agilon health, inc. (NYSE: AGL), the company transforming health
care for seniors by empowering primary-care physicians to focus on
the entire health of their patients, announced results for the
first quarter ended March 31, 2021.
First Quarter 2021
Results:
- Total revenue of $413 million increased 42% from 2020 and would
have increased approximately 50% including a recently completed
group Medicare Advantage (MA) contract that is retroactive to
January 2021
- Members of approximately 165,300 as of March 31 increased 35%
from 2020 and would have increased 42% to approximately 174,300
including the retroactive group contract
- Same geography membership growth of 8% from 2020 and same
geography membership growth of 15% including the retroactive group
contract
- Net loss from continuing operations of $14 million, compared to
$8 million in 2020
- Medical Margin of $52 million, compared to $42 million in
2020
- Adjusted EBITDA of $4 million, compared to $3 million in
2020
“We are pleased with our first quarter results, highlighted by
42% revenue growth and 35% membership growth. Including the
retroactive group MA contract, same geography membership growth
increased 15%, reflective of strong member retention and
broad-based additions across all markets. Our aligned partnership
model is resonating with physician groups and we began implementing
six new geographies with approximately 49,000 members that will
go-live in January 2022,” said Steve Sell, Chief Executive Officer.
“With the completion of our initial public offering, we are well
capitalized to support our growth strategy. We plan to use the
proceeds to scale our platform, support growth of our existing
physician partners, and partner with additional groups to help
transform senior care in local communities across the country.”
Outlook for Second Quarter and Fiscal
Year 2021:
Quarter Ending June 30, 2021
Year Ending December 31, 2021
Low
High
Low
High
Ending members
175,000
177,000
182,000
184,000
Total revenues ($M)
$470
$475
$1,765
$1,780
Adjusted EBITDA ($M)
($41)
($38)
Total revenue outlook for the second quarter 2021 includes an
estimated $24 million associated with the group MA contract
attributable to the first quarter. Adjusted EBITDA loss reflected
in the full year 2021 outlook is expected to be weighted to the
second half of the fiscal year.
We have not reconciled guidance for Adjusted EBITDA to net
income (loss), the most directly comparable GAAP measure, and have
not provided forward-looking guidance for net income (loss),
because of the uncertainty around certain items that may impact net
income (loss), including stock-based compensation, that are not
within our control or cannot be reasonably predicted.
Membership Details
Membership as of March 31, 2021 was approximately 165,300, an
increase of 35% from 2020. Average membership during the first
quarter 2021 was approximately 163,000. Including an estimated
49,000 members currently in implementation for 2022 go-live, total
MA membership on the agilon platform was approximately 214,300 as
of March 31, 2021.
Same geography membership increased 8% year-over-year during the
first quarter 2021 and increased 15% including a recently completed
group MA contract that is retroactive to January 2021. During the
first quarter, a group MA contract transitioned between two payers
in one of our geographies. Due to the timing required to complete
the transition, agilon health’s first quarter 2021 results do not
include the revenue, membership, or costs of these members. agilon
health recently completed a new agreement covering this membership
and this will be reflected in the company’s financial results for
the second quarter 2021, including retroactive amounts associated
with first quarter 2021. We estimate the retroactive revenue and
membership associated with this contract for the first quarter 2021
are approximately $24 million and 9,000, respectively. Importantly,
patients covered by this group plan were under the continuous care
of their primary care doctor during this transition.
Direct Contracting
In collaboration with seven of our physician group partners, we
launched five Direct Contracting Entities (DCE) with over 50,000
attributed beneficiaries on April 1, 2021. The DCE program allows
physician groups on the agilon platform to operate a single line of
business for Medicare patients. While the recent announcement from
the Center for Medicare and Medicaid Innovation will limit new DCE
entrants for 2022, we will be able to utilize existing DCEs as a
vehicle for existing or new physician groups to participate in the
Direct Contracting program.
Initial Public Offering and Debt Refinancing
On April 19, 2021, we completed the initial public offering of
53,590,000 shares of common stock at a price of $23.00 per share.
The net proceeds of the offering were approximately $1.16 billion,
after underwriting fees and other offering expenses.
On February 18, 2021, we executed a new credit facility
agreement (2021 Secured Credit Facilities). The 2021 Secured Credit
Facilities included an initial $100 million senior secured term
loan and a $100 million senior secured revolving credit facility.
