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agilon health Reports Fourth Quarter and Fiscal Year 2021 Results

03/03/2022

Revenue growth of 44% for the fourth quarter and 50% for fiscal year 2021

Total members live on the agilon platform grew 82% to 238,000, driven by 42% growth in Medicare Advantage and contribution from Direct Contracting

Guidance for 2022 includes significant gains in Adjusted EBITDA while maintaining strong revenue growth, reflecting agilon’s capital efficient partnership model

Class of 2023 new partners expected to add 80,000 Medicare Advantage members across 7 physician groups, including entry into 4 states and 8 geographies

agilon health scheduled to host inaugural Investor Day on March 11

agilon health, inc. (NYSE: AGL), the company transforming health care for seniors by empowering primary-care physicians to focus on the entire health of their patients, announced results for the fourth quarter and year ended December 31, 2021.

Fourth Quarter and Fiscal Year 2021 Results:

  • Total revenue of $463 million increased 44% during the fourth quarter, driven by 42% growth in Medicare Advantage membership, including 15% membership growth in same geographies. For fiscal year 2021, total revenues of $1.83 billion increased 50% from 2020.
  • Total members live on the agilon platform increased 82% to 238,000 as of December 31, including 186,300 Medicare Advantage members and 51,700 Direct Contracting beneficiaries.
  • Net loss of $57 million in the fourth quarter compared to a net loss of $24 million in the fourth quarter 2020. For fiscal year 2021, net loss of $407 million compared to a net loss of $60 million in 2020. Net loss for the fiscal year 2021 includes $292 million in non-cash stock-based compensation expense primarily related to agilon’s initial public offering in April 2021.
  • Medical margin of $31 million in the fourth quarter compared to $27 million in the fourth quarter 2020. For fiscal year 2021, medical margin of $182 million compared to $192 million in 2020. The year-over-year change in medical margin during fiscal 2021 in part reflects the impact from COVID on healthcare utilization in the prior year.
  • Adjusted EBITDA loss of $27 million during the fourth quarter compared to a loss of $13 million during the fourth quarter 2020. For fiscal year 2021, Adjusted EBITDA loss of $39 million compared to a $6 million gain in 2020.

“Our partnership model produced distinctive, predictable results in 2021, despite evolving COVID dynamics,” said Steve Sell, Chief Executive Officer. “Looking ahead to 2022, we expect to generate significant gains in profitability while maintaining strong growth in membership and revenue. Our partnership model and purpose-built platform, supported by powerful structural drivers, has enabled us to make rapid progress against our vision to transform healthcare in 100+ communities by empowering primary care.”

Outlook for First Quarter and Fiscal Year 2022:

 

Quarter Ended

March 31, 2022

 

Year Ended

December 31, 2022

 

Low

 

High

 

Low

 

High

Medicare Advantage Members1

245,000

 

250,000

 

260,000

 

270,000

Direct Contracting Members1

85,000

 

90,000

 

80,000

 

85,000

Total Members Live on Platform1

330,000

 

340,000

 

340,000

 

355,000

Total revenues ($M)

$635

 

$650

 

$2,505

 

$2,590

Medical Margin ($M)

$82

 

$88

 

$290

 

$305

Adjusted EBITDA ($M)2

$10

 

$14

 

$0

 

$10

1Membership reflects management’s outlook for end of period. agilon’s partnered Direct Contracting Entities (DCEs) are not consolidated within its financial results.

2We have not reconciled guidance for Adjusted EBITDA to net income (loss), the most comparable GAAP measure, and have not provided forward-looking guidance for net income (loss), because of the uncertainty around certain items that may impact net income (loss), including stock-based compensation, that are not within our control or cannot be reasonably predicted.

