10-Q 1 agl-20210930.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the quarterly period ended September 30, 2021

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission file number 001-40332

 

 

agilon health, inc.

(Exact name of registrant as specified in its charter)

 

Delaware

37-1915147

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

1 World Trade Center, Suite 2000

Long Beach, CA 90831

(Address of principal executive offices)

(562) 256-3800

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common stock, $0.01 par value

AGL

New York Stock Exchange

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesNo

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer

  ☐

 

Accelerated Filer

  ☐

 

 

 

 

 

Non-accelerated Filer

  ☒

 

Smaller Reporting Company

 

 

 

 

 

 

 

 

Emerging Growth Company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YES NO ☒

At October 22, 2021, there were 393,655,423 shares of the registrant’s $0.01 par value common stock outstanding.

 

 


 

agilon health, inc.

INDEX

 

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

Item 1.

Unaudited Financial Statements:

 

 

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020

3

 

 

 

 

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020

4

 

 

 

 

Condensed Consolidated Statements of Contingently Redeemable Common Stock and Stockholders’ Equity (Deficit) for the Three and Nine Months Ended September 30, 2021 and 2020

5

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020

7

 

 

 

 

Notes to the Condensed Consolidated Financial Statements

8

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

37

 

 

 

Item 4.

Controls and Procedures

37

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

38

 

 

 

Item 1A.

Risk Factors

38

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

38

 

 

 

Item 6.

Exhibits

39

 

 

 

Signatures

40

 

2

 


 

agilon health, inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

 

 

 

September 30,
2021

 

 

December 31,
2020

 

 

 

(unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,081,601

 

 

$

106,795

 

Restricted cash and equivalents

 

 

14,302

 

 

 

28,383

 

Receivables, net

 

 

342,500

 

 

 

144,555

 

Prepaid expenses and other current assets, net

 

 

14,463

 

 

 

9,639

 

Current assets held for sale and discontinued operations, net

 

 

 

 

 

4,825

 

Total current assets

 

 

1,452,866

 

 

 

294,197

 

Property and equipment, net

 

 

6,462

 

 

 

6,456

 

Intangible assets, net

 

 

58,147

 

 

 

60,468

 

Goodwill

 

 

41,540

 

 

 

41,540

 

Other assets, net

 

 

126,105

 

 

 

43,700

 

Total assets

 

$

1,685,120

 

 

$

446,361

 

LIABILITIES, CONTINGENTLY REDEEMABLE COMMON STOCK
   AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Medical claims and related payables

 

$

288,121

 

 

$

162,868

 

Accounts payable and accrued expenses

 

 

129,660

 

 

 

97,244

 

Current portion of long-term debt

 

 

5,000

 

 

 

3,041

 

Current liabilities held for sale and discontinued operations

 

 

 

 

 

3,682

 

Total current liabilities

 

 

422,781

 

 

 

266,835

 

Long-term debt, net of current portion

 

 

44,628

 

 

 

64,665

 

Other liabilities

 

 

90,272

 

 

 

90,091

 

Total liabilities

 

 

557,681

 

 

 

421,591

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Mezzanine equity:

 

 

 

 

 

 

Contingently redeemable common stock, $0.01 par value: 76,201 shares issued
   and outstanding at December 31, 2020

 

 

 

 

 

309,500

 

 

 

 

 

 

 

 

Stockholders' equity (deficit):

 

 

 

 

 

 

Common stock, $0.01 par value: 2,000,000 shares authorized;
   
391,548 and 249,374 shares issued and outstanding, respectively

 

 

3,915

 

 

 

2,494

 

Additional paid-in capital

 

 

2,024,764

 

 

 

263,966

 

Accumulated deficit

 

 

(900,956

)

 

 

(551,190

)

Total agilon health, inc. stockholders' equity (deficit)

 

 

1,127,723

 

 

 

(284,730

)

Noncontrolling interests

 

 

(284

)

 

 

 

Total stockholders’ equity (deficit)

 

 

1,127,439

 

 

 

(284,730

)

Total liabilities, contingently redeemable common stock and stockholders’
   equity (deficit)

 

$

1,685,120

 

 

$

446,361

 

 

The condensed consolidated balance sheets include assets and liabilities of consolidated variable interest entities (“VIEs”) as agilon health, inc., together with its consolidated subsidiaries and variable interest entities (the “Company”), is the primary beneficiary of these VIEs. The condensed consolidated balance sheets include total assets that can only be used to settle obligations of the Company’s consolidated VIEs totaling $478.4 million and $287.9 million as of September 30, 2021 and December 31, 2020, respectively, and total liabilities of the Company’s consolidated VIEs for which creditors do not have recourse to the general credit of the primary beneficiary of $337.9 million and $174.0 million as of September 30, 2021 and December 31, 2020, respectively. See Note 13 for additional details.

