Shares of the Passport Health Plan's would-be buyer Evolent Health tumbled again Thursday. The photo shows an unfinished high-rise.

The idle construction site of Passport Health Plan’s proposed new headquarters at 18th Street and West Broadway. | Photo by Boris Ladwig

Shares of Passport Health Plan‘s would-be buyer Evolent tumbled again Thursday, hitting an all-time low of $7.16. The plummeting stock price also is undermining the finances of Passport, which continues to hold 1.1 million Evolent shares, which, since November, have declined in value by about $24 million.

Passport, which was near insolvency this spring, told Insider Friday that it applied for the new five-year Kentucky Medicaid contract, which will take effect next summer. That contract is essentially Passport’s sole revenue stream. A health care expert has told Insider that the nonprofit will get competition for the contract and that financial stability will be one factor state regulators will weigh as they award the contract.

Passport handles Medicaid benefits for about 307,000 Kentuckians, including 129,000 in Jefferson County, according to the most recent state data. Passport provides services for nearly a quarter of Kentucky’s Medicaid beneficiaries.

Medicaid is a mostly federally funded health insurance program primarily for the poor, pregnant women and people with disabilities. The state funnels the federal dollars to managed care providers, which then pay for medical services the beneficiaries incur when they seek help from medical providers.

Passport has lost $164 million in the last three years, including $123 million last year and was near insolvency this spring. The nonprofit’s leaders have blamed recent struggles on the state’s decision last summer to lower its disbursement of Medicaid dollars. The state said that it made changes to the Medicaid program in part because of budget constraints.

To cut costs, Passport has reduced staff, halted construction on its $87 million planned headquarters at 18th Street and West Broadway and lowered reimbursement rates to medical providers. The state this spring increased its Medicaid disbursements. Passport’s CEO, Mark Carter, said he was cautiously optimistic that the revenue boost, coupled with cost reduction efforts, would be enough to keep the nonprofit solvent.

However, Evolent Health said in late May that it planned to take a $70 million, 70% stake in Passport.  The Louisville nonprofit is the Arlington, Va.-based company’s biggest client. Passport paid Evolent nearly $26 million in the first quarter, representing 13.1% of the company’s revenue.

A health care expert told Insider that without Evolent’s bailout, Passport likely would have lacked the capital required to even qualify to apply for the new five-year Kentucky Medicaid contract. The application deadline for the new contract was July 5. The state is looking for five managed care organizations, the same number that currently provide services.

A Passport spokesman told Insider Friday that the nonprofit has applied to continue to be one of Kentucky’s five managed care organizations. The Kentucky Department of Insurance could not be reached to say how many other responses it has received.

Share price decline

Evolent Health tumbled again Thursday. The image shows a fever chart showing how Evolent shares have lost nearly half their value in the last year.

Shares of Evolent Health, which plans to buy a 70% stake in Passport Health, have lost about three-quarters of their value since November. | Courtesy of Yahoo! Finance.

Passport told Insider earlier this year that it owned 1.1 million Evolent shares. A company spokesman confirmed Thursday that the nonprofit was still holding on to its 1.3 percent stake in the health care consulting company.

Those shares were worth $11.5 million when the parties announced on Feb. 2, 2016, that they planned to create the Medicaid Center of Excellence in Louisville. At their peak, in November, Passport’s Evolent holdings were worth $32 million, but their value has declined to just $8 million today.

An investment of $11.5 million in the S&P 500 made in February 2016 would today be worth about $18 million.

Evolent investors have reacted poorly to the company’s proposed Passport acquisition. Since Evolent announced the plans on May 29, the company’s shares have lost nearly half their value.

Last November, Evolent’s market cap was $2.4 billion. When markets closed Thursday, the company was worth about $600 million.