agilon health (AGL)
We see potential in agilon health. Although it has burned cash, its growth shows it’s deploying the Jeff Bezos reinvestment strategy.― StockStory Analyst Team
1. News
2. Summary
Why agilon health Is Interesting
Transforming how doctors care for seniors by shifting financial incentives from volume to outcomes, agilon health (NYSE:AGL) provides a platform that helps primary care physicians transition to value-based care models for Medicare patients through long-term partnerships and global capitation arrangements.
- Annual revenue growth of 37.2% over the last five years was superb and indicates its market share increased during this cycle
- Earnings per share grew by 13.2% annually over the last four years and trumped its peers
- On the flip side, its persistent adjusted operating margin losses suggest the business manages its expenses poorly
agilon health has some noteworthy aspects. If you like the stock, the price seems fair.
Why Is Now The Time To Buy agilon health?
At $0.40 per share, agilon health trades at 0.5x forward EV-to-EBITDA. When viewed through the lens of revenue growth, the current valuation seems quite attractive.
If you think the market is undervaluing the company, now could be a good time to build a position.
3. agilon health (AGL) Research Report: Q4 CY2025 Update
Healthcare services company Agilon Health (NYSE:AGL) reported revenue ahead of Wall Street’s expectations in Q4 CY2025, with sales up 3.1% year on year to $1.57 billion. On the other hand, next quarter’s revenue guidance of $1.37 billion was less impressive, coming in 12.6% below analysts’ estimates. Its GAAP loss of $0.46 per share was 69.1% below analysts’ consensus estimates.
agilon health (AGL) Q4 CY2025 Highlights:
- Revenue: $1.57 billion vs analyst estimates of $1.46 billion (3.1% year-on-year growth, 7.2% beat)
- EPS (GAAP): -$0.46 vs analyst expectations of -$0.27 (69.1% miss)
- Adjusted EBITDA: -$141.9 million (-9% margin, 69% year-on-year decline)
- Revenue Guidance for Q1 CY2026 is $1.37 billion at the midpoint, below analyst estimates of $1.57 billion
- Operating Margin: -12.3%, down from -7.1% in the same quarter last year
- Free Cash Flow was -$23.51 million, down from $13.15 million in the same quarter last year
- Customers: 511,000, up from 503,000 in the previous quarter
- Market Capitalization: $163.5 million
Company Overview
Transforming how doctors care for seniors by shifting financial incentives from volume to outcomes, agilon health (NYSE:AGL) provides a platform that helps primary care physicians transition to value-based care models for Medicare patients through long-term partnerships and global capitation arrangements.
At the core of agilon's business model is a fundamental shift in how healthcare is delivered and paid for. Rather than the traditional fee-for-service approach where physicians are paid for each service provided, agilon enables doctors to receive fixed monthly payments (called "global capitation") for managing the total healthcare needs of Medicare patients. This aligns financial incentives with keeping patients healthy rather than simply treating illnesses.
The company forms risk-bearing entities in local communities that contract with health insurers, then partners with established physician groups through 20-year agreements. These physician partners gain access to agilon's technology platform, operational support, and capital needed to succeed under value-based care arrangements.
For example, a primary care practice in Ohio partnering with agilon might receive a set monthly payment for each Medicare Advantage patient in their care. The practice then becomes responsible for coordinating all aspects of that patient's healthcare—from preventive screenings to specialist referrals to hospital admissions—with financial incentives to improve outcomes while managing costs.
agilon generates revenue through these per-member-per-month payments from health insurers. The company's platform includes technology for data analysis, care coordination tools, and operational support to help physicians identify high-risk patients, close care gaps, and optimize care delivery.
Beyond Medicare Advantage, agilon also participates in the Centers for Medicare & Medicaid Services' ACO REACH Model through eight Accountable Care Organizations, allowing physician partners to apply similar value-based approaches to traditional Medicare fee-for-service beneficiaries.
The company has expanded its geographic footprint across multiple states including Ohio, Connecticut, Maine, Michigan, Texas, and others, creating a network of physician partners who can share best practices and insights across communities.
