agilon health, inc. (AGL)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

All references in this report to “agilon,” “the Company”, “we,” “us” or “our” mean agilon health, inc., together with its consolidated subsidiaries. Unless the context suggests otherwise, references to “agilon health, inc.” mean the parent company without its subsidiaries.

Cautionary Language Regarding Forward-Looking Statements

Statements in this Quarterly Report on Form 10-Q (the “Report”) that are not historical factual statements are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Some of the forward-looking statements can be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “will,” “shall,” “should,” “would,” “could,” “seeks,” “aims,” “projects,” “is optimistic,” “intends,” “plans,” “estimates,” “anticipates” or the negative versions of these words or other comparable terms. Forward-looking statements include, without limitation, all matters that are not historical facts. They appear in several places throughout this Report and include, without limitation, statements regarding our intentions, beliefs, assumptions or current expectations concerning, among other things, our financial position, results of operations, cash flows, prospects, growth strategies, and our management transition.

Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be outside our control. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Report, we caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of the market in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this Report. In addition, even if our results of operations, financial condition, and cash flows, and the development of the market in which we operate, are consistent with the forward-looking statements contained in this Report, those results or developments may not be indicative of results or developments in subsequent periods. You are therefore cautioned not to place undue reliance on the forward-looking statements included in this report. A number of important factors, including, without limitation, the risks and uncertainties discussed under Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, could cause actual results and outcomes to differ materially from those reflected in the forward-looking statements. Furthermore, new risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Report. Factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation:

•our history of net losses and the expectation that our expenses will increase in the future;

•failure to identify and develop successful new geographies, physician partners and payors, or execute upon our growth initiatives;

•success in executing our operating strategies or achieving results consistent with our historical performance;

•medical expenses incurred on behalf of our members may exceed revenues we receive;

•our ability to maintain and secure additional contracts with Medicare Advantage (“MA”) payors on favorable terms, if at all;

•our ability to grow new physician partner relationships sufficient to recover startup costs;

•availability of additional capital, on acceptable terms or at all, to support our business in the future;

•significant reduction in our membership;

•transition to a Total Care Model may be challenging for physician partners;

•inaccuracy in estimates of our members’ risk adjustment factors, medical services expense, incurred but not reported claims, and earnings pursuant to payor contracts;

•public health crises, such as COVID-19, could adversely affect us;

•the impact of restrictive clauses or exclusivity provisions in some of our contracts with physician partners;

•our ability to hire and retain qualified personnel;

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•our ability to realize the full value of our intangible assets;

•security breaches, cybersecurity attacks, loss of data and other disruptions to our information systems;

•our ability to protect the confidentiality of our know-how and other proprietary and internally developed information;

•our reliance on our subsidiaries to perform and fund their operations;

•our use of algorithms, artificial intelligence, and machine learning in our business and challenges with properly managing the development and use of these technologies;

•our reliance on a limited number of key payors;

•the limited terms of contracts with our payors and our ability to renew them upon expiration;

•our ability to navigate the changing healthcare payor market;

•our reliance on our payors, physician partners and other providers to operate our business;

•our ability to obtain accurate and complete diagnosis data;

•our reliance on third-party software, data, infrastructure and bandwidth;

•consolidation and competition in the healthcare industry;

•the impact of changes to, and dependence on, federal government healthcare programs;

•uncertain or adverse economic and macroeconomic conditions, including a downturn or decrease in government expenditures;

•regulation of the healthcare industry and our physician partners’ ability to comply with such laws and regulations;

•federal and state investigations, audits and enforcement actions;

•repayment obligations arising out of payor audits;

•negative publicity regarding the managed healthcare industry generally;

•our use, disclosure and processing of personally identifiable information, protected health information, and de-identified data;

•failure to obtain or maintain an insurance license, a certificate of authority or an equivalent authorization;

•changes in tax laws and regulations, or changes in related judgments or assumptions;

•our indebtedness and our potential to incur more debt;

•our dependence on our subsidiaries for cash to fund all of our operations and expenses;

•provisions in our governing documents;

•our ability to achieve a return on investment depends on appreciation in the price of our common stock;

•non-compliance with the New York Stock Exchange could result in a delisting of our securities;

•lawsuits not covered by insurance and securities class action litigation;

•sustainability issues;

•our stock price may be volatile;

•risks related to management transitions, including the transition to our new Chief Executive Officer, and our ability to effectively manage leadership changes; and

•risks related to other factors discussed under Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

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.

