Last Update 09 Dec 25

Fair value Decreased 7.77%

EVH: Contract Wins And AI Initiatives Will Drive Future Margin Expansion

Analysts have modestly reduced their price expectations for Evolent Health, with the fair value estimate easing by about $0.86 per share as they factor in lower target multiples and a slightly softer growth outlook, while still expressing confidence in the company’s long term EBITDA and margin expansion potential.

Analyst Commentary

Analysts remain constructive on Evolent Health’s long term setup, highlighting a growing contract base and clearer visibility into future revenue, but they are recalibrating expectations to reflect a more gradual earnings ramp and policy related uncertainty.

Bullish Takeaways

Bullish analysts point to more than $750M of recently signed contracts and a remaining pipeline above $650M as evidence that Evolent’s commercial momentum can sustain mid to long term revenue growth.
Visibility into 2026 revenue of roughly $2.5B, including about $550M from new contracts, is viewed as a key de-risking factor for the growth outlook and supports the case for valuation support despite near term volatility.
Margin maturation on existing contracts, supported by AI and operational initiatives, underpins expectations for significant EBITDA expansion beginning in 2027 and beyond, which bullish analysts see as underappreciated at current valuation levels.
Some analysts frame 2025 as a trough earnings year, suggesting that investors willing to look through short term headwinds could benefit from operating leverage as recent bookings flow through to earnings in 2026 and later years.

Bearish Takeaways

Bearish analysts are trimming price targets as they moderate target multiples and temper near term growth assumptions, arguing that the stock’s risk reward is less compelling until earnings acceleration is more visible.
Uncertainty around Medicare Advantage and the ACA is seen as a key overhang on the revenue base, with potential policy shifts creating downside risk to utilization, pricing, and long term contract value.
Membership dynamics ahead of 2026 are described as fluid, raising execution risk around ramping newly signed contracts and achieving the scale needed to fully realize anticipated margin gains.
The expectation of “flattish” EBITDA in 2026 before a step up in 2027 and beyond contributes to a delayed profitability narrative, which cautious analysts believe could cap valuation in the near term.

What's in the News

Board appoints Mario Ramos as Chief Financial Officer, effective January 1, 2026, as part of a broader leadership restructuring. He brings prior CFO and CEO experience across health care and financial services (company filing).
Company issues fourth quarter 2025 revenue guidance of $462 million to $472 million and full year 2025 revenue outlook of approximately $1.87 billion to $1.88 billion (company guidance).
Evolent Health and American Oncology Network launch a strategic alliance to roll out an AI enabled cancer care model that removes prior authorization, ties payments to quality, and supports end to end condition management in select markets (company announcement).

Valuation Changes

The fair value estimate has fallen modestly from about $11.04 to approximately $10.18 per share, reflecting lower target multiples and a slightly softer outlook.
The discount rate is unchanged at 12.5%, indicating no shift in the assumed risk profile or cost of capital.
Revenue growth has eased slightly, with the long term annual growth assumption moving from roughly 13.73% to about 13.59%.
The net profit margin remains effectively stable, inching up from about 7.11% to roughly 7.11% on a rounded basis, implying no material change in long term profitability expectations.
The future P/E multiple has declined from about 7.39x to roughly 6.84x, signaling a more conservative view on the earnings multiple investors may be willing to pay.

Accelerating demand for value-based care and advanced tech platforms is boosting Evolent's market expansion, long-term revenue growth, and client retention.
Investments in AI, proprietary programs, and regulatory tailwinds are improving margins, reducing costs, and enabling profitable market share gains over legacy solutions.
Heavy reliance on uncontracted pipeline, client concentration, regulatory shifts, and rising competition create substantial risks to Evolent's revenue growth, margin stability, and market position.

Catalysts

About Evolent Health

Through its subsidiary, provides specialty care management services in oncology, cardiology, and musculoskeletal markets in the United States.What are the underlying business or industry changes driving this perspective?

The shift towards value-based care and demand for advanced population health platforms is accelerating, driving Evolent's expanding addressable market, as evidenced by pipeline growth and multi-year partnerships-supporting long-term revenue growth above industry averages.
The rapid adoption of AI and digital automation is enabling Evolent to significantly reduce costs, improve quality, and enhance client outcomes, with recent operational initiatives expected to yield run-rate EBITDA improvements and margin expansion over the next 24 months.
Demographic dynamics, such as an aging U.S. population and the rising chronic disease burden, continue to increase the need for Evolent's specialty care management services, directly supporting long-term topline growth and client retention.
Ongoing investments in proprietary technology and scalable specialty programs (e.g., oncology, cardiology, MSK) are creating cross-sell opportunities and supporting operational leverage, which is likely to drive improved operating margins as revenue scales.
Legislative and payer-driven mandates for greater interoperability, streamlined prior authorization, and clinical data exchange are accelerating client adoption, positioning Evolent to win market share from legacy in-house solutions and contributing to a higher proportion of high-margin, recurring revenue in future financials.

Evolent Health Earnings and Revenue Growth

Evolent Health Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Evolent Health's revenue will grow by 10.8% annually over the next 3 years.
Analysts are not forecasting that Evolent Health will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Evolent Health's profit margin will increase from -8.4% to the average US Healthcare Services industry of 8.8% in 3 years.
If Evolent Health's profit margin were to converge on the industry average, you could expect earnings to reach $262.0 million (and earnings per share of $2.22) by about September 2028, up from $-185.2 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 9.2x on those 2028 earnings, up from -6.0x today. This future PE is lower than the current PE for the US Healthcare Services industry at 54.8x.
Analysts expect the number of shares outstanding to grow by 0.82% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 9.74%, as per the Simply Wall St company report.

Evolent Health Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

A significant portion of Evolent's near-term revenue growth (notably the projected $2.5 billion+ in 2026) is dependent on converting a weighted pipeline of potential deals, many of which are not yet contracted and may be delayed or downsized, introducing execution and timing risk that could negatively impact future revenue and earnings.
Evolent's ongoing shift to enhanced contract terms for the Performance Suite-prioritizing downside risk protection over upside-may cap earnings potential, especially if the new risk corridors materially limit profitability as utilization trends become more volatile, thereby compressing net margins over time.
Heavy client concentration in large national payers such as Aetna exposes Evolent to the risk that the loss, underperformance, or delayed expansion with any single client could have an outsized negative effect on revenue and earnings visibility.
Regulatory and policy uncertainty surrounding Medicaid and Affordable Care Act (exchange) populations-including potential loss of subsidies or state-level enrollment changes-could drive meaningful declines in covered lives and corresponding EBITDA headwinds (as noted, a 5% membership reduction equates to an $8–10 million EBITDA impact), limiting incremental revenue growth and pressuring operating results.
Intensifying competition and accelerating technological advances by major incumbents and digital health disruptors (e.g., UnitedHealth/Optum, CVS/Aetna) may increase pricing pressure, raise the required pace of investment in AI and analytics (with uncertain ROI), and risk eroding Evolent's technological advantage, thereby pressuring future net margins and market share.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $15.462 for Evolent Health based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $20.0, and the most bearish reporting a price target of just $9.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.0 billion, earnings will come to $262.0 million, and it would be trading on a PE ratio of 9.2x, assuming you use a discount rate of 9.7%.
Given the current share price of $9.58, the analyst price target of $15.46 is 38.0% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Value-based Care And Digital Automation Will Expand Future Opportunities