4. Outpatient & Specialty Care
The outpatient and specialty care industry delivers targeted medical services in non-hospital settings that are often cost-effective compared to inpatient alternatives. This means that they are more desired as rising healthcare costs and ways to combat them become more and more top-of-mind. Outpatient and specialty care providers boast revenue streams that are stable due to the recurring nature of treatment for chronic conditions and long-term patient relationships. However, their reliance on government reimbursement programs like Medicare means stroke-of-the-pen risk. Additionally, scaling a network of facilities can be capital-intensive with uneven return profiles amid competition from integrated healthcare systems. Looking ahead, the industry is positioned to grow as demand for outpatient services expands, driven by aging populations, a rising prevalence of chronic diseases, and a shift toward value-based care models. Tailwinds include advancements in medical technology that support more complex procedures in outpatient settings and the increasing focus on preventive care, which can be aided by data and AI. However, headwinds such as reimbursement rate cuts, labor shortages, and the financial strain of digitization may temper growth.
agilon health competes with other companies focused on value-based primary care models including Oak Street Health (acquired by CVS Health), Privia Health (NASDAQ: PRVA), VillageMD (majority-owned by Walgreens Boots Alliance), and privately-held companies like Iora Health (acquired by One Medical/Amazon) and Aledade.
5. Economies of Scale
Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.
With $5.93 billion in revenue over the past 12 months, agilon health has decent scale. This is important as it gives the company more leverage in a heavily regulated, competitive environment that is complex and resource-intensive.
6. Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, agilon health’s 37.2% annualized revenue growth over the last five years was incredible. Its growth beat the average healthcare company and shows its offerings resonate with customers, a helpful starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. agilon health’s annualized revenue growth of 17.2% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
agilon health also reports its number of customers, which reached 511,000 in the latest quarter. Over the last two years, agilon health’s customer base averaged 5.8% year-on-year growth. Because this number is lower than its revenue growth, we can see the average customer spent more money each year on the company’s products and services. 
This quarter, agilon health reported modest year-on-year revenue growth of 3.1% but beat Wall Street’s estimates by 7.2%. Company management is currently guiding for a 10.6% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 1.5% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.
7. Operating Margin
agilon health’s high expenses have contributed to an average operating margin of negative 7.2% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out.
On the plus side, agilon health’s operating margin rose by 13.7 percentage points over the last five years, as its sales growth gave it operating leverage. Zooming into its more recent performance, however, we can see the company’s margin has decreased by 2.4 percentage points on a two-year basis. Given its business quality, we’re optimistic that agilon health can correct course and return to expansion.
agilon health’s operating margin was negative 12.3% this quarter.
8. Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
agilon health’s earnings losses deepened over the last five years as its EPS dropped 38.7% annually. We’ll keep a close eye on the company as diminishing earnings could imply changing secular trends and preferences.
In Q4, agilon health reported EPS of negative $0.46, down from negative $0.26 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects agilon health to improve its earnings losses. Analysts forecast its full-year EPS of negative $0.95 will advance to negative $0.39.
9. Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
agilon health’s demanding reinvestments have consumed many resources over the last five years, contributing to an average free cash flow margin of negative 3.2%. This means it lit $3.19 of cash on fire for every $100 in revenue.
Taking a step back, an encouraging sign is that agilon health’s margin expanded by 6.4 percentage points during that time. The company’s improvement shows it’s heading in the right direction, and continued increases could help it achieve long-term cash profitability.
agilon health burned through $23.51 million of cash in Q4, equivalent to a negative 1.5% margin. The company’s cash burn increased meaningfully year on year while its cash conversion fell 2.4 percentage points. This relationship shows agilon health’s management team spent more cash this quarter but was less efficient at generating sales with that cash.
10. Balance Sheet Assessment
One of the best ways to mitigate bankruptcy risk is to hold more cash than debt.
agilon health is a well-capitalized company with $285.1 million of cash and $34.99 million of debt on its balance sheet. This $250.2 million net cash position is 153% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.
11. Key Takeaways from agilon health’s Q4 Results
We were impressed by agilon health’s optimistic EBITDA guidance for next quarter, which blew past analysts’ expectations. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. On the other hand, its full-year revenue guidance missed and its revenue guidance for next quarter fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded up 2.9% to $0.49 immediately following the results.
12. Is Now The Time To Buy agilon health?
The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in agilon health.
agilon health possesses a number of positive attributes. To kick things off, its revenue growth was exceptional over the last five years. And while its declining EPS over the last five years makes it a less attractive asset to the public markets, its rising cash profitability gives it more optionality. On top of that, its expanding operating margin shows the business has become more efficient.
agilon health’s EV-to-EBITDA ratio based on the next 12 months is 0.4x. Looking at the healthcare landscape right now, agilon health trades at a pretty interesting price. If you’re a fan of the business and management team, now is a good time to scoop up some shares.
Wall Street analysts have a consensus one-year price target of $0.99 on the company (compared to the current share price of $0.49), implying they see 101% upside in buying agilon health in the short term.