Evolent Health (NYSE: EVH) reported Q2 2026 revenue of $652.5 million, up 46.9% from $444.3 million a year earlier, while its GAAP diluted loss narrowed to $0.25 per share from $0.44. Performance Suite growth drove the top line, but a higher medical expense ratio pushed adjusted EBITDA and operating margins lower. The results cover the three months ended June 30, 2026.
Core Earnings Data
Revenue growth did not translate into stronger operating profitability. Cost of revenue increased 66.2%, faster than the 46.9% revenue increase, and adjusted EBITDA declined 25.3%.
The narrower GAAP loss attributable to common shareholders primarily reflected the absence of $31.2 million in preferred dividends and accretion recorded in Q2 2025. The prior-year period also included $9.0 million of preferred stock extinguishment and refinancing fees, so the improvement in the bottom-line loss did not represent an improvement in current operating performance.
| Metric | Q2 2026 | Q2 2025 | YoY change |
|---|---|---|---|
| Revenue | $652.5 million | $444.3 million | +46.9% |
| GAAP operating loss | $(9.6) million | $(1.2) million | Loss widened by $8.4 million |
| GAAP net loss attributable to common shareholders | $(28.4) million | $(51.1) million | Loss narrowed 44.5% |
| GAAP diluted EPS | $(0.25) | $(0.44) | Loss narrowed by $0.19 |
| Adjusted EBITDA | $28.1 million | $37.5 million | -25.3% |
| Adjusted EBITDA margin | 4.3% | 8.5% | -4.2 percentage points |
| Adjusted EPS | $0.02 | $(0.10) | Improved by $0.12 |
Adjusted EBITDA, adjusted EBITDA margin and adjusted EPS are non-GAAP measures. Adjusted EPS turned positive, but adjusted EBITDA provides a less favorable view of the underlying operating trend because it declined despite substantially higher revenue.
Business and Segment Performance
Performance Suite accounted for most of the revenue increase, rising 80.8% to $484.5 million and representing roughly three-quarters of total quarterly revenue. The other revenue streams were mixed, with Specialty Technology and Services and Administrative Services declining.
| Revenue stream | Q2 2026 | Q2 2025 | YoY change |
|---|---|---|---|
| Performance Suite | $484.5 million | $267.9 million | +80.8% |
| Specialty Technology and Services Suite | $78.2 million | $81.4 million | -4.0% |
| Administrative Services | $48.0 million | $55.9 million | -14.1% |
| Case-based products | $41.9 million | $39.1 million | +7.0% |
Performance Suite’s increase was driven much more by revenue per member than by membership. Average lives on platform rose 3.5%, while the average per-member-per-month fee increased 74.8% to $24.05 from $13.76.
Specialty Technology and Services experienced modest declines in both average lives and PMPM fees. Administrative Services also recorded fewer lives and a lower PMPM fee. Case-based revenue increased even though reported cases declined to 12 from 13, as revenue per case rose to $3,608 from $2,969.
Evolent also announced two additional partnerships, bringing its year-to-date total to four. An Oncology Performance Suite agreement with an existing advanced imaging client is expected to cover approximately 1.5 million Medicaid and Medicare lives across 11 states. Subject to regulatory approvals, Evolent expects a launch by December 2026 and approximately $300 million of annualized revenue.
A regional Blues plan also expanded its use of Specialty Technology and Services. Those implementations are scheduled for the third and fourth quarters of 2026 and are expected to generate less than $5 million in annualized revenue. These are forward-looking annualized amounts rather than revenue recorded in Q2.
Higher Medical Costs Separated Revenue Growth From Operating Earnings
Claims incurred for specialty care management rose to $461.5 million from $214.2 million, an increase of approximately 115%, compared with the 80.8% increase in Performance Suite revenue. As a result, the medical expense ratio reached 95.3%, versus 80.0% as reported in Q2 2025.
Because Evolent Care Partners was sold in December 2025, the more relevant comparison is the prior-year ratio excluding that business. On this basis, the medical expense ratio increased from 84.9% to 95.3%, a deterioration of 10.4 percentage points.
Cost controls outside medical expenses provided only a partial offset. Adjusted selling, general and administrative expenses declined 16.3% to $53.5 million, but that reduction was not enough to prevent the adjusted EBITDA margin from falling to 4.3%. Interest expense also increased to $16.9 million from $11.6 million.
Cash Flow and Balance Sheet
For the six months ended June 30—not the second quarter alone—net cash and restricted cash used in operating activities improved to $10.3 million from $25.8 million in the comparable 2025 period. Working-capital movements were significant: accounts receivable and contract assets consumed $139.3 million, while the reserve for claims and performance-based arrangements provided $186.2 million.
Cash and cash equivalents stood at $115.7 million at quarter-end, down from $151.9 million at December 31, 2025. Evolent reported $966.5 million of net long-term debt and repaid $10.0 million during the first half. The combination of continuing cash use, a large debt balance and rising interest expense makes cash conversion and planned debt reduction important components of the company’s outlook.
Guidance
Evolent raised its full-year 2026 revenue guidance and tightened its adjusted EBITDA range. The release did not provide the previous numerical ranges, so the size of those revisions cannot be calculated from the available information.
| Metric | Latest outlook | Company action or basis |
|---|---|---|
| 2026 revenue | $2.6 billion-$2.7 billion | Guidance raised |
| 2026 adjusted EBITDA | $120 million-$135 million | Range tightened |
| 2026 capitalized software cash deployment | $25 million-$30 million | Additional outlook |
| 2027 revenue growth | More than 25% versus 2026 | Based on existing contracts, scheduled launches and oncology demand |
| 2027 adjusted EBITDA outlook midpoint | At or above $150 million | Expected care-margin improvement and expense reductions |
Management expects improved Performance Suite care margins and lower expenses to support its 2027 adjusted EBITDA outlook. It also acknowledged continued headwinds from Medicaid and client-specific membership attrition and said it is evaluating targeted debt-reduction initiatives to improve financial flexibility.
Risks Investors Need to Monitor
- Medical-cost pressure: A 95.3% medical expense ratio leaves limited room between Performance Suite revenue and claims costs. Continued pressure could restrict adjusted EBITDA growth even if revenue continues to expand.
- Cash conversion and leverage: First-half operating cash flow remained negative, receivables increased substantially, and net long-term debt was $966.5 million. Rising interest expense adds to the importance of working-capital improvement and debt reduction.
- Membership attrition: Management specifically identified Medicaid and client-related membership losses as continuing industry headwinds that could offset new business growth.
- Launch and regulatory execution: The planned oncology partnership represents approximately $300 million in annualized revenue, but its expected December launch remains subject to regulatory approvals.
Summary
Evolent’s Q2 2026 results combined rapid Performance Suite-led revenue growth with weaker operating economics. Higher medical costs reduced adjusted EBITDA and margins, while the narrower common-shareholder loss benefited from the absence of prior-year preferred-stock charges. The main issues to follow are medical expense management, conversion of growth into cash flow, execution of scheduled oncology launches and progress toward the company’s 2027 margin and debt-reduction objectives.
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