Aug. 4 at 8:20 PM
$EVH This post tries to sound analytical but fails at basic accounting.
1. Broken Leverage Math: their post calculates "Net Leverage" as
$700M /
$125M = 5.6x. That is GROSS leverage. Net leverage subtracts cash on hand. EVH holds over
$140M in cash. Subtracting that from their debt drops true net leverage drastically. Her core math is fundamentally wrong.
2. Risk Corridor Value: Corridors aren't just an "airbag." By structurally capping downside risk, EVH safely captures upside profit (shared savings) without exposing its balance sheet to catastrophic medical utilization spikes. The 93.3% Q1 MER was expected due to upfront reserves for new patient onboarding, not permanent unprofitability.
3. Valuation Reality: Even valuing them purely on EV/EBITDA, EVH is trading at a distressed, near-bankruptcy discount. When their new
$200M+ expansion launches in Q3 to drive the back-half margin ramp, this multiple will violently re-rate.
Don't let bad math shake your conviction.