Membership Details for the Year Ending 2021

Total members live on the agilon platform as of December 31, 2021, were 238,000, an increase of 82% from 2020. Total members live on the platform include 186,300 Medicare Advantage members and 51,700 attributed Direct Contracting beneficiaries.

agilon’s consolidated Medicare Advantage membership increased 42% during 2021, driven by contributions from new geographies and 15% growth within same geographies. Average Medicare Advantage membership was 186,200 during the fourth quarter and 181,800 for the fiscal year 2021.

Outlook for Class of 2023 New Partners

agilon health expects to add 80,000 Medicare Advantage members from 7 new partner groups in 2023, driving record growth and entry into 4 new states and 8 new geographies. With the addition of these new partner groups, agilon health will have long-term partnerships with 23 physician groups in 12 states and 25 geographies. Management intends to provide additional details on the Class of 2023 new partners at the company’s investor day on March 11, 2022.

Webcast and Conference Call:

agilon health will host a conference call and webcast to discuss fourth quarter and fiscal year 2021 results on Friday, March 4, 2022 at 8:30 AM Eastern Time. The conference call can be accessed by dialing (844) 200-6205 for U.S. participants and +1 (929) 526-1599 for international participants, and referencing participant code 269811. A simultaneous webcast can be accessed by visiting the “Events & Presentations” section of https://investors.agilonhealth.com. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call.

About agilon health

agilon health is transforming health care for seniors by empowering primary-care physicians to focus on the entire health of their patients. Through our partnerships and our platform, agilon is leading the nation in creating the system we need – one built on the value of care, not the volume of fees. We honor the independence of local physicians and serve as their partners so they can be the doctors they trained to be. agilon provides the capital, data, payor relationships, executive experience and contract support that allow physician groups to take on the risk of total care for their most vulnerable patients. The result: healthier communities, and doctors who can devote the right amount of time with the patients who need it most. With rapidly growing appeal, agilon is scaled to grow and is here to help our nation’s best independent physician groups have a sustained, thriving future. Together, we are reinventing primary care. For more information about agilon health, visit www.agilonhealth.com and connect with us on Twitter, Instagram, LinkedIn and YouTube.

Forward-Looking Statements

Statements in this release that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among other things, statements regarding our and our officers’ intent, belief or expectation as identified by the use of words such as “may,” “will,” “project,” “expect,” “believe,” “intend,” “anticipate,” “seek,” "target," “forecast,” “plan,” “potential,” “estimate,” “could,” “would,” “should,” and other comparable and derivative terms or the negatives thereof. Examples of forward-looking statements include, among other things: (i) statements regarding timing, outcomes and other details relating to current, pending or contemplated new markets, new partnership structures, financing activities, dispositions, or other transactions discussed in this release; and (ii) statements regarding growth opportunities, ability to deliver sustainable long-term value, business environment, long term opportunities and strategic growth plan including without limitation with respect to expected revenue and net income, total and average membership, Adjusted EBITDA, and other financial projections and assumptions, as well as comparable statements included in other sections of this release. Forward-looking statements reflect our current expectations and views about future events and are subject to risks and uncertainties that could significantly affect our future financial condition and results of operations. While forward-looking statements reflect our good faith belief and assumptions we believe to be reasonable based upon current information, we can give no assurance that our expectations or forecasts will be attained. Further, we cannot guarantee the accuracy of any such forward-looking statement contained in this release, and such forward-looking statements are subject to known and unknown risks and uncertainties that are difficult to predict. These risks and uncertainties that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, but are not limited to: our history of net losses, and our ability to achieve or maintain profitability in an environment of increasing expenses; our ability to identify and develop successful new geographies, physician partners and payors, or to execute upon our growth initiatives; our ability to execute our operation strategies or to achieve results consistent with our historical performance; our expectation that our expenses will increase in the future and the risk that medical expenses incurred on behalf of members may exceed the amount of medical revenues we receive; our ability to secure contracts with Medicare Advantage payors or to secure Medicare Advantage payments at favorable financial terms; our ability to recover startup costs incurred during the initial stages of development of our physician partner relationships and program initiatives; significant reductions in our membership; challenges for our physician partners in the transition to a Total Care Model; inaccuracies in the estimates and assumptions we use to project the size, revenue or medical expense amounts of our target markets; the spread of, and response to, the novel coronavirus, or COVID-19, and the inability to predict the ultimate impact on us; security breaches, loss of data or other disruptions to our data platforms; the impact of devoting significant attention and resources to the provision of certain transition services in connection with the disposition of our California operations; our subsidiaries’ lack of performance or ability to fund their operations, which could require us to fund such losses; our dependence on a limited number of key payors; the limited terms of our contracts with payors and that they may not be renewed upon their expiration; our reliance on our payors for membership attribution and assignment, data and reporting accuracy and claims payment; our dependence on physician partners and other providers to effectively manage the quality and cost of care and perform obligations under payor contracts; our dependence on physician partners to accurately, timely and sufficiently document their services and potential False Claims Act or other liability if any diagnosis information or encounter data are inaccurate or incorrect; reductions in reimbursement rates or methodology applied to derive reimbursement from, or discontinuation of, federal government healthcare programs, from which we derive substantially all of our total revenue; statutory or regulatory changes, administrative rulings, interpretations of policy and determinations by intermediaries and governmental funding restrictions, and their impact on government funding, program coverage and reimbursements; regulatory proposals directed at containing or lowering the cost of healthcare and our participation in such proposed models; the impact on our revenue of CMS modifying the methodology used to determine the revenue associated with MA members; the potential that we may incur future indebtedness; and risks related to other factors discussed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. 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.

