Evolent Health, Inc.EVH
Evolent Health, Inc. Goodwill & Intangibles Disclosure
Goodwill and Intangible Assets, Net
Goodwill
Goodwill has an estimated indefinite life and is not amortized; rather, it is reviewed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
Our annual goodwill impairment review occurs on October 31 of each fiscal year. We evaluate qualitative factors that could cause us to believe the estimated fair value of our reporting unit may be lower than the carrying value and trigger a quantitative assessment, including, but not limited to (i) macroeconomic conditions, (ii) industry and market considerations, (iii) our overall financial performance, including an analysis of our current and projected cash flows, revenues and earnings, (iv) a sustained decrease in share price and (v) other relevant entity-specific events including changes in management, strategy, partners, or litigation.
2025 Interim Goodwill Impairment Test
On September 23, 2025, the Company agreed to sell Evolent Care Partners Holding Company, Inc., a wholly owned subsidiary. As a result, the Company performed an interim goodwill impairment assessment as of September 11, 2025. We used the income approach, adjusted to exclude the future impact of Evolent Care Partners Holding Company, in our interim goodwill impairment analysis. This analysis required us to make judgments about revenues, expenses, fixed asset and working capital requirements, capital market assumptions, cash flows and discount rates. The quantitative analysis showed that the fair value exceeded the carrying value. We will continue to monitor for such changes in facts or circumstances, which may be indicators of potential impairment triggers.
2025 Annual Goodwill Impairment Test
Subsequent to our 2024 goodwill impairment test through the end of 2025, the closing price per share of our Class A common stock declined from $23.35 per common share on October 31, 2024 to $6.67 at October 31, 2025. As a result of the prolonged decline in our stock price, the Company elected to forego the qualitative assessment and proceed directly to the quantitative assessment of the goodwill impairment test for our sole reporting unit. To determine the implied fair value for our single reporting unit, we used a discounted cash flow valuation approach (“income approach”). In determining the estimated fair value using the income approach, we projected future cash flows based on management’s estimates and long-term plans and applied a discount rate based on the Company’s weighted average cost of capital. This analysis required us to make judgments about revenues, expenses, fixed asset and working capital requirements, capital market assumptions and cash flows, as well as discount rates to reconcile to our market capitalization. As a result of the decrease in our Class A common stock since our 2024 goodwill impairment test, the market capitalization reconciliation indicated that the carrying amount of our reporting unit exceeded its fair value. Therefore, the Company recorded a $398.0 million non-cash and non-tax-deductible impairment charge, reflected within operating expenses in the consolidated statements of operation for the year ended December 31, 2025.
As of December 31, 2025, the Company assessed whether there were additional events or changes in circumstances since its annual goodwill impairment test that would indicate that it was more likely than not that the fair value of the reporting units was less than the reporting units carrying amounts that would require an interim impairment assessment after October 31, 2025. The Company determined there had been no such indicators, therefore, we did not perform an interim goodwill impairment assessment as of December 31, 2025.
2024 Goodwill Impairment Test
The Company elected to forego the qualitative assessment and proceed directly to the quantitative assessment of the goodwill impairment test for our sole reporting unit. To determine the implied fair value for our single reporting unit, we used an income approach. In determining the estimated fair value using the income approach, we projected future cash flows based on management’s estimates and long-term plans and applied a discount rate based on the Company’s weighted average cost of capital. This analysis required us to make judgments about revenues, expenses, fixed asset and working capital requirements, applicable tax rates, capital market assumptions and other subjective inputs. In our quantitative assessment, the most sensitive assumption related to the income approach, other than the projected cash flows, was the discount rate. A significant increase in the discount rate in isolation would result in a significantly lower fair value. The concluded fair value under the income approach exceeded carrying value of consolidated total assets by approximately $336.0 million, or 13.6%, as of October 31, 2024. As fair value was greater than carrying value under the income approach, goodwill was not impaired as of October 31, 2024. As of December 31, 2024, Evolent assessed whether there were events or changes in circumstances that would more likely than not reduce the fair value of its goodwill below its carrying amount and require an additional impairment test. The Company determined there had been no such indicators. Therefore, it was unnecessary to perform an additional goodwill impairment assessment as of December 31, 2024.
