[8-K] Evolent Health, Inc Reports Material Event

Rhea-AI Filing Summary

Evolent Health, Inc. (NYSE: EVH) filed an 8-K on 19 June 2025 announcing several capital-structure actions and an outlook update.

Amendment No. 5 to Credit Agreement. The amendment broadens the definition of “Liquidity” to include commitments under a new Incremental Facility, stipulates that failure to consummate a contemplated preferred-share exchange will be an event of default, carves out certain transactions from mandatory prepayments, and relaxes restrictions so the company can make restricted payments on its 1.50% Convertible Senior Notes due 15 Oct 2025.

Commitment Letter – Incremental Facility. On the same date, EVH and Ares Management Credit funds signed a commitment for up to non-dilutive first- and second-lien term loans that can be drawn to retire the $2025 convertibles and fund working capital. Key terms include:

• Drawn at EVH’s option, sized so post-payoff cash & equivalents ≤ $125 million.
• Interest: Adjusted Term SOFR + 600 bp until the fourth full quarter compliance certificate, with step-downs thereafter based on senior-secured leverage.
• Exchange of existing Series A Preferred into a second-lien term loan with no equity conversion feature if the facility is drawn (or at Ares’ request).
• Exit fee payable on amounts retired.

The company states that, after fees, liquidity will be sufficient for working capital and to support accelerated 2026 revenue bookings.

Guidance Reaffirmed. Favorable oncology cost trends through May allow EVH to reaffirm 2025 Adjusted EBITDA guidance of $135 – $165 million and Q2 2025 guidance of $33 – $40 million. Management again notes it cannot reasonably reconcile Adjusted EBITDA to GAAP net income due to numerous potential non-core adjustments.

Implications. The committed Incremental Facility removes near-term refinancing risk for the October 2025 convertibles and avoids potential equity dilution. Reaffirmed profitability guidance, driven by lower medical cost trend, supports the growth narrative. Offsetting factors include a high cost of debt (SOFR + 600 bp) and tighter covenants, including a default trigger tied to the preferred-share exchange.

Positive

• Reaffirmed 2025 Adjusted EBITDA guidance of $135 – $165 million despite lower oncology cost trend.
• Secured non-dilutive Incremental Facility sufficient to retire $2025 convertible notes, removing near-term refinancing risk.
• Amendment No. 5 adds flexibility to make restricted payments and manage liquidity without triggering mandatory prepayments.
• Liquidity definition expanded to include undrawn commitments, improving covenant headroom.

Negative

• High interest rate of Adjusted Term SOFR + 6.0 % increases future interest expense.
• Event of default risk if the preferred-share Exchange is not completed as specified.
• Incremental secured leverage and exit fee may pressure credit metrics.
• Company still unable to reconcile non-GAAP EBITDA to GAAP net income, limiting transparency.

Insights

Buy-Side Healthcare Analyst

TL;DR: Reaffirmed EBITDA and secured debt backstop reduce 2025 refinancing overhang; interest expense rises but equity dilution risk falls—net positive.

The Ares commitment effectively bridges the $172 million face value of 1.50% converts maturing in Oct-25, eliminating a binary financing event and limiting shareholder dilution. Although SOFR + 600 bp implies a blended coupon > 10 %, incremental interest of roughly $17 million annually (if fully drawn) would still keep leverage under 3× 2025E Adjusted EBITDA midpoint. Oncology trend running below plan underpins guidance, suggesting margin stability despite payer mix. Amendment No. 5 provides flexibility to settle converts and make selective restricted payments, but the event-of-default clause linked to the Series A exchange raises execution risk. Overall impact is positive because it clarifies the capital path and validates demand-driven growth in 2026.

Credit Risk Specialist

TL;DR: Incremental Facility strengthens liquidity yet embeds costlier first/second-lien debt; covenant additions slightly tighten risk profile—overall credit-neutral.

The commitment enhances liquidity coverage for the converts and working capital, but the pricing (SOFR + 600 bp) and exit fee signal higher perceived credit risk. Inclusion of committed but undrawn amounts in Liquidity for Maturity Date testing is favorable, while permitting additional restricted payments moderately weakens lender protections. The mandatory preferred-share exchange upon draw adds structural subordination of cash flows. Covenant package remains standard, with leverage-based margin ratchets offering upside. From a credit lens, the transaction is balanced: improved maturity ladder versus greater secured leverage and borrowing costs.

