agilon health, inc.: Form 10-Q for the period ended Jun 30, 2026

All references in this report to “agilon,” “the Company”, “we,” “us” or “our” mean agilon health, inc., together with its consolidated subsidiaries. Unless the context suggests otherwise, references to “agilon health, inc.” mean the parent company without its subsidiaries.

Cautionary Language Regarding Forward-Looking Statements

Statements in this Quarterly Report on Form 10-Q (the “Report”) that are not historical factual statements are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Some of the forward-looking statements can be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “will,” “shall,” “should,” “would,” “could,” “seeks,” “aims,” “projects,” “is optimistic,” “intends,” “plans,” “estimates,” “anticipates” or the negative versions of these words or other comparable terms. Forward-looking statements include, without limitation, all matters that are not historical facts. They appear in several places throughout this Report and include, without limitation, statements regarding our intentions, beliefs, assumptions or current expectations concerning, among other things, our financial position, results of operations, cash flows, prospects, growth strategies, and our management transition.

Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be outside our control. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Report, we caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of the market in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this Report. In addition, even if our results of operations, financial condition, and cash flows, and the development of the market in which we operate, are consistent with the forward-looking statements contained in this Report, those results or developments may not be indicative of results or developments in subsequent periods. You are therefore cautioned not to place undue reliance on the forward-looking statements included in this report. A number of important factors, including, without limitation, the risks and uncertainties discussed under Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, could cause actual results and outcomes to differ materially from those reflected in the forward-looking statements. Furthermore, new risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Report. Factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation:

• our history of net losses and the expectation that our expenses will increase in the future;
• failure to identify and develop successful new geographies, physician partners and payors, or execute upon our growth initiatives;
• success in executing our operating strategies or achieving results consistent with our historical performance;
• medical expenses incurred on behalf of our members may exceed revenues we receive;
• our ability to maintain and secure additional contracts with Medicare Advantage (“MA”) payors on favorable terms, if at all;
• our ability to grow new physician partner relationships sufficient to recover startup costs;
• availability of additional capital, on acceptable terms or at all, to support our business in the future;
• significant reduction in our membership;
• transition to a Total Care Model may be challenging for physician partners;
• inaccuracy in estimates of our members’ risk adjustment factors, medical services expense, incurred but not reported claims, and earnings pursuant to payor contracts;
• public health crises, such as COVID-19, could adversely affect us;
• the impact of restrictive clauses or exclusivity provisions in some of our contracts with physician partners;
• our ability to hire and retain qualified personnel;
• our ability to realize the full value of our intangible assets;
• security breaches, cybersecurity attacks, loss of data and other disruptions to our information systems;
• our ability to protect the confidentiality of our know-how and other proprietary and internally developed information;
• our reliance on our subsidiaries to perform and fund their operations;
• our use of algorithms, artificial intelligence, and machine learning in our business and challenges with properly managing the development and use of these technologies;
• our reliance on a limited number of key payors;
• the limited terms of contracts with our payors and our ability to renew them upon expiration;
• our ability to navigate the changing healthcare payor market;
• our reliance on our payors, physician partners and other providers to operate our business;
• our ability to obtain accurate and complete diagnosis data;
• our reliance on third-party software, data, infrastructure and bandwidth;
• consolidation and competition in the healthcare industry;
• the impact of changes to, and dependence on, federal government healthcare programs;
• uncertain or adverse economic and macroeconomic conditions, including a downturn or decrease in government expenditures;
• regulation of the healthcare industry and our physician partners’ ability to comply with such laws and regulations;
• federal and state investigations, audits and enforcement actions;
• repayment obligations arising out of payor audits;
• negative publicity regarding the managed healthcare industry generally;
• our use, disclosure and processing of personally identifiable information, protected health information, and de-identified data;
• failure to obtain or maintain an insurance license, a certificate of authority or an equivalent authorization;
• changes in tax laws and regulations, or changes in related judgments or assumptions;
• our indebtedness and our potential to incur more debt;
• our dependence on our subsidiaries for cash to fund all of our operations and expenses;
• provisions in our governing documents;
• our ability to achieve a return on investment depends on appreciation in the price of our common stock;
• non-compliance with the New York Stock Exchange could result in a delisting of our securities;
• lawsuits not covered by insurance and securities class action litigation;
• sustainability issues;
• our stock price may be volatile;
• risks related to management transitions, including the transition to our new Chief Executive Officer, and our ability to effectively manage leadership changes; and
• risks related to other factors discussed under Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Except as required by law, we do not undertake, and hereby disclaim, any obligation to update any forward-looking statements, which speak only as of the date on which they are made.

