AGL Agilon Health inc

Revenue increased 75% to $1.22 billion, Medicare Advantage membership increased 58% to 420,300, and total members live on the agilon platform grew to 508,000

Strong performance across core partner markets supported by membership growth and profitability gains in Medicare Advantage and ACO REACH

Sale of MDX Hawaii enables agilon to focus on its core partner markets

agilon health, inc. (NYSE: AGL), the trusted partner empowering physicians to transform health care in our communities, announced results for the third quarter ended September 30, 2023.

“Momentum across our business remains strong, driven by the power of agilon’s physician network and platform to improve patient outcomes across the Medicare Advantage and ACO REACH populations,” said Steve Sell, chief executive officer. “Our decision to sell MDX Hawaii and focus on our core partner markets, which leverage a common operating model, will better position agilon, our partner groups, and their patients for continued success in 2024 and beyond.”

Third Quarter 2023 Results:

• Total members live on the agilon platform increased to 508,000 as of September 30, 2023, including 420,300 Medicare Advantage members and 87,700 ACO REACH beneficiaries. Medicare Advantage membership increased 58%, with 9% growth across same geographies.
• Total revenue of $1.22 billion increased 75% during the third quarter 2023, compared to $695 million in the third quarter 2022. Gross profit of $30 million in the third quarter 2023, compared to $26 million in the third quarter 2022. Net loss of $31 million in the third quarter 2023, compared to a net loss of $31 million in third quarter 2022.
• Medical margin of $108 million increased 42% during the third quarter 2023, compared to $76 million in the third quarter 2022. Medical margin for the third quarter 2023 included a negative $8 million net impact from prior year claims and revenue, consisting of $9 million in prior year claims and $1 million in prior year revenue.
• Adjusted EBITDA loss of $6 million in the third quarter 2023, compared to an Adjusted EBITDA loss of $26 million in the third quarter 2022. Adjusted EBITDA included $18 million in geography entry costs in the third quarter 2023, compared to $21 million in the third quarter 2022. ACO REACH contributed $18 million to Adjusted EBITDA during the third quarter 2023, compared to a $3 million loss in the third quarter 2022.
• Due to the sale of MDX Hawaii, which closed on October 31, 2023, agilon is providing Adjusted (Non-GAAP) results for the company’s core partner markets, which exclude MDX Hawaii. Adjusted (Non-GAAP) results for agilon’s core partner markets for the third quarter 2023 included: Medicare Advantage membership of 384,100, total revenues of $1,137 million, gross profit of $37 million, medical margin of $111 million, net loss of $22 million, and Adjusted EBITDA of $6 million. See accompanying schedules with reconciliations to the most comparable GAAP measure.

Reported – Key Financial and Operating Metrics ($M):

(Third Quarter 2023 vs. 2022)

 

Three Months Ended September 30,

 

 

Change

 

20233

 

20224

 

% YoY

Medicare Advantage Members1

420,300

 

266,600

 

58%

ACO REACH Members1, 2

87,700

 

89,400

 

(2%)

Total Members Live on Platform1, 2

508,000

 

356,000

 

43%

Avg. Medicare Advantage Members

425,100

 

270,100

 

57%

Total revenues

$1,216

 

$695

 

75%

Gross Profit

$30

 

$26

 

18%

Medical Margin

$108

 

$76

 

42%

Net Loss

($31)

 

($31)

 

NM

Adjusted EBITDA

($6)

 

($26)

 

NM

Geography Entry Costs

$18

 

$21

 

(14%)

1. Membership metrics reflect end of period results.
2. agilon’s ACO REACH entities are not included within its consolidated financial results.
3. Third quarter 2023 results include the following attributed to MDX Hawaii: MA membership of 36,200, avg. MA members of 36,200, revenues of $79 million, gross profit of negative $6 million, medical margin of negative $3 million, net loss of $9 million, and Adjusted EBITDA of negative $11 million.
4. Third quarter 2022 results include the following attributed to MDX Hawaii: MA membership of 38,700, avg. MA members of 38,700, revenues of $81 million, gross profit of negative $4 million, and medical margin of $0 million.

