agilon health, inc. (AGL) Bundle
Understanding agilon health, inc. (AGL) Revenue Streams
Understanding agilon health, inc. Revenue Streams
The company primarily generates revenue through its medical services, which are structured around Medicare Advantage and other healthcare services. Below is a detailed revenue analysis for the year 2024.
Breakdown of Primary Revenue Sources
- Medical Services Revenue: For the nine months ended September 30, 2024, medical services revenue was $4,528,471 thousand, an increase of 39% compared to $3,253,810 thousand for the same period in 2023.
- Other Operating Revenue: This segment generated $9,573 thousand for the nine months ended September 30, 2024, compared to $6,480 thousand in 2023.
Year-over-Year Revenue Growth Rate
The company experienced significant growth in its revenue streams:
- Year-to-Date Revenue Growth: Total revenue for the nine months ended September 30, 2024, was $4,538,044 thousand, reflecting a 39% increase from $3,260,290 thousand in 2023.
- Quarterly Revenue Growth: For the third quarter of 2024, total revenue was $1,450,932 thousand, an increase of 28% from $1,136,863 thousand in the third quarter of 2023.
Contribution of Different Business Segments to Overall Revenue
The medical services segment represents the entirety of the revenue structure, accounting for 100% of total revenues. The revenue breakdown is as follows:
| Revenue Source | Q3 2024 (in $ thousands) | Q3 2023 (in $ thousands) | Change (%) |
|---|---|---|---|
| Medical Services Revenue | 1,447,697 | 1,133,457 | 28% |
| Other Operating Revenue | 3,235 | 3,406 | -5% |
| Total Revenue | 1,450,932 | 1,136,863 | 28% |
Analysis of Significant Changes in Revenue Streams
Key highlights of revenue changes include:
- The increase in medical services revenue was primarily driven by a growth in average membership, which increased by 39% due to the addition of seven new geographies.
- Medical services expense grew significantly to $4,323,852 thousand for the nine months ended September 30, 2024, compared to $2,853,266 thousand in 2023, marking a 52% increase.
- Despite revenue growth, the gross profit for the nine months ended September 30, 2024, was $43,096 thousand, down from $164,538 thousand in 2023.
A Deep Dive into agilon health, inc. (AGL) Profitability
Profitability Metrics
In examining the profitability metrics for the company, we observe the following key figures:
- Gross Profit: For the nine months ended September 30, 2024, the gross profit was $43 million, a decrease from $165 million in 2023.
- Operating Profit: The operating loss for the nine months ended September 30, 2024 was $(184 million), compared to an operating loss of $(68 million) in 2023.
- Net Profit Margin: The net loss for the nine months ended September 30, 2024 was $(154 million), resulting in a net profit margin of (3.4%) compared to (1.0%) in 2023.
Trends in Profitability Over Time
The trends in profitability metrics show a concerning decline:
| Metric | 9M 2024 | 9M 2023 | Change (%) |
|---|---|---|---|
| Gross Profit | $43 million | $165 million | (74%) |
| Operating Profit | $(184 million) | $(68 million) | (170%) |
| Net Profit | $(154 million) | $(32 million) | (377%) |
Comparison of Profitability Ratios with Industry Averages
In comparison to industry averages:
- Industry Average Gross Margin: 30% vs. Company Gross Margin of (1%).
- Industry Average Operating Margin: 10% vs. Company Operating Margin of (4%).
- Industry Average Net Margin: 5% vs. Company Net Margin of (3.4%).
Analysis of Operational Efficiency
Operational efficiency metrics indicate:
- Medical Services Revenue: Increased to $4.5 billion in 2024, up from $3.3 billion in 2023, reflecting a growth of 39%.
- Medical Services Expense: Rose to $4.3 billion in 2024, up from $2.9 billion in 2023, an increase of 52%.
- Adjusted EBITDA Loss: Increased to $(70 million) for nine months in 2024, compared to $42 million in profit in 2023, a decline of 267%.
Given these figures, the company's profitability metrics indicate significant challenges, with a marked decline in gross and net profits, reflecting broader operational inefficiencies and increased expenses.
Debt vs. Equity: How agilon health, inc. (AGL) Finances Its Growth
Debt vs. Equity: How agilon health, inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, the total liabilities of the company amounted to $1.52 billion, which included short-term liabilities of $1.41 billion and long-term debt of $34.9 million.