agilon health, inc.

Consolidated Balance Sheets

In thousands, except share and per share data

 

 

 

December 31,
2021

 

 

December 31,
2020

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,040,039

 

 

$

106,795

 

Restricted cash and equivalents

 

 

14,781

 

 

 

28,383

 

Receivables, net

 

 

293,407

 

 

 

144,555

 

Prepaid expenses and other current assets, net

 

 

18,968

 

 

 

9,639

 

Current assets held for sale and discontinued operations, net

 

 

 

 

 

4,825

 

Total current assets

 

 

1,367,195

 

 

 

294,197

 

Property and equipment, net

 

 

9,161

 

 

 

6,456

 

Intangible assets, net

 

 

55,398

 

 

 

60,468

 

Goodwill

 

 

41,540

 

 

 

41,540

 

Other assets, net

 

 

112,958

 

 

 

43,700

 

Total assets

 

$

1,586,252

 

 

$

446,361

 

LIABILITIES, CONTINGENTLY REDEEMABLE COMMON STOCK
AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Medical claims and related payables

 

$

239,014

 

 

$

162,868

 

Accounts payable and accrued expenses

 

 

112,946

 

 

 

97,244

 

Current portion of long-term debt

 

 

5,000

 

 

 

3,041

 

Current liabilities held for sale and discontinued operations

 

 

 

 

 

3,682

 

Total current liabilities

 

 

356,960

 

 

 

266,835

 

Long-term debt, net of current portion

 

 

43,401

 

 

 

64,665

 

Other liabilities

 

 

94,295

 

 

 

90,091

 

Total liabilities

 

 

494,656

 

 

 

421,591

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingently redeemable common stock, $0.01 par value: 76,201
shares issued and outstanding at December 31, 2020

 

 

 

 

 

309,500

 

 

 

 

 

 

 

 

Stockholders' equity (deficit):

 

 

 

 

 

 

Common stock, $0.01 par value: 2,000,000 and 500,000 shares
authorized; 400,095 and 249,374 shares issued and outstanding,
respectively

 

 

4,001

 

 

 

2,494

 

Additional paid-in capital

 

 

2,045,572

 

 

 

263,966

 

Accumulated deficit

 

 

(957,677

)

 

 

(551,190

)

Total agilon health, inc. stockholders' equity (deficit)

 

 

1,091,896

 

 

 

(284,730

)

Noncontrolling interests

 

 

(300

)

 

 

 

Total stockholders’ equity (deficit)

 

 

1,091,596

 

 

 

(284,730

)

Total liabilities, contingently redeemable common stock and
stockholders’ equity (deficit)

 

$

1,586,252

 

 

$

446,361

 

agilon health, inc.

