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agilon health, inc. (AGL)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 was mixed: revenue modestly beat consensus but EPS missed as lower-than-expected 2025 risk adjustment ($73M) and exited markets (-$20M) weighed on profitability; management reinstated FY25 guidance with sharply lower medical margin and Adjusted EBITDA ranges .
  • The company executed $30M of 2026 operating cost reductions and highlighted 2026 tailwinds from improved contracting (reduced Part D exposure, higher quality incentives), favorable payer bids, and enhanced data visibility covering ~80% of members .
  • Guidance reset: FY25 revenue $5.81–$5.83B, medical margin -$5M to +$15M, Adjusted EBITDA -$270M to -$245M vs prior FY25 guidance of revenue $5.85–$6.03B, medical margin $275–$325M, and Adjusted EBITDA -$95M to -$55M; management explicitly cites ~$150M full-year RAF shortfall, ~$70M negative prior period development YTD, and ~$60M exited market impact .
  • Additional catalyst/overhang: NYSE non-compliance notice (average price < $1) and intention to seek shareholder approval for a reverse split at the 2026 AGM .

What Went Well and What Went Wrong

What Went Well

  • Reinstated FY25 outlook with clearer risk/visibility post enhanced data pipeline and negotiated cost structure; $30M operating expense reduction targeted for 2026 .
  • ACO REACH outperformed: Q3 Adjusted EBITDA contribution was $18M; management expects continued contribution despite program changes, and is optimizing model (considering MSSP for some ACOs) .
  • Quality and clinical programs gaining traction: ~75% of members expected in 4+ Star plans for 2026 ratings (2027 payment year), consolidated average 4.2 Stars; early outcomes in heart failure and transitions of care are favorable (readmissions <5% vs ~20% national) .
    Quote: “We have reduced new inpatient heart failure diagnosis rates from 18% in 2024 to 5% in 2025 across our MA population.”

What Went Wrong

  • Lower-than-expected 2025 risk adjustment reduced revenue by $73M in Q3 (including a nine-month true-up); full-year RAF impact now estimated at ~$150M; exited markets also reduced Q3 by ~$20M .
  • Profitability remained negative: medical margin -$57M, Adjusted EBITDA -$91M; Q3 EPS (continuing ops) -$0.27 missed consensus as management prudently accrued cost trend “a little over 6%” vs first-half restatement to mid-5% .
  • Guidance was sharply reset vs Q1’s prior outlook (now suspended in Q2 and re-established in Q3), reflecting RAF, exited markets, and prior-period development, significantly lowering FY25 profitability expectations .

Financial Results

Headline P&L vs prior year and prior quarter

MetricQ3 2024Q2 2025Q3 2025
Total Revenues ($USD)$1,450,932,000 $1,394,982,000 $1,435,321,000
Net Income (Loss) ($USD)$(117,615,000) $(104,370,000) $(110,207,000)
Diluted EPS – Continuing Ops ($)$(0.29) $(0.25) $(0.27)
Gross Profit (Loss) ($USD)$(64,167,000) $(52,427,000) $(67,646,000)
Medical Margin ($USD, non-GAAP)$(58,253,000) $(53,206,000) $(57,042,000)
Adjusted EBITDA ($USD, non-GAAP)$(96,469,000) $(83,333,000) $(91,492,000)

Notes: Medical Margin and Adjusted EBITDA are non-GAAP as defined by the company .

Consensus vs Actual (Q3 2025)

MetricConsensusActualSurprise
Revenue ($USD)$1,421,761,590*$1,435,321,000 +$13,559,410 (beat)
Primary EPS ($)-$0.1343*-$0.2561 (approx. GAAP EPS cont. ops -$0.27) Miss
  • Values retrieved from S&P Global (consensus).

Drivers: Revenue beat despite RAF pressure due to membership in new/same geographies partly offsetting market exits; EPS miss on RAF true-ups and exited-market headwinds, plus prudent cost trend accrual .

