Healthcare solutions company Evolent Health (NYSE: EVH) met Wall Street’s revenue expectations in Q4 CY2025, but sales fell by 27.5% year on year to $468.7 million. The company’s full-year revenue guidance of $2.5 billion at the midpoint came in 4.9% above analysts’ estimates. Its non-GAAP profit of $0.08 per share was 62.7% above analysts’ consensus estimates.

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Company Overview

Founded in 2011 to transform how healthcare is delivered to patients with complex needs, Evolent Health (NYSE: EVH) provides specialty care management services and technology solutions that help health plans and providers deliver better care for patients with complex conditions.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, Evolent Health’s sales grew at a solid 15.2% compounded annual growth rate over the last five years. Its growth beat the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Evolent Health’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 2.3% over the last two years.

We can better understand the company’s revenue dynamics by analyzing its number of average lives on platform, which reached 79.68 million in the latest quarter. Over the last two years, Evolent Health’s average lives on platform averaged 5.5% year-on-year growth. Because this number is better than its revenue growth, we can see the company’s average selling price decreased.

This quarter, Evolent Health reported a rather uninspiring 27.5% year-on-year revenue decline to $468.7 million of revenue, in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 27.8% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and implies its newer products and services will fuel better top-line performance.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Evolent Health’s high expenses have contributed to an average operating margin of negative 6.5% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

Looking at the trend in its profitability, Evolent Health’s operating margin decreased by 17.2 percentage points over the last five years. This performance was caused by more recent speed bumps as the company’s margin fell by 18.2 percentage points on a two-year basis. We’re disappointed in these results because it shows its expenses were rising and it couldn’t pass those costs onto its customers.

This quarter, Evolent Health generated a negative 87.1% operating margin.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Evolent Health’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.

In Q4, Evolent Health reported adjusted EPS of $0.08, up from negative $0.02 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Evolent Health’s full-year EPS of $0.09 to grow 173%.

Key Takeaways from Evolent Health’s Q4 Results

It was good to see Evolent Health beat analysts’ EPS expectations this quarter. We were also glad its full-year revenue guidance trumped Wall Street’s estimates. On the other hand, its full-year EBITDA guidance missed. Overall, we think this was still a solid quarter with some key areas of upside. The stock remained flat at $2.53 immediately following the results.

Is Evolent Health an attractive investment opportunity at the current price? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).