agilon health (AGL) 7 Aug 212021 Q2 Earnings call transcript

Hello, everyone, and welcome to the agilon health Second Quarter 2021 Earnings Conference Call. My name is Brika, and I'll be the moderator for today's event. [Operator Instructions]. And I will now hand over to Matthew Gillmor to start. Sir Matthew, please go ahead when you're ready.

Brika. you, Thank welcome and second conference quarter Good to call. morning, our morning With Steve is Sell; this and CEO, Bensley. our me Tim our CFO,

prepared and Q&A Following Steve will from a conduct Tim, session. we remarks

discussed with to to and statements Before we responses our questions we and due in stated differ to include may or you uncertainties may associated our statements. results from no remarks risks to assume Actual Please remind update our forward-looking materially filings. begin, risks forward-looking note and that implied are statements. any business. like These I'd those SEC by uncertainties forward-looking that obligation

non-GAAP more A that, certain to financial and financial to results is in understanding is the these non-GAAP our providing earnings GAAP Steve. are with financial SEC. most believe of consistent of Additionally, call filed and that views management measure release with financial we call and measures these results. over measures in comparable gain turn complete this X-K measures. investors We discuss the our the available measures financial press helps how Steve? reconciliation the will I'll Form better With a

from for Thanks, everyone, morning, and today's thank Texas. us. Matt. We're hosting you call Good Austin, joining

primary expanded to support increasing panels adding the group to senior Austin in our largest and demonstrates with partners. top independent our details market Austin Austin closed largest years, power I quality about new with a it agilon minute market care and about partnership I'd our opening important the built physicians, of care and what access XXXX, Physicians, the has physician care experience to Before has X.X In group, second previously the and Regional get team-based like independent multi-specialty partnership entered region. the how in and talk patients. analytics quarter, agilon our to take clinical In in Premier in Clinic, the Family by primary this

improving generating a go partners scores. in year, compounded double will patient program, and quality at the the currently in XXXX. and expanded live has membership dramatically anchor annual are we local in X Texas nearly that implementation East growth experience Advantage world-class new Medicare while the awesome Our in with rate expanded Last all

of Our an growth the country. can of resulting care experience we local access further and awesome independent experience and senior numerous primary that across is statewide in in in care, now communities the benefits quality see states and and and patient in Texas replicated terms

in the our with areas Now remarks. prepared will X of focus cover my call. I

with our launching from I'll highlights Membership and performance finally, XXXX new up our Revenues the quarter few from growth XX%. First, for America; progress membership for this and were up quarter. We XX%, geography a first XX% with reported quarter. basis XX% wrap increased some was pleased in our Starting growth our retroactive on were quarter. with markets up second, Direct from second some results; same collaboration the for on Contracting. membership and increased normalized driving comments recently a and XXXX; third, in second update highlights Primary an Care on and

anchor growth geography new Our driven highly within choosing Medicare panels patients efficient approach same is joining strong Advantage by it as retention, and physicians is existing our platform. on distinctive or the partners

senior practices. partner plan technology of partners attributed tighter accelerated patients strong our in and the quarter's in pull-through operational with amplified was alignments as investments This growth health

in patients. diverse for than XXX,XXX to January have the flexibility now our senior support This XXX,XXX This number We than This our growth the at of compares members and X X; added members on purpose-built XXXX. of implementing reflects demand health Geographies; XX,XXX At innovative growing platform on delivery implementation members of record partners agilon added incredible XXXX, for January the new XX,XXX approximately includes stakeholders scale, year membership. live more the in geographies from and and time are of same a among set we platform and this XX,XXX the XXXX. currently end the Advantage XX,XXX Toledo; groups in Medicare contracting care-centric more primary existing direct geographies Medicare April and platform and care members to at onboard finally, beneficiaries members a in to Same attributed serve, to Hartford, our models. of Advantage Buffalo partners and added the their

a overall results, member XXXX. due medical We per QX of per from our in which up but of period margin. margin depressed QX trend This XXXX, year growth year-to-date With are from year-to-date is the same in down COVID, underlying utilization, significantly in is particularly month XXXX. advanced margin strong $XXX last seeing medical to medical has to in