 

Adjusted to Exclude MDX Hawaii (Non-GAAP) - Key Financial and Operating Metrics ($M)1:

(Third Quarter 2023 vs. 2022)

 

Three Months Ended September 30,

 

 

Change

 

2023

 

2022

 

% YoY

Medicare Advantage Members2

384,100

 

227,900

 

69%

ACO REACH Members2, 3

87,700

 

89,400

 

(2%)

Total Members Live on Platform2, 3

471,800

 

317,300

 

49%

Avg. Medicare Advantage Members

388,900

 

231,400

 

68%

Total revenues

$1,137

 

$614

 

85%

Gross Profit

$37

 

$30

 

23%

Medical Margin

$111

 

$76

 

46%

1. The Adjusted (non-GAAP) financial and operating metrics exclude MDX Hawaii in both periods presented as a result of the company’s disposition, which closed on October 31, 2023; these financial metrics are non-GAAP, see accompanying schedules with reconciliations to the most comparable GAAP measure.
2. Membership metrics reflect end of period results.
3. agilon’s ACO REACH entities are not included within its consolidated financial results.

 

Reported - Key Financial and Operating Metrics ($M):

(YTD 2023 vs. 2022)

 

Nine Months Ended September 30,

 

 

Change

 

20233

 

20224

 

% YoY

Medicare Advantage Members1

420,300

 

266,600

 

58%

ACO REACH Members1, 2

87,700

 

89,400

 

(2%)

Total Members Live on Platform1, 2

508,000

 

356,000

 

43%

Avg. Medicare Advantage Members

411,500

 

261,200

 

58%

Total revenues

$3,501

 

$2,018

 

73%

Gross Profit

$165

 

$102

 

61%

Medical Margin

$408

 

$244

 

67%

Net Loss

($32)

 

($50)

 

NM

Adjusted EBITDA

$28

 

($20)

 

NM

Geography Entry Costs

$49

 

$35

 

40%

1. Membership metrics reflect end of period results.
2. agilon’s ACO REACH entities are not included within its consolidated financial results.
3. Year to date 2023 results include the following attributed to MDX Hawaii: MA membership of 36,200, average MA members of 36,200, revenues of $241 million, gross profit of $0, medical margin of $8 million, net loss of $4 million, and Adjusted EBITDA of negative $14 million.
4. Year to date 2022 results include the following attributed to MDX Hawaii: MA membership of 38,700, average MA members of 38,800, revenues of $245 million, gross profit of $7 million, and medical margin of $16 million.

 

Adjusted to Exclude MDX Hawaii (Non-GAAP) - Key Financial and Operating Metrics ($M)1:

(YTD 2023 vs. 2022)

 

Nine Months Ended September 30,

 

 

Change

 

2023

 

2022

 

% YoY

Medicare Advantage Members2

384,100

 

227,900

 

69%

ACO REACH Members2, 3

87,700

 

89,400

 

(2%)

Total Members Live on Platform2, 3

471,800

 

317,300

 

49%

Avg. Medicare Advantage Members

375,300

 

222,400

 

69%

Total revenues

$3,260

 

$1,774

 

84%

Gross Profit

$165

 

$95

 

72%

Medical Margin

$401

 

$228

 

75%

1. The Adjusted (non-GAAP) financial and operating metrics exclude MDX Hawaii in both periods presented as a result of the company’s disposition, which closed on October 31, 2023; these financial metrics are non-GAAP, see accompanying schedules with reconciliations to the most comparable GAAP measure.
2. Membership metrics reflect end of period results.
3. agilon’s ACO REACH entities are not included within its consolidated financial results.

Sale of MDX Hawaii:

On October 27, 2023, agilon health entered into a definitive agreement to sell MDX Hawaii and its related operations. Acquired by agilon in 2016, MDX Hawaii is a provider network supporting approximately 600 physicians with fully-delegated risk contracts and management services organization capabilities, including claims processing and utilization management. MDX Hawaii’s physician network provides care to approximately 36,000 members covered by two Medicare Advantage health plans on the islands of Oahu, Maui, and Kauai.

Management believes the sale of MDX Hawaii will allow agilon to focus on the company’s core partner markets in the continental United States. In these markets, agilon leverages a common operating structure centered around long-term, joint venture partnerships with physician groups and health systems, and non-delegated, full-risk contracts across multiple health plans.

The sale of MDX Hawaii and its related operations closed on October 31, 2023. Financial terms are not being disclosed.

