Agilon Health Q3 Earnings Call Highlights

Key Points

• Agilon raised its 2026 outlook after Q3 results exceeded guidance: revenue was about $1.5 billion, up 6% year over year, and adjusted EBITDA was $64 million versus a $91 million loss a year earlier. At guidance midpoints, it now expects about $5.88 billion in revenue and $150 million in adjusted EBITDA, up from a prior EBITDA midpoint of about $85 million.
• Improved risk-adjustment revenue and favorable medical costs supported results: the medical services expense ratio fell to 88.5% from 104% a year earlier, and first-half cost trends were estimated in the low 6% range. Medicare Advantage membership declined to 454,000 from 503,000 a year earlier, primarily due to previously announced market exits.
• Agilon expects ACO membership to grow 40%–50% in 2027, from about 110,000 to 160,000, with most growth through the Medicare Shared Savings Program. It also expects a favorable, though more modest, payer-contracting benefit next year.

Agilon Health NYSE: AGL raised its full-year 2026 outlook after reporting third-quarter results that exceeded its guidance, driven by higher risk-adjustment revenue, clinical program performance and favorable medical cost development in the first half of the year.

The company reported third-quarter revenue of approximately $1.5 billion, up 6% from $1.4 billion a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization, a non-GAAP measure, rose to $64 million from a loss of $91 million.

For 2026, Agilon now expects approximately $5.88 billion in revenue and $150 million in adjusted EBITDA, using the midpoints of its guidance ranges. Its previous adjusted EBITDA guidance midpoint was approximately $85 million, Chief Financial Officer Jeff Schwaneke said.

Higher Revenue and Favorable Cost Development

Schwaneke said third-quarter revenue benefited from more constructive 2026 Medicare benchmark rates, payer contracting and higher revenue associated with improved diagnosis, assessment and treatment of members’ conditions. Those gains more than offset a decline in Medicare Advantage membership.

Agilon ended the quarter with 454,000 Medicare Advantage members, compared with 437,000 at the end of the second quarter and 503,000 a year earlier. The current-quarter figure included approximately 39,000 members in care coordination fee arrangements. Schwaneke attributed the year-over-year decline primarily to previously disclosed market exits tied to the company’s profitability-focused contracting approach.

The company’s newly disclosed medical services expense ratio was 88.5% in the third quarter, compared with 104% a year earlier. Schwaneke said higher medical services revenue, including risk-adjustment true-ups, and lower medical expenses contributed to the improvement.

Medical cost trends for the first half of 2026 developed favorably and are now estimated in the low 6% range, he said. Agilon recorded a third-quarter cost trend in the low 7% range, reflecting what Schwaneke described as a prudent reserving approach and limited paid-claims visibility at quarter-end. The full-year outlook assumes a cost trend in the 7% range for the remainder of the year.

Third-quarter adjusted EBITDA exceeded the midpoint of Agilon’s guidance by approximately $64 million. Schwaneke said the beat included $14 million in favorable prior-year development, $23 million from a revised risk-adjustment estimate, $11 million in ACO performance and $12 million from favorable first-half cost trends. Approximately $4 million reflected expenses expected to shift into the fourth quarter.

In explaining the increase in full-year guidance, Schwaneke said the fourth-quarter effect of improved risk adjustment was approximately $7 million. The company also raised its year-end cash outlook to at least $175 million. It ended the third quarter with $312 million in cash and marketable securities, plus $74 million of off-balance-sheet cash held by its ACO entities.

ACO Growth and 2027 Contracting

Chief Executive Officer Tim O’Rourke said Agilon expects accountable care organization membership to grow approximately 40% to 50% in 2027, with most of the increase coming through the Medicare Shared Savings Program. Schwaneke said the company anticipates growing from approximately 110,000 ACO members to approximately 160,000.

Agilon announced three expanded relationships during the quarter covering nearly 50,000 Medicare Shared Savings Program members. Each physician partner already had full-risk Medicare Advantage contracts with the company, O’Rourke said.

Agilon increased its 2026 adjusted EBITDA expectation for ACO REACH to $40 million to $45 million, including approximately $18 million in year-to-date contributions from 2025 performance. O’Rourke said the company will provide more detail on expected 2027 ACO membership and adjusted EBITDA when it issues full-year guidance in February.

Agilon is also working on 2027 payer contracts covering approximately half of its business. Schwaneke said the company expects a favorable contracting benefit next year, though a more modest one than in 2026, when it re-contracted approximately 80% of its membership.

Clinical Programs and Longer-Term Expansion

O’Rourke said Agilon continues to develop clinical pathways for conditions including congestive heart failure, dementia and lung health. He said the company is expanding virtual pharmacy services to support adherence to guideline-directed heart failure therapy; approximately 25% of partners currently participate. Dementia and lung health programs have been rolled out to about a third of markets and partners, he said.

Agilon achieved 4.2-star performance on quality measures used by its contracted health plans for measurement year 2025, O’Rourke said. Based on health plans’ overall performance, the company expects 75% of its members to be in plans rated at least four stars for payment year 2028, compared with 77% for 2027.

For expansion into new markets and physician groups, O’Rourke said the company is considering signing agreements in 2027 for an impact in 2028. New partnerships typically require 12 to 18 months to implement, he said, and Agilon would look to enter risk-bearing arrangements rather than care coordination fee structures.

About Agilon Health (NYSE:AGL)

Agilon Health, Inc is a healthcare company that partners with independent primary care physicians to support the transition from fee-for-service medicine to value-based care. The company works with physician practices serving primarily older adults enrolled in Medicare Advantage and helps them manage the cost, quality and coordination of care for their patient populations.

Agilon provides a technology-enabled platform that includes population health analytics, clinical and administrative support, care coordination resources and practice-management capabilities.

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