agilon health, inc. Healthcare Services and Technology Conference

Yeah. Maybe first, for those of you new to the story, I will provide a little overview who agilon is. First, we are a primary care centered, value-based care company, really focused on improving outcomes for patients by empowering primary care physicians. We do this through high engagement, providing our PCP partners with technology, analytics, capital, and operational support to allow the primary care doctors to do what they do best, which is take care of their patients. Through our over 2,300 physicians in our network and our partners, we serve approximately 445,000 members in the Medicare Advantage space. Then we have approximately 110,000 members in the ACO. So fee for service members that we are partnered with the primary care physicians on the ACO side. Over the last 18 months, we have executed on a transformational strategy, really pivoting the company towards profitability from growth.

If you go back to 2024 and prior, the company was scaling. Matter of fact, we doubled the size of the company in 2024. There was this macro dislocation between underlying cost trends and revenue reimbursement, so we pivoted to a more profitability focused approach. Over the last 18 months, we've executed on that strategy, which included disciplined operating execution, improving data and visibility, superior clinical and quality outcomes, and then technology enabled scalability and using AI with data. Over the past 18 months, we've executed on these initiatives, and some of those initiatives had included, excuse me, the rollout of clinical programs. We've talked about heart failure, which is our most mature clinical program. It's across 90% of our network.

We've seen great outcomes for patients in that program, where we've seen first time heart failure diagnosis from an inpatient setting going from roughly 25% to 5%. Overall great care for the member and reducing overall hospital admissions. We also have other clinical programs that are on the way, including COPD and dementia. Additionally, we've continued to enhance our data and workflow, providing that information to the providers, our PCP partners on a real time basis and using AI from a suspecting perspective. We took a disciplined approach to contracting as part of this transformation strategy. We touched 80% of our contracts a year ago, generated over $120 million of value for 2026. We have 50% of our book open this year, and 20% of that 50% we didn't touch a year ago. More to come on that.

Last but not least, we emphasize cost control. At the end of last year, we undertook an exercise to reduce overall operating expense, and took out roughly $35 million of operating costs, and of course, that benefit falls right to the bottom line. I would say this pivot from growth to profitability has been meaningful. We're in a long cycle business, so a lot of the work that you do over the last 12 to 18 months doesn't show up financially until this year. I think you're seeing that value come through the earnings in the first and second quarters.

Yeah. Certainly, all of those value creation levers that I mentioned, part of this transformation strategy, contracting was very important. We took a disciplined approach with our payer partners and we focused on percent of premium. That's really our revenue. Making sure that we're getting adequately compensated for the risks that we're taking. Two is enhance quality incentives. We have in-year quality incentives with most of our payers, where they put dollars on the table for us to achieve quality scores. These are obviously metrics that we can influence and control, so it's the same CMS Star measures that you're familiar with. Last but not least, carving out risk for things we don't control, like Part D. We've been very successful in carving out risk with Part D. In 2025, 30% of our members we carried the full Part D risk.

This year, it's less than 15%, and we will make further progress on that in 2027. We've already had a payer agree to carve that out next year. But we're not done. We're in the middle of our contracting process, and so we'll give you the final number when that happens. Certainly contracting is a big piece. Second would be our Burden of Illness program. As you noted, first and second quarter, I think we started out the year with a guide of roughly 40 basis points for a risk adjustment lift, if you will. First quarter, we moved that up to 1.5% net of the impact of V28, and now we're sitting here today with roughly a 3% net increase.

All that's really been driven by the work that we did over a year ago, specifically with the clinical programs, heart failure clinical pathway being the most progressed and the most mature, and certainly this year with the rollout of dementia and lung health will also be very important. I think there's more room to run there. But certainly that's been a huge contributor to the value that we've seen here early in the first half of the year. Of course, OpEx and then a little bit of favorability on the cost trend, right? Last year ended at 5.8. We've seen some favorable restatement from Q1 so far. I think that appears to be heading in the right direction as well.

Yeah, certainly the enhanced data pipeline has been meaningful. We have roughly 85% of our payer partners on that data pipeline, and the difference is, we get bifurcated revenue and medical cost information. That information reconciles to the financial arrangement with the payers. We turned that pipeline on in the first quarter of 2025, and it's been monumental for us on estimating risk adjustment and medical claims. We completely redesigned our entire reserving process and estimation process for both revenue and cost around that data pipeline. Sitting here today, we have capabilities that we didn't have a year ago on the revenue estimation, specifically for risk adjustment. We can actually calculate member-level risk scores. We can compare those to the prior year and calculate what our expected risk score improvement is. I think that's what you saw a little bit of in Q1.

Obviously, there's a timing delay on data because it's medical claims from it's codes from 2025. I think what you've seen is we got a little bit of that information in Q1, so we moved it up to 1.5% net. In Q2, we had full validation with getting the mid-year information from the government. That data pipeline is kind of the source of what we'll be able to use going forward from an estimation perspective. The other thing is on medical cost, again, completely redesigned the medical expense reserving process. We're still on a data delay. We get the data between 30 and 60 days later after the payers have the data. So we're still on a little bit of a data lag.