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The information set forth in this Item 2 is intended to provide readers with an understanding of our financial condition, changes in financial condition, and results of operations and should be read in connection with the accompanying Condensed Consolidated Financial Statements and notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Report. We will discuss and provide our analysis in the following order:

•Overview and Recent Developments

•Key Financial and Operating Metrics

•Key Components of Our Results of Operations

•Results of Operations

•Non-GAAP Financial Measures

•Liquidity and Capital Resources

•Critical Accounting Estimates

•Recent Accounting Pronouncements

Overview and Recent Developments

Our business is transforming healthcare by empowering primary care physicians (“PCPs”) to be the agent for change in the communities they serve. We believe that PCPs, with their intimate patient-physician relationships, are best positioned to drive meaningful change in quality, cost, and patient experience when provided with the right infrastructure and payment model. Through our combination of the agilon platform, a long-term partnership model with existing physician groups, and a growing network of like-minded physicians, we believe we are poised to revolutionize healthcare for seniors across communities throughout the United States. We believe our purpose-built model provides the necessary capabilities, capital, and business model for existing physician groups to create a Medicare-centric, globally capitated line of business. Our model operates by forming risk-bearing entities (“RBEs”) within local geographies, which enter into arrangements with payors providing for monthly payments to manage the total healthcare needs of our physician partners’ attributed patients (or, global capitation arrangements). The RBEs also contract with agilon to perform certain functions and enter into long-term professional service agreements with one or more anchor physician groups pursuant to which the anchor physician groups receive a base compensation rate and share in the savings from successfully improving quality of care and reducing costs.

Our business model is differentiated by its focus on existing community-based physician groups and is built around three key elements: (1) agilon’s platform; (2) agilon’s long-term physician partnership model; and (3) agilon’s network. With our model, our goal is to remove the barriers that prevent community-based physicians from evolving to a Total Care Model, where the physician is empowered to manage health outcomes and the total healthcare needs of their attributed Medicare patients.

Second Quarter 2026 Results:

•Medicare Advantage members of approximately 437,500 as of June 30, 2026 decreased 12% from June 30, 2025.

•CMS ACO Models (defined below) attributed beneficiaries of approximately 112,200 as of June 30, 2026 decreased 3% from June 30, 2025.

•Total revenue of $1.5 billion increased 7% compared to $1.4 billion in the second quarter of 2025.

•Gross profit of $107 million, compared to gross loss of $52 million in the second quarter of 2025.

•Medical margin of $197 million, compared to negative medical margin of $53 million in the second quarter of 2025.

•Net income of $18 million, compared to net loss of $104 million in the second quarter of 2025.

•Adjusted EBITDA of $70 million, compared to Adjusted EBITDA loss of $83 million in the second quarter of 2025.

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Year to Date 2026 Results as of June 30, 2026:

•Total revenue of $2.9 billion remained relatively flat in the six months ended June 30, 2026 compared to the same period in 2025.

•Gross profit of $172 million, compared to gross loss of $2 million in the six months ended June 30, 2025.

•Medical margin of $346 million, compared to $75 million in the six months ended June 30, 2025.

•Net income of $67 million, compared to net loss of $92 million in the six months ended June 30, 2025.

•Adjusted EBITDA of $123 million, compared to Adjusted EBITDA loss of $63 million in the six months ended June 30, 2025.

Platform Membership Details

MA members decreased 12% from June 30, 2025, which reflects previously disclosed market exits, as well as payor exits in certain markets resulting from a disciplined approach to contracting focused on profitability. Total members live on the agilon platform at June 30, 2026 include 437,5

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ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information set forth in this Item 7 is intended to provide readers with an understanding of our financial condition, changes in financial condition and results of operations. We will discuss and provide our analysis in the following order:

•Overview and Recent Developments

•Key Financial and Operating Metrics

•Key Components of Our Results of Operations

•Results of Operations

•Non-GAAP Financial Measures

•Liquidity and Capital Resources

•Critical Accounting Estimates

•Recent Accounting Pronouncements

Overview and Recent Developments

Our business is transforming healthcare by empowering the PCP to be the agent for change in the communities they serve. We believe that PCPs, with their intimate patient-physician relationships, are best positioned to drive meaningful change in quality, cost, and patient experience when provided with the right infrastructure and payment model. Through our combination of the agilon platform, a long-term partnership model with existing physician groups and a growing network of like-minded physicians, we believe we are poised to revolutionize healthcare for seniors across communities throughout the United States. We believe our purpose-built model provides the necessary capabilities, capital and business model for existing physician groups to create a Medicare-centric, globally capitated line of business. Our model operates by forming RBEs within local geographies, that enter into arrangements with payors providing for monthly or quarterly payments to manage the total healthcare needs of our physician partners’ attributed patients (or, global capitation arrangements). The RBEs also contract with agilon to perform certain functions and enter into long-term professional service agreements with one or more anchor physician groups pursuant to which the anchor physician groups receive a base compensation rate and share in the savings from successfully improving quality of care and reducing costs.

Our business model is differentiated by its focus on existing community-based physician groups and is built around three key elements: (1) agilon’s platform; (2) agilon’s long-term physician partnership model; and (3) agilon’s network. With our model, our goal is to remove the barriers that prevent community-based physicians from evolving to a Total Care Model, where the physician is empowered to manage health outcomes and the total healthcare needs of their attributed Medicare patients.

2025 Results:

•MA members of approximately 511,000 as of December 31, 2025 decreased 3% from 2024.

•The CMS ACO Models attributed beneficiaries of approximately 114,000 as of December 31, 2025 decreased 13% from 2024.

•Total revenue of $5.93 billion decreased 2% from 2024.

•Gross loss of $160.0 million, compared to gross profit of $4.8 million in 2024.

