agilon health Reports Mixed Q4 Results as Medical Costs Weigh on Profits
agilon health inc (NYSE:AGL), a company that partners with physician groups to transition to value-based care models, announced financial results for the fourth quarter and full fiscal year 2025. The report presented a complex picture: revenue exceeded analyst expectations, but significantly wider-than-anticipated losses, driven by elevated medical costs, captured investor attention and pressured the stock.
Earnings and Revenue Versus Estimates
The company’s top-line performance for the quarter showed resilience. Total revenue reached $1.57 billion, a 3% increase year-over-year and notably above the analyst consensus estimate of approximately $1.48 billion. This beat suggests the underlying revenue generation from its capitated membership remains robust despite challenges.
However, the bottom-line results told a different story. The company reported a non-GAAP loss per share of $0.46. This was substantially worse than the estimated loss of $0.27 per share, reflecting severe pressure on profitability. The market reaction was decisively negative, with shares trading down approximately 6% in after-hours activity following the release.
Key Factors from the Quarterly Report
The divergence between the revenue beat and the steep earnings miss is directly explained by the financial details in the press release. The core issue was a dramatic deterioration in medical margin, which is a critical profitability metric for managed care organizations.
- Medical Margin Collapse: The medical margin, representing revenue after medical services expenses, swung to a loss of $74 million in Q4 2025 from a nominal gain of $1 million in the prior-year quarter. For the full year, it was a loss of $57 million compared to a $205 million profit in 2024.
- Elevated Cost Trend: Management cited a medical cost trend of approximately 7.4% for Medicare Advantage members in the quarter, an elevated level that outpaced revenue adjustments. This indicates the cost of caring for members rose faster than the capitated payments received from payors.
- Membership Contraction: Total members on the platform decreased to 625,000 at year-end, down 5% from 659,000 a year ago. This decline was attributed to previously disclosed market and payor contract exits, which, while potentially improving future focus, impacted scale in the near term.
- Mounting Losses: These pressures flowed through to all loss measures. Gross loss, net loss, and Adjusted EBITDA loss all widened significantly both for the quarter and the full year compared to 2024.
Forward Guidance and Analyst Expectations
Looking ahead, agilon health provided detailed guidance for the first quarter and full year 2026. This outlook is notably more conservative than existing analyst forecasts, which likely contributed to the negative market sentiment.
The company’s revenue guidance for fiscal year 2026 is set between $5.41 billion and $5.58 billion. This range falls meaningfully below the current analyst sales estimate of $6.01 billion. Similarly, its Q1 2026 revenue guidance of $1.35-$1.39 billion is below the $1.60 billion analysts had projected.
On profitability, the forecast suggests a path to improvement but not a swift return to overall profitability. The company expects full-year 2026 Adjusted EBITDA to range between a $15 million loss and a $15 million profit. This is a significant improvement from the $296 million Adjusted EBITDA loss in 2025 but indicates ongoing challenges. The guidance assumes medical cost trends will remain slightly elevated in 2026 and incorporates the impact of further planned membership reductions related to market exits.
Market Reaction and Context
The immediate negative stock price reaction reflects investors weighing the substantial earnings miss and the lowered forward guidance against the quarterly revenue beat. The company’s narrative, as expressed by Executive Chair Ronald Williams, frames 2025 as a “pivotal year” of difficult transformation aimed at strengthening the business model for the long term. The guidance for 2026 is presented as evidence of "material improvement."
However, the market appears focused on the near-term financial realities: steep losses, rising medical costs, and a reset growth trajectory that is lower than previously expected. This comes amid a backdrop of broader investor scrutiny, as noted in recent news headlines referencing securities litigation.
Conclusion
agilon health’s fourth-quarter results highlight the intense operational challenges facing companies in the Medicare Advantage value-based care space. While the company successfully grew revenue per member and is taking decisive steps to reshape its portfolio, surging medical expenses have severely impacted profitability. The management’s 2026 guidance charts a course for recovery but at a scale and pace that is more modest than the market had anticipated. Investors will be closely monitoring the company’s ability to execute on its cost trend management and achieve the profitability improvements embedded in its outlook.
For a detailed breakdown of future quarterly estimates and past earnings performance, you can review the earnings and estimates data for agilon health here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, an endorsement, or a recommendation to buy, sell, or hold any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
