Discontinued Operations

6 Months Ended

Jun. 30, 2021

Discontinued Operations and Disposal Groups [Abstract]

On January 11, 2021, Evolent Health LLC, EH Holdings and True Health, each wholly owned subsidiaries of the Company, entered into a Stock Purchase Agreement (the “True Health SPA”) with Bright Health Management, Inc. (“Bright HealthCare”), pursuant to which EH Holdings agreed to sell all of its equity interests in True Health to Bright HealthCare. Closing of the transactions contemplated by the True Health SPA occurred on March 31, 2021 (the “True Health Closing”) and the Company will have no continuing involvement with True Health subsequent to the closing except an existing services agreement for claims processing and other health plan administrative functions.

As of the first quarter of 2021, the Company determined that True Health met the discontinued operations criteria under ASC 360, and as such, True Health assets and liabilities as of December 31, 2020, and the results of operations for all periods presented are classified as held for sale and are not included in continuing operations in the consolidated financial statements.

The following table summarizes the results of operations of the Company’s True Health business, which are included in loss from discontinued operations in the consolidated statements of operations the three and six months ended June 30, 2021 and 2020:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
Revenue
Platform and operations	—		39		38		279
Premiums	—		25,502		44,795		57,649
Total revenue	—		25,541		44,833		57,928

Expenses
Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) (1)	—		4,640		5,885		7,935
Claims expenses	—		18,144		33,954		41,811
Selling, general and administrative expenses (2)	—		4,236		5,764		9,911
Depreciation and amortization expenses	—		160		160		320
Total operating expenses	—		27,180		45,763		59,977
Operating loss	—		(1,639)		(930)		(2,049)
Interest income	—		137		112		286
Interest expense	—		(3)		(4)		(7)
Other loss	—		(3)		(25)		(3)
Loss before income taxes and non-controlling interests	—		(1,508)		(847)		(1,773)
Benefit for income taxes	—				(326)		—
Net loss	$	—	$	(1,508)	$	(521)	$	(1,773)

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(1)Cost of revenue includes intercompany expenses between the Company and True Health that are recorded in income from continuing operations on the consolidated statements of operations related an existing services agreement for claims processing and other health plan administrative functions of $3.2 million for the three months ended June 30, 2020 and $2.8 million and $6.3 million for the six months ended June 30, 2021 and 2020, respectively.

(2)Selling, general and administrative expenses includes intercompany expenses between the Company and True Health that are recorded in income from continuing operations on the consolidated statements of operations related an existing services agreement for claims processing and other health plan administrative functions of $1.0 million of for the three months ended June 30, 2020 and $1.1 million and $4.1 million for the six months ended June 30, 2021 and 2020, respectively.

The consolidated statements of cash flows for all periods have not been adjusted to separately disclose cash flows related to discontinued operations. Cash flows related to the True Health business during the six months ended June 30, 2021 and 2020 were as follows:


	For the Six Months Ended June 30,
	2021		2020
Cash flows provided by (used in) operating activities	$	5,002	$	10,660
Cash flows provided by (used in) investing activities	(2,494)		382

The following table summarizes the current and long-term assets and liabilities of the discontinued True Health business in the consolidated balance sheets as of December 31, 2020:


	December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	21,488
Restricted cash and restricted investments	63
Accounts receivable, net	3,437


Prepaid expenses and other current assets	5,198
Investments, at amortized cost	3,728
Total current assets	33,914
Restricted cash and restricted investments	616
Investments, at amortized cost	10,919
Prepaid expenses and other noncurrent assets	59
Intangible assets, net	3,080
Goodwill	5,705
Total assets	$	54,293

LIABILITIES
Current liabilities:
Accounts payable (1)	93
Accrued liabilities	11,265
Accrued compensation and employee benefits	1,115
Deferred revenue	4,140
Reserve for claims and performance-based arrangements	9,858
Total current liabilities	26,471
Other long-term liabilities	128
Deferred tax liabilities, net	49
Total liabilities	$	26,648

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(1)Accounts payable exclude $1.5 million between the Company and True Health related an existing services agreement for claims processing and other health plan administrative functions as of December 31, 2020.