The information set forth in this Item 2 is intended to provide readers with an understanding of our financial condition, changes in financial condition, and results of operations and should be read in connection with the accompanying Condensed Consolidated Financial Statements and notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Report. We will discuss and provide our analysis in the following order:

• Overview and Recent Developments
• Key Financial and Operating Metrics
• Key Components of Our Results of Operations
• Results of Operations
• Non-GAAP Financial Measures
• Liquidity and Capital Resources
• Critical Accounting Estimates
• Recent Accounting Pronouncements

Overview and Recent Developments

Our business is transforming healthcare by empowering primary care physicians (“PCPs”) to be the agent for change in the communities they serve. We believe that PCPs, with their intimate patient-physician relationships, are best positioned to drive meaningful change in quality, cost, and patient experience when provided with the right infrastructure and payment model. Through our combination of the agilon platform, a long-term partnership model with existing physician groups, and a growing network of like-minded physicians, we believe we are poised to revolutionize healthcare for seniors across communities throughout the United States. We believe our purpose-built model provides the necessary capabilities, capital, and business model for existing physician groups to create a Medicare-centric, globally capitated line of business. Our model operates by forming risk-bearing entities (“RBEs”) within local geographies, which enter into arrangements with payors providing for monthly payments to manage the total healthcare needs of our physician partners’ attributed patients (or, global capitation arrangements). The RBEs also contract with agilon to perform certain functions and enter into long-term professional service agreements with one or more anchor physician groups pursuant to which the anchor physician groups receive a base compensation rate and share in the savings from successfully improving quality of care and reducing costs.

Our business model is differentiated by its focus on existing community-based physician groups and is built around three key elements: (1) agilon’s platform; (2) agilon’s long-term physician partnership model; and (3) agilon’s network. With our model, our goal is to remove the barriers that prevent community-based physicians from evolving to a Total Care Model, where the physician is empowered to manage health outcomes and the total healthcare needs of their attributed Medicare patients.

Second Quarter 2026 Results:

• Medicare Advantage members of approximately 437,500 as of June 30, 2026 decreased 12% from June 30, 2025.
• CMS ACO Models (defined below) attributed beneficiaries of approximately 112,200 as of June 30, 2026 decreased 3% from June 30, 2025.
• Total revenue of $1.5 billion increased 7% compared to $1.4 billion in the second quarter of 2025.
• Gross profit of $107 million, compared to gross loss of $52 million in the second quarter of 2025.
• Medical margin of $197 million, compared to negative medical margin of $53 million in the second quarter of 2025.
• Net income of $18 million, compared to net loss of $104 million in the second quarter of 2025.
• Adjusted EBITDA of $70 million, compared to Adjusted EBITDA loss of $83 million in the second quarter of 2025.

Year to Date 2026 Results as of June 30, 2026:

• Total revenue of $2.9 billion remained relatively flat in the six months ended June 30, 2026 compared to the same period in 2025.
• Gross profit of $172 million, compared to gross loss of $2 million in the six months ended June 30, 2025.
• Medical margin of $346 million, compared to $75 million in the six months ended June 30, 2025.
• Net income of $67 million, compared to net loss of $92 million in the six months ended June 30, 2025.
• Adjusted EBITDA of $123 million, compared to Adjusted EBITDA loss of $63 million in the six months ended June 30, 2025.

Platform Membership Details

MA members decreased 12% from June 30, 2025, which reflects previously disclosed market exits, as well as payor exits in certain markets resulting from a disciplined approach to contracting focused on profitability. Total members live on the agilon platform at June 30, 2026 include 437,500 MA members and 112,200 attributed CMS ACO Models (as defined below) beneficiaries.

Average MA membership was 447,100 during the second quarter of 2026.

Reverse Stock Split

On March 30, 2026, we filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a 1-for-25 reverse stock split of our issued and outstanding common stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, each twenty-five shares of common stock issued and outstanding was automatically reclassified, combined, and converted into one share of common stock. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who were otherwise entitled to receive fractional shares automatically became entitled to receive cash in lieu of such fractional share. Proportional adjustments were made to the number of shares of common stock awarded and available for issuance under our equity incentive plans, as well as the exercise price and the number of shares issuable upon the exercise or conversion of our outstanding stock options and other equity securities under our equity incentive plans. The Reverse Stock Split did not affect the number of authorized shares of common stock or the par value of the common stock. All common stock, stock options, restricted stock units, and per share information presented within this Quarterly Report on Form 10-Q have been adjusted to reflect the Reverse Stock Split on a retroactive basis for all periods presented.

Appointment of Chief Executive Officer and President

As previously disclosed in our Current Report on Form 8-K filed on April 27, 2026, on April 24, 2026, the Company entered into an employment agreement with Tim O’Rourke, pursuant to which he began to serve as the Company’s Chief Executive Officer and President, reporting to the Board of Directors, on May 7, 2026. Effective as of his commencement date, the Board also appointed Mr. O’Rourke to serve as a Class III director.

Key Financial and Operating Metrics

All of our key metrics exclude historical results from our Hawaii operations (which are included as discontinued operations in our condensed consolidated financial statements).

