employees in shares this year, 2% of revenue. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why Evolent Health is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2016–2025.

1 of the 4 tests turned up something to look into; the other 3 came back clean.

Look hereDid debt outgrow the business?$120M → $973M
Debt rose from $120M to $973M while owner earnings went from about ($56M) to ($65M): the borrowing grew and the earnings that would carry it are not there now. Debt raised for buybacks or deals rather than growth is the kind that bites in a downturn.

And these came back clean

Is it less profitable than it was?
Did receivables and inventory outpace sales?
Are "one-time" charges a yearly habit?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

Peers, Health Care Technology

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
GGenpact	$5.1B	36%	12.4%	15%	11%
VVXV2X Inc.	$4.5B	9%	3.6%	11%	3%
FCNFTI Consulting	$3.8B	32%	10.5%	16%	9%
MEDPMedpace Holdings	$2.5B	—	17.6%	27%	22%
EVHEvolent Health	$1.9B	23%	-12.2%	-6%	-11%
ICFIICF International	$1.9B	36%	6.9%	8%	7%
ONTOnterris Inc.	$831M	35%	-4.8%	-5%	3%
EXPOExponent	$582M	—	20.8%	44%	22%
Group median	—	34%	8.7%	13%	8%

The price

What a price has to assume.

What the price implies

reverse-DCF

Evolent Health is profitable, but owner earnings are negative this year because capital spending currently outruns operating cash, a build-out, so the owner-earnings reverse-DCF has no positive base to grow. We read the price from both ends instead: type a price to see the steady-state profitability it demands, then set the mature margin you would believe and weigh the two against each other. Nothing leaves your browser unless you enter it in your notebook.

Today’s price $

The assumptions Required return 9% Years to get there 10 Revenue growth 0%

Revenue, delivered22%/yr’20→’25

Mature owner-earnings margin 15%

Enter a price to run it.

Owner earnings it must reach—

Margin the price demands—

Owner-earnings margin today−0%

Two reads of one future. From your price: the owner earnings the company must reach, valued at a mature multiple and discounted back at your rate, expressed as the margin it implies on revenue grown at your rate. From your belief: the mature margin you would credit, set on the dial above. When the margin the price demands runs above the one you would believe, you are paying for a future taken on faith. For a deep cyclical at a trough, normalized through-cycle earnings are the better lens; this mode is for the genuinely unprofitable, and for the profitable business whose capital spending currently outruns its cash.

Weigh EVH against another business →

Cite: Owner Scorecard, "Evolent Health (EVH), the owner's record," https://ownerscorecard.com/c/EVH, data as of 2026-07-09.

Manual order: ← EVGO its page in the Manual EVLV →

Industry order: ← DOCS the Health Care Technology chapter