Consolidated Statements of Operations

In thousands, except per share data

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

 

Year Ended
December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

(unaudited)

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Medical services revenue

 

$

461,999

 

 

$

320,227

 

 

$

1,829,735

 

 

$

1,214,270

 

Other operating revenue

 

 

887

 

 

 

780

 

 

 

3,824

 

 

 

4,063

 

Total revenues

 

 

462,886

 

 

 

321,007

 

 

 

1,833,559

 

 

 

1,218,333

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Medical services expense

 

 

430,620

 

 

 

292,928

 

 

 

1,647,659

 

 

 

1,021,877

 

Other medical expenses

 

 

22,678

 

 

 

22,794

 

 

 

109,487

 

 

 

102,306

 

General and administrative (including noncash
stock-based compensation expense of $4,414,
$1,738, $292,394, and $6,472, respectively)

 

 

53,840

 

 

 

41,358

 

 

 

455,821

 

 

 

137,292

 

Depreciation and amortization

 

 

3,621

 

 

 

3,670

 

 

 

14,544

 

 

 

13,531

 

Total expenses

 

 

510,759

 

 

 

360,750

 

 

 

2,227,511

 

 

 

1,275,006

 

Income (loss) from operations

 

 

(47,873

)

 

 

(39,743

)

 

 

(393,952

)

 

 

(56,673

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense), net

 

 

(8,534

)

 

 

2,886

 

 

 

(4,500

)

 

 

2,465

 

Interest expense

 

 

(840

)

 

 

(1,953

)

 

 

(6,146

)

 

 

(8,135

)

Income (loss) before income taxes

 

 

(57,247

)

 

 

(38,810

)

 

 

(404,598

)

 

 

(62,343

)

Income tax benefit (expense)

 

 

(179

)

 

 

(791

)

 

 

(886

)

 

 

(865

)

Income (loss) from continuing operations

 

 

(57,426

)

 

 

(39,601

)

 

 

(405,484

)

 

 

(63,208

)

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before gain (loss) on sales
and income taxes

 

 

(1,209

)

 

 

(6,890

)

 

 

(3,463

)

 

 

(20,049

)

Gain (loss) on sales of assets, net

 

 

 

 

 

19,087

 

 

 

473

 

 

 

20,401

 

Income tax benefit (expense)

 

 

1,898

 

 

 

3,189

 

 

 

1,687

 

 

 

2,804

 

Total discontinued operations

 

 

689

 

 

 

15,386

 

 

 

(1,303

)

 

 

3,156

 

Net income (loss)

 

 

(56,737

)

 

 

(24,215

)

 

 

(406,787

)

 

 

(60,052

)

Noncontrolling interests’ share in (earnings) loss

 

 

16

 

 

 

 

 

 

300

 

 

 

 

Net income (loss) attributable to common shares

 

$

(56,721

)

 

$

(24,215

)

 

$

(406,487

)

 

$

(60,052

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share,
basic and diluted

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.14

)

 

$

(0.12

)

 

$

(1.09

)

 

$

(0.20

)

Discontinued operations

 

$

 

 

$

0.05

 

 

$

 

 

$

0.01

 

Weighted average shares outstanding,
basic and diluted

 

 

396,411

 

 

 

327,231

 

 

 

372,931

 

 

 

323,462

 

agilon health, inc.