ACO REACH Performance in 2022:

On October 23, 2023, agilon health announced that its ACO REACH (ACOs) entities achieved $107 million in gross savings (9.7% gross savings rate), including $24 million savings to the Medicare Trust Fund, during the 2022 performance year. agilon’s ACOs achieved a quality score of 99.8%, with 7 of 8 ACOs achieving a 100% quality score during the 2022 performance year. agilon ACOs performed better than mean performance across all four quality measures including: All Condition Readmissions, Unplanned Admissions for Patients with Multiple Chronic Conditions, Timely Follow Up, and the CAHPS Survey.

Capital Position and Balance Sheet:

agilon health’s balance sheet as of September 30, 2023 included cash, cash equivalents and marketable securities of $574 million and total debt of $40 million.

Outlook for Fiscal Year 2023 ($M):

 

Year Ended December 31, 2023

Updated Guidance1

 

Previous Guidance

Low

 

High

 

Low

 

High

Medicare Advantage (MA) Members2

384,000

 

386,000

 

412,000

 

415,000

ACO REACH Members2, 3

85,000

 

90,000

 

85,000

 

90,000

Total Members Live on Platform2

469,000

 

476,000

 

497,000

 

505,000

Avg. Medicare Advantage (MA) Members

377,000

 

378,000

 

409,000

 

410,000

Total Revenues

$4,310

 

$4,320

 

$4,525

 

$4,540

Medical Margin

$455

 

$470

 

$500

 

$530

Adjusted EBITDA4

$6

 

$18

 

$0

 

$23

Geography Entry Costs5

$69

 

$67

 

$75

 

$68

1. Updated guidance for the fiscal year 2023 excludes MDX Hawaii.
2. Membership reflects management’s outlook for end of period.
3. agilon’s partnered ACO REACH entities are not consolidated within its financial results.
4. Adjusted EBITDA contribution from ACO REACH is now expected to be approximately $39 million for fiscal year 2023. Management’s previous outlook for Adjusted EBITDA contribution from ACO REACH was $30 million to $35 million for fiscal year 2023.
5. Geography Entry Costs represent the corresponding expense included in the low-end and high-end of management’s outlook for Adjusted EBITDA.

 

Outlook for Fourth Quarter 2023 ($M)1:

 

Quarter Ended December 31, 2023

Low

 

High

Medicare Advantage (MA) Members2

384,000

 

386,000

ACO REACH Members2,3

85,000

 

90,000

Total Members Live on Platform2

469,000

 

476,000

Avg. Medicare Advantage (MA) Members

383,000

 

385,000

Total Revenues

$1,050

 

$1,060

Medical Margin

$55

 

$70

Adjusted EBITDA4

($36)

 

($24)

Geography Entry Costs5

$20

 

$18

1. Guidance for the fourth quarter 2023 excludes MDX Hawaii.
2. Membership reflects management’s outlook for end of period.
3. agilon’s partnered ACO REACH entities are not consolidated within its financial results.
4. Adjusted EBITDA contribution from ACO REACH is expected to be approximately $6 million for the fourth quarter 2023.
5. 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 third quarter 2023 results on Thursday, November 2, 2023 at 4:30 PM Eastern Time. The conference call can be accessed by dialing (833) 470-1428 for U.S. participants and +1 (929) 526-1599 for international participants and referencing participant code 269354. 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 X (formerly known as 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, net income and gross profit, total and average membership, Adjusted EBITDA, Medical Margin, geography entry costs and other financial projections and assumptions and the realization of expected benefits of the sale of our Hawaii operations. 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

 

 

September 30, 2023

 

December 31, 2022

 

(unaudited)

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

168,339

 

 

$

497,070

 

Restricted cash and equivalents

 

10,204

 

 

 

10,610

 

Marketable securities

 

395,878

 

 

 

411,901

 

Receivables, net

 

1,345,711

 

 

 

497,574

 

Prepaid expenses and other current assets

 

36,512

 

 

 

34,119

 

Total current assets

 

1,956,644

 

 

 

1,451,274

 

Property and equipment, net

 

26,203

 

 

 

20,050

 

Intangible assets, net

 

92,657

 

 

 

67,680

 

Goodwill

 

62,387

 

 

 

41,540

 

Other assets, net

 

140,184

 

 

 

116,924

 

Total assets

$

2,278,075

 

 

