In a recent move, Citi has upgraded its stance on Agilon Health (AGL, Financial), shifting its rating from Neutral to Buy. This adjustment comes with an increased price target set at $5, up from a previous $3.25. The decision reflects the company's proactive measures in mitigating risks for 2025 and its potential for marked margin improvements in the subsequent years, 2026 and 2027. This optimism is bolstered by a favorable final rate notice for 2026, which surpassed expectations.
Citi's analysis suggests that the sharp 30% decline in Agilon Health's stock following UnitedHealth's (UNH) earnings report has been disproportionately severe. The firm's discussions with key figures, including Aledade's co-Founder and CEO Farzad Mostashari, reinforce their belief that the issues faced are specific to UnitedHealth's Optum strategy rather than indicative of broader industry challenges.
Furthermore, Agilon Health is perceived to have a strategic advantage in effectively managing risks amid significant movements among national insurers. This enhanced ability to navigate changes in the insurance landscape grants Agilon a distinct edge, according to Citi's latest assessment.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 15 analysts, the average target price for Agilon Health Inc (AGL, Financial) is $4.11 with a high estimate of $8.50 and a low estimate of $2.00. The average target implies an upside of 7.68% from the current price of $3.82. More detailed estimate data can be found on the Agilon Health Inc (AGL) Forecast page.
Based on the consensus recommendation from 22 brokerage firms, Agilon Health Inc's (AGL, Financial) average brokerage recommendation is currently 2.9, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Agilon Health Inc (AGL, Financial) in one year is $36.81, suggesting a upside of 863.61% from the current price of $3.82. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Agilon Health Inc (AGL) Summary page.
AGL Key Business Developments
Release Date: February 25, 2025
- Revenue: $1.52 billion for Q4 2024, $6.06 billion for the full year, a 44% increase year-over-year.
- Medical Margin: $1 million for Q4 2024, $205 million for the full year.
- Adjusted EBITDA: Minus $84 million for Q4 2024, minus $154 million for the full year.
- Medicare Advantage Membership: Increased 36% year-over-year to 527,000 members.
- ACO Model Membership: 132,000 members, a 48% year-over-year growth.
- 2025 Revenue Guidance: Expected to decline 2% to $5.925 billion.
- 2025 Medical Margin Guidance: Expected to improve 46% to $300 million at the midpoint.
- 2025 Adjusted EBITDA Guidance: Expected to be minus $75 million at the midpoint.
- Cash and Marketable Securities: $406 million at the end of Q4 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Agilon Health Inc (AGL, Financial) reported a 44% increase in total revenue for the fourth quarter, reaching $1.52 billion, driven by the expansion of the 2024 partner class and organic growth.
- The company successfully reduced its Medicare Part D exposure to less than 30% of its membership, exceeding its initial goal of 50%, which is expected to reduce risk.
- Agilon Health Inc (AGL) achieved a 36% year-over-year increase in Medicare Advantage membership, reaching 527,000 members by the end of the fourth quarter.
- The company has implemented strategic actions to improve financial performance, including exiting unprofitable partnerships and enhancing data and analytics capabilities.
- Agilon Health Inc (AGL) has a strong pipeline for the class of 2026, with signed letters of intent, indicating continued growth potential.
Negative Points
- The company reported an adjusted EBITDA loss of $84 million for the fourth quarter and $154 million for the full year, reflecting lower medical margins and higher costs.
- Agilon Health Inc (AGL) anticipates a 4% decline in Medicare Advantage membership for 2025, due to partnership exits and payor contract terminations.
- The company is facing ongoing challenges in the Medicare Advantage market, including elevated cost trends and regulatory changes impacting its 2025 outlook.
- Medical margin for the full year 2024 was negatively impacted by prior year development and elevated medical cost trends, resulting in a lower-than-expected outcome.
- Agilon Health Inc (AGL) expects continued high medical cost trends in 2025, with an estimated gross cost trend of 6.3%, posing a challenge to financial performance.
