agilon health, inc.

Hello everyone and welcome to the Agilent Health Second Quarter 2021 Earnings Conference Call. My name is Brieke and I'll be the moderator for today's event. If you would like the opportunity to ask a question today, please remember to press star followed by one on your telephone keypads. And I will now hand it over to Matthew Gilmour to start. So Matthew, please go ahead when you're ready.

Thank you, Brika. Good morning and welcome to our second quarter conference call. With me this morning is our CEO, Steve Sell, and our CFO, Tim Bensley. Following prepared remarks from Steve and Tim, we will conduct a Q&A session. Before we begin, I'd like to remind you that our remarks and responses to questions may include forward-looking statements. Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with our business. These risks and uncertainties are discussed in our SEC filings. Please note that we assume no obligation to update any forward-looking statements. Additionally, certain financial measures we will discuss in this call are non-GAAP financial measures. We believe that providing these measures helps investors gain a better and more complete understanding of our financial results and is consistent with how management views our financial results. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measure is available in the earnings press release and Form 8-K, filed with the SEC. With that, I'll turn the call over to Steve.

Thanks, Matt. Good morning, everyone, and thank you for joining us. We're hosting today's call from Austin, Texas. Before I get to the details of our quarter, I'd like to take a minute and talk about our experience in this important market and how it demonstrates the power of what Agilon has built with our physician partners. In 2018, Agilon entered the Austin market in partnership with Austin Regional Clinic, the largest independent multi-specialty group, and Premier Family Physicians, the second largest independent primary care group in the region. In three and a half years, our partnership has expanded access to top quality care in Austin by adding physicians, increasing clinical team-based support and analytics, and opening previously closed primary care panels to new senior patients. Our Austin membership has expanded at a compounded annual rate nearly double the local growth in the Medicare Advantage program, all while dramatically improving quality and generating world-class patient experience scores. Last year, we expanded with two new anchor partners in East Texas that are currently in implementation and will go live in 2022. Our awesome experience of local and now statewide growth in independent primary care and the resulting benefits in terms of senior patient care, quality, and access is an experience that we can see replicated further in Texas and in numerous communities and states across the country. Now to the focus of our call. I will cover four areas in my prepared remarks. First, some highlights from our second quarter results. Second, our collaboration in recently launching Primary Care for America. Third, an update on our progress in driving growth for new markets in 2022 and 2023. And finally, I'll wrap up with some comments on direct contracting. Starting with a few highlights from the second quarter. We were pleased with our performance this quarter. Revenues increased 70% on a reported basis and were up 58% normalized for retroactive membership from the first quarter. Memberships increased 45% and same geography membership growth was up 17%. Our same geography growth approach is distinctive and highly efficient as it is driven by strong retention, patients within existing panels choosing Medicare Advantage, or new physicians joining our anchor partners on the platform. This quarter's strong growth was amplified as investments in technology and tighter operational alignments with health plan partners accelerated the pull-through of attributed senior patients in our partner practices. We have added a record number of members to the Agilent platform in 2021, and we now support more than 280,000 senior patients. This includes 33,000 members added January 1st of this year from new geographies in Hartford, Buffalo, and Toledo. 20,000 members to existing partners in our same geographies. More than 50,000 attributed direct contracting beneficiaries added on April 1st. And finally, 49,000 Medicare Advantage members currently in implementation for January 2022. This compares to approximately 115,000 live and implementing members on the platform at the end of 2019. This incredible growth reflects the flexibility of our purpose-built platform to onboard and serve at scale a diverse set of groups and geographies and the demand among healthcare stakeholders for innovative primary care-centric delivery models. At the same time our partners are growing their Medicare Advantage membership, we are seeing a strong trend of growth in underlying medical margins. With our Q2 results, medical margin has advanced to $100 per member per month year-to-date in 2021. This is down from last year due to COVID, which significantly depressed utilization, particularly in Q2 of 2020, but overall medical margin is up from the same year-to-date period in 2019. We have made this progress despite the temporary dilution from the new members on the platform, indicating a very strong improvement from our earlier cohort patient groups. Additionally, over the same period, we've driven substantial leverage against our platform support, resulting in improvement in our adjusted EBITDA. Turning now to the launch of Primary Care for America. In late June, we partnered with 10 leading healthcare organizations, including the American Academy of Family Physicians and American College of Physicians, to form this new group intent on influencing government health policy. This collaboration is focused on demonstrating the value of primary care and the need for increased investment in innovative payment models. The recent report from the National Academies of Sciences outlines primary care as the only discipline of medicine where a greater supply results in better health outcomes along with longer life expectancy and lower costs. In the coming months, Primary Care for America will engage policymakers through a series of briefings, recommendations, and roundtable discussions. Now let me turn to our progress on driving growth in new markets for 2022 and 2023. As we have previously discussed, the class of 2022 includes six physician partner groups with 49,000 Medicare Advantage members, including the two groups in East Texas I mentioned earlier. As a reminder, these members are on our platform but won't start generating revenue until January of next year. The class of 2022 includes a diverse set of geographies, both in terms of new and existing states, as well as different levels of MA penetration and plan next. We've made strong progress implementing these new geographies by hiring local leadership and completing the initial technology and data integration with multiple new electronic medical record and payer systems. Annual wellness visits are tracking in line with our plan, and we continue to make strong progress on contracting with new health plans in the six markets. With respect to the pipeline for new partners in 2023, our business development team has made great progress in the last couple of months. The pace and tempo in this work is very encouraging, with signed letters of intent or advanced dialogue with multiple groups in new markets, both in existing and new states. This development work will continue through the back half of this year, and while we will share more holistic details in future calls, we remind you that implementation for signed letter of intent groups will begin in the coming months. Within the class of 2023, we are seeing higher levels of interest in operating an integrated Medicare line of business, encompassing both Medicare Advantage and direct contracting. And each of these groups is compelled by the opportunity to shift their senior patients to a subscription-based total care model. With the additions from the class of 2022 and the strong 2023 prospects, our network continues to grow at impressive rates. And we are leveraging this breadth to share best practices, accelerate onboarding, and improve outcomes for senior patients, our partners, and Agilon. In late July, we gathered with 60 physician partners for three days in Traverse City, Michigan, for a retreat. We were hosted by one of our new partners, and the gathering included all of our existing partners, the entire class of 2022, as well as potential members of the class of 2023. The energy and enthusiasm from our partners for transforming senior care in their communities was palpable. Let me close by providing an update on direct contracting. We have been pleased with our initial performance in this new program. While it's still early, our launch has gone relatively smoothly, and attributed membership and adjusted EBITDA came in modestly above our initial expectations. Importantly, our physician partners are already noticing the benefits of operating consistently across the entire Medicare line of business. Over the past several months, we've been able to spend time with the Medicare Innovation Center as well as members of Congress and other interested stakeholders to discuss the program. We've been encouraged with the dialogue and hope to advance policies that could improve the sustainability and predictability of the program. As I've said on prior calls, government programs change over time, but we continue to believe direct contracting is fundamentally aligned with the administration's goals of improving equity and access to primary care delivery models. Over the next few months, we will formalize our plans for participating in the direct contracting program with new and existing partners in 2022, and we expect to update you on those decisions in our next call. With that, I'll now turn the call over to Tim.