Consolidated Statements of Cash Flows

In thousands, except per share data

 

 

 

Year Ended December 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

(406,787

)

 

$

(60,052

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

14,670

 

 

 

14,099

 

Stock-based compensation expense

 

 

292,394

 

 

 

6,688

 

Loss on debt extinguishment

 

 

1,590

 

 

 

 

Loss (income) from equity method investments

 

 

6,766

 

 

 

(514

)

Deferred income taxes and uncertain tax positions

 

 

(3,231

)

 

 

(2,809

)

Release of indemnification assets

 

 

1,705

 

 

 

3,475

 

(Gain) loss on sale of assets, net

 

 

(473

)

 

 

(20,401

)

Distributions of earnings from equity method investments

 

 

174

 

 

 

 

Other non-cash items

 

 

58

 

 

 

(162

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Receivables, net

 

 

(149,041

)

 

 

(59,381

)

Prepaid expense and other current assets

 

 

(3,916

)

 

 

(5,085

)

Other assets

 

 

3,931

 

 

 

(1,977

)

Medical claims and related payables

 

 

76,339

 

 

 

42,383

 

Accounts payable and accrued expenses

 

 

19,360

 

 

 

24,922

 

Other liabilities

 

 

(1,698

)

 

 

5,610

 

Net cash provided by (used in) operating activities

 

 

(148,159

)

 

 

(53,204

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of property and equipment, net

 

 

(6,564

)

 

 

(1,775

)

Purchase of intangible assets

 

 

(6,862

)

 

 

(575

)

Investment in loans receivable and other

 

 

(82,831

)

 

 

(3,847

)

Proceeds from repayment of loans receivable and other

 

 

7,095

 

 

 

2,058

 

Proceeds from sale of business and property, net of cash divested

 

 

(1,344

)

 

 

26,205

 

Net cash provided by (used in) investing activities

 

 

(90,506

)

 

 

22,066

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from initial public offering

 

 

1,170,942

 

 

 

 

Proceeds from other equity issuances, net

 

 

 

 

 

33,590

 

Proceeds from exercise of stock options

 

 

18,086

 

 

 

814

 

Repurchase of shares, net

 

 

 

 

 

(6,742

)

Proceeds from the issuance of long-term debt

 

 

100,000

 

 

 

 

Repayments of long-term borrowings and other

 

 

(119,899

)

 

 

(3,041

)

Equity and debt issuance costs and other

 

 

(14,739

)

 

 

 

Net cash provided by (used in) financing activities

 

 

1,154,390

 

 

 

24,621

 

Net increase (decrease) in cash, cash equivalents and restricted cash
and equivalents

 

 

915,725

 

 

 

(6,517

)

Cash, cash equivalents and restricted cash and equivalents from
continuing operations, beginning of period

 

 

135,178

 

 

 

139,152

 

Cash, cash equivalents and restricted cash and equivalents from
discontinued operations, beginning of period

 

 

3,917

 

 

 

6,460

 

Cash, cash equivalents and restricted cash and equivalents,
beginning of period

 

 

139,095

 

 

 

145,612

 

Cash, cash equivalents and restricted cash and equivalents from
continuing operations, end of period

 

 

1,054,820

 

 

 

135,178

 

Cash, cash equivalents and restricted cash and equivalents from
discontinued operations, end of period

 

 

 

 

 

3,917

 

Cash, cash equivalents and restricted cash and equivalents,
end of period

 

$

1,054,820

 

 

$

139,095

 

agilon health, inc.

Key Operating Metrics

In thousands

(unaudited)

 

MEDICAL MARGIN

 

 

Three Months Ended
December 31,

 

 

Year Ended
December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Medical services revenue

 

$

461,999

 

 

$

320,227

 

 

$

1,829,735

 

 

$

1,214,270

 

Medical services expense

 

 

(430,620

)

 

 

(292,928

)

 

 

(1,647,659

)

 

 

(1,021,877

)

Medical margin

 

$

31,379

 

 

$

27,299

 

 

$

182,076

 

 

$

192,393

 

Medical margin represents the amount earned from medical services revenue after medical services expenses are deducted. Medical services expense represents costs incurred for medical services provided to our members. As our platform matures over time, we expect medical margin to increase in absolute dollars. However, medical margin per member per month (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.

