On Monday, Truist Securities maintained its Buy rating and $33.00 price target for Evolent Health (NYSE:EVH) stock. The firm's analysis followed the Centers for Medicare & Medicaid Services' (CMS) recent disclosure on 2025 Medicare Advantage enrollment projections, which are expected to include 35.7 million lives. The CMS also provided landscape files that detail health insurers' planned offerings and market exits.
The CMS data revealed that Humana (NYSE:NYSE:HUM), which holds a Hold rating from MacDonald, is not exiting any counties in Arizona or Florida where Evolent Health has Performance Suite arrangements. However, Humana will be changing its plan offerings in these states, exiting certain plans while introducing new ones.
Evolent Health previously noted that its risk exposure with Humana is in markets where Humana has shown profitability, indicating an expectation that Humana would not withdraw from these profitable plans.
Despite these changes, Truist Securities' assessment indicates that Humana's exits from plan offerings in Arizona and Florida do not impact Evolent Health's Performance Suite exposure in these states.
The analysis also pointed out that the CMS has not yet released its plan cross-walk files, which could provide further insight into whether any completely exited plans were consolidated into new offerings.
The only complete market exits by Humana observed by the analyst were in Alaska and Rhode Island, which are considered relatively small markets for the insurer, with approximately 17,600 lives as of September 2024. This information suggests that Evolent Health's exposure to Humana's market adjustments may be limited, maintaining the company's outlook as reflected in the reiterated price target and rating.
In other recent news, Evolent Health is garnering attention from analysts and potential buyers. The healthcare company's revenue growth and EBITDA expansion have been highlighted by Barclays, which also sees potential value creation avenues for the company, including a potential sale. Notably, the company has raised its full-year revenue guidance to between $2.56 billion and $2.6 billion.
Additionally, Evolent Health has announced the strategic acquisition of Machinify Technology, which is expected to improve operational efficiency and expand product offerings. The company's Q3 revenue projections are between $615 million and $635 million, with an adjusted EBITDA between $60 million and $68 million.
InvestingPro Insights
To complement Truist Securities' analysis of Evolent Health (NYSE:EVH), recent data from InvestingPro offers additional context to the company's financial position and market performance. Despite the uncertainty surrounding Medicare Advantage enrollment projections, EVH has demonstrated strong revenue growth, with a 44.25% increase over the last twelve months as of Q2 2024, reaching $2.35 billion. This robust growth aligns with the company's strategic positioning in the healthcare sector.
InvestingPro Tips highlight that Evolent Health's stock price movements are quite volatile, which investors should consider in light of the recent Medicare Advantage developments. Additionally, analysts predict the company will be profitable this year, potentially signaling a positive turn for EVH's financial performance.
It's worth noting that EVH has shown a strong return of 53.24% over the last three months, suggesting market optimism about the company's prospects. This performance could be influenced by factors such as the limited impact of Humana's market adjustments on Evolent Health's business, as discussed in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips that could provide further insights into Evolent Health's market position and future potential.
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