Good afternoon, and thanks for joining us for our next session. We're pleased to have with us Evolent Health, and presenting for the company is John Johnson, Chief Financial Officer. Yeah, you know, really happy to have you here. Thanks, John. Thank you for having us. Yeah. You know, maybe, you know, I think the question that everyone's like really focused on, obviously, is Performance Suite. And, you know, obviously, the last year has been challenging for Evolent. You've taken actions at the start of this year, right, to convert, what was it, three quarters of the Performance Suite revenue to an enhanced model, which obviously sort of changes the risk profile for that, both on the upside, but obviously protects you on the downside. You know, maybe talk to a little bit about how that model works and how that differs from what you had previously. I guess in that sense, you know, what is it about this that now gives you, I guess, greater confidence, or that increases at least your confidence in taking risk in specialty, and especially model? Yeah. Thanks again for having us. As we think about how to capture the value that we know we're creating in the Performance Suite relationships, we can look at, for example, authorization data and compare initially submitted requests for a particular therapeutic regimen with what was eventually and finally approved. In that data, we see very consistently improvements of 6%, 8%, 10%, sometimes even 12% across a book for a particular partner. We know that the core value creation is there. That drives not just better costs, but that is fundamentally better adherence to best evidence medicine. It's driving quality for the members. One of the things that we saw happen during 2024 was, at the same time as we're creating that fundamental value, the underlying oncology trend, the pace of growth in oncology expenses was vastly exceeding the rate at which we were creating value. That's something that, in a lot of cases, is fundamentally out of our control. That's driven by a number of patients who have cancer, for example, not something we control, by a mix of disease, not something that we control, et cetera. One of the things that we've sought to do, in particular, as you note, over the last few months, is to transition our Performance Suite from a model that we had entering 2024, where the majority of the revenue in the Performance Suite was uncapped, meaning we could be running an 18% medical margin on the positive side, but there was no cap on our losses, seeking to migrate that into more of a model where we are capped on both the up and the downside. We are capping our losses and also sharing more of the savings with our partners on the upside. That was a very deliberate trade-off that we made as we came into 2025 to seek to align the value creation that we know we are executing on because we can see it in the detail, to align that with our economics that are indexed on total cost for our scope within cancer. It is fair to think that, you know, when you give guidance previously or, you know, and within the guidance for 2025, it has always been sort of within that band of, within the band of upside and downside relative to where those caps, which were a lot wider before, to where they are. It is not to say that because we are capped, it limits necessarily upside to results. Is that a fair way to think of it? I do think that's a fair way to think of it, in particular relative to where we are today. Yeah. All right. We noted that, as an example, relative to these caps, our forecast for the midpoint of our guide for 2025 is $150 million. That assumes a 12% year-on-year cancer trend, so increase in expenses per member adjusting for Medicaid redeterminations. Because of where we are in these corridors with some of our customers, there's some asymmetric upside to us, where if trend is 2% better, 10% instead of 12%, that is a $12 million good guy to EBITDA. If trend is 2% worse, 14% instead of 12%, then we estimate that is a $9 million EBITDA headwind. That is sort of how we think about where we are within those ranges. Yeah. Yeah, that's helpful. You brought up, obviously, we're kind of getting through Medicaid redeterminations, but Medicaid continues to be in focus under this administration, you know, sort of expectations potentially for cuts. Just how much of a potential impact should we think of it for you guys? Obviously, you know, large customers are in that space. Yeah. Look, here's a way to range bind it, right, which is to say we have about 50% of our revenue this year that we expect would be in Medicaid and the exchanges. If there were a dramatic cutback to those populations, call it a 25% reduction in Medicaid and exchange membership, which would be massively dislocating for the entire country, but let's take a downside case, that's a 12.5% revenue hit to us. If we're assuming about $2 billion of revenue this year, that's about $250 million of revenue. A lot of that's in the Performance Suite with relatively small margins. The marginal impact of that then to us on the EBITDA line is very digestible based on our midpoint of $150 million of EBITDA this year. It would be disappointing. I am also wanting folks to sort of get a sense for where those numbers are and ensure that there's an understanding that that's not an existential issue for Evolent Health. Yeah. Yeah, let me come back to that again in a little bit, but wanted to just jump back to Performance Suite if I could. You know, you also talked about one of the, one of your larger customers that you have transitioned to this enhanced Performance Suite. And it actually elected to, I'm sorry, instead of moving to an enhanced Performance Suite, you kind of elected to go back to Tech and Services. You did note that there's a potential to go back to Performance Suite in the beginning. Maybe talk about sort of the background of that. Like, why would a client who chose to go back to Tech and Services then