Evolent Health (NYSE: EVH) and Castlight Health, inc. (NYSE:CSLT) are both small-cap healthcare companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.

Institutional & Insider Ownership

82.5% of Evolent Health shares are held by institutional investors. Comparatively, 41.3% of Castlight Health, inc. shares are held by institutional investors. 8.8% of Evolent Health shares are held by insiders. Comparatively, 37.4% of Castlight Health, inc. shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Evolent Health and Castlight Health, inc.’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Evolent Health $361.53 million 3.24 -$51.15 million ($1.21) -14.71
Castlight Health, inc. $115.24 million 4.91 -$48.77 million ($0.45) -9.56

Castlight Health, inc. has higher revenue, but lower earnings than Evolent Health. Evolent Health is trading at a lower price-to-earnings ratio than Castlight Health, inc., indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Evolent Health and Castlight Health, inc.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Evolent Health -18.40% -8.42% -6.89%
Castlight Health, inc. -42.54% -36.30% -24.42%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Evolent Health and Castlight Health, inc., as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Evolent Health 0 0 13 1 3.07
Castlight Health, inc. 1 4 2 0 2.14

Evolent Health presently has a consensus price target of $28.73, suggesting a potential upside of 61.39%. Castlight Health, inc. has a consensus price target of $4.63, suggesting a potential upside of 7.56%. Given Evolent Health’s stronger consensus rating and higher possible upside, research analysts plainly believe Evolent Health is more favorable than Castlight Health, inc..

Volatility and Risk

Evolent Health has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500. Comparatively, Castlight Health, inc. has a beta of 1.66, suggesting that its stock price is 66% more volatile than the S&P 500.

Summary

Evolent Health beats Castlight Health, inc. on 9 of the 14 factors compared between the two stocks.

Evolent Health Company Profile

Evolent Health, Inc. is engaged in healthcare delivery and payment. The Company supports health systems and physician organizations in their migration toward value-based care and population health management. The Company provides an end-to-end, technology-enabled services platform for providers. The Company’s platform, powered by its technology, processes and integrated services, enables providers to migrate their economic orientation from fee-for-service (FFS) reimbursement to payment models that reward value-based payment models. The Company’s services include providing its customers, with a population management platform, integrated data and analytics capabilities, pharmacy benefit management (PBM) services and comprehensive health plan administration services. Its value-based operations are empowered and supported by Identifi. Identifi is the Company’s technology platform that aggregates and analyzes data, manages care workflows and engages patients.

Castlight Health, inc. Company Profile

Castlight Health, Inc. offers a health benefits platform that engages employees to make healthcare decisions, and enables employers to communicate and measure their benefit programs. The Company operates through cloud-based products segment. Its technology offering aggregates data and applies analytics to make healthcare data transparent. Its products deliver employee engagement and enable employers to integrate benefit programs into a single platform available to employees and their families. Its health benefits platform engages external data and its substantial user base to provide a single, end-to-end solution that engages employees through personalized and relevant communications. Its offering provides employers the opportunity to communicate, measure, and get value out of their benefits and programs on a real-time basis. It offers cross-sell products, such as Castlight Action, Castlight Pharmacy, Castlight Dental, Castlight Elevate, Castlight Protect and Castlight Rewards.

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