GENERAL AND ADMINISTRATIVE COSTS, INCLUDING PLATFORM SUPPORT COSTS

 

 

 

Three Months Ended
December 31,

 

 

Year Ended
December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Platform support costs

 

$

30,899

 

 

$

25,802

 

 

$

123,521

 

 

$

99,943

 

Geography entry costs(1)

 

 

7,872

 

 

 

11,607

 

 

 

20,583

 

 

 

17,945

 

Severance and related costs

 

 

7,763

 

 

 

493

 

 

 

12,861

 

 

 

4,009

 

Management fees(2)

 

 

 

 

 

395

 

 

 

433

 

 

 

1,530

 

Stock-based compensation expense

 

 

4,414

 

 

 

1,738

 

 

 

292,394

 

 

 

6,472

 

Other(3)

 

 

2,892

 

 

 

1,323

 

 

 

6,029

 

 

 

7,393

 

General and administrative

 

$

53,840

 

 

$

41,358

 

 

$

455,821

 

 

$

137,292

 

(1)

Represents direct geography entry costs, including investments to develop and expand our platform and costs in geographies that are in implementation and are not yet generating revenue.

(2)

Represents management fees and other expenses paid to Clayton Dubilier & Rice, LLC (“CD&R”). In connection with our initial public offering, we terminated our consulting agreement with CD&R, effective April 16, 2021. We were not charged a fee in connection with the termination of this agreement.

(3)

Includes changes in non-cash accruals for unasserted claims and contingent liabilities.

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 functions.

agilon health, inc.

Non-GAAP Financial Measures

In thousands

(unaudited)

NETWORK CONTRIBUTION

 

 

 

Three Months Ended
December 31,

 

 

Year Ended
December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Income (loss) from operations

 

$

(47,873

)

 

$

(39,743

)

 

$

(393,952

)

 

$

(56,673

)

Other operating revenue

 

 

(887

)

 

 

(780

)

 

 

(3,824

)

 

 

(4,063

)

Other medical expenses

 

 

22,678

 

 

 

22,794

 

 

 

109,487

 

 

 

102,306

 

Other medical expenses—live geographies(1)

 

 

(18,704

)

 

 

(17,957

)

 

 

(97,498

)

 

 

(93,377

)

General and administrative

 

 

53,840

 

 

 

41,358

 

 

 

455,821

 

 

 

137,292

 

Depreciation and amortization

 

 

3,621

 

 

 

3,670

 

 

 

14,544

 

 

 

13,531

 

Network contribution

 

$

12,675

 

 

$

9,342

 

 

$

84,578

 

 

$

99,016

 

(1)

Represents physician compensation expense related to surplus sharing and other direct medical expenses incurred to improve care for our members in our live geographies. Excludes costs in geographies that are in implementation and are not yet generating revenue. For the three months ended December 31, 2021 and 2020, costs incurred in implementing geographies were $4.0 million and $4.8 million, respectively. For the years ended December 31, 2021 and 2020, costs incurred in implementing geographies were $12.0 million and $8.9 million, respectively.

ADJUSTED EBITDA

 

 

Three Months Ended
December 31,

 

 

Year Ended
December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income (loss)

 

$

(56,737

)

 

$

(24,215

)

 

$

(406,787

)

 

$

(60,052

)

(Income) loss from discontinued operations,
net of income taxes

 

 

(689

)

 

 

(15,386

)

 

 

1,303

 

 

 

(3,156

)

Interest expense

 

 

840

 

 

 

1,953

 

 

 

6,146

 

 

 

8,135

 

Income tax expense (benefit)

 

 

179

 

 

 

791

 

 

 

886

 

 

 

865

 

Depreciation and amortization

 

 

3,621

 

 

 

3,670

 

 

 

14,544

 

 

 

13,531

 

Geography entry costs(1)

 

 

11,846

 

 

 

16,670

 

 

