Revenue increased 71% to $1.15 billion,
Medicare Advantage membership increased 57% to 408,900, and total
members live on the agilon platform grew to 495,900
Durability of agilon partnership model
driving continued gains in profitability across Medicare Advantage
and ACO REACH, inclusive of higher membership
Updating outlook for 2023 and setting a
strong foundation for 2024
agilon health, inc. (NYSE: AGL), the trusted partner empowering
physicians to transform health care in our communities, announced
results for the second quarter ended June 30, 2023.
“The durability and predictability of our partnership model
enabled agilon to deliver strong performance during the second
quarter and first half of 2023,” said Steve Sell, chief executive
officer. “Our execution this year establishes a strong foundation
for success in 2024 and beyond, benefiting our physician partners,
their patients, and the communities we serve.”
Second Quarter 2023
Results:
- Total members live on the agilon platform increased to 495,900
as of June 30, 2023, including 408,900 Medicare Advantage members
and 87,000 ACO REACH beneficiaries. Medicare Advantage membership
increased 57%, with 9% growth in same geographies.
- Total revenue of $1.15 billion increased 71% during the second
quarter 2023, compared to $670 million in the second quarter 2022.
Gross Profit of $57 million in the second quarter 2023, compared to
$34 million in the second quarter 2022. Net loss of $17 million in
the second quarter 2023, compared to a net loss of $21 million in
second quarter 2022.
- Medical Margin of $138 million increased 69% during the second
quarter 2023, compared to $82 million in the second quarter 2022.
Medical Margin for the second quarter 2023 included a negative $7
million net impact from prior year claims and revenue, consisting
of $16 million in prior year claims and $9 million in prior year
revenue.
- Adjusted EBITDA of $10 million in the second quarter 2023,
compared to an Adjusted EBITDA loss of $3 million in the second
quarter 2022. Adjusted EBITDA included $19 million in geography
entry costs in the second quarter 2023, compared to $10 million in
the second quarter 2022. ACO REACH contributed $11 million to
Adjusted EBITDA during the second quarter 2023, compared to $6
million in the second quarter 2022.
Key Financial and Operating Metrics:
Three Months
Ended June 30,
Change
2023
2022
% YoY
Medicare Advantage Members
408,900
261,200
57%
ACO REACH Members
87,000
90,500
(4%)
Total Members Live on Platform
495,900
351,700
41%
Avg. Medicare Advantage Members
409,700
265,400
54%
Total revenues ($M)
$1,149
$670
71%
Gross Profit ($M)
$57
$34
69%
Medical Margin ($M)
$138
$82
69%
Net Income ($M)
($17)
($21)
19%
Adjusted EBITDA ($M)
$10
($3)
NM
Geography Entry Costs ($M)
$19
$10
87%
Membership reflects end of period results, unless otherwise
stated. agilon’s partnered ACO REACH entities are not consolidated
within its financial results.
Class of 2024 New Partnership Announcements:
Center for Primary Care (CPC) and agilon health announced the
formation of a long-term partnership on May 31, 2023. CPC is an
independent primary care practice operating 8 locations in the
Central Savannah River Area, which includes communities in Eastern
Georgia and Western South Carolina.
Capital Position and Balance Sheet:
agilon health’s balance sheet as of June 30, 2023 included cash,
cash equivalents and marketable securities of $590 million and
total debt of $41 million. On May 18, 2023, in connection with an
underwritten secondary offering by certain selling shareholders,
agilon health repurchased 9.6 million shares of common stock for
approximately $200 million.
Outlook for Fiscal Year
2023:
Year Ended December 31,
2023
Updated Guidance
Previous Guidance
Low
High
Low
High
Medicare Advantage Members
412,000
415,000
405,000
410,000
ACO REACH Members
85,000
90,000
85,000
90,000
Total Members Live on Platform
497,000
505,000
490,000
500,000
Avg. Medicare Advantage Members
409,000
410,000
405,000
407,000
Total Revenues ($M)
$4,525
$4,540
$4,410
$4,440
Medical Margin ($M)
$500
$530
$535
$560
Adjusted EBITDA ($M)
$0
$23
($3)
$25
Geography Entry Costs ($M)
$75
$68
$78
$65
Outlook for Third Quarter
2023:
Quarter Ended
September 30, 2023
Low
High
Medicare Advantage Members
410,000
413,000
ACO REACH Members
85,000
90,000
Total Members Live on Platform
495,000
503,000
Avg. Medicare Advantage Members
413,000
416,000
Total Revenues ($M)
$1,130
$1,140
Medical Margin ($M)
$110
$125
Adjusted EBITDA ($M)
($8)
$0
Geography Entry Costs ($M)
$22
$20
Adjusted EBITDA contribution from ACO REACH is now expected in a
range of $30 million to $35 million for fiscal year 2023.