Debt-to-Equity Ratio and Comparison to Industry Standards
The company's debt-to-equity ratio stands at approximately 2.64, calculated using total liabilities of $1.52 billion and total stockholders' equity of $574.9 million. This ratio is significantly above the industry average of 1.0, indicating a higher reliance on debt financing compared to peers in the healthcare sector.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
On May 25, 2023, the company amended its credit facility agreement, extending the maturity date to February 18, 2026. The credit facility consists of a $100 million senior secured term loan and a $100 million senior secured revolving credit facility. As of September 30, 2024, the company had $35 million outstanding under the secured term loan facility.
How the Company Balances Between Debt Financing and Equity Funding
The company has utilized equity funding to bolster its capital structure, issuing 1.97 million shares in common stock during the nine months ended September 30, 2024, which raised $15.2 million. Additionally, the total stockholders' equity as of September 30, 2024, was $574.9 million, reflecting a decrease from $661.0 million as of December 31, 2023.
| Debt Type | Amount (in millions) | Maturity Date |
|---|---|---|
| Secured Term Loan | $35.0 | February 18, 2026 |
| Secured Revolving Facility | $100.0 | February 18, 2026 |
| Total Liabilities | $1,520.0 | N/A |
| Total Stockholders' Equity | $574.9 | N/A |
Assessing agilon health, inc. (AGL) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio, which measures a company's ability to pay short-term obligations, stood at 1.29 as of September 30, 2024, calculated from current assets of $1,811.8 million and current liabilities of $1,409.2 million. The quick ratio, which excludes inventories from current assets, was approximately 1.29 as well, as the company does not maintain significant inventory levels.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, was $402.6 million as of September 30, 2024, compared to $502.9 million a year earlier. This represents a decrease of 19.9%, indicating potential challenges in meeting short-term liabilities.
Cash Flow Statements Overview
The cash flow statements for the nine months ended September 30, 2024, reveal the following trends:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|
| Net cash provided by (used in) operating activities | $(74,196) | $(95,033) | $20,837 |
| Net cash provided by (used in) investing activities | $116,218 | $(41,816) | $158,034 |
| Net cash provided by (used in) financing activities | $(2,561) | $(192,288) | $189,727 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company held cash and cash equivalents of $148.2 million and marketable securities amounting to $244.8 million. The total liquidity position, combining cash and equivalents with short-term investments, is $393 million. Despite the liquidity position, the company reported a net loss of $154.3 million for the nine months ended September 30, 2024, compared to a loss of $32.3 million in the previous year, indicating ongoing operational challenges that could affect future liquidity.
The company’s total liabilities have increased to $1,516.5 million as of September 30, 2024, from $1,079.8 million at the end of 2023, largely due to increased medical claims and related payables of $1,190.7 million. This growing liability could pose risks to liquidity if not managed effectively.
Is agilon health, inc. (AGL) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The current price-to-earnings (P/E) ratio for the company is -11.75, reflecting a negative earnings situation as the company reported a net loss of $154.3 million for the nine months ended September 30, 2024.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio stands at approximately 3.74, based on a book value of $574.9 million and total shares outstanding of 411.96 million as of September 30, 2024.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) is calculated at $1.09 billion, with an adjusted EBITDA of -$70.2 million for the nine months ended September 30, 2024. Thus, the EV/EBITDA ratio is undefined due to negative EBITDA.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated significantly, with a high of $22.55 and a low of $4.35. As of the latest closing price, it is trading at $4.95, indicating a 78% decline over the year.
Dividend Yield and Payout Ratios
Currently, there is no dividend yield as the company has not issued dividends in 2024, consistent with its strategy focused on reinvestment into growth.
Analyst Consensus
The analyst consensus rating for the stock is Hold, with a price target range between $5.00 and $8.00.
| Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | -11.75 |
| Price-to-Book (P/B) Ratio | 3.74 |
| Enterprise Value (EV) | $1.09 billion |
| Adjusted EBITDA | - $70.2 million |
| Stock Price (Current) | $4.95 |
| 52-Week High | $22.55 |
| 52-Week Low | $4.35 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing agilon health, inc. (AGL)
Key Risks Facing the Company
As of 2024, the company faces various internal and external risks that could significantly impact its financial health. These risks include intense competition within the healthcare sector, regulatory changes, and fluctuating market conditions.
Industry Competition
The healthcare industry is highly competitive, with numerous players vying for market share. The company reported a net loss of $154.3 million for the nine months ended September 30, 2024, a substantial increase from a $32.3 million loss in the same period of 2023. This demonstrates that competition is pressuring margins and overall profitability.
