EVH · Evolent Health, Inc.

Evolent Health reported first quarter 2026 results that showed revenue growth but compressed profitability. Revenue increased 2.6% year-over-year to $496.2 million, driven by expansion in the Performance Suite and new client agreements. However, cost of revenue grew faster, rising 8.2% to $412.5 million, leading to a decline in gross margin. The Medical Expense Ratio (MER) spiked to 93.3% from 68.0% in the prior year, reflecting higher claims costs in the Performance Suite. Excluding the divested Evolent Care Partners, MER was 93.3% versus 84.0% last year. Net loss improved significantly to $26.6 million from $72.3 million, partly due to the absence of a $52.3 million loss on option exercise in the prior year. Adjusted EBITDA fell to $22.1 million from $36.9 million, with margin contracting to 4.4% from 7.6%. Management commentary highlighted successful oncology launches at Highmark and Aetna, and a focus on AI opportunities. The company signed two new revenue agreements: an advanced imaging solution covering approximately 4.5 million lives, and an expansion of oncology and cardiology services expected to generate over $200 million in annual revenue. Full-year 2026 guidance was reiterated, with revenue of $2.4 billion to $2.6 billion and Adjusted EBITDA of $110 million to $140 million. The company expects to deploy $25 million to $30 million in capitalized software development during 2026. The results indicate that while top-line growth continues, margin pressure from rising medical costs remains a key concern for investors.