Segment/Supplemental (Q3 2025)

MetricMA (Consolidated)CMS ACO Models (Unconsolidated)
Total Revenues ($USD)$1,435,321,000 $458,309,000
Medical Services Expense ($USD)$(1,489,479,000) $(401,473,000)
Other Medical Expenses ($USD)$(13,488,000) $(33,660,000)
Gross Profit (Loss) ($USD)$(67,646,000) $23,176,000
Medical Margin ($USD)$(57,042,000) $56,836,000

KPIs and Membership

KPIQ3 2024Q2 2025Q3 2025
Medicare Advantage Members (end of period)525,000 498,000 503,000
ACO Model Members (end of period)132,000 116,000 115,000
Total Members on Platform657,000 614,000 618,000
Adjusted EBITDA ($USD)$(96,469,000) $(83,333,000) $(91,492,000)
ACO REACH Adjusted EBITDA Contribution ($USD)$12,000,000 $10,000,000 $18,000,000

Balance Sheet (select): Cash & marketable securities $311M; total debt $35M; off-balance sheet ACO cash $172M at Q3-end .

Guidance Changes

MetricPeriodPrevious Guidance (Q1’25)Current Guidance (Q3’25)Change
Total Revenues ($USD)FY 2025$5.85B – $6.03B $5.81B – $5.83B Lowered
Medical Margin ($USD)FY 2025$275M – $325M -$5M – $15M Lowered
Adjusted EBITDA ($USD)FY 2025-$95M – -$55M -$270M – -$245M Lowered
Medicare Advantage Members (EOP)FY 2025490k – 520k 503k – 506k Refined
ACO Model Members (EOP)FY 2025105k – 115k 113k – 115k Slightly Higher Range Floor
Total Members (EOP)FY 2025595k – 635k 616k – 621k Narrowed
Avg. MA MembersFY 2025490k – 515k 500k – 501k Refined
ACO REACH Adj. EBITDA ($USD)FY 2025$35M – $40M ~$40M–$45M Raised

Management attributes reduced profitability to ~$150M lower RAF for 2025, ~$70M negative prior period development YTD, and ~$60M exited market impact .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Data pipeline/visibilityEnhanced data platform validated ~72% of population; mid-year/member-level RAF visibility improved; using AI to identify high-risk conditions; foundation for 2026 Pipeline covers ~80% of members; improved forecasting, lower volatility expected in 2026 Improving
RAF/Risk Adjustment2024 RAF step-down and 2025 trending lower; Q2 recorded $48M YTD 2025 RAF true-up for 72% membership Q3 revenue reduced $73M (incl. ~$50M 9-month true-up) for remaining 28%; full-year RAF impact ~$150M Still a headwind in 2025; baseline set for 2026
Medical cost trendFirst half ~6% and consistent by Q2; pressure in inpatient and Part B oncology drugs First half restated favorably to mid-5%; Q3 accrued a little over 6% conservatively Stabilizing; cautious accrual
Payer contracting50% of contracts up for renewal; focus on better economics/quality incentives; reduce Part D Progress on reduced Part D exposure, expanded quality incentives, improved Part C terms; prepared to walk from unprofitable payers More disciplined; positive 2026 tailwind
Stars/qualityYear 2+ markets at/above ~4.25 stars; payers increasing $ at risk for quality ~75% members in 4+ Star plans (2026 Stars/2027 payment year); 4.2 consolidated stars Improving; supports economics
Clinical pathwaysLate ‘24/early ‘25 rollout; palliative program across most markets HF readmissions <5% with pharmacy+TOC; COPD/dementia pilots expanding in 2026 Expanding; positive outcomes
ACO REACH programIn-line; $10M Q2 Adjusted EBITDA; considering model shifts (MSSP) $18M Q3 Adjusted EBITDA; lower economics in 2026 but still good margin; reviewing MSSP shifts Solid, but evolving
Leadership/capital marketsCEO transition; withdrew FY25 guide in Q2; liquidity $327M cash & secs at Q2 Reinstated FY25 guide; end-Q3 cash & secs $311M; reverse split anticipated; NYSE notice received Visibility restored; listing remedy underway

