AGL earnings call transcript, November 4, 2026

Supporting them with additional tools to identify disease earlier and coordinate care more effectively. This end-to-end approach is applied to each high-risk condition we address within our population. As we have previously stated, heart failure has emerged as a strong proof point for Agilon's technology-enabled clinical pathway framework, using earlier diagnosis and stronger treatment to improve patients' quality of life while reducing avoidable hospital utilization and medical expense. I want to show you the next one. I want to share one particular patient story with you, which I believe demonstrates the effectiveness of this end-to-end clinical pathway. A 72-year-old patient with hypertension and diabetes had quietly accepted leg swelling and shortness of breath as normal aging and never reported them as symptoms. I want to show you the next one. At AGLON's Technology Foundation, the patient was identified as a candidate for a risk-based echocardiogram screening and was proactively scheduled. That screening identified significant structural heart disease, which had previously gone undiagnosed. Following the results, the physician had a structured conversation with the patient to further assess the patient's daily symptoms, which in combination with echo findings revealed that the patient was experiencing symptomatic heart failure. The appropriate treatment began promptly with medications optimized in line with guideline-directed medical therapy, or GDMT. At the one-month follow-up, the patient said the swelling and breathlessness had resolved. They had felt better than they had.

had in years. This individual's experience demonstrates how Agilent's technology-enabled screening, physician training, and a trusted PCP relationship can turn an overlooked condition into earlier treatment, a meaningful improvement. daily life and reduce unnecessary medical utilization. While CHF pathways have been successful, there are still more opportunities to provide improved care and drive enhanced outcomes. We are continuing to roll out virtual pharmacy across our markets to drive greater adherence to GDMT and further improve performance. Similarly, we are executing a consistent framework for our other end-to-end pathways, including dementia. We are also investing in technology and AI-enabled capabilities that can serve as relevant information at the point of care, reduce administrative work, engage other patients, and help physicians focus their time on those with the greatest needs. We view these tools as force multipliers for primary care. Their value comes from combining technology with the judgment and experience of a trusted physician who understands the patient, the family, and the local community. It is integrating diverse structures. Unstructured and unstructured patient data to drive actionable insights embedded in both AGLON and the PCP workflows to support improved patient care and outcomes and reduce unnecessary medical costs. Through increased performance visibility across markets and payers, we believe we can uncover patterns earlier.

Reduce performance variability and more effectively leverage best practices nationwide. Quality remains central to our model and to the value we create for patients, physicians and health plan partners. Our physician partners show up every day. They deliver better, more coordinated care for their patients. This is supported by timely data and insights, accurate attribution and proactive collaboration. So care gaps are addressed before they become health issues. That commitment shows up in outcomes. Outcomes result in better management of chronic diseases, such as hypertension, cardiovascular disease, and diabetes, more cancer screenings, stronger medication adherence, and more consistent preventative care. To us, these are not. Metrics, but instead are real people getting healthier. Agilon STAR's performance is a result of a highly integrated quality operating model that combines data infrastructure, position engagement, and payer alignment each and every day. Following the publication of the measurement year 2025, Quality Cut Points, on a consolidated basis, Agilon increased gap closure by 3% versus prior year, and consistent with prior year, achieved a 4.2 STAR performance for quality measures used by our contracted health. Based on healthcare plan's overall performance, in measurement year 2025, nationally, we expect 75% of our members to be in 4-plus STAR plans for payment year 2028, compared with 71% nationally.

77% in payment year 2027. We achieved 5-star performance in measures for cardiovascular disease, hypertension, and cancer screenings, as well as 4-star performance in measures for diabetes management, all of which... reflect the impact of our work in preventative care, chronic disease management, and medication adherence. Looking beyond the quarter, we are encouraged by the continued development of our ACO business and the opportunities we see for 2027 beyond. We are seeing positive traction and strong interest from both existing and prospective physician partners. Based on the opportunities we've recently announced, we expect ACO membership to grow approximately 40 to 50%. In 2027, with the majority of that growth expected to come through the Medicare Shared Savings Program, or MSSP, and will enter 2027 with a balance between the two models. During the quarter, we announced three relationship expansions for nearly 50,000 MSSP members. In each case, the physician partner already held full-risk Medicare Advantage contracts with Agilon, so they know our processes well and have seen firsthand how our model supported by our clinical and quality programs can help improve care delivery and positively impact medical outcomes for patients. Through these expansions, we are extending our value-based care approach to traditional Medicare beneficiaries. in addition to their previously contracted Medicare Advantage patients.

