Evolent Health, Inc.

Previous wording

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 March 31, 2026, our customers reported membership declines in Medicaid and Health Exchanges consistent with our expectations.

Current wording

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. During the quarter ended June 30, 2026, our customers reported membership declines in Medicaid and Health Exchanges consistent with our expectations. We anticipate exchange membership attrition to continue through the end of the year, though at a decreasing pace.

Previous wording

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 months ended March 31, 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.

Current wording

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 six months ended June 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.

Previous wording

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.

Current wording

We also deploy our services in capitation arrangements under our specialty care management 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.

Previous wording

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), expenses recorded as part of a Medicare shared savings program and other services, 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.

Current wording

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) and other services, 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.

Previous wording

Performance Suite Lives on Platform are calculated by summing monthly members covered for specialty care services for contracts not under ASO arrangements, plus members managed by Complex Care in capitation arrangements and 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.

Current wording

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.

Previous wording

(2)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 March 31, 2026 to 2025 - Cost of Revenue” for additional information on MER excluding Evolent Care Partners.

Current wording

(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 June 30, 2026 to 2025 - Cost of Revenue” for additional information on MER excluding Evolent Care Partners.

Previous wording

(2)Refer to “Comparison of the Results for the Three Months Ended March 31, 2026 to 2025 - Revenue” for additional information on Performance Suite revenue less revenue from Evolent Care Partners.

Current wording

(2)Refer to “Comparison of the Results For the Three Months Ended June 30, 2026 to 2025 - Revenue” for additional information on Non-GAAP Performance Suite revenue less revenue from Evolent Care Partners.

Previous wording

The increase in MER excluding Evolent Care Partners for the three months ended March 31, 2026 compared to 2025 is driven primarily by the go-live of a Performance Suite contract during the first quarter of 2026.

Current wording

The increase in MER and MER excluding Evolent Care Partners for the three months ended June 30, 2026 compared to 2025 is driven primarily by the go-live of Performance Suite contracts during the first half of 2026.

Previous wording

We recorded a loss on change in fair value of contingent consideration of $0.3 million for the three months ended March 31, 2025 primarily related to our Machinify earnout.

Current wording

We recorded a loss on change in fair value of contingent consideration of $3.2 million for the three months ended June 30, 2025 primarily related to our Machinify earnout.

Previous wording

Total revenue increased $12.6 million, or 2.6%, to $496.2 million for the three months ended March 31, 2026, compared to the same period in 2025. The increase was driven primarily by $83 million from a new Performance Suite contract go-live during the first quarter offset by a reduction of $58 million from the ECP disposition and $17 million from reduction in Medicare memberships.

Current wording

Total revenue increased $220.8 million, or 23.8%, to $1,148.8 million for the six months ended June 30, 2026, compared to the same period in 2025. The increase was driven primarily by $339.8 million from new Performance Suite contract go-lives and expanded oncology services during the six months ended June 30, 2026 offset by a reduction of $73.1 million from the ECP disposition and $44.2 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.

Previous wording

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):

Current wording

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:

Previous wording

Cost of revenue increased by $31.3 million, or 8.2%, to $412.5 million for the three months ended March 31, 2026, as compared to 2025, principally as a result of the 2.6% increase in our revenue compared to year ended March 31, 2025. The increase included approximately $42.7 million of higher claims cost compared to the prior year period, which is primarily attributable to $116.3 million higher claims expense from new and existing Performance Suite contracts, offset by a decrease of $54.4 million of claims from the disposition of ECP in December 2025 and transitioning certain Performance Suite customers to Specialty and Technology Service Suite and narrowing of scope of certain customers totaling $15.6 million and lower personnel costs of $9.8 million compared to the prior year driven by decreased headcount and change in bonus structure for certain employees.

Current wording

Cost of revenue increased by $259.0 million, or 35.7%, to $984.2 million for the six months ended June 30, 2026, as compared to 2025, principally as a result of the 23.8% increase in our revenue compared to the six months ended June 30, 2025. The increase included approximately $286.5 million of higher claims cost compared to the prior year period, which is primarily attributable to $355.9 million higher claims expense from new and existing Performance Suite contracts, offset by a decrease of $59.3 million of claims from the disposition of ECP in December 2025 and transitioning certain Performance Suite customers to Specialty and Technology Service Suite and narrowing of scope of certain customers totaling $9.2 million and lower personnel costs of $21.2 million compared to the prior year driven by decreased headcount and change in bonus and benefits structure for certain employees.

Previous wording

Approximately $0.5 million and $0.7 million of total cost of revenue was attributable to stock-based compensation expense for the three months ended March 31, 2026, and 2025, respectively. Cost of revenue represented 83.1% and 78.8% of total revenue for the three months ended March 31, 2026, and 2025 respectively. Our cost of revenue increased as a percentage of our total revenue due to the maturation profile of a new Performance Suite contract that went live during the first quarter 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.

