10-K: Agilon Health Reports Wider Losses, Membership Decline in 2025

Agilon Health reported a significant increase in net losses and a decline in Medicare Advantage and ACO beneficiaries for the fiscal year ended December 31, 2025, alongside NYSE delisting concerns.

Summary

• Net loss increased to $391.3 million in 2025 from $260.1 million in 2024.
• Medical margin turned negative, reporting a loss of $56.6 million in 2025 compared to a gain of $205.2 million in 2024.
• Total revenue decreased by 2% to $5.93 billion in 2025 from $6.06 billion in 2024.
• Medicare Advantage (MA) members decreased by 3% to 511,000 as of December 31, 2025, primarily due to partnership exits in 2024.
• CMS ACO Models attributed beneficiaries decreased by 13% to 114,000 as of December 31, 2025.
• Gross profit shifted to a loss of $160.0 million in 2025 from a profit of $4.8 million in 2024.
• Adjusted EBITDA loss widened to $296.2 million in 2025 from $154.2 million in 2024.
• The company received a notice from the NYSE on November 5, 2025, regarding non-compliance with the $1.00 average closing price requirement and is pursuing a reverse stock split.
• Impairment charges significantly increased to $36.1 million in 2025 from $3.6 million in 2024, primarily due to goodwill and intangible assets.
• The Credit Facility was amended on February 10, 2026, extending its maturity to February 18, 2028, and reducing revolving credit commitments from $100.0 million to $90.0 million.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing with a highly negative sentiment due to significant financial losses, declining membership, and a NYSE delisting notice, indicating severe operational and market challenges.

Positives

• Other medical expenses decreased by $98.5 million, or 46%, in 2025 compared to 2024, primarily due to lower partner physician compensation expense resulting from recent losses in certain geographies.
• General and administrative expenses decreased by $30.4 million, or 11%, in 2025 compared to 2024, mainly due to partnership exits during 2024.
• The company successfully refinanced its Credit Facility on February 10, 2026, extending the maturity date to February 18, 2028.
• The company was in compliance with all covenants under the Credit Facility as of December 31, 2025.
• Total discontinued operations resulted in a gain of $14.0 million in 2025, compared to a loss of $9.8 million in 2024, due to the release of a contingent obligation from Hawaii operations.

Negatives

• Net loss significantly widened to $391.3 million in 2025 from $260.1 million in 2024.
• Medical margin turned negative, reporting a loss of $56.6 million in 2025 compared to a gain of $205.2 million in 2024.
• Total revenue decreased by 2% to $5.93 billion in 2025, primarily due to declines in average MA membership (2%) and lower risk adjustment revenue (1%).
• Medicare Advantage (MA) members decreased by 3% to 511,000 as of December 31, 2025.
• CMS ACO Models attributed beneficiaries decreased by 13% to 114,000 as of December 31, 2025.
• Gross profit shifted to a loss of $160.0 million in 2025 from a profit of $4.8 million in 2024.
• Adjusted EBITDA loss widened to $296.2 million in 2025 from $154.2 million in 2024.
• Medical services expense increased by 2% in 2025, primarily due to a 5% increase in average medical services expense per member, driven by elevated medical cost trends.
• Impairment charges increased by $32.5 million, or 903%, to $36.1 million in 2025, primarily from goodwill and intangible assets.
• The company received a notice from the NYSE on November 5, 2025, for non-compliance with the $1.00 average closing price requirement.
• Income (loss) from equity method investments decreased by $16.8 million, or 112%, to a loss of $1.8 million in 2025, primarily due to increased operating expenses related to services provided to CMS ACO Models investees.
• The company is subject to multiple securities class action and stockholder derivative lawsuits.

