Evolent Q3 Loss Narrower than Expected; Revenues Rise Y/Y

Shares of Evolent Health, Inc.EVH rallied 12.7% ($1.70) to close at $15.06 on Nov 6, following the announcement of its third-quarter results.

Evolent Health-A (EVH) - Earnings Surprise | FindTheCompany

This provider of healthcare delivery & payment solutions reported adjusted loss of 16 cents per share in the third quarter of 2015, which was narrower than the Zacks Consensus Estimate of a loss of 19 cents and the year-ago equivalent of 31 cents. The year-over-year improvement may be attributed to an increase in revenues, which were however offset to an extent by higher operating loss.

Adjusted revenues rose 44.8% to $43.3 million. The year-over-year upside may be attributed to increased value-based care contracts. Evolent has also been successful in driving the adoption of its services among a higher number of physicians.

Adjusted operating expenses surged 48.6% on a year-over-year basis to $53 million, owing to a 26.3% increase in cost of revenues and a 63.1% rise in selling, general and administrative expenses.

Owing to the escalating operating expenses, operating loss widened almost 68.3% to $9.7 million.

Outlook

For the fourth quarter of 2015, Evolent projects adjusted revenue in the range of $43-$44 million. Adjusted EBITDA is expected in the band of a negative $9.5-$10.5 million.

For full-year 2015, adjusted revenue is projected between $160 million and $161 million, as compared to the prior range of $159-$161 million. Adjusted EBITDA is likely to lie in the range of a negative $35-$36 million, compared with the prior projection of a negative $37-$39 million.

Our Take

Evolent reported decent third-quarter results with both the top and the bottom line improving on a year-over-year basis. The company's service offerings are gaining market traction, which we feel is a key positive. The price increase following the results hint at the fact that investors are upbeat about the company's fundamentals.

Zacks Rank and Key Picks

Currently, Evolent carries a Zacks Rank #3 (Hold). Better-ranked stocks that warrant a look are EDAP TMS SA EDAP , Natus Medical BABY and Cesca Therapeutics KOOL . All the stocks sport a Zacks Rank #1 (Strong Buy).

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NATUS MEDICAL (BABY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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