agilon health(AGL) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Unaudited Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2022 and 2021, detailing balance sheets, operations, equity, cash flows, and accounting notes Condensed Consolidated Balance Sheets Total assets increased to $1.86 billion by March 31, 2022, driven by receivables, while total liabilities rose to $743.7 million, primarily from medical claims, with stockholders' equity slightly increasing Condensed Consolidated Balance Sheets (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total current assets | $1,627,940 | $1,367,195 | | Total assets | $1,855,211 | $1,586,252 | | Total current liabilities | $610,461 | $356,960 | | Total liabilities | $743,734 | $494,656 | | Total stockholders' equity | $1,111,477 | $1,091,596 | - A significant portion of assets and liabilities belong to consolidated Variable Interest Entities (VIEs) As of March 31, 2022, VIE assets totaled $712.6 million and liabilities were $535.9 million[13] Condensed Consolidated Statements of Operations Q1 2022 total revenues grew 58% to $653.4 million, resulting in a net income of $1.2 million, a significant improvement from a $15.1 million net loss in Q1 2021 Q1 2022 vs Q1 2021 Statement of Operations (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Total revenues | $653,445 | $413,104 | | Medical services expense | $566,208 | $360,354 | | Income (loss) from operations | ($743) | ($12,115) | | Net income (loss) | $1,155 | ($15,151) | | Net income (loss) attributable to common shares | $1,230 | ($15,078) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities improved to $23.2 million in Q1 2022, while investing activities remained stable and financing cash decreased due to prior year debt issuance Q1 2022 vs Q1 2021 Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($23,233) | ($40,828) | | Net cash used in investing activities | ($8,869) | ($9,074) | | Net cash provided by financing activities | $13,506 | $30,298 | | Net decrease in cash | ($18,596) | ($19,604) | Notes to the Condensed Consolidated Financial Statements The notes provide critical context to the financial statements, detailing the company's business operations, accounting policies, revenue recognition, credit risk concentrations, debt structure, contingencies, and the nature of its variable interest entities (VIEs), including reliance on Medicare Advantage, revenue concentration, and discontinued California operations - The company's business model focuses on providing capabilities for physician groups to create a Medicare-centric, globally capitated line of business, serving approximately 250,300 Medicare Advantage members as of March 31, 2022[26] - Revenue from Medicare Advantage constitutes nearly 100% of total revenues For Q1 2022, three payors (A, B, and C) accounted for 25%, 19%, and 14% of total revenues, respectively, indicating significant customer concentration[40][42] - The company divested its California operations, now reported as discontinued operations, but remains responsible for certain pre-closing liabilities, including matters related to the California Department of Managed Health Care (DMHC)[73][66] - The company operates through 18 wholly-owned risk-bearing entities (RBEs) consolidated as VIEs, and holds 10 unconsolidated equity method investments in VIEs, primarily Direct Contracting Entities (DCEs)[83][84] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2022 financial results, highlighting significant membership and revenue growth, improved profitability, key operating metrics, COVID-19 impact, non-GAAP measures, liquidity, and capital resources, emphasizing its globally capitated model and continued geographic expansion Q1 2022 Key Financial and Operating Metrics | Metric | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | MA members | 250,300 | 165,300 | 51% | | Medical services revenue | $652.4M | $412.4M | 58% | | Medical margin | $86.2M | $52.1M | 66% | | Adjusted EBITDA | $12.0M | $3.8M | 220% | - Revenue growth was driven by a 52% increase in average membership from new and existing geographies, along with a 4% increase in per-member, per-month (PMPM) capitation rates[139] - The company achieved operating leverage, with General & Administrative expenses decreasing as a percentage of revenue from 9% in Q1 2021 to 6% in Q1 2022[143] - As of March 31, 2022, the company had a strong liquidity position with $1.0 billion in cash and cash equivalents, which management believes is sufficient to meet working capital needs for at least the next 12 months[155][157] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate fluctuations on floating-rate debt, with a hypothetical 100 basis point change having an immaterial impact of less than $1.0 million on quarterly interest expense, and minimal risk on cash and cash equivalents - The primary market risk is interest rate changes affecting the company's floating-rate debt[174] - A hypothetical 100 basis point change in interest rates would impact quarterly interest expense by less than $1.0 million[174] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during Q1 2022 - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of the end of the period[176] - No material changes in internal control over financial reporting were identified during the quarter[177] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company refers to Note 8 for legal proceedings, which describes an ongoing DMHC investigation related to divested California operations, but no other material adverse effects are anticipated - For details on legal proceedings, the report refers to Note 8 of the Condensed Consolidated Financial Statements[179] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 - There have been no material changes to the risk factors disclosed in the company's 2021 Form 10-K[180] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the reporting period - The company reported no unregistered sales of equity securities for the period[180] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including new employment and separation agreements, and required CEO and CFO certifications - Exhibits filed include employment agreements for Benjamin Shaker and Girish Venkatachaliah, separation agreements for Lisa Dombro and Theodore Halkias, and various officer certifications[182][183][184][185] Signatures