アジロン・ヘルス（AGL）2026年第3四半期決算説明会：EBITDA改善に伴いガイダンスを上方修正

要約

• アジロン・ヘルス（AGL）が発表した2026年第3四半期の売上高は、加入者数の減少を料率の改善とリスク調整収益の増加で補い、前年同期の14億ドルから6%増の約15億ドルとなりました。
• 調整後EBITDAは6,400万ドルとなり、前年同期の9,100万ドルの赤字から黒字転換しました。経営陣によると、この結果は第3四半期業績予想の中央値を約6,400万ドル上回りました。
• 医療サービス費用比率は104.0%から88.5%へ改善しました。上半期の医療費動向の好転、リスク調整収益、および医療サービス費用の減少が改善を後押ししました。
• 経営陣は2026年通期の業績予想を引き上げ、ガイダンスの中央値で売上高を約58億8,000万ドル、医療サービス費用比率を90.4%、調整後EBITDAを約1億5,000万ドルとしました。
• 当四半期末時点のメディケア・アドバンテージ加入者数は、公表済みの市場撤退の影響により前年同期比約10%減の45万4,000人となりました。ACO（責任ケア組織）加入者数は11万2,000人でした。
• 同社は、拡大された3つの医師提携先からの約5万人のMSSP（メディケア共有セビングス・プログラム）会員に支えられ、2027年にはACO加入者数が約16万人に増加すると見込んでいます。

主要財務データ

経営陣は、第3四半期ガイダンスの中央値を約6,400万ドル上回る調整後EBITDAを達成した要因として、前年度実績からのプラス影響（1,400万ドル）、リスク調整見積もりの上方修正（2,300万ドル）、ACOの好パフォーマンス（1,100万ドル）、2026年上半期のコスト動向の好転（1,200万ドル）を挙げました。残りの400万ドルは、第4四半期に予定されている市場参入費用および営業費用の時期的なズレを反映したものです。

事業および運用の業績

アジロンの「疾病負担（Burden of Illness）」プログラムは、最終年度リスク調整の好転と中間期リスク調整データの完了により、第3四半期に予想を上回る収益を創出しました。経営陣は、本プログラムが加入者の健康状態の早期発見、診断、治療を支援していると説明しました。

2026年上半期の医療費増加率は6%台前半と好調に推移しました。第3四半期については、四半期末時点で請求支払いデータの見通しが限られていたため慎重な引当を行ったことを反映し、コスト増加率を7%台前半と記録しました。

同社は鬱血性心不全、呼吸器疾患、認知症を対象とした臨床パスの拡大を続けています。ガイドラインに沿った薬物療法の服薬コンプライアンス向上を目指すバーチャル薬局プログラムは、現在、提携医師の約25%をカバーしています。呼吸器疾患および認知症プログラムは、対象市場および提携先の約3分の1に展開されています。

品質向上への取り組みは引き続き重視されています。2025測定年度において、アジロンは契約保険プランで使用される品質評価指標全体で4.2つ星の評価を獲得しました。経営陣は、2028受給年度において加入者の75%が4つ星以上の評価を受けたプランに加入すると予測しており、2027受給年度の77%と同水準を維持する見通しです。

ACO事業は引き続き潜在的な成長機会です。アジロンが運営する8つのACOは、2024パフォーマンス年度において2億2,900万ドルの純削減額を創出し、平均品質スコア96%を達成しました。最近発表された3つの提携拡大により、多年数契約のもとで新たに約5万人のMSSP会員が加わります。

経営陣の業績予想（ガイダンス）

更新された見通しには、年初来の堅調な業績、推定リスクスコアの上昇、および上半期の良好なコスト動向が反映されています。また、2026年残りの期間における医療費増加率を約7%と想定しています。

2027年について、経営陣は保険契約改定によるプラス効果が続くものの、2026年よりは控えめな規模になると予想しています。同社は前回の契約サイクル中に加入者の約80%の価格再設定を行い、2026年に1億2,700万ドルの価値を創出しましたが、現在の交渉対象は契約全体の約50%にとどまっています。

ACO加入者数は現在の約11万人から2027年には約16万人に増加する見込みです。経営陣は、2月に発表する2027年通期の見通しとともに、ACO全体の加入者数および調整後EBITDAのガイダンスを提供する予定です。

外部成長に向けて、アジロンは2028年以降を見据えた新規市場や医師グループの検討を行っています。経営陣によると、2027年に締結された契約は、標準的な12〜18ヶ月の導入期間を経て2028年の業績に寄与する可能性があります。

リスクと注視領域

• 第3四半期の医療費増加率は約7%と計上されましたが、四半期末時点における請求支払いデータの見通しは限定的でした。第4四半期のガイダンスにも同様のコスト増加想定が組み込まれています。
• 経営陣は、通常の季節性により、第4四半期は例年同社で最も利益が低くなる四半期であると説明しました。
• 収益重視の市場撤退と控えめな成長アプローチにより、メディケア・アドバンテージの加入者数は前年同期を下回る水準にとどまっています。
• 前回のサイクルで大部分の契約の価格再設定が完了しているため、2027年に期待される契約改定のプラス効果は2026年よりも小さくなる可能性が高いです。
• アジロンの強化されたデータパイプラインのカバー率は80%台半ば近くに達しています。経営陣の長期目標は90%台前半から半ばですが、残りの各保険会社に対して個別の導入作業が必要となるため、進捗が減速する可能性があります。
• フルリスクのパートDのリスク露出は、2025年の約30%から2026年にはおよそ15%に低下しました。経営陣は2027年にさらなる低下を見込んでいます。