Risks

• History of net losses and expectation of increasing expenses, with no guarantee of achieving or maintaining profitability.
• Failure to identify and develop successful new geographies, physician partners, and payors, or to execute growth initiatives and achieve required operational scale.
• Medical expenses incurred on behalf of members may exceed revenues received, leading to losses.
• Inability to secure contracts with Medicare Advantage (MA) payors on favorable terms, or at all, in new geographies.
• Inability to grow new physician partner relationships sufficiently to recover startup costs.
• Potential need for substantial additional capital in the future, which might not be available on acceptable terms or at all.
• Significant reduction in membership could adversely affect financial performance.
• Challenges for physician partners in transitioning to a Total Care Model, potentially impacting patient outcomes and profitability.
• Inaccuracy in estimates of members' risk adjustment factors, medical services expense, incurred but not reported claims, and earnings pursuant to payor contracts.
• Public health crises (e.g., COVID-19) could cause unexpected changes in healthcare service utilization, impacting medical costs, revenues, and operational efficiency.
• Restrictive clauses or exclusivity provisions in some physician partner contracts may limit future growth and market entry.
• Inability to hire and retain qualified personnel, including senior management and key employees, particularly in a competitive market.
• Failure to realize the full value of intangible assets, potentially leading to significant impairment charges.
• Security breaches, cybersecurity attacks, loss of data, and other disruptions to information systems could compromise sensitive information and expose the company to liability.
• Inability to protect the confidentiality of know-how and other proprietary and internally developed information.
• Reliance on subsidiaries for performance and funding, with potential for the parent company to fund subsidiary losses.
• Challenges with properly managing the development and use of algorithms, AI, and machine learning, potentially leading to reputational harm, legal liability, or adverse operational results.
• Economic dependence on maintaining contracts with a limited number of key payors, increasing bargaining power for payors and credit risk for the company.
• Limited terms of contracts with payors and the risk of non-renewal or less favorable terms upon expiration.
• Reliance on payors for timely and accurate membership attribution, data, reporting, and claims payment, which directly impacts financial performance.
• Dependence on physician partners and other providers to effectively manage quality and cost of care and perform contractual obligations.
• Difficulties in obtaining accurate and complete diagnosis data, potentially leading to lower revenues or liability for inaccuracies.
• Dependence on physician partners to accurately, timely, and sufficiently document services, with failure potentially leading to nonpayment or allegations of fraud (e.g., RADV audits).
• Reliance on third-party software, data, infrastructure, and bandwidth, with restrictions or failures potentially disrupting operations.
• Consolidation in the healthcare industry could increase competition and reduce market opportunities.
• Reductions in federal government healthcare program reimbursement rates or methodologies, or discontinuation of programs, would adversely affect revenues.
• Uncertain or adverse economic and macroeconomic conditions, including decreased government expenditures, could negatively impact enrollment, benefits, and capital raising.
• Competition in the industry from various entities, including hospitals, MSOs, and other value-based care providers.
• Dependence on government performance standards and benchmarks (e.g., CMS STAR ratings), with potential negative impact on compensation and marketability if not met.
• Government funding for healthcare programs is subject to statutory and regulatory changes, administrative rulings, and funding restrictions.
• Regulatory proposals (e.g., ACO REACH, LEAD Model) could impact business, financial condition, and operations due to evolving structures and requirements.
• Federal and state investigations, audits, and enforcement actions, including those initiated by private whistleblowers, could result in substantial penalties or operational changes.
• Regulatory inquiries and corrective action plans imposed by payors, potentially requiring material risk-bearing capital contributions.
• Repayment obligations arising out of payor audits (e.g., CMS RADV audits) can be significant and adversely impact reimbursement rates.
• CMS may modify the methodology for determining revenue associated with MA members (e.g., risk adjustment factors), potentially understating risk adjustment factors and causing underpayment.
• Negative publicity regarding the managed healthcare industry generally could increase regulation, costs, and negatively affect marketability.
• Failure to comply with extensive federal, state, and local healthcare laws and regulations (e.g., fraud and abuse laws, HIPAA, CPOM, fee-splitting) could lead to civil/criminal damages, fines, sanctions, or required operational changes.
• Risk of inadvertently employing or contracting with an excluded person, leading to government sanctions.
• Changes in tax laws and regulations, or related judgments/assumptions, could materially impact financial condition.
• Ability to incur substantially more indebtedness, increasing risks.
• Restrictions and limitations in agreements governing indebtedness could significantly impact operational flexibility.
• Dependence on subsidiaries for cash to fund operations and expenses, with restrictions on distributions.
• Volatility or decline in stock price, regardless of operating performance, resulting in substantial losses for investors.
• Potential for securities or industry analysts to cease coverage or issue unfavorable recommendations.
• Corporate opportunity policies favoring CD&R and its affiliates.
• Anti-takeover provisions in governing documents could discourage changes of control.
• No intention to pay dividends, making investment return dependent on stock price appreciation.
• Exclusive forum provisions in Certificate of Incorporation limiting stockholder litigation options.
• Non-compliance with NYSE listing requirements (e.g., $1.00 share price) could result in delisting, impacting trading, liquidity, and market price.
• Exposure to lawsuits not covered by insurance, including securities class action litigation, leading to significant costs and diversion of management attention.
• Sustainability issues and related reporting requirements may impact reputation and financial outcomes.