Management Commentary

  • “We are building a more streamlined, agile, accountable, and performance-driven organization... reducing operating expenses by an expected $30 million in 2026.” — Ronald A. Williams, Executive Chair .
  • “At the midpoint, we expect revenue of $5.82 billion, medical margin of $5 million, and adjusted EBITDA of -$258 million, which includes the impact of lower-than-expected risk scores for 2025 and costs related to exited markets...” — Ron Williams .
  • “We estimate that [operating expense actions] will drive $30 million in cost and adjusted EBITDA benefit in 2026... Payers are bidding for profitability... increases in premiums, deductibles, and MOOP, and a reduction in supplemental benefits.” — Jeff Schwaneke, CFO .
  • “Approximately 75% of Agilon members are expected to be in 4+ Star plans... Agilon achieved a consolidated average of 4.2 stars.” — Ron Williams .

Q&A Highlights

  • ACO REACH economics: 2026 program changes reduce economics but remain margin-positive; evaluating ACO-by-ACO moves to MSSP; sizing withheld pending 2026 guidance .
  • Contracting discipline: Will walk from payers/markets that do not meet profitability thresholds; membership could decline but margin/EBITDA would benefit .
  • Medical cost trend: First-half restated favorably to mid-5%; Q3 accrued slightly >6% given limited paid claims visibility; inpatient and Part B oncology drugs remain pressure points .
  • Cash/Capital: Expect ~$(310)M in cash at 2025 year-end including ~$65M at ACO entities post settlements; planning reverse split subject to shareholder approval .
  • Stars/quality incentives: Payers increasingly willing to tie more dollars to quality; Agilon’s performance positions it well for enhanced incentives .

Estimates Context

  • Q3 2025: Revenue beat and EPS miss vs consensus. Revenue: $1,435.3M actual vs $1,421.8M consensus; Primary EPS: -$0.2561 actual vs -$0.1343 consensus (GAAP cont. ops EPS -$0.27) . Drivers were RAF true-ups and exited markets impacting profitability despite cost actions. Estimates for FY25 profitability are likely to be revised down to reflect reinstated guidance (medical margin -$5M to $15M; Adj. EBITDA -$270M to -$245M) .
  • Forward quarters: Consensus implies continued losses near term with sequential revenue improvement into 1H26, aligned with management’s 2026 tailwind narrative (contracting, Stars, clinical programs).
    Consensus values marked with * are from S&P Global.
MetricQ3 2025Q4 2025Q1 2026Q2 2026
Primary EPS Consensus Mean ($)-0.1343*-0.2574*-0.0488*-0.1243*
Revenue Consensus Mean ($USD)1,421,761,590*1,465,873,310*1,587,517,540*1,484,229,280*
Primary EPS – # Estimates10*7*4*4*
Revenue – # Estimates16*14*8*8*

Values retrieved from S&P Global.

Key Takeaways for Investors

  • 2025 is a reset year: RAF shortfall (~$150M) and market exits drove a sharp guidance reset; management has re-baselined expectations and improved data visibility to reduce volatility into 2026 .
  • Discipline over growth: Agilon will prioritize profitable contracts and may exit/transition payer relationships; potential membership declines could be margin-accretive .
  • 2026 set-up improving: Favorable payer bids, Part D exposure reduction, enhanced Stars, and $30M opex savings provide multi-front tailwinds .
  • Clinical programs are working: Early outcomes in heart failure and care transitions suggest durable cost/quality benefits as programs scale (COPD/dementia next) .
  • Liquidity adequate near term; listing remediation: ~$(311)M cash & securities at Q3 and planned reverse split to address NYSE non-compliance .
  • Trading setup: Near-term print risk persists (EPS miss, tighter FY25 guide), but the narrative could pivot to 2026 recovery if contracting closes favorably and cost trends remain contained; monitor Q4 RAF development, payer negotiations, and Stars updates .