Agilon Health (NYSE:AGL) outlined what executives described as a transformational year in 2025 and provided a 2026 outlook calling for material improvement in profitability, driven by contracting actions, clinical and quality initiatives, and continued cost discipline.
Management frames 2025 as a reset focused on operational discipline
Executive Chairman Ron Williams said 2025 was focused on “building the foundation of sustainable performance through intense focus on operational discipline,” as the company navigates what he called a “comprehensive transformation.” While Williams said agilon was “not satisfied” with its 2025 financial performance, he pointed to progress in clinical pathways, quality programs, payer contracting discipline, and data-driven performance management.
Fourth-quarter and full-year 2025 results
CFO Jeff Schwaneke reported Medicare Advantage membership of 511,000 at year-end 2025 and ACO REACH membership of 114,000. He said membership was influenced by a “measured approach to growth,” including previously announced market exits.
Agilon reported revenue of $1.57 billion in the fourth quarter and $5.93 billion for full-year 2025. Schwaneke said results reflected lower-than-expected risk adjustment revenue and the impact of market and payer contract exits.
Medical costs were a central topic during the call. Schwaneke said the company saw favorable development from the first half of 2025, with cost trend in the “mid-5%” range earlier in the year, but experienced elevated costs in the third quarter driven primarily by inpatient stays. He highlighted “several cases that were over $1 million,” totaling $6.5 million in the quarter, which contributed to raising the third-quarter medical cost trend assumption to 7.2% from the low-6% range previously recorded. With limited paid-claims visibility for the fourth quarter, the company recorded a fourth-quarter medical cost trend assumption of 7.4%, bringing the full-year 2025 cost trend to approximately 6.5%.
For profitability, Schwaneke reported:
- Medical margin: negative $74 million in 4Q 2025 and negative $57 million for full-year 2025.
- Adjusted EBITDA: negative $142 million in 4Q 2025 and negative $296 million for full-year 2025.
Schwaneke said full-year results included negative $60 million from exited markets and negative $53 million from prior year development.
For ACO REACH, Schwaneke said performance was in line with expectations, with adjusted EBITDA of negative $6 million in the fourth quarter and $41 million for the full year.
On liquidity, agilon ended the quarter with $285 million in cash and marketable securities and an additional $91 million of off-balance sheet cash held by ACO entities. Schwaneke said year-end cash was about $66 million ahead of expectations, including $34 million described as permanent improvement and $32 million related to expense timing. He also noted the company extended its credit facility and term loan after the quarter, with details filed in an 8-K.
2026 guidance: breakeven EBITDA targeted as contracting and incentives improve
Management forecast year-end 2026 membership of 525,000 to 540,000 across the platform, including Medicare Advantage membership of roughly 430,000 at the midpoint and ACO model membership of about 103,000. Williams previously said the company expects membership to be reduced to approximately 430,000 in 2026 due to exits and contracting actions, including about 25,000 members in care coordination fee arrangements with upside performance-based fees.
Schwaneke said disciplined contracting was aimed at achieving positive adjusted EBITDA in every market and that the company exited several payer-specific contracts for 2026, reducing Medicare Advantage membership by 50,000 members. He characterized the contracting benefits as largely “locked-in value” for 2026.
For 2026, the company guided to:
- Revenue: $5.41 billion to $5.58 billion.
- Medical margin: $300 million to $350 million (Williams cited $325 million at the midpoint).
- Adjusted EBITDA: -$15 million to +$15 million, with breakeven at the midpoint (including expected ACO REACH contribution of $20 million to $25 million).
Schwaneke said year-over-year improvement is expected to be driven by known factors, including increased percentage of premium from contracting efforts and payer bids that were on average at or above the CMS benchmark rate. He said these elements are expected to create over $625 million in incremental value in medical margin in 2026. Management also highlighted a reduction in Medicare Part D exposure to below 15% of membership.
On medical cost trends, the company assumed a gross cost trend of 7.5% in 2026 and a net trend of roughly 7% after an estimated 50-basis-point benefit from payer bids. Management said benefit design changes by payers—such as higher premiums, deductibles, and maximum out-of-pocket expenses, plus reduced supplemental benefits—are expected to help cost trends, but the company still assumed elevated trends for the year.
Clinical pathways, quality initiatives, and cost reductions
Williams said the company has improved its financial data pipeline and actuarial and analytical capabilities and is increasingly able to “identify variants earlier and intervene faster.” He said agilon can now calculate member-level risk scores with its enhanced data pipeline. Schwaneke added that the data pipeline now includes over 85% of members and has shown a 99%+ correlation rate, which management expects will improve accuracy and forecasting of risk-based revenue.
Williams emphasized clinical pathways as a key lever, describing them as evidence-based and data-enabled care models focused on chronic conditions including heart failure, dementia, and COPD. He said the heart failure program was adopted in over 90% of the network by year-end. He also highlighted palliative care as an extension of the model intended to improve care coordination and reduce avoidable late-stage utilization.
On quality, Williams said agilon’s network delivers a composite 4.2 stars on measures it can influence and that the company sees an opportunity in 2026 to more than double the incentive contribution. In Q&A, management said 2025 quality measures were not finalized due to run-out, but performance appeared to be near the company’s expectations. For 2026, Schwaneke said the company’s guidance assumes similar quality performance to 2025, while management aims to improve further.
Agilon also discussed operating expense initiatives. Williams and Schwaneke said the company executed $35 million in operating cost reductions above what was communicated at the end of the third quarter. For 2026, the company expects G&A of approximately $234 million, slightly lower than 2025, and geographic entry expenses of about $15 million, which Schwaneke said reflect prior commitments and some residual growth-related costs.
Regulatory outlook and ACO programs
In response to questions on the 2027 MA Advance Notice, Schwaneke said the company is exposed to the normalization and risk model changes but believes it is “very close” to what is outlined in the rate notice and intends to use the same levers—contracting and its burden of illness program—to mitigate impacts. Williams added that expanded clinical pathways are expected to contribute over time.
On ACO REACH, Schwaneke said the latest fee-for-service trend referenced on the call was 8.1%, down from 8.5%, and that trends were more concentrated in the back half of the year. Management also discussed CMS’s newly announced LEAD program, which is expected to launch after the REACH model concludes at the end of 2026. Williams called LEAD an encouraging “positive signal” because it is designed as a 10-year voluntary model with a longer planning horizon, and said agilon plans to remain actively involved in policy discussions as the details evolve.
About Agilon Health (NYSE:AGL)
Agilon Health (NYSE: AGL) is a healthcare company that partners with independent primary care physicians to deliver value-based care for Medicare beneficiaries. Through risk-sharing arrangements, Agilon assumes financial responsibility for patient populations, enabling physicians to focus on preventive and proactive health management. The company provides the administrative, clinical and operational infrastructure needed to support comprehensive care delivery.
Agilon’s platform encompasses data analytics, care management, patient engagement tools and population health programs.