Current wording

Approximately $1.2 million and $1.7 million of total cost of revenue was attributable to stock-based compensation expense for the six months ended June 30, 2026, and 2025, respectively. Cost of revenue represented 85.7% and 78.1% of total revenue for the six months ended June 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.

Previous wording

Selling, general, and administrative expenses decreased by $5.6 million, or 7.1%, to $72.8 million for the three months ended March 31, 2026, as compared to 2025. The decrease was primarily driven by lower personnel costs of $4.2 million from reduced headcount and change to the 2026 bonus structure for certain employees including decreased severance of $1.0 million, lower professional fees of $2.8 million driven by transaction costs, lower stock compensation expense due to the achievement and change in projected achievement of certain performance measurements of $0.3 million offset by higher technology costs including cloud services and licensing fees of $1.7 million and a $0.6 million increase in bad debt expense versus the prior period reflecting a return to normal collections timing.

Current wording

Selling, general, and administrative expenses decreased by $12.0 million, or 7.8%, to $141.6 million for the six months ended June 30, 2026, as compared to 2025. The decrease was primarily driven by lower personnel costs of $8.9 million from reduced headcount and change to the 2026 benefits and bonus structure for certain employees and decreased severance of $1.5 million and lower professional fees of $6.0 million driven by the ECP disposition in December 2025 offset by higher stock compensation expense due to the achievement and change in projected achievement of certain performance measurements of $3.7 million and a $0.8 million increase in bad debt expense versus the prior period reflecting a return to normal collections timing.

Previous wording

Approximately $10.1 million and $10.4 million of total selling, general and administrative expenses were attributable to stock-based compensation expense for the three months ended March 31, 2026 and 2025, respectively. Acquisition and severance costs accounted for approximately $0.5 million and $1.7 million of total selling, general and administrative expenses for the three months ended March 31, 2026 and 2025, respectively. Selling, general and administrative expenses represented 14.7% and 16.2% of total revenue for the three months ended March 31, 2026, as compared to 2025, respectively, driven primarily from contractual updates with certain customers in our Performance Suite.

Current wording

Approximately $24.6 million and $21.0 million of total selling, general and administrative expenses were attributable to stock-based compensation expense for the six months ended June 30, 2026 and 2025, respectively. Acquisition and severance costs accounted for approximately $1.3 million and $2.5 million of total selling, general and administrative expenses for the six months ended June 30, 2026 and 2025, respectively. Selling, general and administrative expenses represented 12.3% and 16.6% of total revenue for the six months ended June 30, 2026, as compared to 2025, respectively, driven primarily from contractual updates with certain customers in our Performance Suite.

Previous wording

Depreciation and amortization expenses decreased $2.5 million, or 10.4%, to $21.6 million, as compared to 2025 primarily due to $0.4 million of lower depreciation on computer hardware and $0.5 million of lower depreciation of internally developed software, $0.6 million of lower amortization on ECP provider network contracts which was sold in December 2025 and $0.9 million 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 March 31, 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.

Current wording

Depreciation and amortization expenses decreased $4.1 million, or 8.6%, to $43.1 million, for the six months ended June 30, 2026, as compared to 2025 primarily due to $0.7 million of lower depreciation on computer hardware and $0.3 million of lower depreciation of internally developed software, $1.3 million of lower amortization on ECP provider network contracts which was sold in December 2025 and $1.3 million lower amortization of certain customer relationships and technology intangibles reaching their useful life. Depreciation and amortization expenses include $25.0 million and $26.7 million for the six months ended June 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.

Previous wording

During the year ended December 31, 2024, the Company terminated its Chicago, IL lease effective October 31, 2024. We recorded an additional $1.9 million loss on lease termination related to negotiated termination payments and real estate commissions the three months ended March 31, 2025.

Current wording

During the year ended December 31, 2024, the Company terminated its Chicago, IL lease effective October 31, 2024. We recorded an additional $1.9 million loss on lease termination related to negotiated termination payments and real estate commissions during the six months ended June 30, 2025.

Previous wording

We recorded interest expense (including amortization of deferred financing costs) of approximately $16.9 million and $10.4 million for the three months ended March 31, 2026 and 2025, respectively. The increase in interest expense for the three months ended March 31, 2026 compared to the three months ended March 31, 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.

Current wording

We recorded interest expense (including amortization of deferred financing costs) of $16.9 million and $33.7 million for the three and six months ended June 30, 2026, respectively, and $11.6 million and $22.0 million for the three and six months ended June 30, 2025, respectively. The increase in interest expense for the three and six months ended June 30, 2026 compared to the three and six months ended June 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.