Subsequent to the end of the first quarter and in connection with
our initial public offering, we repaid $50 million of the senior
secured term loan.
As of April 30, 2021, including the impact from the initial
public offering, debt refinancing, debt repayment and other items,
agilon health had approximately $1.1 billion of cash and $50
million of debt outstanding.
Webcast and Conference Call:
agilon health will host a conference call and webcast to discuss
first quarter 2021 results on Thursday, May 27, 2021 at 8:30 AM
Eastern Time. The conference call and webcast can be accessed by
dialing (855) 435-0829 for U.S. participants, or +1 (639) 491-2399
for international participants, and referencing participant code
9436419, or visiting the “Events & Presentations” section of
https://investors.agilonhealth.com. A replay of the call will be
available via webcast for on-demand listening shortly after the
completion of the call.
About agilon health
agilon health is transforming health care for seniors by
empowering primary-care physicians to focus on the entire health of
their patients. Through our partnerships and our platform, agilon
is leading the nation in creating the system we need – one built on
the value of care, not the volume of fees. We honor the
independence of local physicians and serve as their partners so
they can be the doctors they trained to be. agilon provides the
capital, data, payor relationships, executive experience and
contract support that allow physician groups to take on the risk of
total care for their most vulnerable patients. The result:
healthier communities, and doctors who can devote the right amount
of time with the patients who need it most. With rapidly growing
appeal, agilon is scaled to grow and is here to help our nation’s
best independent physician groups have a sustained, thriving
future. Together, we are reinventing primary care.
Forward Looking Statements
Statements in this release that are not historical facts are
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements include, among other things, statements regarding our
and our officers’ intent, belief or expectation as identified by
the use of words such as “may,” “will,” “project,” “expect,”
“believe,” “intend,” “anticipate,” “seek,” "target," “forecast,”
“plan,” “potential,” “estimate,” “could,” “would,” “should,” and
other comparable and derivative terms or the negatives thereof.
Examples of forward-looking statements include, among other things:
(i) statements regarding timing, outcomes and other details
relating to current, pending or contemplated new markets, new
partnership structures, financing activities, dispositions, or
other transactions discussed in this release; and (ii) statements
regarding growth opportunities, ability to deliver sustainable
long-term value, business environment, long term opportunities and
strategic growth plan including without limitation with respect to
expected revenue and net income, total and average membership,
Adjusted EBITDA, and other financial projections and assumptions,
as well as comparable statements included in other sections of this
release. Forward-looking statements reflect our current
expectations and views about future events and are subject to risks
and uncertainties that could significantly affect our future
financial condition and results of operations. While
forward-looking statements reflect our good faith belief and
assumptions we believe to be reasonable based upon current
information, we can give no assurance that our expectations or
forecasts will be attained. Further, we cannot guarantee the
accuracy of any such forward-looking statement contained in this
release, and such forward-looking statements are subject to known
and unknown risks and uncertainties that are difficult to predict.
These risks and uncertainties that could cause actual results and
outcomes to differ from those reflected in forward-looking
statements include, but are not limited to: our history of net
losses, and our ability to achieve or maintain profitability in an
environment of increasing expenses; our ability to identify and
develop successful new geographies, physician partners and payors,
or to execute upon our growth initiatives; our ability to execute
our operation strategies or to achieve results consistent with our
historical performance; our expectation that our expenses will
increase in the future and the risk that medical expenses incurred
on behalf of members may exceed the amount of medical revenues we
receive; our ability to secure contracts with Medicare Advantage
payors or to secure Medicare Advantage at favorable financial
terms; our ability to recover startup costs incurred during the
initial stages of development of our physician partner
relationships and program initiatives; significant reductions in
our membership; challenges for our physician partners in the
transition to a Total Care Model; inaccuracies in the estimates and
assumptions we use to project the size, revenue or medical expense
amounts of our target market; the spread of, and response to, the
novel coronavirus, or COVID-19, and the inability to predict the
ultimate impact on us; security breaches, loss of data or other
disruptions to our data platforms; the impact of devoting
significant attention and resources to the provision of certain
transition services in connection with the disposition of our
California operations; our subsidiaries’ lack of performance or
ability to fund their operations, which could require us to fund
such losses; our dependence on a limited number of key payors; the
limited terms of our contracts with payors and that they may not be
renewed upon their expiration; our reliance on our payors for
membership attribution and assignment, data and reporting accuracy
and claims payment; our dependence on physician partners and other
providers to effectively manage the quality and cost of care and
perform obligations under payor contracts; our dependence on
physician partners to accurately, timely and sufficiently document
their services and potential False Claims Act or other liability if
any diagnosis information or encounter data are inaccurate or
incorrect; reductions in reimbursement rates or methodology applied
to derive reimbursement from, or discontinuation of, federal
government healthcare programs, from which we derive substantially
all of our total revenue; statutory or regulatory changes,
administrative rulings, interpretations of policy and
determinations by intermediaries and governmental funding
restrictions, and their impact on government funding, program
coverage and reimbursements; regulatory proposals directed at
containing or lowering the cost of healthcare and our participation
in such proposed models; the impact on our revenue of CMS modifying
the methodology used to determine the revenue associated with MA
members; our substantial indebtedness and the potential that we may
incur additional indebtedness; and risks related to other factors
discussed under “Risk Factors” in our Registration Statement on
Form S-1. Except as required by law, we do not undertake, and
hereby disclaim, any obligation to update any forward-looking
statements, which speak only as of the date on which they are
made.
