Healthcare services company Agilon Health (NYSE: AGL) announced better-than-expected revenue in Q3 CY2025, but sales fell by 1.1% year on year to $1.44 billion. The company expects the full year’s revenue to be around $5.82 billion, close to analysts’ estimates. Its GAAP loss of $0.27 per share was 60% below analysts’ consensus estimates.
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agilon health (AGL) Q3 CY2025 Highlights:
- Revenue: $1.44 billion vs analyst estimates of $1.42 billion (1.1% year-on-year decline, 1% beat)
- EPS (GAAP): -$0.27 vs analyst expectations of -$0.17 (60% miss)
- Adjusted EBITDA: -$91.49 million vs analyst estimates of -$50.39 million (-6.4% margin, 81.6% miss)
- EBITDA guidance for the full year is -$257.5 million at the midpoint, below analyst estimates of -$179.5 million
- Operating Margin: -9.1%, in line with the same quarter last year
- Customers: 502,800, up from 498,000 in the previous quarter
- Market Capitalization: $300.1 million
StockStory’s Take
Agilon Health’s third quarter results showed revenue above Wall Street expectations, but profitability remained pressured due to persistent headwinds. Management attributed the quarter’s performance to ongoing execution of clinical and quality programs and cost discipline, but also highlighted the negative impact from lower-than-expected risk adjustment scores and elevated costs from exited markets. Executive Chairman Ronald Williams noted, “We were impacted by lower-than-expected in-year RAF contribution as well as continued high costs from exited markets,” underscoring the operational hurdles faced.
For the remainder of the year and into 2026, Agilon Health’s outlook hinges on strategic initiatives to improve financial predictability and drive efficiency. Management believes that enhancements to their data pipeline, further reductions in Part D exposure, and disciplined payer contracting will stabilize their business model. Williams emphasized that the company is “focused on executing a strong finish to 2025, and a quick start in 2026,” with investments in technology and clinical pathways expected to produce tangible improvements in profitability and operational visibility.
Key Insights from Management’s Remarks
Management attributed Q3 results to a mix of clinical program execution, technology investments, and ongoing cost optimization, while also flagging the negative impact of risk adjustment shortfalls and costs from exited markets.
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Risk adjustment challenges: Lower-than-expected risk adjustment revenue, particularly from a new payer in 2024 for which historical data was unavailable, weighed on both top-line and margin performance. Management expects improved risk assessment accuracy in 2026 due to enhanced data integration.
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Exited markets continue to drag: Costs associated with previously exited and underperforming geographies continued to negatively impact margins. The leadership team reiterated their willingness to exit unprofitable payer contracts, even at the expense of short-term membership declines, to prioritize margin improvement.
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Clinical programs deliver outcomes: New heart failure and palliative care pathways, launched over the past year, are producing measurable clinical improvements—such as reduced hospital readmissions and earlier disease identification. Management expects these programs to yield further financial benefits as they scale across the member base.
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Enhanced data pipeline: Agilon Health’s upgraded data systems now provide near real-time clinical and claims information for approximately 80% of members. This is expected to increase forecasting accuracy and support rapid identification of cost-saving opportunities.
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Cost discipline and restructuring: The company’s $30 million operating expense reduction, achieved via headcount reductions and centralization of key functions, is designed to drive greater operating leverage and align costs with a more measured growth outlook.
Drivers of Future Performance
Looking forward, Agilon Health’s guidance is shaped by efforts to improve contracting discipline, expand value-based clinical programs, and leverage enhanced data analytics to boost profitability.
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Tighter payer contracting: Management is actively renegotiating or exiting payer contracts that do not meet profitability thresholds. This disciplined approach may reduce short-term membership but is intended to support improved medical margins and adjusted EBITDA in 2026 and beyond.
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Clinical program expansion: The rollout of clinical pathways for chronic conditions—including heart failure, COPD, and dementia—is expected to continue, with pilots transitioning to full-scale programs. These initiatives are designed to improve care quality and reduce costly hospitalizations, supporting long-term margin expansion.
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Technology-driven visibility: Investments in data analytics and AI are central to Agilon Health’s strategy. Enhanced data feeds are expected to improve the accuracy of risk scoring, enable better contract negotiations, and allow for earlier intervention in member care, reducing financial volatility.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the effectiveness of Agilon Health’s renegotiated and newly structured payer contracts in stabilizing margins, (2) the pace and financial impact of scaling clinical pathways for chronic conditions, and (3) the tangible benefits from enhanced data analytics in risk scoring and operational forecasting. These markers will help determine whether Agilon can achieve its targeted improvements in 2026.
agilon health currently trades at $0.73, up from $0.72 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).
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