Markets

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

EDAP TMS SA-ADR (EDAP): Free Stock Analysis Report

CESCA THERAP (KOOL): Free Stock Analysis Report

EVOLENT HEALTH (EVH): 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.


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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