agilon health, inc.
Consolidated Balance
Sheets
In thousands, except share and
per share data
March 31,
2021
December 31,
2020
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
105,289
$
106,795
Restricted cash and equivalents
14,202
28,383
Receivables, net
288,827
144,555
Prepaid expenses and other current assets,
net
9,314
9,639
Current assets held for sale and
discontinued operations, net
—
4,825
Total current assets
417,632
294,197
Property and equipment, net
4,799
6,456
Intangible assets, net
61,609
60,468
Goodwill
41,540
41,540
Other assets, net
47,259
43,700
Non-current assets held for sale, net
1,199
—
Total assets
$
574,038
$
446,361
LIABILITIES, CONTINGENTLY REDEEMABLE
COMMON STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Medical claims and related payables
$
276,984
$
162,868
Accounts payable and accrued expenses
95,122
97,244
Current portion of long-term debt
—
3,041
Current liabilities held for sale and
discontinued operations
—
3,682
Total current liabilities
372,106
266,835
Long-term debt, net of current portion
99,412
64,665
Other liabilities
91,264
90,091
Total liabilities
562,782
421,591
Commitments and contingencies
Contingently redeemable common stock,
$0.01 par value: 76,201 shares issued and outstanding
309,500
309,500
Stockholders' equity (deficit):
Common stock, $0.01 par value: 500,000
shares authorized; 249,474 and 249,374 shares issued and
outstanding, respectively
2,494
2,494
Additional paid-in capital
265,603
263,966
Accumulated deficit
(566,268
)
(551,190
)
Total agilon health, inc. stockholders'
equity
(298,171
)
(284,730
)
Noncontrolling interests
(73
)
—
Total stockholders’ equity (deficit)
(298,244
)
(284,730
)
Total liabilities, contingently redeemable
common stock and stockholders’ equity (deficit)
$
574,038
$
446,361
agilon health, inc.
Consolidated Statements of
Operations
In thousands, except per share
data
(unaudited)
Three Months Ended March
31,
2021
2020
Revenues:
Medical services revenue
$
412,412
$
289,814
Other operating revenue
692
1,234
Total revenues
413,104
291,048
Expenses:
Medical services expense
360,354
247,653
Other medical expenses
23,661
18,426
General and administrative
37,777
27,605
Depreciation and amortization
3,427
3,198
Total expenses
425,219
296,882
Income (loss) from operations
(12,115
)
(5,834
)
Other income (expense):
Other income (expense), net
1,336
122
Interest expense
(2,941
)
(2,149
)
Income (loss) before income
taxes
(13,720
)
(7,861
)
Income tax benefit (expense)
(16
)
—
Income (loss) from continuing
operations
(13,736
)
(7,861
)
Discontinued operations:
Income (loss) before income taxes
(1,351
)
(8,089
)
Income tax benefit (expense)
(64
)
(149
)
Total discontinued operations
(1,415
)
(8,238
)
Net income (loss)
(15,151
)
(16,099
)
Noncontrolling interests’ share in
earnings (loss)
73
—
Net income (loss) attributable to
common shares
$
(15,078
)
$
(16,099
)
Net income (loss) per common share,
basic and diluted
Continuing operations
$
(0.04
)
$
(0.02
)
Discontinued operations
$
(0.01
)
$
(0.03
)
Weighted average shares outstanding,
basic and diluted
325,659
321,250
agilon health, inc.