Future Outlook

The CMS ACO REACH Model will terminate at the end of 2026 and be replaced by the Long-term Enhanced ACO Design (LEAD) Model starting January 1, 2027. There are many unknowns regarding the technical, operational, and financial aspects of the LEAD Model, including benchmark calculation, risk adjustment methodology, and quality measures, which will significantly impact the company's decision to participate. The company expects its expenses to increase substantially in the foreseeable future as it invests in growing its business, expanding its management team, building relationships, and developing new services.

Management Comments

• Our business is transforming healthcare by empowering the primary care physicians (PCP) to be the agents 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.
• 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.
• We expect that our expenses will increase substantially in the foreseeable future and our losses may continue, in part as we invest in growing our business, expanding our management team, building relationships with physician partners and payors, developing new services and complying with the requirements associated with being a public company.
• We believe that our existing cash and cash equivalents, investments in marketable securities, as well as available borrowing capacity under the Credit Facility, will be sufficient to meet our working capital and capital expenditure needs over at least the next 12 months, though we may require additional capital resources in the future.

Industry Context

StockSavvy.ai notes that the healthcare industry continues its shift towards value-based care models, with government programs like Medicare Advantage and ACOs playing a central role. The termination of the ACO REACH Model and the introduction of the LEAD Model highlight the ongoing regulatory evolution and uncertainty in this space. Agilon Health's challenges with profitability and membership decline, coupled with increased medical costs, suggest difficulties in navigating these complex dynamics, especially compared to more established or diversified competitors who may have greater scale or more stable revenue streams in a highly competitive and consolidating market.

Comparison to Industry Standards

• Agilon Health's significant net losses and negative medical margin in 2025 contrast sharply with the profitability often seen in mature, well-managed value-based care organizations that have achieved economies of scale and effective cost management.
• The 3% decline in MA members and 13% decline in ACO beneficiaries indicate a struggle to retain and grow its patient base, which is critical for value-based care models, especially when compared to industry leaders who are generally expanding their attributed lives.
• The increase in average medical services expense per member by 5% due to elevated medical cost trends suggests that Agilon Health's cost management strategies or risk adjustment capabilities may be underperforming relative to industry benchmarks, where effective care coordination typically aims to bend the cost curve.
• The NYSE delisting notice due to a sub-$1.00 share price indicates severe underperformance compared to publicly traded peers in the healthcare technology and value-based care sectors, which typically maintain higher share prices and market capitalization.
• The substantial increase in impairment charges for goodwill and intangible assets suggests that the company's past acquisitions or investments are not generating the expected returns, a situation that can be more pronounced in rapidly evolving industries where valuations are sensitive to future growth prospects.

Management Changes

Corporate Governance

Legal Proceedings

• In re agilon health, inc. Securities Litigation (W.D. Tex.): Consolidated class action lawsuit filed in February and March 2024, alleging securities fraud under Sections 10(b), 20(a) of the Exchange Act and Sections 11, 12(a)(2), 15 of the Securities Act. Claims relate to statements made between April 2021 and February 2024 concerning financial guidance, medical margin, Adjusted EBITDA, growth strategy, and data management. Some claims were dismissed, others are proceeding to discovery.
• Vandersluis v. agilon health, Inc. (E.D.N.Y.): Putative securities class action filed on December 31, 2025, alleging violations of Sections 10(b) and 20(a) of the Exchange Act for statements made between February 2025 and August 2025 regarding financial guidance, medical margin, and Adjusted EBITDA.
• In re agilon health, inc. Shareholder Derivative Litigation (W.D. Tex.): Consolidated putative stockholder derivative class action lawsuits (Douglas v. Steven J. Sell et al. and Bingham v. Steven J. Sell et al.) filed in May and October 2024. Allegations include claims under Sections 14(a) and 10(b) of the Exchange Act, and common law claims like breach of fiduciary duty, related to financial guidance, medical margin, Adjusted EBITDA, growth strategy, and data management. Discovery is ongoing.
• Bushansky v. Steven J. Sell et al. (S.D. Ohio): A third putative stockholder derivative class action lawsuit filed on September 18, 2025, with similar allegations to the Consolidated Derivative Matters, plus new allegations regarding the 2024 Proxy Statement. This case was transferred to the Western District of Texas and subsequently dismissed without prejudice on January 23, 2026.
• Sinha v. Sell et al. (E.D.N.Y.): Putative stockholder derivative action lawsuit filed on February 12, 2026, asserting claims under Sections 14(a) and 10(b) of the Exchange Act and common law claims including breach of fiduciary duty, related to statements made between February 2025 and August 2025 concerning financial guidance, medical margin, and Adjusted EBITDA.
• The company intends to vigorously oppose all pending lawsuits but is unable to predict the outcome or estimate monetary liability due to the early stages of litigation.