June 19, 20250001628908false00016289082025-06-192025-06-19

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________

FORM 8-K

_________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

June 19, 2025

Date of Report (Date of earliest event reported)   

Evolent Health, Inc.

(Exact name of registrant as specified in its charter)

_________________________

			Delaware						001-37415																		32-0454912
			(State or other jurisdiction of incorporation or organization)						Commission File Number:																		(I.R.S. Employer Identification No.)
			1812 N.Moore Street			,			Suite 1705			,			Arlington			,			Virginia			,			22209
			(Address of principal executive offices)(zip code)

(571) 389-6000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report.)

_________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock of Evolent Health, Inc., par value $0.01 per share

EVH

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 1.01 Entry into a Material Definitive Agreement.

On June 19, 2025, Evolent Health, Inc. (the “Company”) and EVH LLC entered into Amendment No. 5 to the Credit Agreement, dated as of August 1, 2022, by and among the Lenders party thereto, EVH LLC, as the Administrative Borrower, the other borrowers party thereto, the Company, as the Parent, each other Guarantor party thereto, Ares Capital Corporation, as Administrative Agent, and ACF Finco I LP, as Collateral Agent and Revolving Agent (as amended through the date hereof, the “Credit Agreement”), primarily to (i) include amounts committed under the Incremental Facility (as defined below) for purposes of testing “Liquidity” under the definition of “Maturity Date,” (ii) provide that failure to consummate the Exchange (as defined below) in certain circumstances will constitute an event of default, (iii) exclude certain transactions from the mandatory prepayment requirement, and (iv) provide additional flexibility to make certain restricted payments in respect of the Company’s 1.50% Convertible Senior Notes due October 15, 2025 (the “2025 Convertible Notes”) prior to maturity thereof.

Item 7.01 Regulation FD Disclosure.

On June 19, 2025, the Company noted that based on leading indicators and paid claims data through May, it continues to experience oncology cost trend below the Company’s expectations coming into 2025. As a result, the Company is reaffirming its Adjusted EBITDA guidance for full year 2025 of $135.0 million to $165.0 million, and for the second quarter of 2025 of $33.0 million to $40.0 million.

The Company does not believe it can meaningfully reconcile guidance for non-GAAP Adjusted EBITDA to net income (loss) attributable to common shareholders of Evolent Health, Inc. because the Company cannot provide guidance for the more significant reconciling items between net income (loss) attributable to common shareholders of Evolent Health, Inc. and Adjusted EBITDA without unreasonable effort. This is due to the fact that future period non-GAAP guidance includes adjustments for items not indicative of our core operations, and as a result from changes to our business due to transactions and other events. Such items may, from time to time, include loss on repayment/extinguishment of debt; gain (loss) from equity method investees, loss on option exercise, change in fair value of contingent consideration, change in tax receivable agreement liability, other income (expense), gain (loss) on disposal of non-strategic assets, right-of-use asset impairments, losses on lease terminations, repositioning costs, stock-based compensation expense, severance costs, dividends and accretion on Series A Preferred Stock and transaction-related costs. Such adjustments may be affected by changes in ongoing assumptions, judgements, as well as nonrecurring, unusual or unanticipated charges, expenses or gains (losses) or other items that may not directly correlate to the underlying performance of our business operations. The exact amount of these adjustments is not currently determinable but may be significant.

In addition, on June 20, 2025, the Company issued a press release relating to items contained in this Form 8-K. A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.

None of the information furnished in Item 7.01 hereto shall be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Unless expressly set forth by specific reference in such filings, none of the information furnished in this report shall be incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), whether made before or after the date hereof and regardless of any general incorporation language in such filings.

Item 8.01 Other Events.

