Evolent Health Inc. (EVH) shares plummeted nearly 40% on November 8, 2024, after the healthcare services company reported disappointing third-quarter results and slashed its full-year guidance due to a significant spike in oncology costs.

For the third quarter, Evolent Health posted an adjusted loss per share of $0.27, widely missing analysts' consensus estimate of $0.34 earnings per share. The company's revenue for the quarter came in at $621.4 million, slightly lower than the expected $627.2 million.

The company cited higher-than-expected medical costs, particularly in its Specialty Performance Suite, as the primary reason for the poor performance. Evolent Health attributed the surge in costs to factors such as increased disease prevalence, rapid increases in unit costs, and other cost pressures related to oncology treatments.

To address the issue, Evolent Health is seeking to negotiate an additional $100 million in annualized rate increases with its partners, effective January 1, 2025. The company is also auditing claims data, managing its cost structure, and may consider exiting risk arrangements with certain partners if new rates cannot be aligned.

As a result of the cost pressures, Evolent Health lowered its full-year 2024 adjusted EBITDA guidance to a range of $160 million to $175 million, down from its previous expectations. The company expects fourth-quarter adjusted EBITDA to be between $22 million and $37 million.