Regulatory Changes
Changes in healthcare regulations can create operational challenges. The company operates under Medicare Advantage programs, which are subject to frequent updates by the Centers for Medicare & Medicaid Services (CMS). Such changes can affect reimbursement rates. For instance, the company experienced a 7% decrease in per member per month (PMPM) capitation rates, impacting revenue generation.
Market Conditions
Market conditions are volatile, influenced by economic factors such as inflation and interest rates. As of September 30, 2024, the company's cash and cash equivalents totaled $148.2 million, with marketable securities valued at $244.8 million. However, the company also faces increasing costs, reflected in a 47% rise in medical services expenses from the previous year.
Operational Risks
Operational risks stem from the company's dependency on existing physician partnerships and the scalability of its platform. As of September 30, 2024, the company reported an adjusted EBITDA loss of $70.2 million, compared to adjusted EBITDA earnings of $42.1 million in 2023. This shift indicates operational inefficiencies that could hinder growth potential.
Financial Risks
Financial risks include the potential for liquidity issues and reliance on debt financing. The company has a credit facility with a total capacity of $200 million, which includes a senior secured term loan. As of September 30, 2024, total liabilities stood at $1.5 billion, highlighting the elevated level of debt.
Mitigation Strategies
The company has implemented strategies to mitigate these risks, such as diversifying its member base and enhancing operational efficiencies. The membership of Medicare Advantage members increased to approximately 525,200, a 37% increase from the previous year. This growth could provide a buffer against competitive pressures and market volatility.
| Risk Type | Description | Impact |
|---|---|---|
| Industry Competition | High competition leading to pressure on margins | Net loss increased to $154.3 million |
| Regulatory Changes | Changes in Medicare policies affecting reimbursement | 7% decrease in PMPM capitation rates |
| Market Conditions | Economic fluctuations affecting operational costs | Medical services expenses increased by 47% |
| Operational Risks | Dependency on physician partnerships and scalability | Adjusted EBITDA loss of $70.2 million |
| Financial Risks | High debt levels and potential liquidity issues | Total liabilities of $1.5 billion |
Future Growth Prospects for agilon health, inc. (AGL)
Future Growth Prospects for agilon health, inc. (AGL)
Key Growth Drivers:
- As of September 30, 2024, the company reported approximately 525,200 Medicare Advantage members, reflecting a 37% increase from September 30, 2023.
- Beneficiaries attributed to CMS ACO Models reached approximately 132,200, representing a 51% increase year-over-year.
- The company has expanded operations into seven new geographies that began generating revenue in 2024.
Future Revenue Growth Projections:
- Total revenue for the nine months ended September 30, 2024, was $4.5 billion, up 39% from $3.3 billion in the same period in 2023.
- For the third quarter of 2024, total revenue was $1.5 billion, a 28% increase from $1.1 billion in the third quarter of 2023.
Earnings Estimates:
- Net loss for the nine months ended September 30, 2024, was $154 million, compared to a net loss of $32 million in the same period in 2023.
- Adjusted EBITDA loss for the nine months ended September 30, 2024, was $70 million, down from earnings of $42 million in 2023.
Strategic Initiatives and Partnerships:
- The company has established long-term partnerships with existing physician groups, facilitating a shift towards a Medicare-centric, globally capitated business model.
- Agilon health is positioned to enter new markets through its model, which empowers primary care physicians to manage the total healthcare needs of attributed patients.
Competitive Advantages:
- As of September 30, 2024, total stockholders’ equity stood at $574.9 million, providing a solid financial foundation for growth initiatives.
- The company benefits from a unique platform that integrates care management and operational support, enhancing service delivery in local communities.
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Medicare Advantage Members | 525,200 | 384,200 | 37% |
| CMS ACO Models Beneficiaries | 132,200 | 87,600 | 51% |
| Total Revenue | $1.5 billion | $1.1 billion | 28% |
| Net Loss | ($118 million) | ($31 million) | 274% |
| Adjusted EBITDA | ($96 million) | $6 million | (1,687%) |
| Total Stockholders' Equity | $574.9 million | $871.6 million | (34%) |
Conclusion: The company is leveraging its current growth trajectory and strategic partnerships to expand its market presence and enhance its service offerings, positioning itself for continued growth in the healthcare sector.
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Updated on 16 Nov 2024
Resources:
- agilon health, inc. (AGL) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of agilon health, inc. (AGL)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View agilon health, inc. (AGL)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.