On June 19, 2025, the Company and EVH LLC entered into a Commitment Letter with Ares Management Credit funds (“Ares”) which provides the Company additional available non-dilutive debt capital (the “Incremental Facility”) to retire its 2025 Convertible Notes on or before October 15, 2025 (the maturity date of the 2025 Convertible Notes) and for working capital, subject to certain conditions. The Company may draw on the Incremental Facility at its sole option, in an amount such that its balance of cash and cash equivalents after paying off the 2025 Convertible Notes is no more than $125.0 million, satisfying the company's working capital needs, business operations and to support recent acceleration in its organic new revenue bookings forecast for 2026 go-lives. In lieu of the Incremental Facility, the Company may consider other financing sources in an effort to optimize

its capital structure, which to the extent obtained, would similarly provide sufficient financing for working capital needs, business operations and to support recent acceleration in organic growth in response to high market demand for the Company's services. The Incremental Facility includes both First Lien and Second Lien term loan tranches. If the Incremental Facility is entered, the interest rate for both existing term loans outstanding under the Credit Agreement and new loans under the Incremental Facility will be the relevant Adjusted Term SOFR Rate plus 6.00% until a compliance certificate is delivered for the fourth full quarter after draw, with step down tiers thereafter based on senior secured leverage. The Incremental Facility also provides for an exit fee payable upon the retirement of amounts up to amounts drawn on the Incremental Facility. The Commitment Letter also provides that in the event the Incremental Facility is drawn, or upon request of Ares in certain circumstances, the Company will exchange its existing Series A Preferred Shares for an additional second lien term facility on substantively similar economic terms to the existing Series A Preferred Shares, with no common stock conversion feature (the “Exchange”). After the payment of fees and expenses incurred in connection with the Commitment Letter and entering into of the Incremental Facility, some of which may be paid prior to any borrowing under the Incremental Facility, the Company will have sufficient liquidity for working capital and other general corporate purposes.

Forward-Looking Statements

Certain statements made in this report are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). A forward-looking statement is a statement that is not a historical fact and, without limitation, includes any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like: “believe,” “anticipate,” “expect,” “estimate,” “aim,” “predict,” “potential,” “continue,” “plan,” “project,” “will,” “should,” “shall,” “may,” “might” and other words or phrases with similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to the Company’s full year and second quarter 2025 guidance, availability of the Incremental Facility, and sufficiency of capital for the company's working capital needs, business operations and to support recent acceleration, as well as any other statements which are not historical facts. The Company intends such forward-looking statements to be covered under the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act. By their nature, forward-looking statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. These risks and uncertainties are discussed under the headings “Forward-Looking Statements - Cautionary Language,” and “Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, which is on file with the U.S. Securities and Exchange Commission (the “SEC”), and in the Company’s other filings with the SEC, including its Quarterly Report on Form 10-Q for the period ended March 31, 2025, filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statements were made. Except for any ongoing obligation to disclose material information as required by the United States federal securities laws, the Company does not have any intention or obligation to publicly update or revise any forward-looking statements after filing this Current Report on Form 8-K, whether to reflect any future events or circumstances or otherwise.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.						Description
99.1						Press Release dated June 20, 2025.
104						Cover Page Interactive Data File (embedded within the Inline XBRL).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Evolent Health, Inc.

Date: June 20, 2025

/s/ Jonathan D. Weinberg

Jonathan D. Weinberg

General Counsel and Secretary

(Duly Authorized Officer)

FAQ

What guidance did Evolent Health (EVH) reaffirm for 2025?

EVH maintained its full-year 2025 Adjusted EBITDA outlook of $135 – $165 million and Q2 2025 guidance of $33 – $40 million.

How will Evolent retire its 1.50% Convertible Notes due October 2025?

A committed Incremental Facility from Ares can be drawn to fully repay the 2025 converts, providing non-dilutive debt capital.

What are the key terms of the Incremental Facility?

Loans will bear interest at Adjusted Term SOFR + 6.0 % initially, include first- and second-lien tranches, and carry an exit fee upon repayment.

Does the new credit amendment affect covenant calculations?

Yes. Undrawn Incremental commitments now count toward “Liquidity” and certain transactions are exempt from mandatory prepayments, offering more flexibility.

Why can’t EVH reconcile Adjusted EBITDA to GAAP net income in its guidance?

Future non-core items—such as debt extinguishment gains/losses, stock-based compensation, and transaction costs—are not reasonably estimable at this time.

What could trigger an event of default under the amended Credit Agreement?

Failure to consummate the exchange of Series A Preferred into a second-lien term facility under certain circumstances would constitute default.

How does the amendment impact payments on the 2025 Convertible Notes?

It grants additional flexibility to make restricted payments on the notes prior to maturity without violating covenants.