Management’s previous outlook for Adjusted EBITDA contribution from
ACO REACH was $5 million to $10 million for fiscal year 2023.
Membership reflects management’s outlook for end of period,
unless otherwise stated. agilon’s partnered ACO REACH entities are
not consolidated within its financial results. Management’s outlook
for Geography Entry Costs represent the corresponding expense
included in the low-end and high-end of management’s outlook for
Adjusted EBITDA.
We have not reconciled guidance for Medical Margin to Gross
Profit or Adjusted EBITDA to net income (loss), the most comparable
GAAP measures, and have not provided forward-looking guidance for
net income (loss) in each case because of the uncertainty around
certain items that may impact Gross Profit or net income (loss),
including non-cash stock-based compensation.
Webcast and Conference Call:
agilon health will host a conference call to discuss second
quarter 2023 results on Thursday, August 3, 2023 at 4:30 PM Eastern
Time. The conference call can be accessed by dialing (833) 470-1428
for U.S. participants and +44 (208) 068-2558 for international
participants and referencing participant code 946264. A
simultaneous webcast can be accessed by visiting the “Events &
Presentations” section of agilon’s Investor Relations website at
https://investors.agilonhealth.com. A replay of the call will be
available via webcast for on-demand listening shortly after the
completion of the call.
About agilon health
agilon health is the trusted partner empowering physicians to
transform health care in our communities. Through our partnerships
and purpose-built platform, agilon is accelerating at scale how
physician groups transition to a value-based Total Care Model for
senior patients. agilon provides the technology, people, capital,
process, and access to a peer network of 2,700+ PCPs that allow
physician groups to maintain their independence and focus on the
total health of their most vulnerable patients. Together, agilon
and its physician partners are creating the healthcare system we
need – one built on the value of care, not the volume of fees. The
result: healthier communities and empowered doctors. agilon is the
trusted partner in 30+ diverse communities and is here to help more
of our nation's leading physician groups and health systems have a
sustained, thriving future. For more information visit
www.agilonhealth.com and connect with us on Twitter, Instagram,
LinkedIn and YouTube.
Forward-Looking Statements
Statements in this release that are not historical factual
statements are “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements include, among other things, statements
regarding our and our officers’ intent, belief or expectation as
identified by the use of words such as “believes,” “expects,”
“may,” “will,” “shall,” “should,” “would,” “could,” “seeks,”
“aims,” “projects,” “is optimistic,” “intends,” “plans,”
“estimates,” “anticipates” or the negative versions of these words
or other comparable terms. Examples of forward-looking statements
include, among other things: statements regarding timing, outcomes
and other details relating to current, pending or contemplated new
markets, growth opportunities, ability to deliver sustainable
long-term value, business environment, long-term opportunities and
strategic growth plans, expected revenue and net income, total and
average membership, Adjusted EBITDA, Medical Margin, geography
entry costs and other financial projections and assumptions.
Forward-looking statements reflect our current expectations and
views about future events and are subject to risks and
uncertainties that could significantly affect our future financial
condition and results of operations. While forward-looking
statements reflect our good faith belief and assumptions we believe
to be reasonable based upon current information, we can give no
assurance that our expectations or forecasts will be attained.
Forward-looking statements are subject to known and unknown risks
and uncertainties, many of which may be outside our control. These
risks and uncertainties that could cause actual results and
outcomes to differ from those reflected in forward-looking
statements include, but are not limited to, those factors discussed
in our filings with the Securities and Exchange Commission (the
“SEC”), including the factors discussed under “Risk Factors” in our
Annual Report on Form 10-K for the fiscal year ended December 31,
2022, which can be found at the SEC’s website at www.sec.gov.
