agilon health, inc.

Jay Song, Good afternoon, and thank you for attending the Agilent Health second quarter 2025 conference call. My name is Jay Song. I'll be the moderator today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to your host, Evan Smith.

Evan Smith, Thank you, operator. Good afternoon, and welcome to the call. With me are Ron Williams, our executive chair, and our CFO, Jeff Schwanke. Following our prepared remarks, we will conduct a Q&A session. Before we begin, I would 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 reviews our financial results. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures is available in the earnings press release and form 8K filed with the SEC. And with that, let me turn the call over to Ron. Ron? Thanks, Evan.

Good afternoon, everyone, and thank you for joining us on short notice. I'm pleased to be with all of you today. For those of you I may not have met before, I've been chair of Agilon Health since we founded the company. As we announced today, I have been appointed by the board to the role of executive chairman, with Steve Sell stepping down as president, CEO, and the director of the board. We also reported our second quarter results and withdrew our 2025 guidance. Jeff will walk you through this in detail. But first, I want to take a step back, introduce myself, and discuss how we are tackling Agilent's recent underperformance and positioning the company to realize the value of our unique and differentiated model in 2026 and beyond. I've been fortunate to have served in a number of leadership and operational roles in healthcare companies, including as chair and CEO of Aetna. Throughout my long career in the sector and many different economic and market cycles, I've helped organizations at critical inflection points to drive transformation and improve performance, including at Aetna. From its inception, I believed in Agilent's mission and the critical role we serve in the healthcare industry, helping to transform healthcare for seniors by empowering primary care physicians to focus on the entire health of their patients and to create value for stakeholders. The foundation of our business and Agilent's model is built on a belief that aligning incentives with community-based physicians and a commitment to delivering innovative, integrated capabilities will allow primary care physicians to successfully navigate their transition to a healthcare system defined by providing high-value medical care. The value that Agilon's model provides is more important today than ever. The healthcare system needs effective solutions to improve quality outcomes and address costs by empowering primary care physicians to support the aging population that is rapidly growing, particularly the growing 80 plus years old segment, which typically have the most complex needs. As we move through 2024, we identified certain challenges our business could face in 2025. Recognizing Agilon would be operating in a volatile environment and that this year would be an important transition period. Using learnings we gained in 2024, we took action and launched strategic initiatives last year to strengthen our platform and improve performance, which our team has actively advanced this year. These efforts include deepening our engagement with our physician partners, expanding programs that support the most complex patients, enhancing our operational and business visibility capabilities, including through investments in AI and advanced technology, and improving contract economics in our cost structure. Given the long-term nature of our business cycle, we have not yet captured the full upside from these enhancements this year, but are confident in realizing them in 2026. Nevertheless, as 2025 progressed, The industry complexities and headwinds we believed Agilon would face were more acute than previously expected, and our execution was not adequate. This resulted in the underperformance we reported. There are two key drivers, as Jeff will cover. One, the final 2024 payer data we received indicated our risk adjustment last year was lower than we previously assumed, resulting in a lower 2024 risk baseline. Two, due to the lower 2024 baseline and because of our enhanced data platform, we see our 2025 risk adjustment is trending lower than expected. And the activity levels that would allow us to overcome this have not yet materialized. We are clearly disappointed with the financial results as we firmly believe in the value our business creates for physicians, patients, and payers, and the significant growth opportunities Agilent can capture. This is why we are taking additional decisive actions to further strengthen our foundation as we look to drive improved performance and take advantage of what we expect will be a more favorable environment in 2026. We will be aggressive in aligning our talent and execution to our opportunity. We're transitioning our leadership as announced today, and I will work even more closely with the Agilent team as executive chairman while we conduct a search for a permanent CEO. I'm committed to ensuring a smooth transition, but in the meantime, I'm fully focused on improving execution across our business and helping to strengthen all relationships that are critical to our future success. In addition, I formed an Office of the Chairman to help drive this effort, which includes several key members from across our existing leadership team. This group is recalibrating the culture of the organization against a standard of urgency, accountability, and performance. Meeting with the leadership team daily with the purpose of shortening the interval between business performance review and actions to accelerate outcome. This approach is cascading across the organization. We expect this will translate to improve results for our partners and Agilent. Together, we are working with urgency to advance and execute efforts now to improve performance. This includes making economic changes to ensure that Agilon and our physician partners capture the appropriate value for the benefits that we deliver through our outcomes-focused total care model. Urgently addressing the elements that are in our control while also navigating the broader market-based challenges and sharpening our commitment to disciplined and operational rigor, which this current environment demands. I have seen firsthand what is required to stabilize and ultimately reaccelerate an organization that is undergoing a challenging transition and that operates within a prolonged business cycle. In my past roles leading large and complex healthcare technology companies, I have evaluated and implemented ways to streamline operations, reduce administrative complexity, and unlock performance through data-driven decision-making. and a culture of empowerment and accountability. This insight and experience reinforced my confidence in the sustainable value that Agilon can deliver if we improve our execution. We've seen time and again that Agilon's value-based care model provides significant value to our physician partners and their patients across the U.S. Our proven success over the years has been driven by the differentiated value proposition of Agilent's platform. Our foundation remains strong today, and with the many competitive advantages Agilent has created, including our unique integrated set of capabilities that are specific to primary care physicians' driven value-based care model that reinforce our role as a long-term solution for physicians focused on outcomes. We have consistently demonstrated that the Agilon platform can drive utilization performance 20% to 30% better than local fee-for-service benchmark, and quality scores approaching are greater than 4.25 stars. Our deep relationship with community-based physicians, many of which have been leaders in their communities for decades, supports the stability of our business and a durable long-term growth runway. Our scaled platform that serves over 600,000 senior patients, 2,200 primary care physicians, and 30 markets generates consistent quality, clinical cost, outperformance, and significant value to our payers. Building on this foundation, we are committed to enhancing performance and Agilent's position for sustainable value creation so we can maximize the benefits of the initiatives we have been implementing as well as improved Medicare reimbursement model that takes effect next year. We know that our powerful model provides important solutions to the industry, and we believe that improved execution and a CEO with the skills, experience, and relationships that are aligned to our new path will deliver the results for our position partners and our shareholders that we know are possible. Thank you for your continued support during this transition. With that, I'll turn it over to Jeff.