We members strong despite very from a the have made temporary this the progress improvement from earlier the dilution indicating platform, new cohort patient on groups. our

against EBITDA. improvement platform adjusted resulting our our Additionally, in we've period, leverage substantial over support, in the same driven

and medicine briefings, months, longer in primary recent Sciences care with outlines in In Academies discussions. discipline the the of costs. report the through America. leading along Turning greater Primary is coming Care the group In the engage XX on American for Academy innovative health a on influencing models. Care life This intent America better Family form care for from increased of including we of health expectancy with and Physicians of June, and focused The new only this primary the outcomes, now policy. lower College supply partnered government to of late demonstrating where the Primary to series care American for collaboration policymakers launch need and investment payment organizations, of roundtable value will as health recommendations National Physicians, of results a

to XXXX on our progress growth in Now let turn for markets me XXXX. new driving and

discussed, have mentioned physician groups with partner East X in including we members, groups Advantage the earlier. As Medicare previously Texas includes class XX,XXX XXXX of the X I

tempo of terms implementing until of XXXX January generating made next geographies, The local X of progress geographies technology and new penetration very work As intent with a markets. start The is this existing months. Annual of in plan, leadership in of class the pipeline integration groups the states revenue with electronic new last encouraging set with the letters With on continue in health our development are with hiring reminder, We've great and in different data multiple levels in signed and as advanced our a dialogue progress our of business these to these completing contracting plans partners in won't or made XXXX, team platform couple has in both progress the respect diverse line multiple the for intent in new will remind plan wellness you that months. begin new new of MA systems. the implementation with back as development payer and of existing visits letter And we states. mix. while and by will and we to in new members well are continue half year. work This initial of markets, tracking more signed both but includes medical through this on calls, share record and for strong strong make holistic details groups year. and coming in we new future will pace

by encompassing patients interest to model. in of class their care Direct And we and of opportunity of business, to subscription-based senior both Contracting. these levels operating an Medicare the shift higher XXXX, the Medicare a each integrated is Advantage seeing Within of total are compelled line groups

enthusiasm for gathered additions Traverse outcomes existing for strong partners, XXXX of onboarding our at included the accelerate of physician X as from rates. transforming the by senior to With leveraging breadth care of as members partners senior prospects, from agilon. our for in practices, XXXX. And energy for In XXXX partners our XX XXXX network July, The days the Michigan with new best the a partners class grow hosted partners, we class improve and are in entire X were our and class was City, the and and all share their well potential this impressive retreat. late continues We of we palpable. of gathering the communities to our of and patients,

Direct on close Let an me Contracting. providing by update

our pleased been in initial program. performance have new this with We

While gone expectations. modestly came And it's EBITDA launch our initial in still has our smoothly. and relatively adjusted attributed membership early, above

the the Medicare of partners of entire line business. are Importantly, noticing across benefits physician our operating consistently already

Innovation discuss sustainability advance the to Over the able spend with Medicare been to the stakeholders as time of We've been policies well as the members interested the with months, Center we've hope past program. could the several to improve predictability program. and other and and encouraged Congress of dialogue that

prior on primary the access government over improving But to believe care said calls, time. goals As aligned with Contracting is we to equity and fundamentally of change Direct programs models. administration's delivery I've continue

in partners existing call that, for plans Direct update few the those expect new you will next over the turn months, and Tim. we in now with we our Over Contracting call. the our XXXX, With next on decisions to participating to Program in and formalize I'll

Thanks, members X growth the second Same Steve, was which by reflects morning, the growth approximately review first Geographies our markets starting membership in quarter XXXX, we the the with group the a some It's up new on Membership geography at average the to everyone. XX% to membership. financial highlights last increased approximately or details geographies year. that went national to in contract last during from statements membership includes for mentioned retro of rate during above XXX,XXX provide January. was Same driven of quarter, Similar same impact to growth by additional retroactive keep XX% broad-based and was quarter. the attributed growth full last and growing some year Advantage guidance our was quarter. for call. mind quarter good metric on all our the with geography our from the and across third membership large I'll enrollment. Membership Average This year-over-year combination that XX,XXX for in Medicare basis on and same important impact quarter, live second a geography XX% XXX,XXX. was growth

some Steve impact. $XXX as million. during drove attribution XX% average year-over-year $XXX from revenues Revenues quarter, benefited to on referenced, Additionally, a the basis which faster XX% increased to Year-to-date increased retro membership additional million. member

associated quarter million in retro revenue quarter. include the with first Second results $XX

was Excluding increased been basis, per and the Revenue new member XX% growth month per a by suspension primarily revenue revenue sequestration Same benchmarks, quarter. year. On The or month revenue driven county and relative X during changes CMS gains this, from driven would Geographies. increase quarter. geographies PMPM, to PMPM member growth to updates burden in illness the prior have X.X% or primarily by of membership was in acuity to of second extra