$

1,697,468

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

Current liabilities:

 

 

 

Medical claims and related payables

$

1,005,762

 

 

$

346,727

 

Accounts payable and accrued expenses

 

290,563

 

 

 

183,364

 

Current portion of long-term debt

 

5,000

 

 

 

5,000

 

Total current liabilities

 

1,301,325

 

 

 

535,091

 

Long-term debt, net of current portion

 

34,780

 

 

 

38,482

 

Other liabilities

 

70,370

 

 

 

83,286

 

Total liabilities

 

1,406,475

 

 

 

656,859

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders' equity (deficit):

 

 

 

Common stock, $0.01 par value: 2,000,000 shares authorized; 405,980 and 412,385 shares issued and outstanding, respectively

 

4,060

 

 

 

4,124

 

Additional paid-in capital

 

1,970,930

 

 

 

2,106,886

 

Accumulated deficit

 

(1,096,393

)

 

 

(1,064,230

)

Accumulated other comprehensive income (loss)

 

(6,230

)

 

 

(5,560

)

Total agilon health, inc. stockholders' equity (deficit)

 

872,367

 

 

 

1,041,220

 

Noncontrolling interests

 

(767

)

 

 

(611

)

Total stockholders’ equity (deficit)

 

871,600

 

 

 

1,040,609

 

Total liabilities and stockholders’ equity (deficit)

$

2,278,075

 

 

$

1,697,468

 

 

agilon health, inc.

Consolidated Statements of Operations

In thousands, except per share data

(unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Medical services revenue

$

1,212,132

 

 

$

693,934

 

 

$

3,494,006

 

 

$

2,015,541

 

Other operating revenue

 

3,528

 

 

 

924

 

 

 

6,853

 

 

 

2,896

 

Total revenues

 

1,215,660

 

 

 

694,858

 

 

 

3,500,859

 

 

 

2,018,437

 

Expenses:

 

 

 

 

 

 

 

Medical services expense

 

1,104,396

 

 

 

618,287

 

 

 

3,085,957

 

 

 

1,771,635

 

Other medical expenses

 

80,787

 

 

 

50,659

 

 

 

249,936

 

 

 

144,512

 

General and administrative (including noncash stock-based compensation expense of $20,736, $7,907, $53,980 and $18,430, respectively)

 

74,138

 

 

 

51,980

 

 

 

222,483

 

 

 

143,738

 

Depreciation and amortization

 

5,310

 

 

 

3,450

 

 

 

15,014

 

 

 

9,865

 

Total expenses

 

1,264,631

 

 

 

724,376

 

 

 

3,573,390

 

 

 

2,069,750

 

Income (loss) from operations

 

(48,971

)

 

 

(29,518

)

 

 

(72,531

)

 

 

(51,313

)

Other income (expense):

 

 

 

 

 

 

 

Income (loss) from equity method investments

 

14,659

 

 

 

(4,314

)

 

 

24,507

 

 

 

3,473

 

Other income (expense), net

 

5,690

 

 

 

4,888

 

 

 

21,001

 

 

 

6,367

 

Gain (loss) on lease terminations

 

—

 

 

 

—

 

 

 

—

 

 

 

(5,458

)

Interest expense

 

(1,651

)

 

 

(1,000

)

 

 

(4,772

)

 

 

(2,816

)

Income (loss) before income taxes

 

(30,273

)

 

 

(29,944

)

 

 

(31,795

)

 

 

(49,747

)

Income tax benefit (expense)

 

(1,210

)

 

 

(559

)

 

 

(524

)

 

 

(1,068

)

Income (loss) from continuing operations

 

(31,483

)

 

 

(30,503

)

 

 

(32,319

)

 

 

(50,815

)

Discontinued operations:

 

 

 

 

 

 

 

Income (loss) before income taxes

 

—

 

 

 

(224

)

 

 

—

 

 

 

526

 

Income tax benefit (expense)

 

—

 

 

 

(12

)

 

 

—

 

 

 

(26

)

Total discontinued operations

 

—

 

 

 

(236

)

 

 

—

 

 

 

500

 

Net income (loss)

 

(31,483

)

 

 

(30,739

)

 

 

(32,319

)

 

 

(50,315

)

Noncontrolling interests’ share in (earnings) loss

 

47

 

 

 

71

 

 