See accompanying Notes to the Condensed Consolidated Financial Statements.

3

 


 

agilon health, inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Medical services revenue

 

$

457,646

 

 

$

311,734

 

 

$

1,367,736

 

 

$

894,043

 

Other operating revenue

 

 

967

 

 

 

950

 

 

 

2,937

 

 

 

3,283

 

Total revenues

 

 

458,613

 

 

 

312,684

 

 

 

1,370,673

 

 

 

897,326

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Medical services expense

 

 

414,202

 

 

 

260,933

 

 

 

1,217,039

 

 

 

728,949

 

Other medical expenses

 

 

29,454

 

 

 

26,325

 

 

 

86,809

 

 

 

79,512

 

General and administrative

 

 

34,683

 

 

 

30,368

 

 

 

114,001

 

 

 

91,200

 

Stock-based compensation expense

 

 

11,960

 

 

 

1,558

 

 

 

287,980

 

 

 

4,734

 

Depreciation and amortization

 

 

3,915

 

 

 

3,344

 

 

 

10,923

 

 

 

9,861

 

Total expenses

 

 

494,214

 

 

 

322,528

 

 

 

1,716,752

 

 

 

914,256

 

Income (loss) from operations

 

 

(35,601

)

 

 

(9,844

)

 

 

(346,079

)

 

 

(16,930

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense), net

 

 

(269

)

 

 

(469

)

 

 

4,034

 

 

 

(421

)

Interest expense

 

 

(867

)

 

 

(1,953

)

 

 

(5,306

)

 

 

(6,182

)

Income (loss) before income taxes

 

 

(36,737

)

 

 

(12,266

)

 

 

(347,351

)

 

 

(23,533

)

Income tax benefit (expense)

 

 

(256

)

 

 

(35

)

 

 

(707

)

 

 

(74

)

Income (loss) from continuing operations

 

 

(36,993

)

 

 

(12,301

)

 

 

(348,058

)

 

 

(23,607

)

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

1,117

 

 

 

584

 

 

 

(1,781

)

 

 

(11,845

)

Income tax benefit (expense)

 

 

(82

)

 

 

(110

)

 

 

(211

)

 

 

(385

)

Total discontinued operations

 

 

1,035

 

 

 

474

 

 

 

(1,992

)

 

 

(12,230

)

Net income (loss)

 

 

(35,958

)

 

 

(11,827

)

 

 

(350,050

)

 

 

(35,837

)

Noncontrolling interests’ share in (earnings) loss

 

 

115

 

 

 

 

 

 

284

 

 

 

 

Net income (loss) attributable to common shares

 

$

(35,843

)

 

$

(11,827

)

 

$

(349,766

)

 

$

(35,837

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share, basic and diluted

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.09

)

 

$

(0.04

)

 

$

(0.95

)

 

$

(0.07

)

Discontinued operations

 

$

 

 

$

 

 

$

(0.01

)

 

$

(0.04

)

Weighted average shares outstanding, basic and diluted

 

 

391,229

 

 

 

324,563

 

 

 

365,018

 

 

 

324,068

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements.

4

 


 

agilon health, inc.

CONDENSED CONSOLIDATED STATEMENTS OF CONTINGENTLY REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands)

(unaudited)

For the three months ended September 30, 2021:

 

 

Total Stockholders’ Equity

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Noncontrolling

 

 

Total
Stockholders’
Equity

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Interest

 

 

(Deficit)

 

July 1, 2021

 

 

390,883

 

 

$

3,909

 

 

$

2,011,651

 

 

$

(865,113

)

 

$

(169

)

 

$

1,150,278

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

(35,843

)

 

 

(115

)

 

 

(35,958

)

Offering costs in connection
   with initial public offering ("IPO")

 

 

 

 

 

 

 

 

104

 

 

 

 

 

 

 

 

 

104

 

Exercise of stock options
   and other, net

 

 

665

 

 

 

6

 

 

 

1,049

 

 

 

 

 

 

 

 

 

1,055

 

Stock-based compensation
   expense

 

 

 

 

 

 

 

 

11,960

 

 

 

 

 

 

 

 

 

11,960

 

September 30, 2021

 

 

391,548

 

 

$

3,915

 