want to move back to Performance Suite? Kind of what gives you the confidence that that could happen? Yeah. There are two different operating models. As we've talked about before, within the Tech and Services Suite, we're generally investing less of Evolent's dollars in operating and driving outcomes in that market than we are in the Performance Suite because we're not getting paid to do it. That is one reason why a plan might be interested in moving back into a risk model, because fundamentally we are investing more in the network, in those relationships, and we're driving, therefore, better outcomes. I think in a lot of circumstances across the managed care industry coming into this year, there were a number of health plans that had meaningful changes in their underlying membership. That gave some plans pause to say, let's figure out what's going to happen this year. What is the membership profile of our plan going to be like in 2025 after some of the changes that we saw through AEP and redeterminations, for example? Let's pull up and see once we know what the baseline spend is and see if there's a risk deal to be done. Is it the right way to think of it then, you know, this customer, it's not so much that they didn't find value in Performance Suite, they recognize just with all the moving pieces, it's hard to price a business that way. You got it. Yeah. You know, I think on the last call, you also talked about the narrowing of scope for one complex care client and one advanced imaging client. You know, I think people were trying to understand a little bit more about that. You know, what's the reason behind making this kind of change, you know, in these instances? Because it's a little bit different than, you know, what we just talked about earlier. Yeah. Yeah. They are quite different contracts, John. As you noted, neither of these contracts is within our core of oncology and cardiology Performance Suite. We have one advanced imaging Performance Suite contract, one complex care sort of total cost of care Performance Suite contract. Because of the structure of both of those, again, N- of-1 contracts in each case, when we went to implement one of our priorities coming into this year across the Performance Suite, which was to narrow the possible range of outcomes. When we went to implement those changes for those two particular contracts, which again are structured differently than our standard oncology and cardiology contracts. contracts. It is our expectation that those changes will result in a change in the revenue recognition for those two clients. To be really explicit, if we were previously recognized $100 of revenue, $90 of medical expenses, and $10 of medical margin under our expected recognition in 2025, we will just recognize $10 of revenue and medical margin. That is all that is happening. It is isolated to those two contracts, again, just because of the nature and somewhat unique nature of those two contracts. Got it. Okay. Also, you know, one last thing, just going back, and this kind of goes back to the third quarter, right, when you kind of talked about having a whole bunch of claims come in that may or may not be within the scope. I'm not sure that you kind of gave a final kind of verdict on, you know, what ended up happening. Were they mostly within scope in the end, or were they some, some not? Yeah. We completed that audit as we were closing the books for 2024. We saw about $1 million within that pool of claims that ended up not being within our scope. That was captured within our final 2024 results. The vast bulk of those claims did turn out to be part of our scope. Now, is that just an issue on the client side on systems to get that information to you in a timely fashion, or just it just wasn't submitted early enough, I guess? Yeah. Our clients in the Performance Suite, where they're paying the claims, which is the case in these two contracts, are contractually obligated to send us a full accounting of what they paid each month. What we learned as we were closing Q3 is for these two clients, there were certain paid claims that they had not been sending to us. That was a massive problem. We've done two things to ensure that that's not going to happen again. The first is we've sought to insert into our contracts teeth that limit our liability in the event that claims that are paid are not delivered to us on time. The second and more important change is to assert a requirement with our partners that we have more direct conversation and interaction between the medical economics teams at Evolent and at the partner to do much more frequent reviews and comparing, for example, here's what we're seeing in the lag triangles based on the claims that you're sending to us. Is that consistent with what you're seeing? That requires deep relationships that we've built with these plans over time. It requires an investment of time on the part of the plan partner. It's something that we've been able to demand given what happened last year. We therefore are much more comfortable as we come into this year that we have foreclosed on that possibility. Have you so far, you know, here at the beginning of March, has that been invoked and are you already kind of reviewing Yeah. claims? Okay. It feels like it's fair to say then your partners are pretty much on board with this. Yes. That's right. More unlikely than not that we'll have a similar repeat of the claims issue. That's right. Okay. I want to talk about Auth Intelligence. You know, so for Machinify, can you talk about this integration of this with actually the integration of Auth Intelligence and give us some details on how the implementation of AI? I think you talked about generating up to $20 million of annualized benefit. How does that come about? Like, what is it? What's driving that kind of benefit? Yeah. If you go into the operations, you know, we employ 1,500 clinicians, 350 doctors, close to 1,000 nurses, therapists, social