Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MA membership grew 38% year over year to 513,000 members.
- MA revenue increased by 39% to $1.5 billion.
- Medical margin for the second quarter was $106 million, translating to $69 per member per month.
- Adjusted EBITDA for the second quarter was minus $3 million, better than expected due to lower operations costs.
- Agilon Health Inc (AGL, Financial) raised its full-year membership guidance to a midpoint of 519,000 members.
Negative Points
- Second quarter results were at the lower end of guidance due to the termination of select unprofitable payer group contracts.
- Medical margin was slightly below the midpoint of guidance due to higher than expected cost trends.
- Full-year revenue guidance was modestly lowered due to retroactive contract terminations.
- Adjusted EBITDA for the second quarter was negative, reflecting higher utilization and lower MA medical margins.
- Cost trends remain elevated with Part D drugs and inpatient medical admissions being principal drivers.
Q & A Highlights
Q: Hi, good afternoon. I just wanted to start with the cost trends. If I heard you talk both inpatient and part D. The first are you're seeing an impact to rule on the inpatient side? And then secondly, when we think about your cost trend, we think about risk adjustment, as you talked about, but what's the impact that you're seeing from [B28] in 2024?
A: Thanks for the question, Lisa. I think when it comes to utilization, we had incorporated in our guidance a step up in inpatient medical admits from the two midnight rule. But we have seen that and it is coming in line with kind of our expectation. As I talked about, as we look at our leading indicator data, we are seeing a slight decline in terms of those inpatient admits as we move from Q1 into Q2. And so we're encouraged by that. But as both Jeff and I talked about, we did book up our Q2 cost trend at 7.3% versus what we previously forecasted at 6.8% because we think that's really a prudent thing to do in this environment. And then as it relates to B28, we are seeing that impact in line with our expectations. We saw rough -- we had expected roughly a 2% impact from B28, and that's about what we're seeing to date.
Q: Hi. This is Dean Rosales on for Justin. Any update on medical margin improvement in the 2021 and 2022 classes? would you say those cohorts are starting to trend in that $150 to $200 medical margin range quite yet? Could you speak to the ramp there? Thank you so much.
A: So thanks for the question, Deane. I mean, across that cohort. We do have groups and markets that are at that level. And we are seeing a step up year over year on an incurred basis on a year-over-year basis. We did see an improvement across all of our cohorts. So I think we're beginning to track up. Within specifically the class of '21 and '22, we do have markets at that level.
Q: Hi, thanks. I'm trying to make sure that we understand beyond the trend commentary correctly. So Q1 looks like it's coming in better, but you're booking in Q2 higher than you initially expected. So I guess first, and what are you implying you're booking the back half of the year at in this guidance? And I think you also discussed cost trends and offset lower revenues. But then it seems like you're also discussing booking appropriately in the current environment? Just trying to understand which one of that is. Thank you.
A: Yes, hey, this is Jeff. A couple of a couple of things. You're right, so on the first quarter, 9.1% down to 8.2%. We had originally forecasted 6.8%, looking at up slightly. Really, we're just moderating that trend line. And as Steve mentioned, we're just being prudent given the environment we're in. I will tell you on the back half of the year, specifically Q3, our cost trend from our previous assumption really hasn't changed much. We're around 6% cost trend. And as you get to the fourth quarter, it's kind of hard to apply a trend from Q4 of last year, but we really looked at the [PMPMs] and looking at historical seasonality of those from a cost perspective. And so yes, you are correct. There is a piece and a component that's driven by yield as well, right? So we have updated cost trends with our performance in Q1 and Q2. And then ultimately, we have some premium yield there being offsetting cost piece as well. But it but in general, I think we're still taking a prudent posture on the back-end -- back half cost trends.
Q: YeAH, thanks for taking the questions. Steve, one for you. You talked a little bit about the new data lake. I'm curious if you can go into a bit more detail how you were using that, not in regards to how you model the financial outlook or expectations on cost, but rather how you're using that data to analyze care trends and really to intervene faster, at the practice level, how you get that data to individuals, how do you move in the workflow or get patients and when needed? Give us a little more color on that as it seems like a big potential point? Thanks.
A: Ryan. Thank you really appreciate the question. I think our whole partnership is built around our proximity to that primary care physicians and the ability for us to be able to provide them timely information, on what's happening with their senior patients allows for earlier innovate intervention, better enrollment in our clinical programs. And so now when I talked about our active panel management and the ability for us to have a discussion with a physician about their entire senior population, focus on those highest risk patients that are driving 50% of the costs and have active care plans, what we've been able to do with our data lake is triangulate the data from our health plans. And they'll have senior patients in three, four or five different health plans along with their EMR data. And so they have the ability to look at that population, identify those most complex patients look at what's happening across time. But really, it just gives us a better and faster mechanism to benchmark where they're at relative to kind of best practice in terms of dealing with the most complex patients. So it's been very well received. We're in the early days I talked about, we've been able to roll this out now in 20 of our markets to about 75% of our PCPs. I think the early results that 8% reduction that I talked about in terms of ER and inpatient admits is encouraging. It is early, but that's a meaningful move, particularly in this elevated environment. So that's how the technology is really tying into the partnership that we've got.
Q: Hi, guys. Thanks so much for the question. I appreciate the early commentary on some of the primary care doctor engagement that you were just talking about. How do we think about that in terms of translating that into an opportunity for sort of the back half of '24. as that continues to roll out and then kind of in the 2025 plus that categories?
A: Great question, Elizabeth. So it's early. I think, to Jeff's theme of being prudent, we're trying to be really measured in both how we reported Q2 and how we're forecasting the back half. But our clinical initiatives are included in our forecast. That PCP engagement and the work around active panel management to really help them understand where they're at, to develop these care plans, and to remove any of the operational issues that could be in the way they are part of those clinical activities. So they're incorporated in what we think is kind of a prudent guide on the back half. But it's something that we believe really kind of differentiates our partnership and our network with PCPs and in our ability to better manage cost trend
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
