agilon health inc
For the period ended Jun 30, 2024. Filed Aug 6, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 6, 2024
AGL$113.39-0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0001628280-24-021088
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001628280-24-035179
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 173 previous paragraphs and 187 current paragraphs.
143 unchanged; 24 reworded; 15 added; 6 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 15 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
•our ability to navigate the changing healthcare payor market;
Current report
Second Quarter 2024 Results:
Current report
•Total revenue of $1.5 billion increased 39% from the second quarter of 2023.
Current report
•Gross profit of $32 million, compared to $55 million in the second quarter of 2023.
Current report
•Medical margin of $106 million, compared to $134 million in the second quarter of 2023.
Current report
•Net loss of $31 million, compared to $17 million in the second quarter of 2023.
Current report
•Adjusted EBITDA loss of $3 million, compared to earnings of $12 million in the second quarter 2023.
Current report
Year to Date 2024 Results as of June 30, 2024:
Current report
•Gross profit of $107 million, compared to $128 million in the first half of 2023.
Current report
•Medical margin of $263 million, compared to $290 million in the first half of 2023.
Current report
•Net loss of $37 million, compared to $1 million in the first half of 2023.
Current report
•Adjusted EBITDA of $26 million, compared to $37 million in the first half 2023.
Current report
Medical services revenue increased for the three months ended June 30, 2024 due primarily to growth in average membership of 36%, which was attributable to seven new geographies that began to generate revenue in 2024 and growth in our existing geographies. The increase in medical services revenue for the three months ended June 30, 2024 was also driven, to a lesser extent, by an increase in PMPM capitation rates of 2%. Medical services revenue for the three months ended June 30, 2024 includes a $55.9 million reduction related to selected payor contract terminations that were retroactively effective January 1, 2024.
Current report
Medical services expense increased for the three months ended June 30, 2024 due primarily to growth in average membership of 36%, which was attributable to seven new geographies that became operational in 2024 and growth in our existing geographies. The increase in medical services expense for the three months ended June 30, 2024 was also driven, to a lesser extent, by an increase in average medical services expense per member of 9%. Medical services expense for the three months ended June 30, 2024 includes a $54.3 million reduction related to selected payor contract terminations that were retroactively effective January 1, 2024.
Current report
Net cash used in financing activities was $1.2 million for the six months ended June 30, 2024 compared to $193.7 million for the six months ended June 30, 2023. During the six months ended June 30, 2023, we used $200.0 million to repurchase shares of our common stock in an underwritten secondary public offering.
Removed paragraphs (6)
Previous report
First Quarter 2024 Results:
Previous report
•Gross profit of $75 million, compared to $73 million in the first quarter of 2023.
Previous report
•Medical margin of $157 million, compared to $156 million in the first quarter of 2023.
Previous report
•Net loss of $6 million, compared to net income of $16 million in the first quarter of 2023.
Previous report
•Adjusted EBITDA of $29 million in the first quarter compared to $24 million in the first quarter 2023.
Previous report
Net cash provided by financing activities was $0.6 million for the three months ended March 31, 2024 compared to $8.3 million for the three months ended March 31, 2023. During the three months ended March 31, 2024, we received proceeds from stock option exercises of $1.8 million compared to $9.6 million for the three months ended March 31, 2023.
Reworded paragraphs (24)
Previous wording
•our ability to secure contracts with Medicare Advantage (“MA”) payors;
Current wording
•our ability to maintain and secure additional contracts with Medicare Advantage (“MA”) payors on favorable terms, if at all;
Previous wording
•Medicare Advantage members of approximately 522,800 as of March 31, 2024 increased 43% from March 31, 2023.
Current wording
•Medicare Advantage members of approximately 512,800 as of June 30, 2024 increased 38% from June 30, 2023.
Previous wording
•CMS ACO Models attributed beneficiaries of approximately 131,000 as of March 31, 2024 increased 48% from March 31, 2023.
Current wording
•CMS ACO Models (defined below) attributed beneficiaries of approximately 131,700 as of June 30, 2024 increased 51% from June 30, 2023.
Previous wording
•Total revenue of $1.6 billion increased 52% from the first quarter of 2023.
Current wording
•Total revenue of $3.1 billion increased 45% from the first half of 2023.
Previous wording
Medicare Advantage members increased 43% from March 31, 2023, which includes contributions from new geographies and growth within geographies existing prior to 2023. Total members live on the platform includes 522,800 Medicare Advantage members and 131,000 attributed CMS ACO Models beneficiaries.
Current wording
Medicare Advantage members increased 38% from June 30, 2023, which includes contributions from new geographies and growth within geographies existing prior to 2023. Total members live on the platform includes 512,800 Medicare Advantage members and 131,700 attributed CMS ACO Models beneficiaries.