 

156

 

 

 

228

 

Net income (loss) attributable to common shares

$

(31,436

)

 

$

(30,668

)

 

$

(32,163

)

 

$

(50,087

)

 

 

 

 

 

 

 

 

Net income (loss) per common share, basic and diluted

 

 

 

 

 

 

 

Continuing operations

$

(0.08

)

 

$

(0.07

)

 

$

(0.08

)

 

$

(0.12

)

Discontinued operations

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Weighted average shares outstanding

 

 

 

 

 

 

 

Basic

 

405,787

 

 

 

411,065

 

 

 

412,077

 

 

 

406,823

 

Diluted

 

405,787

 

 

 

411,065

 

 

 

412,077

 

 

 

406,823

 

 

agilon health, inc.

Consolidated Statements of Cash Flows

In thousands

(unaudited)

 

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

Cash flows from operating activities:

 

 

 

Net income (loss)

$

(32,319

)

 

$

(50,315

)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

 

Depreciation and amortization

 

15,014

 

 

 

9,865

 

Stock-based compensation expense

 

53,980

 

 

 

18,430

 

Loss (income) from equity method investments

 

(24,507

)

 

 

(3,473

)

Other noncash items

 

(1,511

)

 

 

4,261

 

Changes in operating assets and liabilities

 

(105,690

)

 

 

(59,617

)

Net cash provided by (used in) operating activities

 

(95,033

)

 

 

(80,849

)

Cash flows from investing activities:

 

 

 

Purchase of property and equipment, net

 

(11,898

)

 

 

(11,937

)

Purchase of intangible assets

 

(3,535

)

 

 

(12,415

)

Investment in loans receivable and other

 

(8,778

)

 

 

(4,510

)

Investments in marketable securities

 

(107,020

)

 

 

(423,183

)

Proceeds from maturities and sales of marketable securities and other

 

133,894

 

 

 

15,127

 

Net cash paid in business combination

 

(44,479

)

 

 

—

 

Proceeds from sale of business and property, net of cash divested

 

—

 

 

 

500

 

Net cash provided by (used in) investing activities

 

(41,816

)

 

 

(436,418

)

Cash flows from financing activities:

 

 

 

Proceeds from equity issuances, net

 

11,462

 

 

 

30,676

 

Common stock repurchase

 

(200,000

)

 

 

—

 

Repayments of long-term debt

 

(3,750

)

 

 

(3,750

)

Net cash provided by (used in) financing activities

 

(192,288

)

 

 

26,926

 

Net increase (decrease) in cash, cash equivalents and restricted cash and equivalents

 

(329,137

)

 

 

(490,341

)

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

$

178,543

 

 

$

564,479

 

 

agilon health, inc.

Key Operating Metrics

In thousands

(unaudited)

 

GROSS PROFIT

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Total revenues

$

1,215,660

 

 

$

694,858

 

 

$

3,500,859

 

 

$

2,018,437

 

Medical services expense

 

(1,104,396

)

 

 

(618,287

)

 

 

(3,085,957

)

 

 

(1,771,635

)

Other medical expenses(1)

 

(80,787

)

 

 

(50,659

)

 

 

(249,936

)

 

 

(144,512

)

Gross profit

$

30,477

 

 

$

25,912

 

 

$

164,966

 

 

$

102,290

 

_______________

(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 September 30, 2023 and 2022, costs incurred in implementing geographies were $10.3 million and $7.2 million, respectively. For the nine months ended September 30, 2023 and 2022, costs incurred in implementing geographies were $20.3 million and $10.9 million, respectively.

 

GENERAL AND ADMINISTRATIVE COSTS, INCLUDING PLATFORM SUPPORT COSTS

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Platform support costs

$

46,629

 

 

$

34,764

 

 

$

141,176

 

 

$

104,868

 

Geography entry costs(1)

 

8,064

 

 

 

14,034

 

 

 

28,620

 

 

 

24,456

 

Severance and related costs

 

—

 

 

 

512

 

 

 

188

 

 

 

2,470

 

Stock-based compensation expense

 

20,736

 

 

 

7,907

 

 

 

53,980

 

 

 

18,430

 

Other(2)

 

(1,291

)

 

 

(5,237

)

 

 

(1,481

)

 

 

(6,486

)

General and administrative

$

74,138

 

 

$

51,980

 

 

$

222,483

 

 

$

143,738

 

_______________

(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 interest income, non-cash accruals for unasserted claims and contingent liabilities, and transaction-related costs.

