Evolent Health (EVH) presents a deeply negative liquidation recovery posture as of March 31, 2026. Applying standard liquidation haircuts to reported assets and holding liabilities at face value produces a deficit well in excess of reported book equity. Total assets of $1.88B are dominated by balance-sheet-zero items: goodwill ($694M, 0% recovery), finite-lived intangibles net ($570M, 0% recovery), and capitalized software within PP&E gross ($293M gross, $82M net, 50-70% haircut on tangible subset only). Tangible, liquid assets are limited: cash and equivalents $142M (100% recovery), restricted cash $27M (partial recovery given encumbrances), and accounts receivable net $314M (90-95% recovery after the existing $22.5M allowance). Operating lease ROU asset ($3.9M) is worthless in liquidation and the corresponding liability ($11.9M) survives at face. Total liabilities of $1.48B include long-term debt noncurrent of $973M — comprising $569M convertible notes principal (2029-2031 maturities), $117M first lien term loan, $72.5M revolving facility, and $175M second lien term loan (all SOFR-based floating) — plus $231M reserve for claims and performance-based arrangements, $381M current liabilities, and $8.1M other noncurrent liabilities. The Tax Receivable Agreement liability (85% of future tax benefits) is discussed in MD&A and Note 10 but does not appear as a separately tagged balance-sheet liability in XBRL; its contingent obligation survives windup and is not quantified in the filing. MFFAIS-reported cash liquidation value is approximately -$1.22B and liquid liquidation value approximately -$902M, consistent with this analysis. Compared to the prior 10-K (December 31, 2025), the quarter shows: claims reserve grew $40M (from $192M to $232M), driven by a new Performance Suite contract generating $325M incurred claims in Q1 2026 at a 93.3% medical expense ratio vs. 84% excluding ECP in Q1 2025; interest expense stepped up to $16.9M/quarter from $10.4M reflecting the August 2025 exchange of Series A Preferred Stock into $175M second lien term loan and issuance of $167M 2031 convertible notes. The One Big Beautiful Bill Act (enacted July 4, 2025) creates material Medicaid and ACA membership headwinds that could pressure future AR and claims reserve adequacy. No goodwill impairment was recorded in Q1 2026; management assessed no triggering events, but the $694M goodwill balance represents 37% of total assets and carries zero liquidation value. Retained earnings deficit of -$1.34B reflects cumulative losses. In a liquidation scenario, equity recovery is negative by several hundred million dollars after applying haircuts to the modest tangible asset base against face-value obligations.
▼ Community Notes