We monitor the following key financial and operating metrics to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions. We believe the following key metrics are useful in evaluating our business (dollars in thousands):

(1) Medical margin and Adjusted EBITDA are non-GAAP financial measures. Gross profit (loss) is the most directly comparable financial measure calculated in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) to medical margin. Net income (loss) is the most directly comparable financial measure calculated in accordance with U.S. GAAP to Adjusted EBITDA. See “—Non-GAAP Financial Measures" below for additional information.

Medicare Advantage Members

Our MA members include all individuals enrolled in an MA plan that are attributed to the PCPs on our platform at the end of a given period.

Medical Services Revenue

Our medical services revenue consists of capitation revenue under contracts with various payors. Under the typical capitation arrangement, we are entitled to per member per month (“PMPM”) fees to provide a defined range of healthcare services for MA health plan members through our contracted physician partners and affiliated PCPs. Such fees are typically based on a defined percentage of corresponding premium that payors receive from the Centers for Medicare & Medicaid Services (“CMS”). We recognize capitation revenue over the period eligible members are entitled to receive healthcare services.

Gross Profit (Loss)

Gross profit (loss) represents the amount earned from total revenues less medical services expense and other medical expenses. Total revenues include medical services revenue and other operating revenue. The Company’s costs of revenues consist of medical services expense and other medical expenses, which represents the costs that are directly related to providing the services that generate revenue.

The following table presents our gross profit (loss) (dollars in thousands):

(1) Represents physician incentive expense related to surplus sharing and other care management expenses that help to create medical cost efficiency. Includes costs in geographies that are in implementation and are not yet generating revenue and investments to grow existing markets. For the three months ended June 30, 2026 and 2025, costs incurred in implementing geographies were $0.7 million and $0.2 million, respectively. For the six months ended June 30, 2026 and 2025, costs incurred in implementing geographies were $1.3 million and $(1.0) million, respectively.

Medical Margin

We define medical margin as medical services revenue after medical services expense is deducted. Medical services expense represents costs incurred for medical services provided to our members. Medical margin PMPM may vary as the percentage of new members brought onto our platform fluctuates. New membership added to the platform is typically dilutive to medical margin PMPM.

See “—Non-GAAP Financial Measures” below for additional information regarding our use of medical margin and a reconciliation of gross profit (loss) to medical margin.

Platform Support Costs

Our platform support costs, which include regionally-based support personnel and other operating costs to support our geographies, are expected to decrease over time as a percentage of revenue as our physician partners add members and our revenue grows. Our operating expenses at the enterprise level include resources and technology to support payor contracting, clinical program development, quality, data management, finance, and legal and compliance functions.

The table below presents costs to support our live geographies and enterprise functions, which are included in general and administrative expenses (dollars in thousands):

Net Income (Loss) and Adjusted EBITDA

Net income (loss) is the most directly comparable U.S. GAAP measure to Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) adjusted to exclude: (i) income (loss) from discontinued operations, net of income taxes, (ii) interest expense, (iii) income tax expense (benefit), (iv) depreciation and amortization, (v) stock-based compensation expense, (vi) severance and related costs, and (vii) certain other items that are not considered by us in the evaluation of ongoing operating performance. We reflect our share of Adjusted EBITDA for equity method investments by applying our actual ownership percentage for the period to the applicable reconciling items on an entity-by-entity basis.

See “—Non-GAAP Financial Measures” below for additional information regarding our use of Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA.

Key Components of Our Results of Operations

Revenues

Medical Services Revenue

Our medical services revenue consists of capitation revenue under contracts with various payors. Under the typical capitation arrangement, we are entitled to PMPM fees to provide a defined range of healthcare services for MA health plan members through our contracted physician partners and affiliated PCPs. Such fees are typically based on a defined percentage of corresponding premium that payors receive from CMS. We recognize capitation revenue over the period eligible members are entitled to receive healthcare services. In certain of our payor arrangements, we are also financially responsible for Medicare Part D pharmaceutical costs for prescriptions rendered to members.

Medical services revenue constitutes substantially all our total revenue for the three and six months ended June 30, 2026 and 2025.

Operating Expenses

Medical Services Expense

In each of our geographies, a network of physicians, hospitals, and other healthcare providers provide care to our members. Medical services expense represents costs incurred for medical services provided to our members. Our medical services expense trends primarily relate to changes in per visit costs incurred by our members, along with changes in health system and provider utilization of services. Medical services expense is recognized in the period in which services are provided and includes estimates of our obligations for medical services that have been rendered by third parties but for which claims have either not yet been received, processed, or paid.

Other Medical Expenses

Other medical expenses include: (i) partner physician incentive expense and (ii) other provider costs. Partner physician incentive expense represents obligations to our physician partners corresponding to a portion of the surplus generated in our geographies, which is a function of medical services revenues less the sum of medical services expenses, other provider costs and market operating costs, for the respective geography. Physician payment obligations are reconciled quarterly, and settlement payments are typically issued to providers on an annual basis in arrears, with interim payments issued periodically. Other provider costs include payments to support physician-patient engagement, certain other medical costs, and other care management expenses that help to create medical cost efficiency. Other provider costs include costs incurred for geographies that are in implementation and are not yet generating revenue.

