agilon health, inc. [AGL] Filings

10-Q 1 agl-20220930.htm 10-Q 10-Q

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, 2022


☐	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.)

6210 E Hwy 290, Suite 450

Austin, TX 78723

(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. Yes ☒ No ☐

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 31, 2022, there were 411,854,786 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, 2022 and December 31, 2021	3

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2022 and 2021	5

	Condensed Consolidated Statements of Contingently Redeemable Common Stock and Stockholders’ Equity (Deficit) for the Three and Nine Months Ended September 30, 2022 and 2021	6

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021	8

	Notes to the Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

Item 4.	Controls and Procedures	35

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 5.	Other Information	36

Item 6.	Exhibits	38

Signatures		39

agilon health, inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)


	September 30, 2022			December 31, 2021
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	551,287		$	1,040,039
Restricted cash and equivalents		13,192			14,781
Marketable securities		407,993			—
Receivables, net		637,731			293,407
Prepaid expenses and other current assets, net		24,067			18,968
Total current assets		1,634,270			1,367,195
Property and equipment, net		17,940			9,161
Intangible assets, net		60,602			55,398
Goodwill		41,540			41,540
Other assets, net		116,083			112,958
Total assets	$	1,870,435		$	1,586,252
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Medical claims and related payables	$	490,840		$	239,014
Accounts payable and accrued expenses		162,386			112,946
Current portion of long-term debt		5,000			5,000
Total current liabilities		658,226			356,960
Long-term debt, net of current portion		39,713			43,401
Other liabilities		87,207			94,295
Total liabilities		785,146			494,656

Commitments and contingencies

Stockholders' equity (deficit):
Common stock, $0.01 par value: 2,000,000 shares authorized; 411,741 and 400,095 shares issued and outstanding, respectively		4,117			4,001
Additional paid-in capital		2,094,562			2,045,572
Accumulated deficit		(1,007,764	)		(957,677	)
Accumulated other comprehensive income (loss)		(5,098	)		—
Total agilon health, inc. stockholders' equity (deficit)		1,085,817			1,091,896
Noncontrolling interests		(528	)		(300	)
Total stockholders’ equity (deficit)		1,085,289			1,091,596
Total liabilities and stockholders’ equity (deficit)	$	1,870,435		$	1,586,252

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 $805.9 million and $420.5 million as of September 30, 2022 and December 31, 2021, 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 $587.8 million and $282.0 million as of September 30, 2022 and December 31, 2021, respectively. See Note 14 for additional details.

See accompanying Notes to the Condensed Consolidated Financial Statements.

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,
	2022			2021			2022			2021
Revenues:
Medical services revenue	$	693,934		$	457,646		$	2,015,541		$	1,367,736
Other operating revenue		924			967			2,896			2,937
Total revenues		694,858			458,613			2,018,437			1,370,673
Expenses:
Medical services expense		618,287			414,202			1,771,635			1,217,039
Other medical expenses		50,659			29,454			144,512			86,809
General and administrative (including noncash stock-based compensation expense of $7,907, $11,960, $18,430, and $287,980, respectively)		51,980			46,643			143,738			401,981
Depreciation and amortization		3,450			3,915			9,865			10,923
Total expenses		724,376			494,214			2,069,750			1,716,752
Income (loss) from operations		(29,518	)		(35,601	)		(51,313	)		(346,079	)
Other income (expense):
Other income (expense), net		574			(269	)		9,840			4,034
Gain (loss) on lease terminations		—			—			(5,458	)		—
Interest expense		(1,000	)		(867	)		(2,816	)		(5,306	)
Income (loss) before income taxes		(29,944	)		(36,737	)		(49,747	)		(347,351	)
Income tax benefit (expense)		(559	)		(256	)		(1,068	)		(707	)
Income (loss) from continuing operations		(30,503	)		(36,993	)		(50,815	)		(348,058	)
Discontinued operations:
Income (loss) before income taxes		(224	)		1,117			526			(1,781	)
Income tax benefit (expense)		(12	)		(82	)		(26	)		(211	)
Total discontinued operations		(236	)		1,035			500			(1,992	)
Net income (loss)		(30,739	)		(35,958	)		(50,315	)		(350,050	)
Noncontrolling interests’ share in (earnings) loss		71			115			228			284
Net income (loss) attributable to common shares	$	(30,668	)	$	(35,843	)	$	(50,087	)	$	(349,766	)

Net income (loss) per common share, basic and diluted
Continuing operations	$	(0.07	)	$	(0.09	)	$	(0.12	)	$	(0.95	)
Discontinued operations	$	—		$	—		$	—		$	(0.01	)
Weighted average shares outstanding, basic and diluted		411,065			391,229			406,823			365,018

See accompanying Notes to the Condensed Consolidated Financial Statements.

agilon health, inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Net income (loss)	$	(30,739	)	$	(35,958	)	$	(50,315	)	$	(350,050	)
Other comprehensive income (loss):
Net unrealized gain (loss) on marketable securities, net of tax		(5,611	)		—			(5,098	)		—
Total comprehensive income (loss)		(36,350	)		(35,958	)		(55,413	)		(350,050	)
Comprehensive (income) loss attributable to noncontrolling interests		71			115			228			284
Total comprehensive income (loss) attributable to agilon health, inc.	$	(36,279	)	$	(35,843	)	$	(55,185	)	$	(349,766	)

See accompanying Notes to the Condensed Consolidated Financial Statements.

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, 2022:


	Total Stockholders’ Equity
	Common Stock					Additional Paid-In			Accumulated			Accumulated Other Comprehensive			Noncontrolling			Total Stockholders’ Equity
	Shares			Amount		Capital			Deficit			Income (loss)			Interest			(Deficit)
July 1, 2022		408,204		$	4,082	$	2,076,329		$	(977,096	)	$	513		$	(457	)	$	1,103,371
Net income (loss)		—			—		—			(30,668	)		—			(71	)		(30,739	)
Other comprehensive income (loss)		—			—		—			—			(5,611	)		—			(5,611	)
Exercise of stock options		3,390			33		10,356			—			—			—			10,389
Vesting of restricted stock units		149			2		(2	)		—			—			—			—
Shares withheld related to net share settlement		(2	)		—		(28	)		—			—			—			(28	)
Stock-based compensation expense		—			—		7,907			—			—			—			7,907
September 30, 2022		411,741		$	4,117	$	2,094,562		$	(1,007,764	)	$	(5,098	)	$	(528	)	$	1,085,289

For the nine months ended September 30, 2022:


	Total Stockholders’ Equity
	Common Stock					Additional Paid-In			Accumulated			Accumulated Other Comprehensive			Noncontrolling			Total Stockholders’ Equity
	Shares			Amount		Capital			Deficit			Income (loss)			Interest			(Deficit)
January 1, 2022		400,095		$	4,001	$	2,045,572		$	(957,677	)	$	—		$	(300	)	$	1,091,596
Net income (loss)		—			—		—			(50,087	)		—			(228	)		(50,315	)
Other comprehensive income (loss)		—			—		—			—			(5,098	)		—			(5,098	)
Exercise of stock options		11,392			113		31,349			—			—			—			31,462
Vesting of restricted stock units		289			3		(3	)		—			—			—			—
Shares withheld related to net share settlement		(35	)		—		(786	)		—			—			—			(786	)
Stock-based compensation expense		—			—		18,430			—			—			—			18,430
September 30, 2022		411,741		$	4,117	$	2,094,562		$	(1,007,764	)	$	(5,098	)	$	(528	)	$	1,085,289

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

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