Except as required by law, we do not undertake, and hereby
disclaim, any obligation to update any forward-looking statements,
which speak only as of the date on which they are made.
agilon health, inc.
Consolidated Balance
Sheets
In thousands, except per share
data
June 30, 2023
December 31,
2022
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
190,981
$
497,070
Restricted cash and equivalents
10,204
10,610
Marketable securities
389,046
411,901
Receivables, net
1,417,052
497,574
Prepaid expenses and other current assets,
net
37,560
34,119
Total current assets
2,044,843
1,451,274
Property and equipment, net
24,407
20,050
Intangible assets, net
94,185
67,680
Goodwill
62,140
41,540
Other assets, net
127,346
116,924
Total assets
$
2,352,921
$
1,697,468
LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT)
Current liabilities:
Medical claims and related payables
$
1,099,533
$
346,727
Accounts payable and accrued expenses
257,819
183,364
Current portion of long-term debt
5,000
5,000
Total current liabilities
1,362,352
535,091
Long-term debt, net of current portion
36,017
38,482
Other liabilities
75,106
83,286
Total liabilities
1,473,475
656,859
Commitments and contingencies
Stockholders' equity (deficit):
Common stock, $0.01 par value: 2,000,000
shares authorized; 405,427 and 412,385 shares issued and
outstanding, respectively
4,054
4,124
Additional paid-in capital
1,947,438
2,106,886
Accumulated deficit
(1,064,957
)
(1,064,230
)
Accumulated other comprehensive income
(loss)
(6,369
)
(5,560
)
Total agilon health, inc. stockholders'
equity (deficit)
880,166
1,041,220
Noncontrolling interests
(720
)
(611
)
Total stockholders’ equity (deficit)
879,446
1,040,609
Total liabilities and stockholders’ equity
(deficit)
$
2,352,921
$
1,697,468
agilon health, inc.
Consolidated Statements of
Operations
In thousands, except per share
data
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenues:
Medical services revenue
$
1,147,044
$
669,184
$
2,281,874
$
1,321,607
Other operating revenue
2,008
950
3,325
1,972
Total revenues
1,149,052
670,134
2,285,199
1,323,579
Expenses:
Medical services expense
1,008,734
587,140
1,981,561
1,153,348
Other medical expenses
83,125
49,080
169,149
93,853
General and administrative (including
noncash stock-based compensation expense of $19,572, $6,553,
$33,244 and $10,523, respectively)
81,499
51,924
148,345
91,758
Depreciation and amortization
5,515
3,042
9,704
6,415
Total expenses
1,178,873
691,186
2,308,759
1,345,374
Income (loss) from operations
(29,821
)
(21,052
)
(23,560
)
(21,795
)
Other income (expense):
Other income (expense), net
15,687
6,997
25,159
9,266
Gain (loss) on lease terminations
—
(5,458
)
—
(5,458
)
Interest expense
(1,588
)
(945
)
(3,121
)
(1,816
)
Income (loss) before income
taxes
(15,722
)
(20,458
)
(1,522
)
(19,803
)
Income tax benefit (expense)
(1,073
)
(580
)
686
(509
)
Income (loss) from continuing
operations
(16,795
)
(21,038
)
(836
)
(20,312
)
Discontinued operations:
Income (loss) before income taxes
—
321
—
750
Income tax benefit (expense)
—
(14
)
—
(14
)
Total discontinued operations
—
307
—
736
Net income (loss)
(16,795
)
(20,731
)
(836
)
(19,576
)
Noncontrolling interests’ share in
(earnings) loss
46
82
109
157
Net income (loss) attributable to
common shares
$
(16,749
)
$
(20,649
)
$
(727
)
$
(19,419
)
Net income (loss) per common share,
basic and diluted
Continuing operations
$
(0.04
)
$
(0.05
)
$
—
$
(0.05
)
Discontinued operations
$
—
$
—
$
—
$
—
Weighted average shares
outstanding
Basic
410,338
407,339
411,748
404,666
Diluted
410,338
407,339
411,748
404,666
agilon health, inc.
