• Revenue: $1.52 billion for Q4 2024, $6.06 billion for the full year, a 44% increase year-over-year.
• Medical Margin: $1 million for Q4 2024, $205 million for the full year.
• Adjusted EBITDA: Minus $84 million for Q4 2024, minus $154 million for the full year.
• Medicare Advantage Membership: Increased 36% year-over-year to 527,000 members.
• ACO Model Membership: 132,000 members, a 48% year-over-year growth.
• 2025 Revenue Guidance: Expected to decline 2% to $5.925 billion.
• 2025 Medical Margin Guidance: Expected to improve 46% to $300 million at the midpoint.
• 2025 Adjusted EBITDA Guidance: Expected to be minus $75 million at the midpoint.
• Cash and Marketable Securities: $406 million at the end of Q4 2024.

• Warning! GuruFocus has detected 2 Warning Sign with AGL.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Agilon Health Inc (NYSE:AGL) reported a 44% increase in total revenue for the fourth quarter, reaching $1.52 billion, driven by the expansion of the 2024 partner class and organic growth.
• The company successfully reduced its Medicare Part D exposure to less than 30% of its membership, exceeding its initial goal of 50%, which is expected to reduce risk.
• Agilon Health Inc (NYSE:AGL) achieved a 36% year-over-year increase in Medicare Advantage membership, reaching 527,000 members by the end of the fourth quarter.
• The company has implemented strategic actions to improve financial performance, including exiting unprofitable partnerships and enhancing data and analytics capabilities.
• Agilon Health Inc (NYSE:AGL) has a strong pipeline for the class of 2026, with signed letters of intent, indicating continued growth potential.

Negative Points

• The company reported an adjusted EBITDA loss of $84 million for the fourth quarter and $154 million for the full year, reflecting lower medical margins and higher costs.
• Agilon Health Inc (NYSE:AGL) anticipates a 4% decline in Medicare Advantage membership for 2025, due to partnership exits and payor contract terminations.
• The company is facing ongoing challenges in the Medicare Advantage market, including elevated cost trends and regulatory changes impacting its 2025 outlook.
• Medical margin for the full year 2024 was negatively impacted by prior year development and elevated medical cost trends, resulting in a lower-than-expected outcome.
• Agilon Health Inc (NYSE:AGL) expects continued high medical cost trends in 2025, with an estimated gross cost trend of 6.3%, posing a challenge to financial performance.

Q & A Highlights

Q: Can you provide more details on the changes to Part D contracting for 2025 and its impact on the P&L? A: Steven Sell, CEO, explained that Agilon Health has reduced its exposure to Part D risk to less than 30% of its membership, exceeding their goal of 50%. This reduction reflects strong relationships with payors who recognize the uncontrollable nature of Part D risk. CFO Jeffrey Schwaneke added that Part D is recorded net in revenue, and for 2025, they have doubled the PMPM loss from 2024 due to the Inflation Reduction Act.

Q: How did the class of 2024 perform, and what are your expectations for the class of 2025 and 2026? A: CEO Steven Sell stated that the class of 2024 performed very well, being the largest class to date. The class of 2025 is smaller, with 20,000 members, and includes a care management fee with no downside risk for most members. For 2026, they have strong letters of intent, and the class is expected to be larger than 2025, reflecting the need for a new business model for primary care physicians.

Q: Can you clarify the medical cost trend guidance and the impact of the two-midnight rule and supplemental benefits? A: CFO Jeffrey Schwaneke explained that the two-midnight rule contributed to a 50-basis-point increase in cost trend for 2024, which is incorporated into their 2025 guidance. Supplemental benefits have decreased due to payor bid adjustments, reducing the magnitude of those costs for 2025. The company aims to reduce risk for elements outside their control, like supplemental benefits.

Q: What is the impact of the ACO REACH program on your financials, and how do you view the cost trend for year-two cohorts? A: CFO Jeffrey Schwaneke noted that the ACO REACH program has been a strong performer, with medical margin equivalent north of $100 PMPM. The cost trend for year-two cohorts is expected to be 100 basis points lower due to payor bid adjustments, reflecting a reduction in revenue and cost perspective.

Q: How are you managing working capital, and what impact do you expect in 2025? A: CEO Steven Sell highlighted disciplined cash management as a priority, with improvements in partnership exits, tighter working capital management, and payor contract negotiations. CFO Jeffrey Schwaneke added that they ended 2024 with $440 million in cash and expect to use $110 million in 2025, which is $75 million better than previous expectations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.