Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Agilon Health Inc (AGL, Financial) reported membership revenue, medical margin, and adjusted EBITDA in line with their Q1 guidance range, maintaining their trajectory for full-year 2025 guidance.
- The company has made significant progress in strengthening its network and enhancing its platform through advancements in technology, clinical pathways, and operating efficiency.
- Agilon Health Inc (AGL) has successfully reduced its exposure to Medicare Part D, with less than 30% of its membership carrying Part D risk in 2025.
- The company is optimistic about 2026, with a 280 basis point increase in the final rate notice from CMS, which addresses high cost and utilization trends.
- Agilon Health Inc (AGL) continues to maintain cost discipline while investing in technology and clinical programs to support medical margin and patient outcome improvements.
Negative Points
- The company experienced a slight year-over-year decline in Medicare Advantage membership, driven by previously disclosed partner exits and a smaller 2025 class.
- Medical costs for the first quarter of 2025 were driven by continued elevated utilization, incremental flu-related costs, and negative prior period development.
- Agilon Health Inc (AGL) reported a negative prior period development of $22 million, impacting their financial results.
- The company is operating in a challenging environment with ongoing utilization pressures in areas such as inpatient services and Part B drug spend.
- Agilon Health Inc (AGL) expects a headwind from the full implementation of LV. 28 in 2026, which will impact their financial performance.
Q & A Highlights
Q: Can you provide an update on the impact of the 28 risk model transition on Agilon Health's performance in 2025 and expectations for 2026?
A: Steve Zhang, CEO: The transition is in line with our expectations, with a 2% net increase year-over-year, including a 3% headwind from the 28. Our primary care physicians have long-standing relationships with patients, allowing us to manage this transition effectively. We are encouraged by the continuity and stability in our membership, which remains largely unchanged from 2024.
Q: How are previously exited areas affecting current performance, and what lingering impacts should be expected for the rest of the year?
A: Jeff, CFO: The $7 million unfavorable development from exited markets is a legacy issue that will not impact 2025. We have minimal remaining IB&R, and we expect no significant lingering effects from these exits moving forward.
Q: With the 2026 MA filing notice being better than expected, how should we think about its impact on Agilon Health's pricing and membership?
A: Steve Zhang, CEO: We repriced 40% of our membership for January 2025, and the CMS data update will flow through as a percentage of premium increases. For 2026, 50% of our membership is up for renewal, presenting opportunities to improve economic terms, reduce Part D exposure, and enhance quality incentives.
Q: Can you elaborate on the impact of the final rate notice for 2026 on Agilon Health's growth and financial outlook?
A: Steve Zhang, CEO: The final rate notice is a positive development, providing a tailwind for 2026. While we are not giving specific guidance yet, the notice, along with disciplined growth and quality incentives, positions us well for improved performance. However, macro utilization trends and the full implementation of LV. 28 will also play a role.
Q: How are clinical programs like heart health and palliative care progressing, and what impact do you expect them to have on medical margins in 2026?
A: Steve Zhang, CEO: Our clinical programs are focused on managing high-acuity chronic diseases, which are critical for patient health and financial success. The heart failure program is in early stages but showing promise in early detection and disease management. Palliative care is already delivering significant savings. These programs are expected to provide a tailwind for medical margin improvements in 2026.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
