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agilon health, inc. (AGL)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $1.53B, down 4% YoY, with medical margin of $128M and Adjusted EBITDA of $21M; net income was $12M driven by a $14M gain from discontinued operations .
  • Revenue beat Wall Street consensus by ~$28M; S&P Global primary EPS missed (estimated +$0.011 vs actual -$0.008 on their “primary EPS” basis). Management reaffirmed FY 2025 guidance and raised the low end of full-year revenue guidance to $5.85B from $5.825B, citing retroactive membership revenue recognized in Q1 *.
  • Strategic actions continued: reduced Part D exposure to <30% of membership, measured growth (smaller 2025 class under glidepath), and flat YoY G&A, while advancing technology (financial data pipeline, AI-enabled clinical documentation) and clinical programs (palliative care, heart failure) .
  • Near-term headwinds include elevated utilization (inpatient, Part B drugs) and negative prior period development of $22M (including $7M from exited markets), but management expects improved visibility and contracting to mitigate pressures; CMS’s stronger 2026 final rate notice is a medium-term tailwind .

What Went Well and What Went Wrong

What Went Well

  • Reaffirmed FY 2025 guidance with a higher revenue floor ($5.85B–$6.03B); CFO noted increasing the bottom end due to retroactive membership and revenue recognized in Q1 .
  • Operational discipline: reduced Part D exposure to <30%, maintained flat YoY G&A, and advanced clinical programs (palliative, heart failure) and technology (data pipeline, AI), improving forecasting and quality outcomes .
  • Management quote: “We are pleased with our first quarter results… and we remain on track to deliver in line with our full year 2025 guidance” — CEO Steven Sell .

What Went Wrong

  • Elevated utilization and negative prior period development pressured medical margin; Q1 included $22M negative prior period development (incl. $7M from exited markets), with inpatient and Part B drug costs as key drivers .
  • Adjusted EBITDA fell YoY ($21M vs $29M) given cost trends; medical margin declined to $128M from $157M YoY .
  • Membership contracted due to market exits: MA members were 491k (down 6% YoY), total platform members 605k (down 7% YoY) as of March 31, 2025 .

Financial Results

Core P&L and Margin (YoY and Sequential)

MetricQ1 2024Q4 2024Q1 2025
Total Revenues ($USD)$1,604,354 $1,522,486 $1,532,782
Gross Profit ($USD)$75,088 $(38,255) $50,722
Medical Margin ($USD)$157,353 $566 $128,012
Net Income (Loss) ($USD)$(6,034) $(105,790) $12,112
Adjusted EBITDA ($USD)$29,054 $(83,970) $20,567

KPIs and Membership

KPIQ1 2024Q1 2025
Medicare Advantage Members (end of period)523,000 491,000
ACO Model Members (end of period)131,000 114,000
Total Members Live on Platform654,000 605,000
Avg. Medicare Advantage Members518,000 490,000
Geography Entry Costs ($USD)$11,000,000 $6,562,000
Cash, Cash Equivalents & Marketable Securities ($USD)$406,000,000 (FY24 YE) $369,000,000 (Q1 2025; includes $25M ACO cash)
Total Debt ($USD)$35,000,000 (FY24 YE) $35,000,000 (Q1 2025)

Segment/Program Supplemental (Q1 2025)

SegmentMedical Services Revenue ($USD)Other Operating Revenue ($USD)Total Revenues ($USD)Medical Services Expense ($USD)Other Medical Expenses ($USD)Gross Profit ($USD)Medical Margin ($USD)
Medicare Advantage (Consolidated)$1,529,879,000 $2,903,000 $1,532,782,000 $(1,401,867,000) $(80,193,000) $50,722,000 $128,012,000
CMS ACO Models (Unconsolidated)$413,465,000 — $413,465,000 $(351,853,000) $(36,242,000) $25,370,000 $61,612,000

Actual vs Wall Street Consensus (S&P Global)

MetricQ1 2025 ConsensusQ1 2025 ActualBeat/Miss
Revenue ($USD)$1,505,016,980*$1,532,782,000 Beat
Primary EPS (USD, S&P “primary EPS”)$0.01142*-$0.00836*Miss