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 September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Gross profit(1)

$

30,477

 

 

$

25,912

 

 

$

164,966

 

 

$

102,290

 

Other operating revenue

 

(3,528

)

 

 

(924

)

 

 

(6,853

)

 

 

(2,896

)

Other medical expenses

 

80,787

 

 

 

50,659

 

 

 

249,936

 

 

 

144,512

 

Medical margin

$

107,736

 

 

$

75,647

 

 

$

408,049

 

 

$

243,906

 

_______________ (1)

Gross profit is defined as total revenues less medical services expense and other medical expenses.

 

ADJUSTED EBITDA

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net income (loss)(1)

$

(31,483

)

 

$

(30,739

)

 

$

(32,319

)

 

$

(50,315

)

(Income) loss from discontinued operations, net of income taxes

 

—

 

 

 

236

 

 

 

—

 

 

 

(500

)

Interest expense

 

1,651

 

 

 

1,000

 

 

 

4,772

 

 

 

2,816

 

Income tax expense (benefit)

 

1,210

 

 

 

559

 

 

 

524

 

 

 

1,068

 

Depreciation and amortization

 

5,310

 

 

 

3,450

 

 

 

15,014

 

 

 

9,865

 

(Gain) loss on lease terminations

 

—

 

 

 

—

 

 

 

—

 

 

 

5,458

 

Severance and related costs(2)

 

—

 

 

 

512

 

 

 

188

 

 

 

2,470

 

Stock-based compensation expense

 

20,736

 

 

 

7,907

 

 

 

53,980

 

 

 

18,430

 

EBITDA adjustments related to equity method investments

 

3,702

 

 

 

1,325

 

 

 

8,426

 

 

 

2,988

 

Other(3)

 

(6,903

)

 

 

(10,089

)

 

 

(22,243

)

 

 

(12,753

)

Adjusted EBITDA(3)

$

(5,777

)

 

$

(25,839

)

 

$

28,342

 

 

$

(20,473

)

_______________

(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 September 30, 2023 and 2022, (i) $10.3 million and $7.2 million, respectively, are included in other medical expenses and (ii) $8.0 million and $14.1 million, respectively, are included in general and administrative expenses. For the nine months ended September 30, 2023 and 2022, (i) $20.3 million and $10.9 million, respectively, are included in other medical expenses and (ii) $28.6 million and $24.5 million, respectively, are included in general and administrative expenses.

(2)

For the three and nine months ended September 30, 2022, includes taxes and related costs on stock option exercises for departed executives of $0.6 million and $2.0 million.

(3)

Includes interest income, non-cash accruals for unasserted claims and contingent liabilities, and transaction-related costs.

 

agilon health, inc.

Non-GAAP Financial Measures

In thousands

(unaudited)

Key Financial and Operating Metrics, Excluding MDX Hawaii (Non-GAAP)

 

On October 31, 2023, we completed the disposition of our MDX Hawaii operations. For comparative purposes, total revenues, gross profit, medical margin, net income, and Adjusted EBITDA are presented to exclude the pre-disposition results of operations from our MDX Hawaii operations. The results of the MDX Hawaii operations presented have been calculated on the same basis as our consolidated results.

 

Total Revenues

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

Total revenues

$

1,215,660

 

$

694,858

 

$

3,500,859

 

$

2,018,437

Less: MDX Hawaii total revenues

 

78,797

 

 

80,606

 

 

240,569

 

 

244,900

Total revenues, excluding MDX Hawaii (non-GAAP)

$

1,136,863

 

$

614,252

 

$

3,260,290

 

$

1,773,537

Gross Profit

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

Gross profit

$

30,477

 

 

$

25,912

 

 

$

164,966

 

$

102,290

Less: MDX Hawaii gross profit(1)

 

(6,362

)

 

 

(4,015

)

 

 

428

 

 

6,821

Gross profit, excluding MDX Hawaii (non-GAAP)

$

36,839

 

 

$

29,927

 

 

$

164,538

 

$

95,469

_______________

(1)

For the three months ended September 30, 2023 and 2022, includes other medical expenses of $3.6 million and $4.2 million, respectively. For the nine months ended September 30, 2023 and 2022, includes other medical expenses of $7.5 million and $9.2 million, respectively.