Change in Goodwill
The following table summarizes the changes in the carrying amount of goodwill, for the periods presented (in thousands):
| For the Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance, beginning of period | $ | 1,137,320 | $ | 1,116,542 | $ | 722,774 | |||||||||||
Goodwill acquired (1) | — | 20,809 | 395,164 | ||||||||||||||
| Measurement period adjustment | — | — | 971 | ||||||||||||||
Goodwill disposal (2) | (44,790) | — | (2,363) | ||||||||||||||
| Impairment of goodwill | (398,000) | — | — | ||||||||||||||
| Foreign currency translation | (48) | (31) | (4) | ||||||||||||||
| Balance, end of period | $ | 694,482 | $ | 1,137,320 | $ | 1,116,542 | |||||||||||
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(1)Goodwill acquired from acquisitions driven by Machinify and NIA in the years ended December 31, 2024 and 2023, respectively.
(2)During the year ended December 31, 2025, the Company allocated $44.8 million of goodwill to Evolent Care Partners based on the value of the transaction compared to the estimated business enterprise value on the closing date. See Note 4 for further discussion on the Evolent Care Partners disposal. Goodwill disposed of during the year ended December 31, 2023 was written-off upon disposal of non-strategic assets.
Intangible Assets, Net
Details of our intangible assets (in thousands, except weighted-average useful lives) are presented below:
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Weighted- Average Remaining Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | Weighted- Average Remaining Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||||||||||||||||||||||||
| Corporate trade name | 0.0 | $ | 51,965 | $ | 51,965 | $ | — | 0.0 | $ | 51,965 | $ | 51,965 | $ | — | |||||||||||||||||||||||||||||||||
| Customer relationships | 12.6 | 806,668 | 255,517 | 551,151 | 13.5 | 806,668 | 186,377 | 620,291 | |||||||||||||||||||||||||||||||||||||||
| Technology | 2.0 | 169,715 | 135,929 | 33,786 | 3.0 | 169,715 | 117,924 | 51,791 | |||||||||||||||||||||||||||||||||||||||
| Below market lease, net | 0.0 | 1,218 | 1,218 | — | 0.0 | 1,218 | 1,218 | — | |||||||||||||||||||||||||||||||||||||||
Provider network contracts | 0.0 | 9,600 | 9,600 | — | 4.8 | 26,522 | 18,448 | 8,074 | |||||||||||||||||||||||||||||||||||||||
| Total intangible assets, net | $ | 1,039,166 | $ | 454,229 | $ | 584,937 | $ | 1,056,088 | $ | 375,932 | $ | 680,156 | |||||||||||||||||||||||||||||||||||
The decrease in provider network contracts for the year ended December 31, 2025 was driven primarily by the sale of ECP Holding Company. Amortization expense related to intangible assets was $89.6 million, $88.1 million and $91.0 million for the years ended December 31, 2025, 2024 and 2023, respectively. The increase in amortization expense for the year ended December 31, 2025 compared to the year ended December 31, 2024 was driven primarily by $21.9 million higher amortization of certain customer relationship intangibles and $1.6 million higher amortization of existing technology intangibles, offset in part by $21.6 million of accelerated amortization on our retired trade names in 2024.
Future estimated amortization of intangible assets (in thousands) as of December 31, 2025, is as follows:
| 2026 | $ | 61,021 | |||
| 2027 | 59,028 | ||||
| 2028 | 47,133 | ||||
| 2029 | 44,992 | ||||
| 2030 | 43,959 | ||||
| Thereafter | 328,804 | ||||
| Total future amortization of intangible assets | $ | 584,937 | |||
Intangible assets are reviewed for impairment if circumstances indicate the Company may not be able to recover the assets’ carrying value. As discussed above, we identified a triggering event and performed a quantitative analysis over the carrying value of our goodwill balance during the fourth quarter of 2025. Identification of the triggering event requires an impairment analysis of the carrying value of our intangible asset group. In conjunction with the impairment testing of the carrying value of our goodwill, we performed an analysis to determine whether the carrying amount of our intangible asset group was recoverable. We performed a quantitative analysis, which required management to compare the total pre-tax, undiscounted future cash flows of the intangible asset group to the current carrying amount. The total undiscounted cash flows included only the future cash flows that are directly associated with and that were expected to arise as a result of the use and eventual disposal of the asset group. Based on our quantitative analysis, we determined that the pre-tax, undiscounted cash flows exceeded the carrying value and therefore concluded that our intangible assets were recoverable.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 3, 2017 | |
| 2015 | Feb 29, 2016 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.