Group 1 - AGL Energy Limited reported strong earnings results for the half year, aligning with expectations [5] - The company is focused on connecting every customer to a sustainable future [5] - Markus Brokhof, the Chief Operating Officer, announced his retirement effective September 15 after five years of service [4]

Core Viewpoint - Three stocks have been added to the Zacks Rank 5 (Strong Sell) List due to downward revisions in earnings estimates Group 1: Company Summaries - Agilon Health, Inc. (AGL) is a healthcare services provider with a current year earnings estimate revised downward by 12.7% over the last 60 days [1] - Ashtead Group plc (ASHTY) is an equipment leasing company with a current year earnings estimate revised downward by 5.1% over the last 60 days [1] - China Coal Energy Company Limited (CCOZY) is a healthcare solutions provider with a current year earnings estimate revised downward by 13.3% over the last 60 days [2]

Group 1 - AB Volvo (publ) has been added to the Zacks Rank 24 (Strong Sell) List, with a 4.7% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Agilon Health, Inc. is also on the Zacks Rank 24 (Strong Sell) List, experiencing a 12.7% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Apogee Enterprises, Inc. has been noted for a 1.8% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2]

Group 1 - Agilon Health, Inc. (AGL) is a healthcare services provider with a Zacks Consensus Estimate for its current year earnings revised 64.1% downward over the last 60 days [1] - The Berkeley Group Holdings plc (BKGFY) is a real estate development company with a Zacks Consensus Estimate for its current year earnings revised 11.4% downward over the last 60 days [1] - Berry Global Group, Inc. (BERY) is a consumer and industrial goods company with a Zacks Consensus Estimate for its current year earnings revised 18.3% downward over the last 60 days [2]

Group 1 - ATI Inc. (ATI) is a specialty materials manufacturing company with a Zacks Consensus Estimate for its current year earnings revised 5.2% downward over the last 60 days [1] - Alliance Resource Partners, L.P. (ARLP) is a natural resource company with a Zacks Consensus Estimate for its current year earnings revised 9.7% downward over the last 60 days [1] - Agilon Health, Inc. (AGL) is a healthcare services provider with a Zacks Consensus Estimate for its current year earnings revised 43.6% downward over the last 60 days [2]

Group 1 - ATI Inc. is a specialty materials manufacturing company with a Zacks Consensus Estimate for its current year earnings revised 5.2% downward over the last 60 days [1] - ATS Corporation is an automation solutions provider with a Zacks Consensus Estimate for its current year earnings revised 12.3% downward over the last 60 days [1] - Agilon Health, Inc. is a healthcare services provider with a Zacks Consensus Estimate for its current year earnings revised 43.6% downward over the last 60 days [2]