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Medicare Advantage Members (end of period)FY 2025490,000–520,000 490,000–520,000 Maintained
ACO Model Members (end of period)FY 2025105,000–115,000 105,000–115,000 Maintained
Total Members Live on PlatformFY 2025595,000–635,000 595,000–635,000 Maintained
Avg. Medicare Advantage MembersFY 2025489,000–516,000 490,000–515,000 Maintained (minor mix)
Total Revenues ($USD)FY 2025$5,825–$6,025B $5.85–$6.025B Raised low end (+$25M)
Medical Margin ($USD)FY 2025$275–$325M $275–$325M Maintained
Adjusted EBITDA ($USD)FY 2025($95)–($55)M ($95)–($55)M Maintained
Geography Entry Costs ($USD)FY 2025$35–$40M $35–$40M Maintained
Total Revenues ($USD)Q2 2025N/A$1.435–$1.505B New
Medical Margin ($USD)Q2 2025N/A$50–$70M New
Adjusted EBITDA ($USD)Q2 2025N/A($35)–($20)M New
Medicare Advantage Members (end of period)Q2 2025N/A485,000–515,000 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Elevated medical cost trend (inpatient, Part B)Q3: Higher costs; negative prior period dev, lower risk adjustment Costs within expected elevated range; inpatient up (flu), Part B drugs pressure Stabilizing within guidance (still elevated)
Market exits / membership mixQ3: Exiting unprofitable partnerships/payor contracts End-of-period MA members down 6% YoY; exits impacted PYD Mix shifting to year 2+ markets
Part D exposureQ4: Plan to reduce exposure in 2025 Reduced to <30% membership; aiming further carve-outs/corridors in 2026 Improving exposure profile
Technology/data/AIQ4: Platform and quality investments Financial data pipeline live; AI/documentation; mphrX integration Material visibility improvement
Clinical programs (Palliative, Heart Failure)Q4: Building clinical program capabilities PalliUM expansion; HF pathway launched to improve early detection and outcomes Scaling programs; tailwinds for 2026
Policy/Rate Environment (CMS)Q3/Q4: Difficult MA environment; realignment expected CMS 2026 final rate notice +280bps supportive; optimistic medium term Turning more favorable

Management Commentary

  • CEO: “We are pleased with our first quarter results… we remain on track to deliver in line with our full year 2025 guidance” .
  • Strategic priorities: “Reduced exposure to Part D to less than 30%… Maintain flat YoY G&A… Smaller class of ’25 under glidepath… $35–$40M new geo entry costs” .
  • Technology and data: “We went live on our new financial data pipeline… greater visibility into detailed revenue and claims information, including Part D” — CFO .
  • Clinical programs: “Expanding Palliative care program; initial launch of Heart Failure program… early detection and guideline-directed therapy to reduce acute exacerbations” — CEO .

Q&A Highlights

  • Risk adjustment/V28: Management expects net +2% YOY risk adjustment on same members in 2025 despite ~3% V28 headwind, citing continuity of PCP relationships and prior-year documentation work .
  • Prior period development: Q1 negative PYD of $22M (incl. $7M exits; $10M from 2023 DOS with one payer); ~90% completion factor for 2024 DOS; improved visibility with new pipeline .
  • Part D strategy: Below 30% exposure; pursuing carve-outs/corridors and higher % of premium where needed; sees less material impact vs supplemental benefits in 2025 .
  • 2026 rate/contracting: 50% membership up for renewal; priorities include further Part D reduction, expanded quality incentives, improved Part C economics; one regional payer already carving out Part D for 2026 .
  • Clinical initiatives impact: Palliative care driving 2025 savings; heart failure pathway early but expected to be a 2026+ tailwind .

Estimates Context

  • Q1 2025: Revenue beat consensus ($1.533B vs $1.505B); S&P primary EPS missed (actual -$0.008 vs est +$0.011), reflecting continued cost trend and PYD headwinds even as GAAP net income was positive on discontinued operations *.
  • Q2 2025: Guidance revenue range $1.435–$1.505B brackets consensus (~$1.472B); guidance implies medical margin of $50–$70M and Adjusted EBITDA of -$35M to -$20M, consistent with a transition year as the 2025 class is largely care coordination under glidepath *.
  • FY 2025: Low end revenue raised to $5.85B; medical margin $275–$325M; Adjusted EBITDA ($95)–($55)M maintained — suggests sell-side models should lift revenue but remain cautious on EBITDA given utilization and investment cadence .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue resilience amid membership exits; operational discipline and quality programs underpin maintained FY guidance with a higher revenue floor — constructive for sentiment .
  • Near-term margin pressure persists from inpatient and Part B drugs and PYD; improved payer terms and visibility (data pipeline) should reduce variance in 2H25/2026 .
  • Strategic levers in 2026 renewals (Part D carve-outs/corridors, quality incentives, Part C economics) plus CMS rate tailwind can re-rate earnings power medium term .
  • Clinical pathway scaling (palliative, heart failure) is a multi-year margin tailwind; expect incremental disclosure through FY25/early FY26 .
  • Watch Q2 print for seasonality and execution vs guidance (medical margin $50–$70M, EBITDA -$35M to -$20M) and updates on payer negotiations and data pipeline coverage .
  • Risk management focus: lower Part D exposure (<30%) and disciplined growth (smaller 2025 class under glidepath) position AGL for more predictable performance .
  • Portfolio stance: favors medium-term recovery path; near-term trading likely driven by utilization trends, PYD resolution, and any incremental clarity on 2026 contracting and quality incentive flow-through .