costs compared quarter impacted medical by $XXX the and retro the mix in on structure true-ups, a was to to COVID on a and closer our of well XX% last the partners, On in $XXX $XX PMPM in million year. year-over-year the G&A, clinical $XX quarter more margin. the last Revenue physician to platform was impact in on true-ups as $XXX year. lower support Additionally, prior contribution to year-to-date of year reflects to On was $XX during The prior support medical compared Medical below quarter members. compared support have and growth, $XX the margin than would during a which enterprise The XXXX. compared in platform. sequestration during margin overhead with to period for million the with few prior year-to-date network the growth basis, costs, numbers include million model. PMPM margin the which utilization million The $XX a XX% PMPM the year-to-date was Network consistent these roughly basis, million margin million reflects network basis year. contribution due during decline retro the after quarter been year. year surplus primarily year-to-date second a the second offset to revenue same million. from mix growth sharing Medical from million. $XX impact was light our in prior is contribution, prior $XX normalized level basis, million was revenue defined second COVID, our also Platform platform to the to the which and compared in maturation was million partnership $XX the market the year-over-year remains first impact medical margin year which increased our medical positive of X% programs cost On increased but in decline $XX $XXX highlights benefit.

million X% in $X million platform to was was direct other X% compared negative the As was from $XX a quarter, positive percent support prior second by in $XX discussed of year. a contributions support in EBITDA EBITDA previously EBITDA included which costs platform adjusted down the million revenue, the On year. versus year-over-year million during support approximately medical a was for contracting, On dynamics basis, positive quarter This year-to-date XX%. PMPM and the prior declined Adjusted The we approximately platform for basis, leverage partially positive margin. offset reflects adjusted change income. last against $X is to year. from

by as the a and million our to in $XX company million capital $X cash and $X support, debt which public from for sheet initial as quarter $XX million we cash, the billion ended severance incentive in reflects operations included in Turning payment which balance entry quarter, well with $X.X We costs negative was D&O premium and in $XX flow. Cash proceeds completed in April. the the $XX million flow geography IPO. outstanding insurance, million public annual million offering triggered from comp in expense in

Turning full year quarter the to XXXX. our financial and third guidance for

quarter, XXX,XXX in quarter of range due retroactive to we million. $XXX the the in ending to membership is the second of quarter. third range revenue result guidance The XXX,XXX revenue to a $XXX quarter in million recognized from and expect revenue that membership third in we from For second primarily sequential the decline to

increased For a outlook billion we full $X.XX our XXX,XXX to membership to the range to $X.XX of have billion. year XXX,XXX of to our and outlook a revenue range XXXX, ending

adjusted to $XX continue We million. $XX EBITDA expect to of loss million

utilization due will quarter. be normal levels our the to the as and that will through adjusted year. weighted This pre-COVID loss expect expectation is move the We approach EBITDA seasonality somewhat fourth we to

the take now your and an year we're temporary full our from Operator? adjusted reflects view unchanged for ready Direct questions. EBITDA membership dilution outlook With Additionally, higher growth of profitability that, to Contracting.

[Operator Instructions].

The Bank. first have from we Hill from question comes Deutsche Stuart

came of Bank. the love that would kind around of but can of number, attribution a we strong could in George about be, follow-up membership you than other that. as question the kind bit kind it's quick would expected. then more higher medical And of Hill a talk driver small you from I that's Deutsche color little I know QX? guess, in expense And incremental number little a a a provide just any

the first you take Sure. Thanks, one. George. take one, second and Tim, I'll the can

So do closely think, George, It part with well and pleased of and we're is to quarter. our growth Attribution, is I with I us members something that strong we health distinctive model. think allows really in very get plans really the attributed a partners. work our more to our

making health do are investments our technology in and operations We on to partners that. with plan working

they half January technologies, X his of the step-up back of remarks, platform them able the the so this And are growth in to And attribution. retroactive QX by we are getting as members XX% year. into geography better of around really biggest Tim expected was year. process to might saw pull same the But have that a the first bring These you to of in and typically the driver XX% the year. the in the from we half on shared the were to that

that the of the retro think within activity. that you about I was members X,XXX see

of strength, think one Disproportionate So the that at getting area amount an better for those area is strength numbers us. we all are of we're PPO, of which time.

gives that you hopefully, So context.

the in down because $XXX as margin And a were pretty medical overall, is prior the of George. of And we it Thanks, year-to-date margin on the reported overall quarter where much basis expected with be. that obviously versus PMPM said, Steve in and $XX, year is $XXX medical number to that the... line Yes. of PMPM

medical other expense. the Mention

were incentives to oh, -- a other we up. physician we about of are sorry, be essentially those and AWVs overall, kind when can those expenses That -- were happen Well, on incentives. pay our talking medical we depending on I'm I Other include -- expense that other AWV basis quarter-to-quarter pay thought medical when medical partners. lumpy our

that earlier And up, out. talk to, shape incentives really you we're number paying we're completed getting is medical talking George. then and good can year-over-year year as the in in I too, was the want means our so margin if about far the in those more Steve actually So when it about, -- AWVs

from Thank of Kevin Bank Fischbeck you. The America. next question of comes

also This I -- But you medical you EBITDA guess, comment It then the in like for your you MLR, what quarter to Adam higher is even in reiterated year, estimating, guide and back about you costs. actually But came beat. to beat on and for were seems the it Kevin. EBITDA a little though don't we consensus. but than

thoughts back medical are just was higher on EBITDA, the costs of you're And I expecting reiterating So basically utilization by cost patterns. wondering kind half? in

Yes.