Related Party Transactions

• CD&R (Largest Shareholder): In 2023, the company recognized $1.7 million in general and administrative expenses for administered secondary offerings of shares of its common stock sold by CD&R. The company did not receive any proceeds from these sales.
• Gentiva Health Services (Controlled by CD&R): For the year ended December 31, 2025, the company incurred expenses of $8.4 million for provider services delivered by Illumia Health, LLC (wholly owned by Gentiva). As of December 31, 2025, an outstanding receivable from Illumia of $5.2 million existed.
• Population Health, LLC (Equity Method Investee): For the years ended December 31, 2025, 2024, and 2023, the company incurred expenses of $7.0 million, $8.0 million, and $8.9 million, respectively, for provider services delivered by Population Health, LLC (49% equity ownership). As of December 31, 2025 and 2024, an outstanding payable to Population Health, LLC of $0.6 million and $1.2 million, respectively, existed.
• CMS ACO Models Investments (Equity Method Investees): For the years ended December 31, 2025, 2024, and 2023, the company recognized revenue of $3.5 million, $3.9 million, and $1.6 million, respectively, for technology services rendered. For the same periods, the company recognized other income of $50.1 million, $14.9 million, and $2.9 million, respectively, for operational and administrative services provided. As of December 31, 2025 and 2024, an outstanding receivable from the CMS ACO Models of $51.3 million and $7.0 million, respectively, existed.

Stakeholder Impact

• Shareholders: Negative impact due to significant net losses, declining membership, negative medical margin, increased impairment charges, and the NYSE delisting notice. The proposed reverse stock split aims to address listing compliance but carries risks of further dilution or lack of sustained price appreciation. Ongoing litigation also poses financial and reputational risks.
• Employees: Potential impact from strategic changes in the workforce, as indicated by severance costs related to the former CEO's departure and other strategic changes. The company's ability to attract and retain qualified personnel may be affected by financial performance and stock price volatility.
• Physician Partners: Declining MA and ACO beneficiaries, coupled with negative medical margin, could impact the financial viability and attractiveness of the company's partnership model. Lower partner physician compensation due to losses in certain geographies directly affects their earnings. The transition to a Total Care Model may be challenging for some.
• Payors: The company's financial struggles and declining membership could affect its ability to maintain favorable contractual terms or secure new contracts with MA payors. Reliance on payors for accurate data and claims payment remains a critical dependency.
• Creditors: The company's increased net losses and negative cash flow from operations, along with the need for potential future capital raises, indicate increased credit risk. The recent amendment to the Credit Facility, while extending maturity, also imposes stricter covenants and cash collateralization requirements.

Next Steps

• Seek stockholder approval for an amendment to the Amended and Restated Certificate of Incorporation to effect a reverse stock split at a ratio of one-for-five to one-for-twenty-five.
• Hold a special meeting of stockholders on March 17, 2026, for the purpose of approving the reverse stock split.
• Continue to monitor developments related to the potential rate increase from CMS's 2027 Advanced Notice for Medicare Advantage and Part D Payment Rates.
• Evaluate participation in the new CMS LEAD Model, which replaces the ACO REACH Model starting January 1, 2027, given the many unknowns concerning its technical, operational, and financial aspects.
• Manage ongoing legal proceedings, including securities class action and stockholder derivative lawsuits.
• Continue to improve existing systems for operational and financial management, including reporting systems, procedures, controls, and enterprise/operational risk mitigation.
• Develop, test, and maintain implementation of algorithms, AI, and machine learning technologies to minimize unintended, harmful impact.

Key Dates

Recommendation

The filing reveals a deeply concerning financial picture for Agilon Health, marked by a substantial increase in net losses, a shift to negative medical margin, and declining membership across its core Medicare Advantage and ACO segments. The NYSE delisting notice due to a sub-$1.00 share price is a critical red flag, indicating severe market distress and potential liquidity issues. While management is pursuing a reverse stock split, this is often a temporary fix that does not address underlying operational weaknesses. The significant impairment charges suggest that past investments are failing, and ongoing legal proceedings add further uncertainty and potential financial burden. The company's reliance on future capital raises in this challenging environment, coupled with stricter debt covenants, points to a precarious financial position. Given the deteriorating financial performance, declining core metrics, and significant governance and market challenges, a seasoned investor would likely recommend a strong sell.

Keywords

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