Why Healthcare Service Provider Agilon Health Shares Are Sinking Today

Agilon Health Inc AGL shares are sinking today by around 32% after it disclosed its Chief Financial Officer (CFO) retirement and lowered its 2023 outlook.

The company's CFO, Timothy Bensley, is retiring from his position within the next nine months this year. 

The company has started searching for a new CFO, and Bensley has agreed to remain CFO through this process to ensure a seamless transition.

In a separate announcement, AGL stated revised guidance for 2023, reflecting higher-than-expected costs, and provided 2024 guidance.

Given the lower-than-expected baseline now projected for 2023, AGL also withdrew its previously issued target for 2026.

FY23 Outlook Revised: AGL lowered revenue expectations to $4.295 billion-$4.305 billion (from $4.310 billion-$4.320 billion prior) vs. $4.53 billion estimate and adjusted EBITDA loss to $(69) million-$(55) million from adjusted EBITDA of $6 million-$18 million.

The company lowered its 2023 medical margin outlook by about $110 million to $340 million-$360 million due to a reduction in core medical performance on $90 million in higher-than-expected medical costs and negative revenue revision of $20 million with two regional health plans in new geographies.

Steve Sell, chief executive officer, said, "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. As a result, while Medicare Advantage membership growth and ACO REACH performance are in line with prior guidance, we are lowering Medicare Advantage medical margin guidance for 2023."

FY24 Initial Guidance: AGL expects revenue of $6.350 billion-$6.420 billion (vs. consensus: $5.98 billion), adjusted EBITDA of $40 million-$60 million, and medical margin of $560 million-$600 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. Taken together we believe these changes support Adjusted EBITDA growth in 2024 and beyond," added Sell.

Price Action: AGL shares are down 32.78% at $8.12 premarket on the last check Friday.