Consolidated Statements of
Cash Flows
In thousands
(unaudited)
Six Months Ended June
30,
2023
2022
Cash flows from operating
activities:
Net income (loss)
$
(836
)
$
(19,576
)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization
9,704
6,415
Stock-based compensation expense
33,244
10,523
Loss (income) from equity method
investments
(9,848
)
(7,787
)
Other noncash items
(2,322
)
3,497
Changes in operating assets and
liabilities
(111,957
)
(76,568
)
Net cash provided by (used in) operating
activities
(82,015
)
(83,496
)
Cash flows from investing
activities:
Purchase of property and equipment,
net
(7,811
)
(8,504
)
Purchase of intangible assets
(1,837
)
(12,168
)
Investment in loans receivable and
other
(8,468
)
(4,510
)
Investments in marketable securities
(65,568
)
(285,077
)
Proceeds from maturities and sales of
marketable securities and other
97,269
4,279
Net cash paid in business combination
(44,367
)
—
Proceeds from sale of business and
property, net of cash divested
—
500
Net cash provided by (used in) investing
activities
(30,782
)
(305,480
)
Cash flows from financing
activities:
Proceeds from equity issuances, net
8,802
20,315
Common stock repurchase
(200,000
)
—
Repayments of long-term debt
(2,500
)
(2,500
)
Net cash provided by (used in) financing
activities
(193,698
)
17,815
Net increase (decrease) in cash, cash
equivalents and restricted cash and equivalents
(306,495
)
(371,161
)
Cash, cash equivalents and restricted
cash and equivalents, beginning of period
507,680
1,054,820
Cash, cash equivalents and restricted
cash and equivalents, end of period
$
201,185
$
683,659
agilon health, inc.
Key Operating Metrics
In thousands
(unaudited)
GROSS PROFIT
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Total revenues
$
1,149,052
$
670,134
$
2,285,199
$
1,323,579
Medical services expense
(1,008,734
)
(587,140
)
(1,981,561
)
(1,153,348
)
Other medical expenses(1)
(83,125
)
(49,080
)
(169,149
)
(93,853
)
Gross profit
$
57,193
$
33,914
$
134,489
$
76,378
______________
(1)
Represents physician compensation
expense related to surplus sharing and other care management
expenses that help to create medical cost efficiency. Includes
costs in geographies that are in implementation and are not yet
generating revenue and investments to grow existing markets. For
the three months ended June 30, 2023 and 2022, costs incurred in
implementing geographies were $7.7 million and $3.6 million,
respectively. For the six months ended June 30, 2023 and 2022,
costs incurred in implementing geographies were $10.0 million and
$3.7 million, respectively.
GENERAL AND ADMINISTRATIVE COSTS,
INCLUDING PLATFORM SUPPORT COSTS
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Platform support costs
$
46,869
$
36,291
$
94,547
$
70,104
Geography entry costs(1)
11,306
6,618
20,556
10,422
Severance and related costs
—
256
188
1,958
Stock-based compensation expense
19,572
6,553
33,244
10,523
Other(2)
3,752
2,206
(190
)
(1,249
)
General and administrative
$
81,499
$
51,924
$
148,345
$
91,758
______________
(1)
Represents direct geography entry
costs, including investments to develop and expand our platform and
costs in geographies that are in implementation and are not yet
generating revenue and investments to grow existing markets.
(2)
Includes non-cash accruals for
unasserted claims and contingent liabilities.
Our platform support costs, which include regionally-based
support personnel and other operating costs to support our
geographies, are expected to decrease over time as a percentage of
revenue as our physician partners add members and our revenue
grows. Our operating expenses at the enterprise level include
resources and technology to support payor contracting, clinical
program development, quality, data management, finance and legal
functions.
agilon health, inc.