We believe these expansions are significant to our business for a couple of reasons. First, it demonstrates the embedded growth opportunity and trust we build with our partners over time. As partners experience the benefits of the model, we can further deepen our relationships by extending a consistent care approach across a broader portion of their Medicare populations, improving support and outcomes for patients with the greatest needs. Second, it demonstrates the scalability and flexibility of the AGLON platform. We can bring our clinical programs, quality capabilities, technology-enabled workflows and care management resources to more physicians and patients across multiple value-based care models. Within the same organization. Our confidence in the opportunity ahead is grounded in demonstrated performance through the ACO business. As a reminder, in performance year 2024, our eight ACOs generated 229 million dollars in gross savings and achieved an average quality score of 96% with four earning perfect quality scores and five recognized as high performers. These results combined with our strong platform capabilities and continued interest reinforce our belief that the ACO business will remain a strong contributor to Agilon's performance in 2027 and beyond. As we enter 2027, we expect both ACO care models may create additional opportunities. for Agilon and our physician partners. We are taking a measured approach to that growth, prioritizing partnerships where we see strong alignment, a clear path to improve patient outcomes, and the ability to generate sustainable performance over time.

We will provide additional detail regarding expected total ACO membership and adjusted EBITDA contribution when we issue our full year 2027 guidance in February. Taken together, the progress this quarter reinforces our confidence in Agile. We believe our operational discipline is strengthening. Our clinical programs are becoming more systematic. Our physician partnerships are deepening and our ACO capabilities are enabling us to extend the reach of our model. to additional Medicare patients. We still have work ahead of us and remain focused on a few key areas. First, strengthening operational execution across the organization by reducing performance variability, ensuring that our strongest operating practices are consistently adopted across the network and enhancing our care delivery through the continuation of our clinical and quality programs. Second, Discipline Payer Contracting. We are in the midst of our 2027 contracting, which will address approximately 50% of our book of business, and we remain focused on reducing risk outside our control while securing economic supportive of the value we provide our physician and payer partners. Third, we are looking towards measured growth, ways to further enhance our data capabilities to drive actionable insights at the point of patient care, and gaining efficiencies while maintaining the market expertise, as well as our proximity to the PCP and patient, which

differentiates our model. With regards to growth, I want to remind you that we will take a measured approach. In the near term, we are focused on embedded opportunities. Looking to 2028 and beyond, we are evaluating new markets and position groups that align with our model. As a reminder, onboarding typically involves a 12- to 18-month implementation timeframe, which allows us to establish the infrastructure, data integration, and clinical workflows necessary to position these partnerships for long-term. Success. This disciplined approach, combined with our continued focus on operational execution, provides a solid foundation as we move forward. We believe we are well-positioned with the right strategy, the right physician partner. Partnerships, and an increasingly strong set of capabilities to work towards better outcomes for patients and more predictable performance over time. I want to thank our physician partners, employees, and health plan partners for their continued commitment and collaboration. Their work is the foundation of our progress and the reason we remain confident in AGLON's long-term opportunity. With that, I'll turn the call over to Jeff to discuss our financial results and updated outlook in greater detail.

Thank you, Tim, and good afternoon. As Tim mentioned, we're pleased with the continued strength in our performance and execution by the AGLON team and our PCP partners. Third quarter results were strong and exceeded the high end of our guidance. Across our key financial metrics, the positive results and increase to our full year guidance were driven by better than expected performance in the burden of illness and clinical pathways initiatives and favorable medical expense development. In the first half of 2026, I'll cover three things today. First, our strong third quarter financial performance. Second, an update on cost trends and the macro environment. And finally, our increased full year 2026 outlook and what we believe will drive continued performance improvement in 2027. First, let me highlight our third quarter performance. Medicare Advantage membership at the end of the third quarter was 454,000 members compared to 437,000 members at the end of the second quarter 2026 and 503,000 members in the third quarter of 2025. Membership in the current period and year to date includes approximately 39,000 members in care coordination fee arrangements. As a reminder, the year over year decline of approximately 10% reflects previously disclosed market exits. related to our discipline profitability focused approach to contracting in 2026 and measured approach to growth. ACO membership for the third quarter was 112,000 compared to 112,000.

...results and we believe the foundation we're building supports durable performance into 2027 and beyond. With that, operator, let's move to the Q&A portion of the call.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster.

Your next question comes from the line of Ryan Langston.

Your next question comes from the line of Andrew Mock with Barclays. Your line is open. Please go ahead.

Your next question comes from the line of Jack Slevin with Jeffries. Your line is open. Please go ahead.

Your next question comes from the line of Amir Farhani with Evercore. Your line is open.

Your next question comes from Ryan Daniels with William Blair. Your line is open. Please go ahead.

There are no further questions at this time. I will now turn the call back to Tim O'Rourke for closing remarks.

Thank you, operator, and thank you all for joining us today. The third quarter performance showed Agilon's continued progress against our strategic priorities and improved operational execution. I want to thank our employees along with our physician and payer partners for their dedication. and our shareholders for their continued support. We look forward to updating you next quarter. Thanks.

This concludes today's call.

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