agilon health(US:AGL)2023-11-06 00:51Financial Data and Key Metrics Changes - Total membership increased by 43% to 508,000 members, with revenues rising by 75% to $1.2 billion, exceeding guidance [8][19] - Adjusted EBITDA loss was $6 million for the quarter, an improvement from a loss of $26 million year-over-year, with year-to-date adjusted EBITDA at $28 million compared to a loss of $20 million last year [23][24] - Medical margins for Medicare Advantage (MA) increased by 42% year-over-year to $108 million, while year-to-date medical margins rose by 67% to $408 million [20][24] Business Line Data and Key Metrics Changes - Medicare Advantage membership grew by 58% to 420,000, with adjusted for Hawaii, MA membership in core markets increasing by 69% to 384,000 [18][19] - ACO REACH generated $55 million in medical margin for the quarter, doubling year-over-year, with year-to-date margins at $117 million [22][24] Market Data and Key Metrics Changes - The company reported a 10% increase in revenue per member per month (PMPM) during Q3, driven by benchmark updates and membership mix [19] - The percentage of membership in four-plus star plans is expected to increase to approximately 84% for 2024 [12] Company Strategy and Development Direction - The company plans to focus on its core partner markets following the sale of its Hawaii business, which was deemed less strategic [6][7] - The leadership position in moving physicians to full risk is expected to enhance clinical and financial performance, with a strong demand from physician groups and health systems [14][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory of adjusted EBITDA inflection and the ability to manage the new risk adjustment model starting in 2024 [15][17] - The company anticipates a strong class of new partners for 2024, with expectations of 110,000 new MA members and 25,000 new ACO REACH members [14][15] Other Important Information - The company is maintaining a conservative reserving approach as it exits 2023, which is reflected in the medical margin outlook for MA [10][26] - The sale of MDX Hawaii is expected to enhance focus on core business and improve overall performance [7][28] Q&A Session Summary Question: Clarification on medical cost side and utilization trends - Management noted that they raised EBITDA guidance due to strong performance across MA and REACH, with utilization trends moderating after a spike in May and June [30][31] Question: REACH performance expectations - REACH generated $55 million in medical margin, outperforming expectations, with management confident in continued strong performance [34][37] Question: Medical margin guidance revisions - The reduction in medical margin guidance was primarily due to the removal of Hawaii's performance and a conservative approach to reserving for potential negative developments [43][44] Question: Impact of Hawaii's sale on EBITDA - The sale of Hawaii was a significant drag on EBITDA, with management explaining that seasonality affects medical margins in that region [48][49] Question: Utilization trends and Flex card discussions - Management indicated that their PPO business is performing well and that discussions regarding Flex cards have shown a reduction in total dollars across the population [54] Question: Preservation of benefits in a tough revenue environment - Management expects a net pullback on supplemental benefits but remains confident in their ability to manage the new risk adjustment model effectively [56][57]