Previous wording

The Company reported net loss attributable to common shareholders of Evolent Health, Inc. of $26.6 million and $72.3 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the Company had $142.0 million of cash and cash equivalents and $26.7 million in restricted cash.

Current wording

The Company reported net loss attributable to common shareholders of Evolent Health, Inc. of $55.0 million and $123.3 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, the Company had $115.7 million of cash and cash equivalents and $25.8 million in restricted cash.

Previous wording

Cash flows used in operating activities of $1.0 million for the three months ended March 31, 2026 were driven primarily by an overall increase in reserve for claims and performance-based arrangements of $39.8 million due to the timing of customer settlements and claims payments, offset in part by decreases in accrued liabilities of $21.0 million from timing of customer settlements, our partner and vendor payments and accrued compensation and benefits of $20.0 million due to the timing of 2025 bonus payments.

Current wording

Cash flows used in operating activities of $10.3 million for the six months ended June 30, 2026 were driven primarily by an overall increase in reserve for claims and performance-based arrangements of $186.2 million offset in part by increases in accounts receivable of $139.3 million, both primarily driven by new Performance Suite contract go-lives in 2026 and timing of claims, customer settlements and reconciliations, decreases in accrued liabilities of $22.3 million from timing of customer settlements, our partner and vendor payments and accrued compensation and benefits of $22.0 million due to the changes to benefits and bonus structure for employees.

Previous wording

Cash flows provided by operating activities of $4.6 million for the three months ended March 31, 2025 were affected by increases in accounts receivable of $15.8 million from timing of our partner and vendor payments, offset by a reduction reserve for claims and performance-based arrangements of $15.1 million due to the timing of claims payments and a reduction in accrued compensation and benefits of $2.2 million due to the timing of 2024 bonus payments and severance of $1.0 million.

Current wording

Cash flows used in operating activities of $25.8 million for the six months ended June 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 $131.5 million due to the timing of claims payments, offset in part by decreases in accounts receivable of $55.9 million from timing of our partner and vendor payments and an increase in accrued compensation and benefits of $4.5 million due to the timing of 2024 bonus payments and severance of $1.8 million.

Previous wording

Cash flows used in investing activities of $6.4 million for the three months ended March 31, 2026 were primarily related to investments in internal-use software and purchases of property and equipment.

Current wording

Cash flows used in investing activities of $13.1 million for the six months ended June 30, 2026 were primarily related to investments in internal-use software and purchases of property and equipment.

Previous wording

Cash flows used in investing activities of $13.1 million in the three months ended March 31, 2025 were primarily attributable to cash paid for asset acquisitions and business combinations of $4.5 million and $8.6 million of investments in internal-use software and purchases of property and equipment.

Current wording

Cash flows used in investing activities of $73.6 million for the six months ended June 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 $17.4 million.

Previous wording

Cash flows used in financing activities of $107.9 million in the three months ended March 31, 2025 were primarily related to $221.0 million of borrowings under our Term Loan Facility, offset in part by $62.5 million of repayments under our Revolving Facility and $41.5 million related to changes in working capital balances related to claims processing.

Current wording

Cash flows provided by financing activities of $98.9 million for the six months ended June 30, 2025 were primarily related to $221.0 million of borrowings under our Term Loan Facility, offset, in part by $62.5 million of repayments under our Revolving Facility, $44.8 million related to changes in working capital balances related to claims processing and $9.2 million of preferred dividends paid on our Series A Preferred Stock.

Previous wording

(2)Refer to the discussion in “Part I - Item 1. Financial Statements - Note 9” for additional information on payment dates for our convertible notes interest.

Current wording

(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.

Previous wording

As of March 31, 2026, there was $117.2 million, $72.5 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.

Current wording

As of June 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.

Previous wording

Accounts receivable are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. During the three months ended March 31, 2026, accounts receivable, net, increased primarily due to the timing of cash receipts from certain customers.

Current wording

Accounts receivable are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. During the six months ended June 30, 2026, accounts receivable, net, increased primarily due to the timing of cash receipts from certain customers.

Previous wording

Restricted cash of $26.7 million is carried at cost and includes cash held on behalf of other entities for claims processing services of $10.8 million, collateral for letters of credit required as security deposits for facility leases of $0.2 million, and amounts held with financial institutions for risk-sharing arrangements of $15.7 million as of March 31, 2026. See “Part I - Item 1. Financial Statements - Note 2” for further details of the Company’s restricted cash balances.

Current wording

As of June 30, 2026, there was restricted cash of $25.8 million is carried at cost and includes cash held on behalf of other entities for claims processing services of $9.8 million, collateral for letters of credit required as security deposits for facility leases of $0.2 million, and amounts held with financial institutions for risk-sharing arrangements of $15.8 million. See “Part I - Item 1. Financial Statements - Note 2” for further details of the Company’s restricted cash balances.