Agilon Health’s Earnings Call: Mixed Sentiments and Future Prospects

Agilon Health Inc ((AGL)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for agilon Health Inc. presented a mixed sentiment, reflecting both positive strides and notable challenges. While the company showcased operational improvements, cost reductions, and successful clinical programs, it also faced significant financial hurdles, including negative margins, declining membership, and lower-than-expected risk adjustments.

Positive Developments for 2026

The company is optimistic about 2026, viewing it as a pivotal year with enhanced financial data pipeline ramping to 80% in membership and Part D exposure potentially decreasing below 30%. They anticipate improved forecasting, reduced volatility, and significant internal and market-driven tailwinds, setting a strong foundation for future growth.

Operating Cost Reductions

agilon Health has successfully reduced operating costs by $30 million and foresees further savings in 2026 through strategic realignment, centralization of functions, and alignment with PCP partners. These measures are expected to bolster the company’s financial health.

Strong ACO REACH Performance

The ACO REACH program exceeded expectations with an adjusted EBITDA of $18 million, underscoring the value agilon can deliver and its role in transforming their Medicare Advantage business.

Enhanced Stars Ratings

Approximately 75% of agilon members are projected to be in 4+ Star plans by 2027, up from 71% in the 2026 payment year. This improvement supports better payer economics and reflects positively on the company’s quality of service.

Clinical Program Success

The heart failure pathway has significantly reduced new inpatient heart failure diagnosis rates from 18% in 2024 to 5% in 2025. Additionally, virtual pharmacy solutions have led to 30-day readmission rates falling below 5%, compared to the national average of 20%.

Negative Financial Metrics

In Q3 2025, agilon Health reported a revenue of $1.44 billion, but faced a medical margin of negative $57 million and an adjusted EBITDA of negative $91 million, highlighting ongoing financial challenges.

Lower-than-Expected Risk Adjustment

The company faced a significant impact on its medical margin, approximately $150 million, due to lower-than-expected risk adjustment, primarily driven by one payer in a new market in 2024.

Membership Decline

There was a decline in Medicare Advantage membership from 525,000 members in Q3 2024 to 503,000 in Q3 2025, and ACO REACH membership also decreased from 132,000 to 115,000 in the same period, indicating challenges in maintaining membership levels.

High Medical Cost Trends

Elevated medical cost trends for inpatient and Part D oncology drugs continue to impact the company’s financial performance, posing a challenge to profitability.

Forward-Looking Guidance

During the earnings call, agilon Health provided guidance for fiscal year 2025, projecting revenue to reach $5.82 billion and a medical margin of $5 million, with adjusted EBITDA expected at negative $258 million. These projections account for the impact of lower-than-expected risk scores and expenses from exited markets, partially offset by positive developments in medical costs and strong ACO REACH performance. Strategic initiatives, including cost reductions, enhanced data analytics, and improved payer contract terms, are expected to drive better financial performance in 2026.

In summary, agilon Health’s earnings call highlighted a blend of positive developments and financial challenges. While the company is making strides in operational efficiency and clinical success, it continues to grapple with negative financial metrics and membership declines. The forward-looking guidance suggests a cautious optimism for 2026, with strategic initiatives aimed at improving financial outcomes.