What Happened?
Shares of healthcare services company Agilon Health (NYSE: AGL) fell 51.6% in the morning session after the company reported dismal second-quarter financial results, announced the departure of its CEO, and withdrew its full-year guidance.
The company's revenue missed analyst estimates and its net loss more than doubled expectations. The poor performance stemmed from a significant reversal in its medical margin, which swung from a $106 million profit in the same quarter last year to a $53 million loss, driven by reductions in expected revenue. Concurrently, Agilon announced that President and CEO Steven Sell stepped down. Citing the leadership change and market uncertainty, the company suspended its 2025 financial forecast, which deepened investor concerns.
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What Is The Market Telling Us
agilon health’s shares are extremely volatile and have had 79 moves greater than 5% over the last year. But moves this big are rare even for agilon health and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 7 days ago when the stock dropped 3% on the news that industry bellwether UnitedHealth Group (UNH) slashed its 2025 profit forecast after reporting a significant surge in medical costs, sending shockwaves across the health insurance sector. The core of the issue stems from an “unprecedented medical cost trend environment,” particularly within the Medicare Advantage market, which are privately run versions of the federal health insurance program. UnitedHealth, the largest provider in this space, now expects these costs to rise by 7.5% in 2025, a significant jump from its earlier 5% projection, with the potential to accelerate to almost 10% in 2026. In response, the insurer announced it will drop plans covering over 600,000 people. The company's lowered earnings forecast has raised investor concerns that these surging costs and utilization rates are an industry-wide problem, impacting the profitability of other carriers as well.
agilon health is down 58.3% since the beginning of the year, and at $0.80 per share, it is trading 87.6% below its 52-week high of $6.46 from August 2024. Investors who bought $1,000 worth of agilon health’s shares at the IPO in April 2021 would now be looking at an investment worth $25.81.
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