Agilon Health’s third quarter results showed revenue above Wall Street expectations, but profitability remained pressured due to persistent headwinds. Management attributed the quarter’s performance to ongoing execution of clinical and quality programs and cost discipline, but also highlighted the negative impact from lower-than-expected risk adjustment scores and elevated costs from exited markets. Executive Chairman Ronald Williams noted, “We were impacted by lower-than-expected in-year RAF contribution as well as continued high costs from exited markets,” underscoring the operational hurdles faced.
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agilon health (AGL) Q3 CY2025 Highlights:
- Revenue: $1.44 billion vs analyst estimates of $1.42 billion (1.1% year-on-year decline, 1% beat)
- Adjusted EPS: -$0.26 vs analyst expectations of -$0.14 (87.9% miss)
- Adjusted EBITDA: -$91.49 million vs analyst estimates of -$50.39 million (-6.4% margin, 81.6% miss)
- EBITDA guidance for the full year is -$257.5 million at the midpoint, below analyst estimates of -$183.5 million
- Operating Margin: -9.1%, in line with the same quarter last year
- Customers: 503,000, up from 498,000 in the previous quarter
- Market Capitalization: $273.4 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From agilon health’s Q3 Earnings Call
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Hua Ha (Baird) asked about the impact of ACO REACH program changes and whether narrowing savings rates would affect margins. CFO Jeffrey Schwaneke responded that lower economics are expected and some ACOs may transition to alternative models, but emphasized risk adjustment changes as more significant.
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Jack Slevin (Jefferies) questioned whether further market or payer exits were possible and their potential scale. Schwaneke confirmed a disciplined contracting approach, stating reductions in membership would benefit margins, though the magnitude remains uncertain.
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Ryan Langston (TD Cowen) inquired about risk adjustment impacts, especially for the 28% of members with previously unavailable data. Schwaneke noted a new payer was the main driver, but improved data integration should enhance future accuracy.
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Craig Jones (BofA Securities) asked about the scalability and ongoing value of new clinical programs such as palliative and heart failure pathways. Schwaneke explained these are permanent and expected to deliver continuous improvements as they expand.
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Matthew Shea (Needham) sought details on the rollout and timeline for COPD and dementia clinical pilots. Schwaneke stated pilots typically last 6-8 months, with phased market expansion planned for 2026.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the effectiveness of Agilon Health’s renegotiated and newly structured payer contracts in stabilizing margins, (2) the pace and financial impact of scaling clinical pathways for chronic conditions, and (3) the tangible benefits from enhanced data analytics in risk scoring and operational forecasting. These markers will help determine whether Agilon can achieve its targeted improvements in 2026.
agilon health currently trades at $0.65, down from $0.72 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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