workers, et cetera. A lot of their day-to-day work is building administrative sort of support for then making a clinical decision. Ultimately, that clinical decision is typically made by the doctor. There is a tremendous amount of work that goes into some of these cases that can be quite complex. Where we see a real opportunity to deploy the generative AI or other sort of leading technologies is in the compilation of that data and the removal of some of the administrative work that is required in this particular niche of healthcare. That can mean making those reviewers more efficient. It can also mean eliminating upfront work because maybe the data was not transmitted correctly the first time. Can we leverage Auth Intelligence or other platforms that we're building out to ensure that we're catching early an incomplete submission or something else? That's the opportunity. Yeah. Within that context then, I think you guys talked about $10 million adjusted EBITDA impact from investments this year relative to the $20 million in efficiency expected to realize by the year end. Maybe give us a sense on sort of the cadence of that. Is it really think of it more in the first half of this year versus the back half? Anything that'd be helpful there? Yes. The way to think about it is the $10 million in investments this year is a net number. We are investing more than $10 million and expecting to recognize some of those efficiencies in particular as we get into the back half of this year, such that we are exiting with that $20 million benefit as we move into next year. We will see a nice year-on-year improvement as a result of making those investments. Some of those investments are one-time in nature. They will not recur. We are then seeing the $20 million run rate value exiting this year. We should be exiting at a $20 million run rate value, but when we think about the investments relative to the benefit net for the full year, it should be a $10 million investment. That's correct. Okay. I think you've talked about Auth Intelligence. You know, we'll be able to generate, you know, up to $50 million in annualized benefits. What's the timeline we should think of that way? If we're exiting at $20 million, is that maybe another two years after that? Is that? Yeah. I think that's right. You know, it's certainly a multi-year trajectory. I think importantly, we think of that as a net number, right? Because we don't exist in a static market. It's our intention to be able to use a leadership position in using this kind of technology to lower the administrative burden of healthcare. It's our intention to be able to use that to gain share also, right? It's not just a margin, a gross margin improvement lever, although that's an important one. It's also potentially a growth stimulant. Does this change then the margin profile for the T&S business? You know, I think we have historically thought of it sort of like a 50% margin business. Obviously, a little bit lower when NIA comes into it, right? But should we then think with this, like most of this is just going to margin in that sense, should we, the margin should be ticking up then? Yes. We fully anticipate that the gross margin of that business over time will increase from where it is today, which is about 50%, as you note. It is not going to go to 75%, right? We will seek to balance, as I noted, the pricing element of this as well. Where we see an opportunity to drive share growth through being extremely competitive on price, because we have done this work on our own unit costs, we will take that opportunity. Got it. I want to touch on guidance here. You introduced 2025 earlier when you guys reported the fourth quarter. Within that, you had an adjusted EBITDA guide of $135 million-$165 million. You noted that the bottom end primarily reflected a buffer for the scenario, you know, where trend accelerates further in 2025. That was sort of the 12% going to 14%, right? When you talked earlier about oncology. Can you maybe speak to the top end of the range and what kind of gets you to $165 million in 2025? Is it really just simply where trend comes out, or are there other factors that can help you get there? Yeah. Three factors, one of which is trend. A potential slowdown relative to what we think is a pretty aggressive assumption of a 12% trend. That's higher than what we saw in Q4, which is the highest we'd ever seen. That's one. Two is stronger underlying value creation within the Performance Suite. There's real value to be had there. That's something we focus on every year, but an opportunity to outperform there. Third is a faster implementation timeline of new growth, both in terms of what's currently contracted and slotted across the year, and in terms of potential outperformance on that growth. That's most likely, even if it does lead to modest outperformance this year, it's most likely to translate into a really nice setup for 2026. Of the three, you'd say that would be probably the least impactful on 2025. That's probably right. Between the other two, which has the potential for the biggest impact? Is it just trend then, would you say, or? Yeah, I think that's the biggest variable. I think the offset to that are the initiatives, the value-based work that we do put into place that's responsive to that trend. Is it too early at this point to see how trend is shaping up in oncology here in the first quarter? Yes, is the short answer. The slightly longer answer is so far, the leading indicator data that we've been able to see is suggesting that we're within our forecasted ranges. No change to our expectation right now. Any reason, and I know, I think I've asked you this in the past as well, any sense on why we're seeing this elevated rate of change? Because, you know, when you think about sort of the traditional or the historical rate of incidence of cancer, it's not double digits, right? It does seem out of place. Now it's been going on for more than a