General and Administrative

General and administrative expenses consist of market-based support personnel and other operating costs to support our geographies, personnel and other operating costs to support our enterprise functions, and investments to support development and expansion of our physician partners. Our enterprise functions include salaries and related expenses, stock-based compensation (including shares issued under partner physician group equity agreements), operational support expenses, technology infrastructure, finance, and legal, as well as other costs associated with the continued growth of our platform. For the purposes of calculating physician partner incentive expense, we allocate a portion of our enterprise general and administrative expenses to our geographies. General and administrative expenses also include severance and accruals for unasserted claims.

Depreciation and Amortization

Depreciation and amortization expenses are associated with our property and equipment and acquired intangible assets. Depreciation includes expenses associated with computer equipment and software, furniture and fixtures, and leasehold improvements. Amortization primarily includes expenses associated with acquired intangible assets.

Other Income (Expense)

Income (loss) from equity method investments

Income (loss) from equity method investments consists primarily of income associated with our participation in the CMS’ Accountable Care Organization Realizing Equity, Access, and Community Health (“ACO REACH”) Medicare Model and Shared Savings Program (“MSSP”) (collectively, “CMS ACO Models”).

Other Income (Expense), Net

Other income (expense), net includes: (i) trademark licensing and other operating and administrative services to our equity method investments and (ii) interest income, which consists primarily of interest earned on our cash and cash equivalents, restricted cash and equivalents, and marketable securities, including amortization/accretion of discount/premium.

Interest Expense

Interest expense consists primarily of interest expense associated with our outstanding debt, including amortization of debt discounts and issuance costs.

Income Tax Benefit (Expense)

We are subject to corporate U.S. federal, state, foreign, and local income taxation. Deferred tax assets are reduced by a valuation allowance to the extent management believes it is not more likely than not to be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. Management makes estimates and judgments about future taxable income based on assumptions that are consistent with our plans and estimates.

Total Discontinued Operations

Total discontinued operations primarily consist of the results of our former Hawaii operations. For certain of our divestiture transactions, we continue to be responsible for any liabilities arising from the business that were incurred prior to the closing date of such transaction, including any fines, penalties, and other sanctions, the payment of claims for medical services incurred prior to the effective date of each transaction, and other contingent liabilities that we currently believe are remote.

Results of Operations

The following table summarizes key components of our results of operations (dollars in thousands):

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The following table summarizes our results of operations as a percentage of total revenues:

Comparison of the Three and Six Months Ended June 30, 2026 to the Three and Six Months Ended June 30, 2025

Medical Services Revenue

(dollars in thousands)

Medical services revenue increased by $100.9 million, or 7%, for the three months ended June 30, 2026 compared to the same period in 2025. The increase in medical services revenue for the three months ended June 30, 2026 was driven by higher premium yield as a result of constructive rates for 2026 from CMS funding, increased expectations for risk adjustment contribution, more favorable percentage of premium as a result of payor contract negotiations, and a new payor relationship in an existing geography. During the three months ended June 30, 2026, PMPM capitation rates increased 19% compared to the same period in 2025. The increase in medical services revenue was partially offset by an average MA membership decline of 10% as a result of our measured approach to growth, previously disclosed market exits which were finalized as of January 1, 2026, and payor exits in certain markets which were a result of our disciplined and profitability-focused contracting efforts.

(dollars in thousands)

Medical services revenue was relatively flat for the six months ended June 30, 2026 compared to the same period in 2025. Medical services revenue for the six months ended June 30, 2026 was impacted by an average MA membership decline of 12% as a result of our measured approach to growth, previously disclosed market exits which were finalized as of January 1, 2026, and payor exits in certain markets, which were a result of our disciplined and profitability-focused contracting efforts. Additionally, medical services revenue for the six months ended June 30, 2026 was impacted by higher premium yield as a result of constructive rates for 2026 from CMS funding, increased expectations for risk adjustment contribution, more favorable percentage of premium as a result of payor contract negotiations, and a new payor relationship in an existing geography. During the six months ended June 30, 2026, PMPM capitation rates increased 13% compared to the same period in 2025.

Medical Services Expense

(dollars in thousands)

Medical services expense decreased by $149.0 million, or 10%, for the three months ended June 30, 2026 compared to the same period in 2025 due primarily to a decline in average MA membership of 10% as a result of our measured approach to growth, previously disclosed market exits which were finalized as of January 1, 2026, and payor exits in certain markets which were a result of our disciplined and profitability-focused contracting efforts. Additionally, medical services expense for the three months ended June 30, 2026 benefited from positive claims development from 2025 and the first quarter of 2026. Based on our current census data, cost trends for the three months ended June 30, 2026 remained in line with what has been stated by our payor partners and others in our industry.

