agilon health(US:AGL)2024-11-10 09:58Financial 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]