agilon health(AGL)2025-05-06 20:30Financial Data and Key Metrics Changes - For Q1 2025, total revenue was 1.6 billion in Q1 2024, primarily due to market and partnership exits, partially offset by premium growth [21] - Membership at the end of Q1 2025 was 491,000, a decrease from 523,000 in Q1 2024, reflecting a cautious approach to growth and partner exits [19] - Medical margin for Q1 2025 was 157 million in Q1 2024, driven by elevated utilization and costs [21][22] - Adjusted EBITDA for Q1 2025 was 29 million in Q1 2024, reflecting ongoing elevated cost trends [23] Business Line Data and Key Metrics Changes - ACO REACH membership decreased to 114,000 in Q1 2025 from 131,000 in Q1 2024, primarily due to exiting an underperforming partnership [20] - Medical costs for Q1 2025 were in line with expectations, driven by elevated utilization and flu-related costs [22] - The medical cost trend for year two plus markets was 5.5% in Q1 2025, down from 6.7% in Q1 2024 [24] Market Data and Key Metrics Changes - The Medicare Advantage market continues to expand, with CMS data showing a year-over-year growth trend of 3.9% [10] - Overall market trends in 2025 remain consistent with the prior year, with an expected full-year trend of 5.3% [9] Company Strategy and Development Direction - The company is focused on disciplined growth, reducing exposure to costs outside of its control, and enhancing clinical and operational capabilities [6][12] - Investments in technology and clinical programs are expected to drive competitive advantages and improve quality outcomes [13][14] - The company anticipates a more favorable environment in 2026, supported by improved payer bids and final rate notices from CMS [11][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the final rate notice from CMS for 2026, which is expected to address high cost and utilization trends [6][18] - The company is taking a cautious approach to membership growth, with expectations for retroactive membership assignments in Q2 [5][19] - Management highlighted the importance of early identification and management of chronic diseases as a key focus of their model [7][10] Other Important Information - The company ended Q1 2025 with 110 million of cash in 2025 [27] - The company is maintaining a disciplined approach to capital allocation to support business objectives while aiming for cash flow breakeven in 2027 [27] Q&A Session Summary Question: Impact of V-28 risk model transition on value-based care companies - Management indicated that the risk adjustment perspective for 2025 is in line with expectations, with a 2% net increase year over year, despite a 3% headwind from V-28 [33][34] Question: Contribution from previously exited areas - Management noted that unfavorable development from exited markets would not impact 2025 significantly, with minimal remaining IBNR [37][38] Question: 2026 MA final rate notice and its flow-through - Management confirmed that 40% of membership was repriced for January 2025, with expected benefits from the average 9% increase across the network [41][42] Question: Risk scores and patient movement - Management clarified that the 2% increase in risk adjustment is on a same member basis, with some movement between payers noted but not significantly affecting care models [49][52] Question: Expectations for 2026 MA bit cycle - Management expressed optimism about the 2026 environment, with a focus on quality incentives and clinical cost-saving initiatives tracking well [58][61] Question: Medical cost trends and visibility on completed claims - Management stated that medical cost trends were in line with expectations, with improved visibility from the new financial data pipeline [65][66] Question: Potential membership reduction due to Part D - Management indicated that they are making progress in reducing Part D exposure and do not anticipate a reduction in membership for 2026 [75][76] Question: Clinical programs and their impact - Management confirmed that while 2025 is an investment year for new clinical programs, benefits are expected to materialize in 2026 and beyond [104][106]