Investigation of Evolent Health, Inc.

Evolent Health, Inc. (EVH) Accused of Misleading Shareholders 

Evolent Health, Inc. supports health systems, health plans, and physician organizations as they move their business models from the traditional fee for service reimbursement to value-based health care, which became mandatory under the Affordable Care Act. Evolent repeatedly assured investors that its strategy servicing health plans rather than owning them would limit its financial exposure and avoid the political and financial risks faced by health plans. However, Evolent’s services extracted ever-increasing fees from its clients, severely deteriorating their financial conditions.

For years, Evolent’s most important customer was Kentucky-based Medicaid plan Passport Health Plan, which accounted for approximately 20% of Evolent’s revenue from 2016 – 2019.  On May 29, 2019, Evolent revealed that contrary to its business strategy, it would purchase a controlling interest in Passport despite Passport’s precarious financial situation, which was likely due at least in part from Evolent’s poor management.  Thereafter, Kentucky issued new requests for proposals to award Medicaid contracts. On November 26, 2019, Kentucky announced its new Medicaid contracts and did not award one to Passport, noting that it did not believe Passport could provide Medicaid services “in a cost-effective manner.”  Kentucky conducted a new rebidding process on May 29, 2020, and again did not select Passport.  On this news, Evolent’s stock price declined, erasing nearly $577 million in market capitalization.

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