•Medical margin was negative $56.6 million, compared to earnings of $205.2 million in 2024.

•Net loss of $391.3 million, compared to net loss of $260.1 million in 2024.

•Adjusted EBITDA loss of $296.2 million, compared to Adjusted EBITDA loss of $154.2 million in 2024.

Platform Membership Details

MA members decreased 3% during 2025, which was primarily attributable to partnership exits during 2024. Total members live on the agilon platform include 511,000 MA members and 114,000 attributed CMS ACO Models beneficiaries. Average MA membership during 2025 was approximately 510,000.

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Reverse Stock Split

On February 6, 2026, we filed a preliminary proxy statement indicating our intent to seek stockholder approval at a special meeting of stockholders to be held on March 17, 2026 for the purpose of seeking: (i) an amendment to our Amended and Restated Certificate of Incorporation to effect a reverse stock split of our common stock at a ratio of one-for-five to one-for-twenty-five, with the exact ratio to be set within this range by the Board in its sole discretion without further stockholder approval, and (ii) authority to adjourn the special meeting, if necessary, to solicit additional proxies if there are insufficient votes to approve the amendment. See the risk factor titled “The listing of shares of our common stock does not currently comply with the continued listing requirements of the NYSE, and if the NYSE delists our common stock, it could have an adverse impact on the trading, liquidity and market price of our common stock” in Item 1A. Risk Factors included in this Report.

Key Financial and Operating Metrics

All of our key metrics exclude historical results from our Hawaii operations (which are included as discontinued operations in our consolidated financial statements).

We monitor the following key financial and operating metrics to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions. We believe the following key metrics are useful in evaluating our business (dollars in thousands):

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(1)Medical margin and Adjusted EBITDA are non-GAAP financial measures. Gross profit (loss) is the most directly comparable financial measure calculated in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) to medical margin. Net income (loss) is the most directly comparable financial measure calculated in accordance with U.S. GAAP to Adjusted EBITDA. See “—Non-GAAP Financial Measures" below for additional information.

Medicare Advantage Members

Our MA members include all individuals enrolled in an MA plan that are attributed to the PCPs on our platform at the end of a given period.

Medical Services Revenue

Our medical services revenue consists of capitation revenue under contracts with various payors. Under the typical capitation arrangement, we are entitled to PMPM fees to provide a defined range of healthcare services for MA health plan members through our contracted physician partners and affiliated PCPs. Such fees are typically based on a defined percentage of corresponding premium that payors receive from CMS. We recognize capitation revenue over the period eligible members are entitled to receive healthcare services.

Gross Profit (Loss)

Gross profit (loss) represents the amount earned from total revenues less medical services expense and other medical expenses. Total revenues include medical services revenue and other operating revenue. The Company’s costs of revenues consist of medical services expense and other medical expenses, which represents the costs that are directly related to providing the services that generate revenue.

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The following table presents our gross profit (loss) (dollars in thousands):

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(1)Represents physician compensation expense related to surplus sharing and other care management expenses that help to create medical cost efficiency. Includes costs in geographies that are in implementation and are not yet generating revenue and investments to grow existing markets. For the years ended December 31, 2025, 2024, and 2023, costs incurred in implementing geographies were $3.7 million, $5.4 million and $33.7 million, respectively.

Medical Margin

We define medical margin as medical services revenue after medical services expense is deducted. Medical services expense represents costs incurred for medical services provided to our members. However, medical margin 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.

See “—Non-GAAP Financial Measures” below, for additional information regarding our use of medical margin and a reconciliation of gross profit (loss) to medical margin.

Platform Support Costs

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 and compliance functions.

The table below presents costs to support our live geographies and enterprise functions, which are included in general and administrative expenses (dollars in thousands):

Net Income (Loss) and Adjusted EBITDA

Net income (loss) is the most directly comparable U.S. GAAP measure to Adjusted EBITDA. 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, (v) stock-based compensation expense, (vi) severance and related costs, and (vii) certain other items that are not considered by us in the evaluation of ongoing operating performance. We reflect our share of Adjusted EBITDA for equity method investments by applying our actual ownership percentage for the period to the applicable reconciling items on an entity-by-entity basis.

See “—Non-GAAP Financial Measures” below, for additional information regarding our use of Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA.

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Key Components of Our Results of Operations

Revenues

Medical Services Revenue

Our medical services revenue consists of capitation revenue under contracts with various payors. Under the typical capitation arrangement, we are entitled to PMPM fees to provide a defined range of healthcare services for MA health plan members through our contracted physician partners and affiliated PCPs. Such fees are typically based on a defined percentage of corresponding premium that payors receive from CMS. We recognize capitation revenue over the period eligible members are entitled to receive healthcare services. In certain of our payor arrangements, we are also financially responsible for Medicare Part D pharmaceutical costs for prescriptions rendered to members.

Medical services revenue constitutes substantially all of our total revenue for the years ended December 31, 2025, 2024, and 2023.

For additional discussion related to our revenue, see “—Critical Accounting Estimates” below and Note 2 to the Consolidated Financial Statements in Item 8 of this Report.

Operating Expenses

Medical Services Expense

In each of our geographies, a network of p

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