(dollars in thousands)

Medical services expense decreased by $281.2 million, or 10%, for the six months ended June 30, 2026 compared to the same period in 2025 due primarily to a decline in average MA membership of 12% as a result of our measured approach to growth, previously disclosed market exits which were finalized as of January 1, 2026, and payor exits in certain markets which were a result of our disciplined and profitability-focused contracting efforts. Additionally, medical services expense for the six months ended June 30, 2026 benefited from positive claims development from 2025. The decline in MA membership was partially offset by an increase in average medical services expense per member of 2% primarily from higher year-over-year cost trends in 2026. Based on our current census data, cost trends for the six months ended June 30, 2026 remained in line with what has been stated by our payor partners and others in our industry.

Other Medical Expenses

(dollars in thousands)

Other medical expenses increased by $89.2 million for the three months ended June 30, 2026 compared to the same period in 2025. Partner physician incentive expense, which is primarily a function of medical services revenues less the sum of medical services expenses, increased by $94.6 million to $59.7 million in 2026 compared to $(34.9) million in the same period in 2025 as a result of the higher margins generated in certain of our geographies during 2026, which were a result of our disciplined and profitability-focused contracting efforts, compared to losses generated in certain of our geographies during the same period in 2025. Other provider costs decreased by $5.4 million to $31.7 million in 2026 compared to $37.1 million in the same period in 2025 primarily as a result of a decline in additional compensation to support physician-patient engagement and other care management expenses.

(dollars in thousands)

Other medical expenses increased by $94.8 million, or 115%, for the six months ended June 30, 2026 compared to the same period in 2025. Partner physician incentive expense, which is primarily a function of medical services revenues less the sum of medical services expenses, increased by $109.1 million to $118.2 million in 2026 compared to $9.1 million in the same period in 2025 as a result of the higher margins generated in certain of our geographies during 2026, which were a result of our disciplined and profitability-focused contracting efforts, compared to losses generated in certain of our geographies during the same period in 2025. Other provider costs decreased by $14.3 million to $59.0 million in 2026 compared to $73.3 million in the same period in 2025 primarily as a result of a decline in additional compensation to support physician-patient engagement and other care management expenses.

General and Administrative

(dollars in thousands)

General and administrative expenses increased $32.2 million, or 57%, for the three months ended June 30, 2026 compared to the same period in 2025. Operating costs to support our live geographies and enterprise functions (platform support costs) increased to $42.7 million in 2026, compared to $37.4 million in the same period in 2025. Operating costs to support our live geographies and enterprise functions as a percentage of revenue remain flat at 3% for the three months ended June 30, 2026 compared to the same period in 2025. Investments to support geography entry decreased to $2.9 million in 2026, compared to $4.2 million in the same period in 2025 due to decreased costs associated with the expansion within existing geographies. Stock-based compensation expense increased $8.4 million for the three months ended June 30, 2026, compared to the same period in 2025 primarily as the performance conditions on certain performance-based equity awards were deemed probable, and thus the related costs were increased. Costs incurred for severance and transaction-related costs increased by $19.8 million to $19.0 million in 2026 compared to $(0.8) million in the same period in 2025 as a result of our cost management initiatives.

(dollars in thousands)

General and administrative expenses increased $20.5 million, or 17%, for the six months ended June 30, 2026 compared to the same period in 2025. Operating costs to support our live geographies and enterprise functions (platform support costs) decreased to $80.3 million in 2026, compared to $81.7 million in the same period in 2025 as a result of our cost management initiatives. Operating costs to support our live geographies and enterprise functions as a percentage of revenue remain flat at 3% for the six months ended June 30, 2026 compared to the same period in 2025. Investments to support geography entry decreased to $4.6 million in 2026, compared to $10.8 million in the same period in 2025 due to decreased costs associated with the expansion within existing geographies. Stock-based compensation expense decreased $2.0 million for the six months ended June 30, 2026, compared to the same period in 2025 primarily as the performance conditions on certain performance-based equity awards were deemed not probable, and thus the related costs were reversed. Costs incurred for severance and transaction-related costs increased by $30.1 million to $27.7 million in 2026 compared to $(2.4) million in the same period in 2025 as a result of our cost management initiatives.

Income (loss) from equity method investments

(dollars in thousands)

Income (loss) from equity method investments decreased $13.0 million to losses of $7.6 million for the three months ended June 30, 2026 compared to income of $5.4 million in the same period in 2025. Our CMS ACO Models investees recognized an increase in operating expenses during the three months ended June 30, 2026 compared to the same period in 2025 as a result of additional services we provided, which began in the fourth quarter of 2025.

(dollars in thousands)

Income (loss) from equity method investments decreased $13.9 million to $4.1 million for the six months ended June 30, 2026 compared to $18.1 million in the same period in 2025. Our CMS ACO Models investees recognized an increase in operating expenses during the six months ended June 30, 2026 compared to the same period in 2025 as a result of additional services we provided, which began in the fourth quarter of 2025. The decrease in income (loss) from equity method investments was partially offset by an increase in gross profit from our CMS ACO Models investees during the six months ended June 30, 2026 compared to the same period in 2025.

