Discontinued Operations

12 Months Ended

Dec. 31, 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 has had no continuing involvement with True Health subsequent to the closing except a pre-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 205, 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 discontinued operations and are not included in continuing operations in the consolidated financial statements.

During the year ended December 31, 2021, the Company recorded purchase prices adjustments to the True Health Closing of $8.7 million which are included in loss from discontinued operations on the consolidated statements of operations and comprehensive income (loss).

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 and comprehensive income (loss) for the years ended December 31, 2021, 2020 and 2019:


	For the Year Ended December 31,
	2021		2020		2019
Revenue
Platform and operations	$	38	$	356	$	145
Premiums	44,795		117,377		171,742
Total revenue	44,833		117,733		171,887

Expenses
Cost of revenue (exclusive of depreciation and amortization expenses presented separately below) (1)	5,885		18,343		6,633
Claims expenses	33,954		87,951		135,774
Selling, general and administrative expenses (2)	5,764		18,576		26,617
Depreciation and amortization expenses	160		640		590
Total operating expenses	45,763		125,510		169,614
Operating income (loss)	(930)		(7,777)		2,273
Interest income	112		531		581
Interest expense	(4)		(12)		21
Other loss	(25)		(1)		(3)
Income (loss) before income taxes and non-controlling interests	(847)		(7,259)		2,872


Benefit (provision) for income taxes	(326)		(1,185)		1,259
Net income (loss)	$	(521)	$	(6,074)	$	1,613

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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 in the consolidated statements of operations and comprehensive income (loss) related to an existing services agreement for claims processing and other health plan administrative functions of $2.8 million, $13.6 million and $6.6 million for the years ended December 31, 2021, 2020 and 2019, 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 and comprehensive income (loss) related to an existing services agreement for claims processing and other health plan administrative functions of $1.1 million, $6.4 million and $6.0 million for the years ended December 31, 2021, 2020 and 2019, 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 year ended December 31, 2021, 2020 and 2019 were as follows:


	For the Year Ended December 31,
	2021		2020		2019
Cash flows provided by (used in) operating activities	$	5,002	$	6,852	$	(6,642)
Cash flows (used in) provided by investing activities	(2,494)		2,636		(7,172)
Cash flows used in financing activities	—		—		(2,500)

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:


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 excludes $1.5 million between the Company and True Health related to an existing services agreement for claims processing and other health plan administrative functions as of December 31, 2020.