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Shares of Agilon Health Inc. were suffering a record plunge toward a record low Friday, after the provider of support services for primary care physicians cut its outlooks for margin, revenue and profitability, citing higher medical service expenses.
In a separate announcement, the company said Chief Executive Tim Bensley plans to retire, two years after joining the company.
“Higher-than-expected costs became visible to us in mid-December during the November close process given updated data from health plans and will impact our FY2023 medical margins,” said Chief Executive Steve Sell.
The stock
AGL,
plummeted 33.8% in afternoon trading, enough to make it the biggest decliner listed on the New York Stock Exchange. The stock was also headed for it’s biggest one-day decline and lowest close since going public on April 15, 2021. The previous record selloff was the 17.2% tumble on March 14, 2022.
While the company raised its guidance range for Medicare Advantage members to 386,000 to 387,000 from 384,000 to 386,000, it lowered its medical margin outlook to $340 million to $360 million from $455 million to $470 million.
Agilon defines medical margins as medical services revenue after medical services expenses.
Higher medical expenses were a result of higher-than-anticipated specialist visits, Part B drugs, outpatient surgeries and supplemental benefits, which offset lower hospital medical admissions.
The company also lowered its revenue outlook to $4.295 billion to $4.305 billion from $4.310 billion to $4.320 billion.
Agilon now expects adjusted earnings before interest, taxes, depreciation and amortization of negative $69 million to negative $55 million, compared with positive $6 million to $18 million.
“While a number of programs have been launched to improve visibility, balance risk-sharing and enhance predictability of results, management has assumed higher costs will continue into 2024,” Agilon said in a statement.
For 2024, the company expects Medicare Advantage members of 548,000 to 553,000, medical margin of $560 million to $600 million and total revenue of $6.35 billion to $6.42 billion. The current FactSet consensus for 2024 revenue is $5.97 billion.
The company expects 2024 adjusted Ebitda of $40 million to $60 million.
“We have implemented a number of initiatives, which we believe will enhance operating performance and improve the predictability of financial results in 2024 and beyond including accelerating operating efficiency, refining payor partnerships, improving data visibility and analytics, and expanding onboarding support for newer PCPs in mature markets,” CEO Sell said.
Separately, CFO Bensley said he plans to retire during 2024, which the company expects to take place within the next nine months. Agilon has begun a search for a new CFO.
Bensley joined Agilon in January 2021, three months before the IPO.
Agilon’s stock has dropped 56% over the past three months, while the Health Care Select Sector SPDR ETF
XLV,
has gained 7.8% and the S&P 500
SPX,
has rallied 10.2%.
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