Agilon Health Q1 Earnings Call Highlights

Key Points

• Q1 outperformance and guidance raise: Agilon beat guidance on revenue, medical margin and adjusted EBITDA, and raised full-year 2026 midpoints to about $5.7 billion revenue, $375 million medical margin and $25 million adjusted EBITDA.
• Operations and leadership driving results: Management credited enhanced payer data feeds, generative AI-driven risk stratification and scaled clinical pathways (CHF now in ~90% of markets) for improved forecasting and profitability, and announced Tim O’Rourke will become CEO on May 7.
• Membership down but profitability improved: Medicare Advantage membership fell year-over-year and revenue declined to ~$1.42 billion in Q1, yet medical margin rose to $149 million and adjusted EBITDA to $54 million, with some ACO REACH upside tied to CMS 2025 benchmark adjustments and a revised +1.5% risk-score estimate for 2026.

Agilon Health NYSE: AGL reported first-quarter 2026 results that exceeded its guidance ranges for total revenue, medical margin, and adjusted EBITDA, prompting management to raise expectations for the full year. Executives repeatedly pointed to operational discipline, improved data visibility, and a more profitability-focused approach to payer contracting as key contributors to the outperformance.

On the call, Executive Chairman Ron Williams also highlighted a leadership transition, noting that Tim O’Rourke will begin as CEO on May 7. Williams said O’Rourke brings “significant experience across the payer and provider space” and is committed to the company’s value-based care strategy.

Operational priorities: data, AI, and clinical pathways

Williams said the company is focused on “disciplined execution and building a durable foundation for sustainable long-term performance,” emphasizing initiatives aimed at improving predictability and reducing variability in results. He pointed to an enhanced data pipeline that provides “more timely direct payer data feeds” and member-level risk scores on about 85% of members, which he said has improved forecasting and trend identification.

Williams also described the company’s use of generative AI-based insights integrated into clinical workflows, with the aim of helping physicians intervene earlier. CFO Jeff Schwaneke later told analysts that, to date, AI’s impact is “probably limited” on operating expenses but “more significant on both the revenue and medical cost line,” including AI-driven risk stratification and “suspecting algorithms” tied to risk adjustment.

Clinically, Williams said agilon’s congestive heart failure (CHF) pathway is now deployed across 90% of markets and has shifted diagnosis earlier in the care continuum. He said inpatient first diagnosis rates improved from about 25% to less than 5% and that the company is expanding a pharmacy-integrated approach for heart failure patients while observing improvement in guideline-directed therapy rates. Williams said agilon plans to scale COPD and broader lung health pathways through 2026 and continues to roll out a dementia program with physician partners.

First-quarter financial performance and key drivers

Schwaneke said first-quarter results were driven by higher-than-expected revenue from risk adjustment, an additional full-risk contract with a new payer in an existing market, and strong performance in ACO REACH.

• Medicare Advantage membership ended the quarter at 426,000, down from 491,000 in Q1 2025.
• ACO REACH membership was 110,000, compared to 114,000 in the same period of 2025.
• Revenue was approximately $1.42 billion versus $1.53 billion a year earlier.
• Medical margin was $149 million, compared to $128 million in Q1 2025.
• Adjusted EBITDA was $54 million, up from $21 million in Q1 2025.
• ACO REACH adjusted EBITDA was $27 million, ahead of expectations by about $5 million.

Schwaneke attributed the year-over-year revenue decline to lower membership, partially offset by what he called more constructive 2026 rates from the CMS benchmark, favorable payer contracting, and increased revenue tied to higher estimated risk scores.

He said agilon’s revised estimate for the full-year increase in risk scores over 2025 is now 1.5%, up from a prior estimate of 0.4%, both net of the V28 impact. Schwaneke said the change reflects improvements in data visibility and forecasting, enabled by payer data files that include claims as well as MAO-004 and MMR data accepted for risk adjustment.

Medical margin outperformance in the quarter also reflected medical expense dynamics. Schwaneke said the company recorded a 7.4% cost trend for Q1 2026 due to limited paid-claims visibility early in the year and described the approach as conservative. He added that cost escalation themes continue to include Part B and inpatient costs.