Other income (expense), net

(dollars in thousands)

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Other income (expense), net increased by $7.1 million, or 91%, for the three months ended June 30, 2026 compared to the same period in 2025 primarily from the increase in income related to additional services rendered to our CMS ACO Models investments recognized beginning in the fourth quarter of 2025.

(dollars in thousands)

Other income (expense), net increased by $13.9 million, or 81%, for the six months ended June 30, 2026 compared to the same period in 2025 primarily from the increase in income related to additional services rendered to our CMS ACO Models investments recognized beginning in the fourth quarter of 2025.

Total Discontinued Operations

(dollars in thousands)

Total discontinued operations relate to the sale of our Hawaii operations in October 2023. Total discontinued operations for the six months ended June 30, 2026 and 2025 relate to the release of a contingent obligation from our Hawaii operations.

Non-GAAP Financial Measures

In addition to providing results that are determined in accordance with U.S. GAAP, we present medical margin and Adjusted EBITDA, which are non-GAAP financial measures.

We define medical margin as medical services revenue after medical services expense is deducted. Medical services expense represents costs incurred for medical services provided to our members. As our platform matures over time, we expect medical margin to increase in absolute dollars. However, medical margin PMPM may vary as the percentage of new members brought onto our platform fluctuates. New membership added to the platform is typically dilutive to medical margin PMPM. We believe this metric provides insight into the economics of our capitation arrangements as it includes all medical services expense directly associated with our members’ care.

We define Adjusted EBITDA as net income (loss) adjusted to exclude: (i) income (loss) from discontinued operations, net of income taxes, (ii) interest expense, (iii) income tax expense (benefit), (iv) depreciation and amortization, (v) stock-based compensation expense, (vi) severance and related costs, and (vii) certain other items that are not considered by us in the evaluation of ongoing operating performance. We reflect our share of Adjusted EBITDA for equity method investments by applying our actual ownership percentage for the period to the applicable reconciling items on an entity-by-entity basis.

Gross profit (loss) is the most directly comparable U.S. GAAP measure to medical margin. Net income (loss) is the most directly comparable U.S. GAAP measure to Adjusted EBITDA.

We believe medical margin and Adjusted EBITDA help identify underlying trends in our business and facilitate evaluation of period-to-period operating performance of our operations by eliminating items that are variable in nature and not considered by us in the evaluation of ongoing operating performance, allowing comparison of our recurring core business operating results over multiple periods. We also believe medical margin and Adjusted EBITDA provide useful information about our operating results, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to key metrics we use for financial and operational decision-making. We believe medical margin and Adjusted EBITDA or similarly titled non-GAAP measures are widely used by investors, securities analysts, ratings agencies, and other parties in evaluating companies in our industry as a measure of financial performance. Other companies may calculate medical margin and Adjusted EBITDA or similarly titled non-GAAP measures differently from the way we calculate these metrics. As a result, our presentation of medical margin and Adjusted EBITDA may not be comparable to similarly titled measures of other companies, limiting their usefulness as comparative measures.

Adjusted EBITDA is not considered a measure of financial performance under U.S. GAAP, and the items excluded therefrom are significant components in understanding and assessing our financial performance. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as an alternative to such U.S. GAAP measures as net income (loss), cash flows provided by or used in operating, investing, or financing activities or other financial statement data presented in our consolidated financial statements as an indicator of financial performance or liquidity. Some of these limitations are:

• Adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs;
• Adjusted EBITDA does not reflect interest expense or the requirements necessary to service interest or principal payments on debt;
• Adjusted EBITDA does not reflect income tax expense (benefit) or the cash requirements to pay taxes;
• Adjusted EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;
• Although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and
• The expenses and other items that we exclude in our calculation of Adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from similarly titled non-GAAP financial measures.

The following table sets forth a reconciliation of gross profit (loss) to medical margin using data derived from our condensed consolidated financial statements for the periods indicated (dollars in thousands):

(1) Gross profit (loss) is defined as total revenues less medical services expense and other medical expenses.

The following table sets forth a reconciliation of net income (loss) to Adjusted EBITDA using data derived from our condensed consolidated financial statements for the periods indicated (dollars in thousands):

(1) Includes elimination of certain administrative services provided by agilon health, inc. to equity method investments.

(2) Includes interest income, transaction-related costs and elimination of certain administrative charges by agilon health, inc. for trademark licensing fees and other service arrangements to its equity method investees.

Liquidity and Capital Resources

We strategically maintain a level of liquidity sufficient to allow us to meet our cash needs in the short-term. We have historically financed our operations primarily through funds generated from our capitation arrangements with payors, distributions and or payments from our equity method investments, issuances of equity securities, and borrowings under credit agreements. We generally invest any excess cash in money market accounts and marketable securities. Over the long term, our investment strategies are designed to provide safety and preservation of capital, and sufficient liquidity to meet the cash flow needs of our business operations.