So chime in. can start, Tim can and I

first margin. say, I me at pleased where think by we're Let we're for medical

-- margin growth. biggest members dilution the where coming June new those our or new There's lower the X of our remarks. as medical over by internally think medical we're cohort encouraged XX the in the in of members January And really that prepared come on said more margins XX% look the groups XX,XXX members is did has this of as our time. improvement we're And always we members we in platform, at cohorts on earlier coming of I Adam, progression, obviously, patient effect right? I will since membership effect in seeing it at year. come that our mature incredible of than been think

medical margin. that's of on So kind commentary

You've in the back EBITDA asked the guidance of half about year.

though we're So in mean, we're higher we QX, changing I'd guidance that our of even parts right? outlook we revenues. biggest few Contracting, program. the facts, a we -- QX, we're had Direct keeping I government new I I not really beat and around the that about talked think in there's EBITDA paraphrase, Tim -- year in full think we're expected, that call line than on what even higher X expected to our than is one were initially is, though out reflecting

so we'll next information approach the dilutive second over those couple coming the we're we're And more of get on. new members that part just taking -- And effect is just then of as months. the

So, Tim anything to add?

to just quarter. that expectation Yes. in of the impact Steve for expect we million our Contracting contributed adjusted as year I to first And Contracting original back Direct he quantify full quickly to about the $X.X full said factors -- can and the the if of EBITDA about, our that for the breakeven around it's year. migrate Direct talked on And impact,

through the half second we're that not million $X.X in flowing guidance. So

Justin the Research. now have We next question from Wolfe of Lake

This is for Harrison Justin. on

one about question thinking Just Direct mechanically on Contracting.

For kind guess, from decline in a, would see year, Direct of the so of you its but program? would adds forward year method? any a I view, contribute the of expect most at general alignment that Contracting come the I expect entry year or maybe of and know claims aligned, normally adds kind And intra-year year? to beginning mostly the -- people other throughout then the expiring would from I you

I throughout are members you year vast might think majority the The adds that process through our voluntary the modest that claims-based through coming see of about, Harrison. about. talked you approach that of attribution we talked sort that

Medicare a little there of think bit kind like a throughout progression year. the will Advantage be I looks that

throughout year growth think, how for will we -- to Direct plays think And sort see it so through. and of I it's going it's we're the early, the relatively Contracting, but be if modest

from now William we [Operator have of Daniels Ryan Instructions]. question And a Blair.

Congrats quarter. on the

short down Are or full the for second nice that I'm than of kind half the for EBITDA conservatism, contribution one turn bring Direct changes? could curious in expected. what loss period into the of the year? Contracting, relative breakeven what on investments you So Another the year. a there to to a actually obviously, other And

Yes.

is what information Ryan, to got more claims getting in revenue perspective. we've going be month We're and X. a think, from a or next information here lot I early the

medical then So think would there. would I that, this sort driver just Tim I of it's that also seasonal it which think biggest about visibility there's in Direct really the which in you drive talked better the which the Contracting progression that the sort And on therefore, remarks, be year. as in will his see path of obviously, follow lower back lower margin EBITDA MA, and half overall same of in

what tack that increase to business, the And do on we just year in of is to And to utilization MA expect versus the the QX. we saw half that. back going in like in

-- the contribute half expect that profitability would to profitability that would year we in the Direct So the also. of on lower the Contracting second would

aren't of program, for partners, MA DC into limited set And groups both or those solutions the sense. more then want makes pipeline DC. conversations that that that such more new advantage X that dozen provider with Is it in X you have potential integrated next That Medicare looking of you're those Okay. that given that solution mentioned in an in your that you already can't giving given so, and integrated they're that year? a already go with

Yes. Thanks, Ryan.

does it think advantage. an give I us

X can come We have X that online and active more DCEs in XXXX.

We new have add in those. physician the underneath to ability groups

penetration ability line this at to rates states. you as markets MA attractive integrated And new the and look have different full to is we -- so look at as different Medicare in these of groups, the business very

we as a advantage. So it real see

We have back no hand so I'll further Matthew. to questions, had it

your at and appreciate look events. interest speaking We to with great. you future future the company. forward calls in We Well,

you. thank So

Thanks, everyone.

does that gentlemen, again you call. joining. Thank for all today's conclude and Ladies

may now You disconnect your lines.