Previous wording
Average Medicare Advantage membership was 518,400 during the first quarter of 2024.
Current wording
Average Medicare Advantage membership was 507,000 during the second quarter of 2024.
Previous wording
(1)Medical margin and Adjusted EBITDA are non-GAAP financial measures. Gross profit is the most directly comparable financial measure calculated in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) to medical margin. Net income (loss) is the most directly comparable financial measure calculated in accordance with U.S. GAAP to Adjusted EBITDA. See “—Non-GAAP Financial Measures" for additional information.
Current wording
(1)Medical margin and Adjusted EBITDA are non-GAAP financial measures. Gross profit is the most directly comparable financial measure calculated in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) to medical margin. Net income (loss) is the most directly comparable financial measure calculated in accordance with U.S. GAAP to Adjusted EBITDA. See “—Non-GAAP Financial Measures" below for additional information.
Previous wording
(1)Represents physician compensation expense related to surplus sharing and other care management expenses that help to create medical cost efficiency. Includes costs in geographies that are in implementation and are not yet generating revenue and investments to grow existing markets. For the three months ended March 31, 2024 and 2023, costs incurred in implementing geographies were $0.6 million and $2.3 million, respectively.
Current wording
(1)Represents physician compensation expense related to surplus sharing and other care management expenses that help to create medical cost efficiency. Includes costs in geographies that are in implementation and are not yet generating revenue and investments to grow existing markets. For the three months ended June 30, 2024 and 2023, costs incurred in implementing geographies were $18,000 and $7.7 million, respectively. For the six months ended June 30, 2024 and 2023, costs incurred in implementing geographies were $0.6 million and $10.0 million, respectively.
Previous wording
Medical services revenue constitutes substantially all of our total revenue for the three months ended March 31, 2024 and 2023.
Current wording
Medical services revenue constitutes substantially all of our total revenue for the three and six months ended June 30, 2024 and 2023.
Previous wording
Depreciation and amortization expenses are associated with our property and equipment and acquired intangible assets. Depreciation includes expenses associated with buildings, computer equipment and software, furniture and fixtures, and leasehold improvements. Amortization primarily includes expenses associated with acquired intangible assets.
Current wording
Depreciation and amortization expenses are associated with our property and equipment and acquired intangible assets. Depreciation includes expenses associated with computer equipment and software, furniture and fixtures, and leasehold improvements. Amortization primarily includes expenses associated with acquired intangible assets.
Previous wording
Total discontinued operations consist of the results of our Hawaii operations. For certain of our divestiture transactions, we continue to be responsible for any liabilities arising from the business that were incurred prior to the closing date of such transaction, including any fines, penalties, and other sanctions, the payment of claims for medical services incurred prior to the effective date of each transaction, a liability for unrecognized tax benefits for which we are indemnified, and other contingent liabilities that we currently believe are remote. For additional discussion, see Note 15 to the Condensed Consolidated Financial Statements.
Current wording
Total discontinued operations primarily consist of the results of our Hawaii operations. For certain of our divestiture transactions, we continue to be responsible for any liabilities arising from the business that were incurred prior to the closing date of such transaction, including any fines, penalties, and other sanctions, the payment of claims for medical services incurred prior to the effective date of each transaction, a liability for unrecognized tax benefits for which we are indemnified, and other contingent liabilities that we currently believe are remote. For additional discussion, see Note 15 to the Condensed Consolidated Financial Statements.
Previous wording
Comparison of the Three Months Ended March 31, 2024 to the Three Months Ended March 31, 2023
Current wording
Comparison of the Three and Six Months Ended June 30, 2024 to the Three and Six Months Ended June 30, 2023
Previous wording
Medical services revenue increased for the three months ended March 31, 2024 due primarily to growth in average membership of 43%, which was attributable to seven new geographies that began to generate revenue in 2024 and growth in our existing geographies. The increase in medical services revenue for the three months ended March 31, 2024 was also driven, to a lesser extent, by an increase in PMPM capitation rates of 7%.
Current wording
Medical services revenue increased for the six months ended June 30, 2024 due primarily to growth in average membership of 39%, which was attributable to seven new geographies that began to generate revenue in 2024 and growth in our existing geographies. The increase in medical services revenue for the six months ended June 30, 2024 was also driven, to a lesser extent, by an increase in PMPM capitation rates of 4%.
Previous wording
Medical services expense increased for the three months ended March 31, 2024 due primarily to growth in average membership of 43%, which was attributable to seven new geographies that became operational in 2024 and growth in our existing geographies. The increase in medical services expense for the three months ended March 31, 2024 was also driven, to a lesser extent, by an increase in average medical services expense per member of 13%.