 

$

2,024,764

 

 

$

(900,956

)

 

$

(284

)

 

$

1,127,439

 

 

For the nine months ended September 30, 2021:

 

 

 

Contingently
 Redeemable
 Common Stock

 

 

 

Total Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Noncontrolling

 

 

Total
Stockholders’
Equity

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Interest

 

 

(Deficit)

 

January 1, 2021

 

 

76,201

 

 

$

309,500

 

 

 

 

249,374

 

 

$

2,494

 

 

$

263,966

 

 

$

(551,190

)

 

$

 

 

$

(284,730

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(349,766

)

 

 

(284

)

 

 

(350,050

)

Reclassification of contingently
   redeemable common stock in
   connection with IPO

 

 

(76,201

)

 

 

(309,500

)

 

 

 

76,201

 

 

 

762

 

 

 

308,738

 

 

 

 

 

 

 

 

 

309,500

 

Issuance of common stock in
   connection with IPO,
   net of offering costs

 

 

 

 

 

 

 

 

 

53,590

 

 

 

536

 

 

 

1,162,597

 

 

 

 

 

 

 

 

 

1,163,133

 

Issuance of common stock under
   partner physician group equity
   agreements upon IPO

 

 

 

 

 

 

 

 

 

11,672

 

 

 

117

 

 

 

268,350

 

 

 

 

 

 

 

 

 

268,467

 

Exercise of stock options
   and other, net

 

 

 

 

 

 

 

 

 

711

 

 

 

6

 

 

 

1,600

 

 

 

 

 

 

 

 

 

1,606

 

Stock-based compensation
   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19,513

 

 

 

 

 

 

 

 

 

19,513

 

September 30, 2021

 

 

 

 

$

 

 

 

 

391,548

 

 

$

3,915

 

 

$

2,024,764

 

 

$

(900,956

)

 

$

(284

)

 

$

1,127,439

 

 

5

 


 

 

agilon health, inc.

CONDENSED CONSOLIDATED STATEMENTS OF CONTINGENTLY REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands)

(unaudited)

 

For the three months ended September 30, 2020:

 

 

 

Contingently Redeemable
 Common Stock

 

 

 

Total Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Total
Stockholders’
Equity

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

(Deficit)

 

July 1, 2020

 

 

76,201

 

 

$

309,500

 

 

 

 

248,282

 

 

$

2,482

 

 

$

264,386

 

 

$

(515,148

)

 

$

(248,280

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,827

)

 

 

(11,827

)

Issuance of common stock, net

 

 

 

 

 

 

 

 

 

211

 

 

 

3

 

 

 

948

 

 

 

 

 

 

951

 

Repurchase of common stock

 

 

 

 

 

 

 

 

 

(1,500

)

 

 

(15

)

 

 

(6,727

)

 

 

 

 

 

(6,742

)

Exercise of stock options and other, net

 

 

 

 

 

 

 

 

 

2,047

 

 

 

21

 

 

 

476

 

 

 

 

 

 

497

 

Settlement of stock-based liabilities

 

 

 

 

 

 

 

 

 

334

 

 

 

3

 

 

 

1,497

 

 

 

 

 

 

1,500

 

Stock-based compensation
   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,616

 

 

 

 

 

 

1,616

 

September 30, 2020

 

 

76,201

 

 

$

309,500

 

 

 

 

249,374

 

 

$

2,494

 

 

$

262,196

 

 

$

(526,975

)

 

$

(262,285

)

 

 

For the nine months ended September 30, 2020:

 

 

 

Contingently Redeemable
 Common Stock

 

 

 

Total Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Total
Stockholders’
Equity

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

(Deficit)

 

January 1, 2020

 

 

69,860

 

 

$

281,000

 

 

 

 

246,743

 

 

$

2,467

 

 

$

256,643

 

 

$

(491,138

)

 

$

(232,028

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35,837

)

 

 

(35,837

)

Issuance of contingently
   redeemable common stock

 

 

6,341

 

 

 

28,500

 

 

 

 

 

 

 

 

 

 

(460

)

 

 

 

 

 

(460

)

Issuance of common stock, net

 

 

 

 

 

 

 

 

 

1,235

 

 

 

13

 

 

 

5,537

 

 

 

 

 

 

5,550

 

Repurchase of common stock

 

 

 

 

 

 

 

 

 

(1,500

)

 

 

(15

)

 

 

(6,727

)

 

 

 

 

 

(6,742

)

Exercise of stock options and other, net

 

 

 

 

 

 

 

 

 

2,562