 

agilon health, inc.

Non-GAAP Financial Measures

In thousands

(unaudited)

 

Key Financial and Operating Metrics, Excluding MDX Hawaii (Non-GAAP)

 

Medical Margin

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

Medical margin

$

107,736

 

 

$

75,647

 

$

408,049

 

$

243,906

Less: MDX Hawaii medical margin

 

(2,850

)

 

 

20

 

 

7,505

 

 

15,627

Medical margin, excluding MDX Hawaii (non-GAAP)

$

110,586

 

 

$

75,627

 

$

400,544

 

$

228,279

 

Net income (loss)

 

Three Months Ended September 30, 2023

 

Nine Months Ended September 30, 2023

Net income (loss)

$

(31,483

)

 

$

(32,319

)

Less: MDX Hawaii net income (loss)

 

(9,444

)

 

 

(4,205

)

Net income (loss), excluding MDX Hawaii (non-GAAP)

$

(22,039

)

 

$

(28,114

)

 

Adjusted EBITDA

 

Three Months Ended September 30, 2023

 

Nine Months Ended September 30, 2023

Adjusted EBITDA

$

(5,777

)

 

$

28,342

 

Less: MDX Hawaii adjusted EBITDA(1)

 

(11,330

)

 

 

(13,718

)

Adjusted EBITDA, excluding MDX Hawaii (non-GAAP)

$

5,553

 

 

$

42,060

 

_______________

(1)

For the three months ended September 30, 2023, MDX Hawaii operations include ($3.3) million of interest income and non-cash accruals for unasserted claims, $1.2 million of depreciation and amortization, and $0.1 million of stock-based compensation. For the nine months ended September 30, 2023, MDX Hawaii operations include ($13.6) million of interest income and non-cash accruals for unasserted claims, $3.7 million of depreciation and amortization, and $0.4 million of stock-based compensation.

 

agilon health, inc.

Supplemental Financial Information

In thousands

(unaudited)

 

 

Three Months Ended September 30, 2023

 

Nine Months Ended September 30, 2023

 

Medicare Advantage (Consolidated)

 

ACO REACH (Unconsolidated)

 

Medicare Advantage (Consolidated)

 

ACO REACH (Unconsolidated)

Medical services revenue

$

1,212,132

 

 

$

296,937

 

 

$

3,494,006

 

 

$

858,286

 

Other operating revenue

 

3,528

 

 

 

—

 

 

 

6,853

 

 

 

—

 

Total revenues

 

1,215,660

 

 

 

296,937

 

 

 

3,500,859

 

 

 

858,286

 

Medical services expense

 

(1,104,396

)

 

 

(242,431

)

 

 

(3,085,957

)

 

 

(741,752

)

Other medical expenses

 

(80,787

)

 

 

(31,970

)

 

 

(249,936

)

 

 

(71,138

)

Gross profit

 

30,477

 

 

 

22,536

 

 

 

164,966

 

 

 

45,396

 

Other operating revenue

 

(3,528

)

 

 

—

 

 

 

(6,853

)

 

 

—

 

Other medical expenses

 

80,787

 

 

 

31,970

 

 

 

249,936

 

 

 

71,138

 

Medical margin

$

107,736

 

 

$

54,506

 

 

$

408,049

 

 

$

116,534

 

Certain of our operations are not consolidated for the period presented because we do not have the ability to control certain activities due to another party’s control of the entities’ board of directors. Although revenues of the unconsolidated operations are not recorded as revenues by us, income (loss) from equity method investments is nonetheless a significant portion of our overall earnings. See Note 14 to the Condensed Consolidated Financial Statements in the Quarterly Report on Form 10-Q for the period ending September 30, 2023 for additional discussion on our equity method investments.

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. Additionally, we present the Adjusted (non-GAAP) key financial and operating metrics to exclude the impact of the disposition of our MDX Hawaii operations, which closed on October 31, 2023.

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, including Adjusted (non-GAAP) key financial and operating metrics, 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/20231102974205/en/

Investor Contact Matthew Gillmor VP, Investor Relations investors@agilonhealth.com

Media Contact Claire Mulhearn Chief Communications & Public Affairs Officer media@agilonhealth.com