Current wording
Medical services expense increased for the six months ended June 30, 2024 due primarily to growth in average membership of 39%, which was attributable to seven new geographies that became operational in 2024 and growth in our existing geographies. The increase in medical services expense for the six months ended June 30, 2024 was also driven, to a lesser extent, by an increase in average medical services expense per member of 11%.
Previous wording
Other medical expenses increased by $1.8 million, or 2%, for the three months ended March 31, 2024 compared to 2023. Partner physician incentive expense decreased by $7.9 million to $49.8 million in 2024 compared to $57.7 million in 2023. Other provider costs increased by $11.4 million to $35.0 million in 2024 compared to $23.6 million in 2023, resulting from the increase in the number of geographies and members on our platform. Other provider costs for the three months ended March 31, 2024 include $0.6 million of costs related to geographies that are expected to become operational in January 2025, while other provider costs for the three months ended March 31, 2023 include $2.3 million of costs related to geographies that became operational in 2024.
Current wording
Other medical expenses decreased by $5.2 million, or 6%, for the three months ended June 30, 2024 compared to the same period in 2023. Partner physician incentive expense declined by $14.4 million to $30.3 million in 2024 compared to $44.7 million in 2023. Other provider costs increased by $9.2 million to $46.2 million in 2024 compared to $37.0 million in the same period in 2023, resulting from the increase in the number of geographies and members on our platform. Other provider costs for the three months ended June 30, 2023 include $7.7 million of costs related to geographies that became operational in 2024.
Previous wording
General and administrative expenses increased $6.7 million, or 10%, for the three months ended March 31, 2024 compared to 2023. Operating costs to support our live geographies and enterprise functions (platform support costs) increased by $2.4 million to $45.7 million in 2024 compared to $43.3 million in 2023 due primarily to growth in operating costs incurred to support geographies that became operational in 2024. Operating costs to support our live geographies and enterprise functions as a percentage of revenue decreased to 3% for the three months ended March 31, 2024 compared to 4% for the same period in 2023. Investments to support geography entry increased to $10.5 million in 2024, compared to $9.3 million in 2023 due to increased costs associated with our geographies that are expected to become operational in the following calendar year and expansion into existing geographies. Stock-based compensation expense increased $3.3 million in 2024 primarily due to the granting of certain stock-based instruments to third parties after the first quarter of 2023.
Current wording
General and administrative expenses decreased $3.0 million, or 2%, for the six months ended June 30, 2024 compared to the same period in 2023. Operating costs to support our live geographies and enterprise functions (platform support costs) increased by $2.1 million to $87.4 million in 2024 compared to $85.3 million in the same period in 2023 due primarily to growth in operating costs incurred to support geographies that became operational in 2024. Operating costs to support our live geographies and enterprise functions as a percentage of revenue decreased to 3% for the six months ended June 30, 2024 compared to 4% for the same period in 2023. Investments to support geography entry decreased to $15.3 million in 2024, compared to $20.6 million in the same period in 2023 due to decreased costs associated with our geographies that are expected to become operational in the following calendar year and expansion into existing geographies.
Previous wording
Income (loss) from equity method investments increased $4.3 million, or 313%, for the three months ended March 31, 2024 compared to 2023 primarily from two new equity investments that began to generate revenue in 2024 and growth in our existing CMS ACO Models investments.
Current wording
Income (loss) from equity method investments increased $1.5 million, or 18%, for the three months ended June 30, 2024 compared to the same period in 2023 primarily from two new equity investments that began to generate revenue in 2024 and growth in our existing CMS ACO Models investments.
Previous wording
Other income (expense), net decreased $2.0 million, or 25%, for the three months ended March 31, 2024 compared to 2023 primarily from interest income as a result of the maturities of various marketable securities investments.
Current wording
Other income (expense), net decreased $2.2 million, or 32%, for the three months ended June 30, 2024 compared to the same period in 2023 primarily from interest income as a result of the maturities of various marketable securities investments.
Previous wording
Total discontinued operations is related to the sale of our Hawaii operations in October 2023. Total discontinued operations for the three months ended March 31, 2024 is primarily related to loss on sale of our Hawaii operations compared to income from discontinued operations for the three months ended March 31, 2023.
Current wording
Total discontinued operations is related to the sale of our Hawaii operations in October 2023. Total discontinued operations for the six months ended June 30, 2024 is primarily related to loss on sale of our Hawaii operations compared to income from discontinued operations for the six months ended June 30, 2023.
Previous wording
We have historically financed our operations primarily through funds generated from our capitation arrangements with payors, issuances of equity securities, and borrowings under credit agreements. We generally invest any excess cash in money market accounts, which are classified as cash equivalents, and marketable securities. Our investment strategies are designed to provide safety and preservation of capital, sufficient liquidity to meet the cash flow needs of our business operations, and attainment of a competitive return. As of March 31, 2024, we had cash and cash equivalents and restricted cash and equivalents of $118.6 million and investments in marketable securities of $307.4 million.