Non-GAAP Financial
Measures
In thousands
(unaudited)
MEDICAL MARGIN
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Gross profit(1)
$
57,193
$
33,914
$
134,489
$
76,378
Other operating revenue
(2,008
)
(950
)
(3,325
)
(1,972
)
Other medical expenses
83,125
49,080
169,149
93,853
Medical margin
$
138,310
$
82,044
$
300,313
$
168,259
______________
(1)
Gross profit is defined as total
revenues less medical services expense and other medical
expenses
ADJUSTED EBITDA
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net income (loss)(1)
$
(16,795
)
$
(20,731
)
$
(836
)
$
(19,576
)
(Income) loss from discontinued
operations, net of income taxes
—
(307
)
—
(736
)
Interest expense
1,588
945
3,121
1,816
Income tax expense (benefit)
1,073
580
(686
)
509
Depreciation and amortization
5,515
3,042
9,704
6,415
(Gain) loss on lease terminations
—
5,458
—
5,458
Severance and related costs(2)
—
256
188
1,958
Stock-based compensation expense
19,572
6,553
33,244
10,523
EBITDA adjustments related to equity
method investments
2,757
492
4,724
1,663
Other(3)
(3,451
)
1,033
(15,340
)
(2,664
)
Adjusted EBITDA
$
10,259
$
(2,679
)
$
34,119
$
5,366
______________
(1)
Includes direct geography entry
costs, including investments to develop and expand our platform and
costs in geographies that are in implementation and are not yet
generating revenue and investments to grow existing markets. For
the three months ended June 30, 2023 and 2022, (i) $7.7 million and
$3.6 million, respectively, are included in other medical expenses
and (ii) $11.3 million and $6.6 million, respectively, are included
in general and administrative expenses. For the six months ended
June 30, 2023 and 2022, (i) $10.0 million and $3.7 million,
respectively, are included in other medical expenses and (ii) $20.6
million and $10.4 million, respectively, are included in general
and administrative expenses.
(2)
For the three and six months
ended June 30, 2022, includes taxes and related costs on stock
option exercises for departed executives of $0.2 million and $1.4
million.
(3)
Includes interest income,
non-cash accruals for unasserted claims and contingent liabilities,
and transaction-related costs.
In addition to providing results that are determined in
accordance with GAAP, we present medical margin and Adjusted
EBITDA, which are non-GAAP financial measures.
We define medical margin as medical services revenue after
medical services expense is deducted. Medical services expense
represents costs incurred for medical services provided to our
members. As our platform matures over time, we expect medical
margin to increase in absolute dollars. However, medical margin per
member per month (PMPM) may vary as the percentage of new members
brought onto our platform fluctuates. New membership added to the
platform is typically dilutive to medical margin PMPM. We believe
this metric provides insight into the economics of our capitation
arrangements as it includes all medical services expense directly
associated with our members’ care.
We define Adjusted EBITDA as net income (loss) adjusted to
exclude: (i) income (loss) from discontinued operations, net of
income taxes, (ii) interest expense, (iii) income tax expense
(benefit), (iv) depreciation and amortization, (v) stock-based
compensation expense, (vi) severance and related costs, and (vii)
certain other items that are not considered by us in the evaluation
of ongoing operating performance. We reflect our share of Adjusted
EBITDA for equity method investments by applying our actual
ownership percentage for the period to the applicable reconciling
items on an entity-by-entity basis.
Gross profit is the most directly comparable GAAP measure to
medical margin. Net income (loss) is the most directly comparable
GAAP measure to Adjusted EBITDA.
We believe medical margin and Adjusted EBITDA help identify
underlying trends in our business and facilitate evaluation of
period-to-period operating performance of our operations by
eliminating items that are variable in nature and not considered by
us in the evaluation of ongoing operating performance, allowing
comparison of our recurring core business operating results over
multiple periods. We also believe medical margin and Adjusted
EBITDA provide useful information about our operating results,
enhance the overall understanding of our past performance and
future prospects, and allow for greater transparency with respect
to key metrics we use for financial and operational
decision-making. We believe medical margin and Adjusted EBITDA or
similarly titled non-GAAP measures are widely used by investors,
securities analysts, ratings agencies, and other parties in
evaluating companies in our industry as a measure of financial
performance. Other companies may calculate medical margin and
Adjusted EBITDA or similarly titled non-GAAP measures differently
from the way we calculate these metrics. As a result, our
presentation of medical margin and Adjusted EBITDA may not be
comparable to similarly titled measures of other companies,
limiting their usefulness as comparative measures.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803965723/en/
Investor Contact Matthew Gillmor VP, Investor Relations
investors@agilonhealth.com
Media Contact Claire Mulhearn Chief Communications &
Public Affairs Officer media@agilonhealth.com
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