Condensed Consolidated
Statements Of Cash Flows
In thousands, except per share
data
(unaudited)
Three Months Ended March
31,
2021
2020
Cash flows from operating
activities:
Net income (loss)
$
(15,151
)
$
(16,099
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
3,481
3,363
Stock-based compensation expense
1,472
1,071
Loss on debt extinguishment
1,186
—
Other noncash items
1,766
837
Changes in operating assets and
liabilities
(33,582
)
(15,299
)
Net cash provided by (used in) operating
activities
(40,828
)
(26,127
)
Cash flows from investing
activities:
Purchase of property and equipment,
net
(178
)
(345
)
Purchase of intangible assets
(3,986
)
(33
)
Investment in loans receivable and
other
(1,204
)
(359
)
Proceeds from repayment of loans
receivable
—
1,056
Proceeds from sale of business, net of
cash divested
(3,706
)
—
Net cash provided by (used in) investing
activities
(9,074
)
319
Cash flows from financing
activities:
Proceeds from equity issuances, net
—
28,128
Proceeds from exercise of stock
options
165
—
Proceeds from the issuance of long-term
debt
100,000
—
Debt issuance costs
(1,218
)
—
Repayments of long-term borrowings
(68,649
)
(760
)
Net cash provided by (used in) financing
activities
30,298
27,368
Net increase (decrease) in cash, cash
equivalents and restricted cash and equivalents
(19,604
)
1,560
Cash, cash equivalents and restricted cash
and equivalents from continuing operations, beginning of period
135,178
139,152
Cash, cash equivalents and restricted cash
and equivalents from discontinued operations, beginning of
period
3,917
6,460
Cash, cash equivalents and restricted
cash and equivalents, beginning of period
139,095
145,612
Cash, cash equivalents and restricted cash
and equivalents from continuing operations, end of period
119,491
142,563
Cash, cash equivalents and restricted cash
and equivalents from discontinued operations, end of period
—
4,609
Cash, cash equivalents and restricted
cash and equivalents, end of period
$
119,491
$
147,172
agilon health, inc.
Key Operating Metrics
In thousands
(unaudited)
MEDICAL MARGIN
Three Months Ended March
31,
2021
2020
Medical services revenue
$
412,412
$
289,814
Medical services expense
(360,354
)
(247,653
)
Medical margin
$
52,058
$
42,161
Medical margin represents the amount earned from medical
services revenue after medical services expenses are deducted.
Medical services expense represents costs incurred for medical
services provided to our members. As our platform matures over
time, we expect medical margin to increase in absolute dollars.
However, medical margin per member per month (PMPM) may vary as the
percentage of new members brought onto our platform fluctuates. New
membership added to the platform is typically dilutive to medical
margin PMPM.
GENERAL AND ADMINISTRATIVE COSTS,
INCLUDING PLATFORM SUPPORT COSTS
Three Months Ended March
31,
2021
2020
Platform support costs
$
28,408
$
23,520
Geography entry costs(1)
3,222
652
Severance and related costs
454
2
Management fees(2)
375
330
Stock-based compensation expense
1,472
1,021
Other(3)
3,846
2,080
General and administrative
$
37,777
$
27,605
(1)
Represents physician incentive
expense related to surplus sharing and other direct medical
expenses incurred to improve care for our members in our live
geographies. Excludes costs in geographies for which we are
contracted to go live in January of the following year.
(2)
Represents management fees and
other expenses paid to Clayton Dubilier & Rice, LLC
(“CD&R”). In connection with our initial public offering, we
terminated our consulting agreement with CD&R, effective April
16, 2021. We were not charged a fee in connection with the
termination of this agreement.
(3)
Includes changes in non-cash
accruals for unasserted claims and contingent liabilities.
Our platform support costs, which include regionally-based
support personnel and other operating costs to support our
geographies, are expected to decrease over time as a percentage of
revenue as our physician partners add members and our revenue
grows. Our operating expenses at the enterprise level include
resources and technology to support payor contracting, clinical
program development, quality, data management, finance and legal
functions.
agilon health, inc.