As of June 30, 2026, we had cash and cash equivalents and restricted cash of $178.8 million and investments in marketable securities of $78.4 million.

From time to time, we may incur operating losses and may generate negative cash flows from operations. As a result, we may require additional capital resources in the future to execute strategic initiatives to grow our business. Our primary uses of cash include payments for medical claims and other medical expenses, including partner physician incentive expense, general and administrative expenses, costs associated with the development of new geographies and expansion of existing geographies, debt service and capital expenditures. Final reconciliation and receipt of amounts due from payors are typically settled in arrears, following completion of the contractual program year.

Based on our planned operations, we believe that our existing cash and cash equivalents, restricted cash, investments in marketable securities, as well as available borrowing capacity under the Credit Facility (defined below), will be sufficient to meet our working capital and capital expenditure needs over at least the next 12 months, though we may require additional capital resources in the future. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. Our cash flows are impacted by the timing of receipts from payors. Our business should normally produce positive cash flows during periods of positive medical margin. Conversely, cash flows would be negatively impacted during periods of negative medical margin. Our cash flows may also be affected by the timing of working capital items including accounts receivable, claims payable, other receivables and payables, and cash requirement covenants under our Credit Agreement (defined below), including daily minimum balances and cash collateral for issuing letters of credit.

We may require additional financing in the future to fund working capital and pay our obligations. We may seek to raise any necessary additional capital through a combination of public or private equity offerings and/or debt financings. There can be no assurance that we will be successful in acquiring additional funding at levels sufficient to fund our operations or on terms favorable to us, if at all. If adequate funds are not available on acceptable terms when needed, we may be required to significantly reduce operating expenses, which may have a material adverse effect on our business, financial condition, cash flows, and results of operations. If we do raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our existing stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.

Our ability to pay dividends to holders of our common stock is significantly limited as a practical matter by our growth plans as well as the Credit Facility insofar as we may seek to pay dividends out of funds made available to us by agilon health management, inc. or its subsidiaries because the Credit Facility restricts agilon health management, inc.’s ability to pay dividends or make loans to us. The borrower on the Credit Facility is agilon health management, inc., our wholly-owned subsidiary. The Credit Facility is guaranteed by certain of our subsidiaries, including those identified as variable interest entities, and contains customary covenants including, among other things, limitations on restricted payments including: (i) dividends and distributions from restricted subsidiaries, (ii) requirements of minimum financial ratios, and (iii) limitation on additional borrowings based on certain financial ratios.

Cash Flows

The following summary discussion of our cash flows is based on the condensed consolidated statements of cash flows. The following table sets forth changes in cash flows (dollars in thousands):

Net Cash Provided By (Used In) Operating Activities

Net cash used in operating activities was $33.6 million for the six months ended June 30, 2026 compared to $67.1 million for the six months ended June 30, 2025. The change in net cash used in operating activities was primarily a result of the increase in medical margin, partially offset by increased provider costs, including partner physician incentive expenses, and timing of settlements with payors. Our cash flow from operations is dependent upon the number of members on our platform, the timing of settlements with payors, and the level of operating and general and administrative expenses necessary to operate and grow our business, among other factors.

Net Cash Provided By (Used In) Investing Activities

Net cash provided by investing activities was $39.2 million for the six months ended June 30, 2026 compared to $47.4 million for the six months ended June 30, 2025. During the six months ended June 30, 2026, we received net proceeds from the maturities of marketable securities and repayments of loans receivables of $46.6 million and made investments of $7.4 million primarily for the acquisition of intangible assets and property and equipment. During the six months ended June 30, 2025, we received proceeds from the maturities of marketable securities of $125.3 million and made investments of $78.0 million primarily for marketable securities, and the acquisition of intangible assets and property and equipment.

Net Cash Provided By (Used In) Financing Activities

Net cash used in financing activities was $0.5 million for the six months ended June 30, 2026 was primarily related to the repayment of debt, partially offset by proceeds from stock option exercises. Net cash used in financing activities of $2.7 million for the six months ended June 30, 2025 was primarily related to the payments for equity issuances.

