XML 62 R25.htm IDEA: XBRL DOCUMENT v3.20.1
Segment Reporting
 3 Months Ended
Mar. 31, 2020
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting

We define our reportable segments based on the way the CODM, currently the chief executive officer, manages the operations for purposes of allocating resources and assessing performance. We classify our operations into two reportable segments as follows:

•
Services, which consists of two clinical solutions: (i) total cost of care management, and (ii) specialty care management services, and one administrative solution: comprehensive health plan administrative services; and
•
True Health, which consists of a commercial health plan we operate in New Mexico that focuses on small and large businesses.

In the ordinary course of business, our reportable segments enter into transactions with one another. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues and expenses recognized by the segment that is the counterparty to the transaction are eliminated in consolidation and do not affect consolidated results.

The CODM uses revenue in accordance with U.S. GAAP and Adjusted EBITDA as the relevant segment performance measures to evaluate the performance of the segments and allocate resources.

Adjusted EBITDA is a segment performance financial measure that offers a useful view of the overall operation of our businesses and may be different than similarly-titled segment performance financial measures used by other companies.

Adjusted EBITDA is the sum of Services Adjusted EBITDA and True Health Adjusted EBITDA and is defined as net loss attributable to common shareholders of Evolent Health, Inc. before interest income, interest expense, (provision) benefit for income taxes, depreciation and amortization expenses, adjusted to exclude equity method investment impairments, loss from equity method investees, loss on disposal of assets, changes in fair value of contingent consideration and indemnification asset, other income (expense), net, net loss attributable to non-controlling interests, purchase accounting adjustments, stock-based compensation expenses, severance costs, amortization of
contract cost assets recorded as a result of a one-time ASC 606 transition adjustment, acquisition-related costs from acquisitions and business combinations, and other infrequently occurring adjustments.

Management considers revenue and Adjusted EBITDA to be the appropriate metrics to evaluate and compare the ongoing operating performance of our segments on a consistent basis across reporting periods as they eliminate the effect of items which are not indicative of each segment's core operating performance.

The following tables present our segment information (in thousands):

 
Services
 
True Health
 
Intersegment
Eliminations
 
Consolidated
Revenue
 
 
 
 
 
 
 
For the Three Months Ended March 31, 2020
 
 
 
 
 
 
 
Services:
 
 
 
 
 
 
 
Transformation services
$
5,238

 
$
—

 
$
—

 
$
5,238

Platform and operations services
216,195

 
—

 
(6,295
)
 
209,900

Services revenue
221,433

 
—

 
(6,295
)
 
215,138

True Health:
 
 
 
 
 
 
 
Premiums
—

 
32,387

 
(240
)
 
32,147

Total revenue
$
221,433

 
$
32,387

 
$
(6,535
)
 
$
247,285

 
 
 
 
 
 
 
 
For the Three Months Ended March 31, 2019
 
 
 
 
 
 
 
Services:
 
 
 
 
 
 
 
Transformation services
$
3,353

 
$
—

 
$
—

 
$
3,353

Platform and operations services
150,351

 
—

 
(3,059
)
 
147,292

Services revenue
153,704

 
—

 
(3,059
)
 
150,645

True Health:
 
 
 
 
 
 
 
Premiums
—

 
47,376

 
(265
)
 
47,111

Total revenue
$
153,704

 
$
47,376

 
$
(3,324
)
 
$
197,756

 
 
 
 
 
 
 
 
 
Services
 
True Health
 
Segments Total
 
 
For the Three Months Ended March 31, 2020
 
 
 
 
 
 
 
Adjusted EBITDA
$
3,876

 
$
(249
)
 
$
3,627

 
 
 
 
 
 
 
 
 
 
For the Three Months Ended March 31, 2019
 
 
 
 
 
 
 
Adjusted EBITDA
$
(15,499
)
 
$
721

 
$
(14,778
)
 
 

The following table presents our reconciliation of segments total Adjusted EBITDA to net loss attributable to Evolent Health, Inc. (in thousands):
 
For the Three Months Ended March 31,
 
2020
 
2019
Net loss attributable to common shareholders of Evolent Health, Inc.
$
(78,752
)
 
$
(46,739
)
Less:
 
 
 
Interest income
919

 
1,060

Interest expense
(6,285
)
 
(3,562
)
(Provision) benefit for income taxes
(270
)
 
496

Depreciation and amortization expenses
(16,138
)
 
(14,266
)
Equity method investment impairment
(47,133
)
 
—

Loss from equity method investees
(412
)
 
(424
)
Loss on disposal of assets
(6,447
)
 
—

Change in fair value of contingent consideration and indemnification asset
3,818

 
(100
)
Other income (expense), net
(71
)
 
427

Net loss attributable to non-controlling interests
—

 
1,910

Purchase accounting adjustments
—

 
(596
)
Stock-based compensation expense
(3,508
)
 
(4,537
)
Severance costs
(6,103
)
 
(10,602
)
Amortization of contract cost assets
(440
)
 
(754
)
Acquisition costs
(309
)
 
(1,013
)
Adjusted EBITDA
$
3,627

 
$
(14,778
)


Asset information by segment is not a key measure of performance used by the CODM. Accordingly, we have not disclosed asset information by segment.