Is Evolent Health (EVH) a Good Investment Choice in the Healthcare Sector?

Alger Capital, an investment management company, released its “Alger Small Cap Focus Fund” second quarter investor letter. A copy of the same can be downloaded here. The fund declined 19.25% in the second quarter compared to the Russell 2000 Growth Index. Class A shares of the fund in the second quarter underperformed the Russell 2000 Growth Index. Financials and consumer discretionary sectors significantly contributed to the fund’s relative performance, while healthcare and information technology were the major performance detractors. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.

In the second quarter investor letter, Alger Capital discussed stocks like Evolent Health, Inc. (NYSE:EVH). Evolent Health, Inc. (NYSE:EVH) is a healthcare company headquartered in Arlington, Virginia. On August 31, 2022, Evolent Health, Inc. (NYSE:EVH) stock closed at $36.75 per share. One-month return of Evolent Health, Inc. (NYSE:EVH) was 0.68% and its shares gained 48.07% of their value over the last 52 weeks. Evolent Health, Inc. (NYSE:EVH) has a market capitalization of $3.567 billion.

Here is what Alger Capital specifically said about Evolent Health, Inc. (NYSE:EVH):

“Evolent Health, Inc. (NYSE:EVH) is a health care delivery and payment services company that supports health systems and physician organizations (providers) and health plans (payers) as these clients move their business models from traditional fee-for-service (FFS) to value-based care. The company’s clinical and administrative solutions seek to help customers manage and administer patient care in a more cost-effective manner. Evolent Health targets mid-teen sales growth over the long-term, with a goal to reach mid-teens earnings before interest, taxes, depreciation and amortization (EBITDA) margin by 2024.

We believe Evolent’s strong second quarter stock performance is attributable to its positive first quarter 2022 earnings report, where Evolent exceeded many analysts’ expectations and raised its fiscal year 2022 outlook. Total lives, or individuals enrolled across all the platforms that Evolent offers, grew 74% year-over-year, driven by both the addition of new lives to the company’s platform and upselling to higher-priced offerings. Evolent also announced two new health plan or provider partnerships in the first quarter, bringing its year-to-date new partnerships to six. Evolent has historically targeted four to six new partnerships per year.

We also believe Evolent shares outperformed relative to health care services peers in the current market environment because, unlike many names in its peer set, it is already profitable and generates positive free cash flow.”

Source: Unsplash

Evolent Health, Inc. (NYSE:EVH) is not on the list of  30 Most Popular Stocks Among Hedge Funds. As per our database, Evolent Health, Inc. (NYSE:EVH) was held by 30 hedge fund portfolios at the end of the second quarter, which was 33 in the previous quarter.

We discussed Evolent Health, Inc. (NYSE:EVH) in another article and shared Carillon Tower Advisers’ views on the company. You can check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other prominent investors.

Disclosure: None. This article is originally published at Insider Monkey.