 

32,572

 

 

 

27,100

 

Severance and related costs(2)

 

 

7,763

 

 

 

493

 

 

 

12,861

 

 

 

4,009

 

Management fees(3)

 

 

 

 

 

395

 

 

 

433

 

 

 

1,530

 

Stock-based compensation expense

 

 

4,414

 

 

 

1,738

 

 

 

292,394

 

 

 

6,472

 

EBITDA adjustments related to equity
method investments(4)

 

 

(571

)

 

 

 

 

 

1,736

 

 

 

 

Other(5)

 

 

2,642

 

 

 

1,323

 

 

 

5,293

 

 

 

7,393

 

Adjusted EBITDA

 

$

(26,692

)

 

$

(12,568

)

 

$

(38,619

)

 

$

5,827

 

(1)

Represents direct geography entry costs, including investments to develop and expand our platform and costs in geographies that are in implementation and are not yet generating revenue. For the three months ended December 31, 2021 and 2020, (i) $4.0 million and $4.8 million, respectively, are included in other medical expenses and (ii) $7.9 million and $11.6 million, respectively, are included in general and administrative expenses. For the years ended December 31, 2021 and 2020, (i) $12.0 million and $8.9 million, respectively, are included in other medical expenses and (ii) $20.6 million and $17.9 million, respectively, are included in general and administrative expenses.

(2)

For the three months and year ended December 31, 2021, includes taxes and related costs on stock option exercises for departed executives of $5.4 million.

(3)

Represents management fees and other expenses paid to CD&R. In connection with our initial public offering, we terminated our consulting agreement with CD&R, effective April 16, 2021. We were not charged a fee in connection with the termination of this agreement.

(4)

Includes direct geography entry costs of $0.1 million and $1.3 million for the three and twelve months ended December 31, 2021, respectively.

(5)

Includes changes in non-cash accruals for unasserted claims and contingent liabilities.

In addition to providing results that are determined in accordance with GAAP, we present network contribution and Adjusted EBITDA, which are non-GAAP financial measures.

We define network contribution as medical services revenue less the sum of: (i) medical services expense and (ii) other medical expenses excluding costs incurred in implementing geographies. Other medical expenses consist of physician compensation expense related to surplus sharing and other direct medical expenses incurred to improve care for our members. We believe this metric provides insight into the economics of our Total Care Model as it includes all medical services expense associated with our members’ care as well as partner compensation and additional medical costs we incur as part of our aligned partnership model. Other medical expenses are largely variable and proportionate to the level of surplus in each respective geography.

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 expense, (v) geography entry costs, (vi) stock-based compensation expense, (vii) severance and related costs, and (viii) 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.

Income (loss) from operations is the most directly comparable GAAP measure to network contribution. Net income (loss) is the most directly comparable GAAP measure to Adjusted EBITDA.

We believe network contribution and Adjusted EBITDA help identify underlying trends in our business and facilitate evaluation of period-to-period operating performance of our live geographies by eliminating items that are variable in nature and not considered by us in the evaluation of ongoing operating performance, allowing comparison of our recurring core business operating results over multiple periods. We also believe network contribution and Adjusted EBITDA provide useful information about our operating results, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to key metrics we use for financial and operational decision-making. We believe network contribution and Adjusted EBITDA or similarly titled non-GAAP measures are widely used by investors, securities analysts, ratings agencies, and other parties in evaluating companies in our industry as a measure of financial performance. Other companies may calculate network contribution and Adjusted EBITDA or similarly titled non-GAAP measures differently from the way we calculate these metrics. As a result, our presentation of network contribution and Adjusted EBITDA may not be comparable to similarly titled measures of other companies, limiting their usefulness as comparative measures.

Investor Contact
Matthew Gillmor
VP, Investor Relations
investors@agilonhealth.com

Media Contact
Claire Mulhearn
Chief Communications & Public Affairs Officer
media@agilonhealth.com

Source: agilon health

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