Current wording
We have historically financed our operations primarily through funds generated from our capitation arrangements with payors, issuances of equity securities, and borrowings under credit agreements. We generally invest any excess cash in money market accounts, which are classified as cash equivalents, and marketable securities. Our investment strategies are designed to provide safety and preservation of capital, sufficient liquidity to meet the cash flow needs of our business operations, and attainment of a competitive return. As of June 30, 2024, we had cash and cash equivalents and restricted cash and equivalents of $116.3 million and investments in marketable securities of $291.6 million.
Previous wording
Net cash used in operating activities was $47.8 million for the three months ended March 31, 2024 compared to $60.8 million for the three months ended March 31, 2023. The decrease in net cash used in operating activities was primarily as a result of the timing of settlements with payors from new and existing geographies. Our cash flow from operations is dependent upon the number of members on our platform, the timing of settlements with payors, and the level of operating and general and administrative expenses necessary to operate and grow our business, among other factors.
Current wording
Net cash used in operating activities was $66.5 million for the six months ended June 30, 2024 compared to $82.0 million for the six months ended June 30, 2023. The decrease in net cash used in operating activities was primarily as a result of the timing of settlements with payors from new and existing geographies. Our cash flow from operations is dependent upon the number of members on our platform, the timing of settlements with payors, and the level of operating and general and administrative expenses necessary to operate and grow our business, among other factors.
Previous wording
Net cash provided by investing activities was $51.4 million for the three months ended March 31, 2024 compared to net cash used in investing activities of $50.8 million for the three months ended March 31, 2023. During the three months ended March 31, 2024, we received proceeds from the maturities of marketable securities of $74.5 million. During the three months ended March 31, 2023, we completed the acquisition of My Personal Health Record Express, Inc. for $44.4 million.
Current wording
Net cash provided by investing activities was $69.7 million for the six months ended June 30, 2024 compared to net cash used in investing activities of $30.8 million for the six months ended June 30, 2023. During the six months ended June 30, 2024, we received proceeds from the maturities of marketable securities of $103.3 million and made investments of $34.1 million primarily for the acquisition of intangible assets and property and equipment. During the six months ended June 30, 2023, we completed the acquisition of My Personal Health Record Express, Inc. for $44.4 million.
Previous wording
For additional discussion on our debt obligations, see Note 8 to the Condensed Consolidated Financial Statements for additional information about our outstanding debt.
Current wording
For additional discussion on our debt obligations, see Note 8 to the Condensed Consolidated Financial Statements.
Previous wording
As of March 31, 2024, we had 410.8 million shares of common stock outstanding. See Note 10 to the Condensed Consolidated Financial Statements for additional information about our equity transactions.
Current wording
As of June 30, 2024, we had 411.4 million shares of common stock outstanding. See Note 10 to the Condensed Consolidated Financial Statements for additional information about our equity transactions.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Current report — wording carried from elsewhere
Other medical expenses decreased by $3.4 million, or 2%, for the six months ended June 30, 2024 compared to 2023. Partner physician incentive expense declined by $22.3 million to $80.1 million in 2024 compared to $102.4 million in 2023. Other provider costs increased by $18.9 million to $81.8 million in 2024 compared to $62.9 million in 2023, resulting from the increase in the number of geographies and members on our platform. Other provider costs for the six months ended June 30, 2024 and 2023 include $0.6 million and $10.0 million, respectively, of costs related to geographies that became operational in the following year.
Current report — wording carried from elsewhere
General and administrative expenses decreased $9.6 million, or 12%, for the three months ended June 30, 2024 compared to the same period in 2023. Operating costs to support our live geographies and enterprise functions (platform support costs) of $41.7 million in 2024 remained relatively flat compared to $42.0 million in the same period in 2023. Operating costs to support our live geographies and enterprise functions as a percentage of revenue decreased to 3% for the three months ended June 30, 2024 compared to 4% for the same period in 2023. Investments to support geography entry decreased to $4.8 million in 2024, compared to $11.3 million in the same period in 2023 due to decreased costs associated with our geographies that are expected to become operational in the following calendar year and expansion into existing geographies.
Current report — wording carried from elsewhere
Income (loss) from equity method investments increased $5.8 million, or 59%, for the six months ended June 30, 2024 compared to the same period in 2023 primarily from two new equity investments that began to generate revenue in 2024 and growth in our existing CMS ACO Models investments.
Current report — wording carried from elsewhere
Other income (expense), net decreased $4.2 million, or 28%, for the six months ended June 30, 2024 compared to the same period in 2023 primarily from interest income as a result of the maturities of various marketable securities investments.