year. Any thoughts as to what's at the root cause of that? Yeah. You know, we think of this as in two key drivers. There's prevalence, which we define as number of active patients per thousand in a given month. And there's cost per patient per month. As you multiply those two together, you get total cost. We've seen meaningful acceleration within both of those metrics, significant spikes in prevalence that are not explainable by traditional factors. The most obvious answer to that question is in some way related to the pandemic, delayed testing or something else. I don't have a good explanation for why now, but that's the best answer there. Within the cost per case metric, you know, that is driven by mostly new drugs and indications. More use of checkpoint inhibitors, for example. That's both an opportunity and a hit to us, right? That it's a trend that we have to deal with within our Performance Suite. It is a dominant trend for everybody who's dealing with oncology expenses. We think we are able to inflect checkpoint inhibitor expense, for example, towards best evidence care much more effectively than any of our other competitors. Is that also a function where they're kind of related because if you are catching things later, you're forced to treat more advanced stages of cancer, which are by definition then more expensive treatments? Yes. Yes. I believe that's a, it is hard to isolate mathematically how much that's contributing to the trend, but yes, I believe that is happening. Yeah. We touched on it a little bit earlier. You're saying at least so far, sort of that initial prior auth data that you're coming through kind of says that you're sort of in line with what you're kind of expecting. Is that across just oncology or is it across, you know, cardiology as well? You know, what are you seeing here tracking so far in the first quarter? Yep, across cardiology as well. The full Performance Suite based on, again, this is all leading indicator data. I am always cautious about claiming that, you know, six weeks of data makes a line. With that proviso, so far across the full book, operating right within our forecasts. Got it. Another piece that factors into sort of the guidance is an assumption on the impact for membership losses at some of your clients. And obviously within the MA space, you know, all the players that, you know, membership has been sacrificed from margin, you know, as benefits have been cut. You know, we start to see sort of the membership files come out of CMS, just trying to get a sense on, as you've kind of surveyed the impact relative to your customers that are, you know, cutting members, how is that tracking relative to what you're kind of putting out there? Exactly in line with what we expected. We put out at JP Morgan a $20 million headwind in terms of EBITDA from membership declines. That underlying membership change is exactly what we saw in the files that CMS released last week. Is it fair to think that when we think of the membership impact, is that all in MA or is it across both? The vast [crosstalk] is in MA. That's right. Okay. And then if we think about it between Performance Suite and, well, I guess it's all Tech and Services now at this point, right? So it's. Oh no, it's both. You know, from an EBITDA perspective, that $20 million is about half and half Performance Suite and Tech and Services. Obviously, the revenue impact is much more dominant on the Performance Suite side, but the EBITDA is split 50-50. Okay. You know, in the couple of minutes that we have left, want to talk about obviously one of your customers, right? One of your big partners, you know, they have an issue with Stars and they're trying to get their Star Ratings back. And that, you know, obviously will have an impact on 2026. So when we think about the membership impact that we've talked about this year, do we face another membership impact potentially in 2026, or is that this is sort of encompassing both? It's a good question. I think the honest answer is it's too early to know. You know, one of our core principles for this is we need to be a diversified business such that if we're growing over here or if one customer is seeing a headwind over here, then we can grow with this customer over here. That'll continue to be our goal. Maybe that's a nice segue into sort of, you know, what's the pipeline looking like for new customers? Obviously, you announced a couple on the fourth quarter here. You had a great year in signing new partners last year. Maybe you get a sense. Has this new enhanced contract structure, as you've kind of now pitched that into the market, has that had a more positive impact on how partners are looking at it? Yeah, I mean, the flip side of having a tough year last year on the medical expense ratio side is that every other entity out there who's managing oncology risk also had a tough year. That made for a very productive selling season last year, best business development year we've ever had. It is shaping up to be a very good year this year, really across the book, both in tech and services and in Performance Suite. I think the reaction, as Blackley noted on the earnings call, the reaction to this 2.0 model in the Performance Suite has been very positive. You know, it's a symmetrical change. We need our losses capped, but we're going to share more of the upside with the partner. That seems to have some resonance. If you were looking to subcapitate risk anyways, it's not like you necessarily want to bring it back to begin with, right? There's a whole reason you're looking to subcapitate it out, right? That's right. Okay. Well, we're coming to time. Last, quickly, capital allocation, anything that, you know, to think about here? Yep. No, priorities have not changed, which is we invest in internal product development. We will continue to do that this year. There is a sort of firm commitment this year to deploying free cash to deliver, which we will do. Sounds good. John.