Investment Thesis
Evolent Health faces severe financial distress with sharp 26.6% revenue contraction, persistent unprofitability, and negative free cash flow of -$36.5M. The company carries excessive leverage (2.46x D/E) with $973.5M debt that cannot be serviced from operations (interest coverage: -1.8x), creating imminent solvency and refinancing risk.
Strengths
- Maintains $142M cash reserves providing near-term liquidity cushion
- Current ratio of 1.32x enables short-term obligation fulfillment
- Large asset base of $1.9B provides restructuring flexibility
Risks
- Revenue collapse of 26.6% YoY indicates severe business deterioration and contract loss in management services sector
- Negative operating cash flow (-$984K) and free cash flow (-$36.5M) demonstrate unsustainable cash burn trajectory
- Debt/Equity of 2.46x with negative interest coverage creates covenant violation risk and debt restructuring probability
Key Metrics to Watch
- Quarterly revenue trend stabilization and client retention rates
- Operating cash flow inflection point and working capital efficiency
- Debt covenant compliance status and refinancing activities
Financial Metrics
Revenue
496.2M
Net Income
-26.6M
EPS (Diluted)
$-0.24
Free Cash Flow
-36.5M
Total Assets
1.9B
Cash
142.0M
Profitability Ratios
Gross Margin
N/A
Operating Margin
-2.1%
Net Margin
-5.4%
ROE
-6.7%
ROA
-1.4%
FCF Margin
-7.4%
Balance Sheet & Liquidity
Current Ratio
1.32x
Quick Ratio
1.32x
Debt/Equity
2.46x
Debt/Assets
78.9%
Interest Coverage
-1.77x
Long-term Debt
973.5M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-09T10:31:30.859327 |
Data as of: 2026-03-31 |
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