Debt Obligations

On February 18, 2021, we executed a credit facility agreement (as amended by the First Amendment to Credit Agreement, dated as of March 1, 2021, the Second Amendment to Credit Agreement, dated as of May 25, 2023, the Third Amendment to Credit Agreement, dated as of February 12, 2026 (the “Third Amendment”), and the Fourth Amendment to Credit Agreement, dated as of April 9, 2026, the “Credit Agreement”), which includes: (i) a secured term loan facility (the “Secured Term Loan Facility”) and (ii) a senior secured revolving credit facility (the “Secured Revolving Facility,” and together with the Secured Term Loan Facility, the “Credit Facility”). The Third Amendment, among other changes, (a) extended the stated maturity date from February 18, 2026 to February 18, 2028; (b) amended certain covenant “baskets” to be measured as a percentage of EBITDA rather than, or as an alternative to, Consolidated Total Assets; (c) required that we maintain a minimum of $50.0 million in Total Cash as of the end of each Business Day; (d) conditioned certain payments, including dividends, to Holdings under the available amount “basket” on us achieving positive EBITDA for two consecutive trailing four-quarter periods each ending after the Third Amendment effective date; (e) required that any reduction in outstanding letters of credit be accompanied by a corresponding prepayment of term loans; (f) reduced the aggregate amount of revolving credit commitments from $100.0 million to $90.0 million; and (g) required cash collateralization at 103% of the amount of each letter of credit outstanding. Concurrently with the effectiveness of the Third Amendment, we executed and delivered an unsecured guaranty of management’s obligations under the Credit Agreement. All capitalized terms used herein, but not defined herein, shall have the meanings ascribed to such terms in the Third Amendment.

The Secured Overnight Financing Rate (“SOFR”) is used as a benchmark interest rate in accordance with the Credit Agreement. At our option, borrowings under the Credit Facility can be either: (i) Term SOFR Rate Loans, (ii) Daily Simple SOFR Rate Loans, or (iii) Base Rate Loans, each as defined in the Credit Agreement. Daily Simple SOFR Rate Loans and Term SOFR Rate Loans bear interest at a rate equal to the sum of 3.50% and the higher of (a) SOFR, as defined in the Credit Agreement, and (b) 0%. Base Rate Loans bear interest at a rate equal to the sum of 2.50% and the highest of: (a) 0.50% in excess of the overnight federal funds rate, (b) the prime rate established by the administrative agent from time to time, (c) the one-month SOFR rate (adjusted for maximum reserves) plus 1.00% and (d) 0%. Additionally, we pay a commitment fee on the unfunded Secured Revolving Facility amount of 0.375%. We must also pay customary letter of credit fees.

The Credit Facility contains customary covenants including, among other things, limitations on restricted payments including: (i) dividends and distributions from restricted subsidiaries, (ii) requirements of minimum financial ratios, and (iii) limitation on additional borrowings based on certain financial ratios.

For additional discussion on our debt obligations, see Note 8 to the Condensed Consolidated Financial Statements.

Equity

As of June 30, 2026, we had 16.8 million shares of common stock outstanding. See “—Overview and Recent Developments” above for information related to the Reverse Stock Split.

Critical Accounting Estimates

Management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires us to use judgment in the application of accounting policies, including making estimates and assumptions. We base estimates on the best information available to us at the time, our historical experience, known trends and events, and various other assumptions that we believe are reasonable under the circumstances. These estimates affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting would have been applied, resulting in a different presentation of our condensed consolidated financial statements. From time to time, we re-evaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 in Part II, Item 7 “Management’s Discussion and Analysis of Financial Conditions and Results of Operations - Critical Accounting

Policies” and Note 2 to the Condensed Consolidated Financial Statements. There have been no significant changes to our critical accounting policies during 2026.

Recent Accounting Pronouncements

For the impact of new accounting standards, see Note 2 to the Condensed Consolidated Financial Statements.

We are exposed to various market risks, including the potential loss arising from adverse changes in interest rates. We do not use derivative financial instruments in the normal course of business or for speculative or trading purposes.

Our exposures to market risk for changes in interest expense relate primarily to the Credit Facility. Indebtedness under the Credit Facility is floating rate debt and is carried at amortized cost. Therefore, fluctuations in interest rates will impact our consolidated financial statements. A rising interest rate environment will increase the amount of interest paid on this debt. A hypothetical 100 basis point change in interest rates would not have a material impact on our interest expense.

We held cash, cash equivalents, restricted cash and equivalents, and marketable securities of $257.3 million and $285.1 million as of June 30, 2026 and December 31, 2025, respectively, consisting of bank deposits, certificates of deposits, money market funds, U.S. Treasury notes, and corporate debt securities. Such interest-earning instruments carry a degree of interest rate risk. A hypothetical 100 basis point change in interest rates would not have a material impact on the fair value of our marketable securities. Declines in interest rates over time will reduce our investment income. The goals of our investment policy are liquidity and capital preservation. We do not enter into investments for trading or speculative purposes.

Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), with the assistance of other members of management, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our CEO and CFO have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that the information we are required to disclose in the reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s (“SEC”) rules and forms and (2) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect every misstatement. An evaluation of effectiveness is subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may decrease over time.

Changes in Internal Control Over Financial Reporting. Under applicable SEC rules (Exchange Act Rules 13a-15(d) and 15d-15(d)), management is required to evaluate any change in internal control over financial reporting that occurred during each fiscal quarter that had materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. There were no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. There have been no material changes to the risk factors disclosed in that Form 10-K.