Non-GAAP Financial
Measures
In thousands
(unaudited)
NETWORK CONTRIBUTION
Three Months Ended March
31,
2021
2020
Income (loss) from operations
$
(12,115
)
$
(5,834
)
Other operating revenue
(692
)
(1,234
)
Other medical expenses
23,661
18,426
Other medical expenses—live
geographies(1)
(21,916
)
(17,421
)
General and administrative
37,777
27,605
Depreciation and amortization
3,427
3,198
Network contribution
$
30,142
$
24,740
(1)
Represents physician incentive
expense related to surplus sharing and other direct medical
expenses incurred to improve care for our members in our live
geographies. Excludes costs in geographies for which we are
contracted to go live in January of the following period. For the
three months ended March 31, 2021 and 2020, costs incurred in
implementing geographies were $1.8 million and $1.0 million,
respectively.
ADJUSTED EBITDA
Three Months Ended March
31,
2021
2020
Net income (loss)
$
(15,151
)
$
(16,099
)
(Income) loss from discontinued
operations, net of income taxes
1,415
8,238
Interest expense
2,941
2,149
Income tax expense (benefit)
16
0
Depreciation and amortization
3,427
3,198
Geography entry costs(1)
4,967
1,658
Severance and related costs
454
2
Management fees(2)
375
330
Stock-based compensation expense
1,472
1,021
Other(3)
3,846
2,080
Adjusted EBITDA
$
3,762
$
2,577
(1)
Represents direct geography entry
costs, including investments to develop and expand our platform,
physician incentive expense, employee-related expenses and
marketing. For the three months ended March 31, 2021 and 2020, (i)
$1.8 million and $1.0 million, respectively, are included in other
medical expenses and (ii) $3.2 million and $0.7 million,
respectively, are included in general and administrative
expenses.
(2)
Represents management fees and
other expenses paid to CD&R. In connection with our initial
public offering, we terminated our consulting agreement with
CD&R, effective April 16, 2021. We were not charged a fee in
connection with the termination of this agreement.
(3)
Includes changes in non-cash
accruals for unasserted claims and contingent liabilities.
In addition to providing results that are determined in
accordance with GAAP, we present network contribution and Adjusted
EBITDA, which are non-GAAP financial measures.
We define network contribution as medical services revenue less
the sum of: (i) medical services expense and (ii) other medical
expenses excluding costs incurred in implementing geographies.
Other medical expenses consist of physician incentive expense
related to surplus sharing and other direct medical expenses
incurred to improve care for our members. We believe this metric
provides insight into the economics of our Total Care Model as it
includes all medical services expense associated with our members’
care as well as partner incentive and additional medical costs we
incur as part of our aligned partnership model. Other medical
expenses are largely variable and proportionate to the level of
surplus in each respective geography.
We define Adjusted EBITDA as net income (loss) adjusted to
exclude: (i) income (loss) from discontinued operations, net of
income taxes, (ii) interest expense, (iii) income tax expense
(benefit), (iv) depreciation and amortization expense, (v)
geography entry costs, (vi) share-based compensation expense, (vii)
severance and related costs and (viii) certain other items that are
not considered by us in the evaluation of ongoing operating
performance.
Income (loss) from operations is the most directly comparable
GAAP measure to network contribution. Net income (loss) is the most
directly comparable GAAP measure to Adjusted EBITDA.
We believe network contribution and Adjusted EBITDA help
identify underlying trends in our business and facilitate
evaluation of period-to-period operating performance of our live
geographies by eliminating items that are variable in nature and
not considered by us in the evaluation of ongoing operating
performance, allowing comparison of our recurring core business
operating results over multiple periods. We also believe network
contribution and Adjusted EBITDA provide useful information about
our operating results, enhance the overall understanding of our
past performance and future prospects, and allow for greater
transparency with respect to key metrics we use for financial and
operational decision-making. We believe network contribution and
Adjusted EBITDA or similarly titled non-GAAP measures are widely
used by investors, securities analysts, ratings agencies, and other
parties in evaluating companies in our industry as a measure of
financial performance. Other companies may calculate network
contribution and Adjusted EBITDA or similarly-titled non-GAAP
measures differently from the way we calculate these metrics. As a
result, our presentation of network contribution and Adjusted
EBITDA may not be comparable to similarly titled measures of other
companies, limiting their usefulness as comparative measures.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210526005986/en/
Investor Contact Matthew Gillmor VP of Investor Relations
investor.relations@agilonhealth.com
Media Contact Shannan Siemens Managing Director, Mercury
media@agilonhealth.com
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