Financial Data and Key Metrics Changes - Medicare Advantage (MA) membership increased by 37% year-over-year to 525,000 members, driven by strong same geography growth and expansion of the new partner class [10][25] - Total revenue grew by 28% year-over-year to $1.45 billion, with year-to-date revenues increasing by 39% to $4.53 billion [25][32] - Medical margin for Q3 was a loss of $58 million, compared to a positive margin of $111 million in the previous year [27] - Adjusted EBITDA loss for Q3 was $96 million, compared to a positive $6 million in Q3 2023 [28] Business Line Data and Key Metrics Changes - Third quarter medical service expenses rose to $1.51 billion, a 47% increase compared to the previous year, attributed to the expansion of the 2024 class and higher utilization [25][27] - ACO model entities had a membership of 132,000, slightly ahead of expectations, with adjusted EBITDA of $12 million, down from $18 million in Q3 2023 due to higher utilization [29] Market Data and Key Metrics Changes - The company is raising its full-year membership guidance from 519,000 to 527,000 members and increasing revenue guidance from $6.025 billion to $6.057 billion [10][32] - The company expects to exit two partnerships, which will reduce projected end-of-year 2024 membership by approximately 45,000 to 75,000 members and annualized revenue by about $470 million to $785 million [16] Company Strategy and Development Direction - The company is focusing on improving profitability and execution while managing through a challenging environment, emphasizing the long-term demand for improved cost and quality performance led by primary care doctors [9][21] - Strategic actions include exiting selected partnerships and narrowing the footprint of health plans for 2025, with a focus on risk mitigation strategies for Part D [15][17] - The company aims to improve its market mix exiting 2024, which should provide a stronger foundation for 2025 [18] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with current results but remains confident in the core business fundamentals and the demand from payers and physicians [8][12] - The company anticipates that 2025 will represent a turning point, with a projected medical margin step-off point of around $325 million before the impact of strategic actions [33][35] - Management highlighted the importance of quality performance and the need for improved data visibility to enhance operational efficiency [20][75] Other Important Information - The company ended Q3 with cash and marketable securities of $399 million, with an expected cash usage of approximately $165 million for the year [30][31] - The company is lowering its full-year 2024 medical margin midpoint to $225 million, down from the previous guidance of $400 million to $450 million [32] Q&A Session Summary Question: Can you provide details on the repricing of 40% of your business? - Management indicated that the repricing pertains to the 40% of membership up for renewal, with improved economic terms and incentives for quality performance [36] Question: What are the trend numbers for Q3 and Q4? - Management clarified that Q3 cost trend increased from 6% to 9.1%, while Q4 is expected to be 5.2% [39][41] Question: What is the expected cash position at the end of 2024? - The company expects to end 2024 with approximately $365 million in cash, including off-balance sheet cash from ACO entities [45] Question: What is the impact of Part D on medical margin and EBITDA? - Management acknowledged that Part D has a negative impact but did not provide specific numbers, emphasizing the need for better forecasting and risk mitigation [71] Question: What are the operational changes to address risk adjustment issues? - Management noted that gaps in processes were identified, and improvements are being implemented to enhance risk adjustment accuracy for future periods [68][69]

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Core Insights - Agilon Health (AGL) reported $1.45 billion in revenue for Q3 2024, a year-over-year increase of 19.4% [1] - The EPS for the same period was -$0.29, compared to -$0.06 a year ago, indicating a significant decline [1] - Revenue fell short of the Zacks Consensus Estimate of $1.47 billion by 1.29%, while the EPS surprise was -190.00% against the consensus estimate of -$0.10 [1] Financial Metrics - Average Medicare Advantage membership reached 535,000, exceeding the average estimate of 514,093 based on two analysts [3] - Revenue from medical services was $1.45 billion, compared to the estimated $1.47 billion by six analysts, reflecting a 19.4% increase year-over-year [3] - Revenue from other operating activities was $3.24 million, slightly below the estimated $3.27 million, showing an 8.3% decline compared to the previous year [3] Stock Performance - Agilon's shares have returned -7.7% over the past month, contrasting with the Zacks S&P 500 composite's +3.2% change [4] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [4]

Financial Performance - Agilon Health reported a quarterly loss of $0.29 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.10, and compared to a loss of $0.06 per share a year ago, indicating a significant earnings surprise of -190% [1] - The company posted revenues of $1.45 billion for the quarter ended September 2024, missing the Zacks Consensus Estimate by 1.29%, and this represents an increase from year-ago revenues of $1.22 billion [2] - Over the last four quarters, Agilon has surpassed consensus EPS estimates only once, and it has topped consensus revenue estimates just once as well [2] Stock Performance - Agilon shares have declined approximately 77.1% since the beginning of the year, contrasting sharply with the S&P 500's gain of 24.3% [3] - The current Zacks Rank for Agilon is 4 (Sell), indicating expectations for the stock to underperform the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.15 on revenues of $1.47 billion, and for the current fiscal year, it is -$0.39 on revenues of $6.02 billion [7] - The estimate revisions trend for Agilon is currently unfavorable, which could change following the recent earnings report [6] Industry Context - The Medical Services industry, to which Agilon belongs, is currently ranked in the bottom 45% of over 250 Zacks industries, suggesting that the outlook for the industry can significantly impact stock performance [8] - Another company in the same industry, Aclarion, Inc. (ACON), is expected to report a quarterly loss of $0.18 per share, reflecting a year-over-year change of +90.6% [9]