On Monday (NASDAQ:MNDY), TD Cowen adjusted its outlook on agilon health Inc (NYSE: NYSE:AGL) shares, reducing the company's price target from $6.00 to $2.00 while maintaining a Hold rating on the stock. This revision follows agilon health's third-quarter 2024 earnings release, which reported an EBITDA loss of $96 million, significantly below the consensus estimate of a $20 million loss. The shortfall was attributed to negative prior year development (PYD) in Part D and risk revenue settlements.
The company also revised its full-year 2024 adjusted EBITDA guidance downward, from a previous estimate of a $38 million loss to a projected $145 million loss. Furthermore, agilon health indicated that it now expects to reach free cash flow breakeven by 2027, a delay from prior expectations.
The analyst from TD Cowen expressed concerns over agilon health's intermediate liquidity and the risk of additional physician partner attrition. These factors have prompted a reassessment of forward estimates and the substantial decrease in the price target to $2.00, which represents a valuation of 0.1 times enterprise value to revenue.
The updated guidance and the revised price target reflect the challenges faced by agilon health as it navigates through its financial performance and market conditions. The company's stock performance and investor expectations may be influenced by these developments as it works towards achieving its revised financial goals.
In other recent news, agilon health reported mixed results in its third quarter financial report. The healthcare company announced a revenue of $1.45 billion, reflecting a 28% increase year-over-year, but fell short of the projected $1.47 billion. This report also revealed an adjusted EBITDA loss of $96 million, significantly missing both the analyst's estimate of a $19.1 million loss and the consensus estimate of a $20.1 million loss.
Following these results, JMP Securities downgraded agilon health's stock rating from Market Outperform to Market Perform. This adjustment was influenced by factors such as higher cost trends and negative development from the previous year, primarily due to Part D. The company also recognized $60 million in unfavorable prior-period development related to claims from 2023, and $25 million of elevated third-quarter medical expenses.
Despite these challenges, agilon health reported a 37% year-over-year growth in Medicare Advantage membership, reaching 525,000 members. The company has also raised its full-year membership guidance to 527,000 members and increased its revenue guidance to $6.057 billion.
However, agilon health's financial outlook for the second half of 2024 suggests a steep decline in medical margin, expected to drop by approximately 44%, reaching $225 million at the midpoint of the revised range. These are the recent developments in agilon health's business operations.
InvestingPro Insights
Recent data from InvestingPro paints a challenging picture for agilon health Inc (NYSE: AGL), aligning with TD Cowen's reduced outlook. The company's market capitalization stands at $758.11 million, reflecting the significant downturn in investor sentiment. This is further evidenced by the stock's price falling 83.75% over the past year, with a particularly steep 31.09% drop in just the last week.
InvestingPro Tips highlight that AGL is "trading near its 52-week low" and "quickly burning through cash," which corroborates the concerns raised about the company's liquidity in the TD Cowen analysis. The tip noting that "analysts do not anticipate the company will be profitable this year" aligns with the revised EBITDA guidance and delayed free cash flow breakeven projection.
Despite these challenges, AGL's revenue growth remains strong at 54.1% over the last twelve months, suggesting that the company's business model still has traction in the market. However, with a gross profit margin of -0.93%, the company is struggling to translate this growth into profitability.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for AGL, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.