Regarding prior-year medical cost development, Schwaneke told analysts the benefit was “roughly $12 million” related to 2025 dates of service, but said there was “really no flow-through” to results because the company increased Part D reserves during the quarter, offsetting the medical expense benefit through premium revenue, where Part D is recorded net.

ACO REACH upside tied to 2025 benchmark adjustments

In Q&A, Schwaneke explained that the quarter’s ACO REACH upside largely reflected CMS actions tied to 2025 performance rather than a step change in 2026 run-rate economics. He said the approximately $5 million benefit was connected to CMS removing “fraudulent urinary catheter and suspect skin substitute costs” from 2025 performance and related benchmark adjustments. He said it was “a little early in the year” to adjust expectations further based on current-year performance.

Williams also said the quarter’s results showed the company’s ability to perform in both Medicare fee-for-service programs and Medicare Advantage, and noted CMS took what he called a “pragmatic approach” to addressing those fraudulent claims for 2025.

Guidance raised; cost trend outlook held steady

Schwaneke said the company raised its full-year 2026 outlook based on the strength of Q1, higher estimated risk scores, ACO REACH performance, and the addition of a new full-risk contract signed in Q1 with a new payer in an existing market. He later quantified the new contract as roughly $200 million in revenue and said it is modeled at “roughly break even margin for the year,” while noting that first-quarter seasonality can produce margin even if the full-year expectation is break-even.

Using midpoints of guidance ranges, agilon now expects for full-year 2026:

• Revenue of approximately $5.7 billion
• Medical margin of approximately $375 million
• Adjusted EBITDA of approximately $25 million

For the second quarter, using midpoints, the company expects revenue of $1.45 billion, medical margin of $123 million, and adjusted EBITDA of $20 million.

Despite favorable medical cost trend development in the second half of 2025, Schwaneke said the company is maintaining its full-year 2026 net cost trend outlook of approximately 7% and continuing what he described as a prudent approach to Part D reserving because final reconciliations typically arrive in the third quarter.

Contracting priorities and 2027 outlook themes

Management repeatedly framed payer contracting as a central lever for sustainability. In response to questions about contracting opportunity, Schwaneke said agilon’s priorities remain consistent, including “percent of premium,” continued reduction of Part D exposure (which he said is now “less than 15% exposure on Part D” in 2026), and adding risk corridors or carving out items “outside of our control, like supplemental benefits.”

On the macro backdrop, Schwaneke said the company believes its starting point across markets aligns with the “5.33% effective growth rate” CMS noted for the final 2027 rate notice. He also said agilon believes it has “minimal exposure to unlinked chart reviews,” and that the company has been able to “more than offset the V28 hurdle” in recent years—adding in Q&A that stronger-than-expected risk adjustment performance in Q1 increased confidence in the company’s ability to offset the 1.12% normalization factor.

Williams told analysts that the company feels good about its positioning because primary care physicians see every patient and “the charts are audited very carefully,” adding that agilon’s focus is ensuring coding is “linked to real care that’s delivered to real patients.”

On growth, Williams said the near-term focus remains “in-market growth, in-market execution,” noting that physician partners are embedded in their communities and benefit from patients aging into Medicare Advantage, but adding, “The time will come when we will turn our attention to other things, but that time’s not here yet.”

In closing remarks, Williams said he has worked closely with the leadership team over the past eight months to increase urgency and focus on priorities tied to improved performance for members, physician partners, and payers, while reiterating optimism around the company’s physician-proximate model and welcoming incoming CEO Tim O’Rourke.

About Agilon Health NYSE: AGL

Agilon Health NYSE: AGL is a healthcare company that partners with independent primary care physicians to deliver value-based care for Medicare beneficiaries. Through risk-sharing arrangements, Agilon assumes financial responsibility for patient populations, enabling physicians to focus on preventive and proactive health management. The company provides the administrative, clinical and operational infrastructure needed to support comprehensive care delivery.

Agilon’s platform encompasses data analytics, care management, patient engagement tools and population health programs.

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