アナリスト質疑応答のハイライト

新規市場での成長：経営陣は、今後の新規市場としてケア調整手数料モデルではなくフルリスク契約をターゲットにしていると述べました。事業開始前に必要なオペレーション、データ連携、およびリスク引き受け事業体を構築するため、12〜18ヶ月の導入プロセスを見込んでいます。

臨床パスの拡大：アジロンは、鬱血性心不全（CHF）プログラムにおけるパフォーマンスのばらつきを縮小し、予防スクリーニングを拡大するさらなる機会があると考えています。認知症および呼吸器疾患は、今後2年間でより広範な導入を目指すその他の主要な臨床パスです。

スターズ評価の収益構造：契約は一般に保険料率に基づいているため、パートナーである保険会社がスターズ関連のボーナス収益を回復した際には収益回復の恩恵を受けられる一方で、低下がアジロン自身の品質実績に起因しない場合は補償・保護を求め続けると経営陣は語りました。

ACOの浸透度：ACO事業は現在、アジロンの提携医師の約半数に浸透しています。経営陣は、方針の一致と持続可能な収益性を条件に、MSSPやその他のACOモデルを通じて既存パートナーへの浸透をさらに深める機会があるとみています。

第4四半期見通しの要因分解：経営陣は、通期の調整後EBITDA中央値の上方修正について、第4四半期への400万ドルの費用繰越とリスク調整改善による約700万ドルの第4四半期追加恩恵を考慮した上で、主に第3四半期の好実績を反映したものであると説明しました。

決算説明会（トランスクリプト）全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Hello, everyone. Thank you for joining us, and welcome to the Agilon Health Third Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question-and-answer session. [Operator Instructions] I will now hand the conference over to Evan Smith, Senior Vice President, Investor Relations. Evan, please go ahead.

Evan Smith

Thank you, operator. Good afternoon, and welcome to the call. With me are our CEO, Tim O'Rourke; and our CFO, Jeff Schwaneke. 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, including the factors discussed under Risk Factors in our annual report Form 10-K for fiscal year ended December 31, 2025, and subsequent 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. Non-GAAP measures are supplemental and not a substitute for GAAP measures. However, we believe that providing these non-GAAP measures helps investors gain a better and more complete understanding of our financial results and are consistent with how management views 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 8-K filed with the SEC today.

Before I turn the call over to Tim, I wanted to highlight that we'll be hosting a virtual investor event on November 17 at 2:00 p.m. Eastern Time entitled Driving Performance at scale of the Agilon framework which will be a deep dive into our Agilon's technology-enabled clinical and quality programs are advancing patient outcomes and supporting sustainable performance. to register, you can go to Agilon's Investor Relations site under events at investor.agilonhealth.com.

And with that, let me turn the call over to Tim.

Timothy O’Rourke

Good afternoon, everyone, and thank you for joining us today. I'm pleased to report that Agilon exceeded our third quarter guidance across key financial metrics. Based on our performance through the third quarter and our outlook for the remainder of the year, we are increasing our full year 2026 guidance. Jeff will discuss both our financial results and outlook in greater sale. This quarter's performance reflects the continued progress we are making against the operational priorities we established at the beginning of the year. As I highlighted last quarter, we have remained focused on the fundamentals of our business, improving performance at the physician and market level, reducing unnecessary variability and delivering measurable clinical and quality outcomes.

Six months in, I continue to believe Agilon sits at the center of where value-based care is going, improving clinical outcomes and quality for patients and reducing unnecessary medical cost. The passion and carrying of our PCP partners reinforces our mission at Agilon and it's our absolute responsibility to support these physicians in their work across all of our communities. As we move forward, we will continue to invest in and advance initiatives to further strengthen our platform to support them in their care pace.

We remain confident that our proximity and understanding of our patient populations places Agilon and our PCP partners in what we believe is the best positioned to have a meaningful impact on daily lives. Realizing the full value of this position depends on our ability to translate proximity into actionable insight. And that is where our investments in data and technology are making a meaningful difference. Our enhanced data capabilities are helping our teams and physician partners identify high-risk patients and gaps in care earlier. This enables timelier diagnosis and intervention, more effective care coordination and better management of chronic conditions. Importantly, this is not a series of short-term initiatives.

We are building repeatable operating capabilities that can be deployed consistently across our network. We believe this combination of local physician relationships with proximity to the member, actionable data and operating discipline positions our model to become more resilient and scalable over time. We continue to advance our evidence-based clinical pathways, including our programs for CHF, lung health and dementia. We are working hand-in-hand with our physician partners, supporting them with additional tools to identify disease earlier and coordinate care more effectively.

This end-to-end approach is applied to each high-risk condition we address within our population. As we have previously stated, heart failures emerges a strong proof point for Agilon's technology-enabled clinical pathway framework. Using earlier diagnosis and stronger treatment to improve patients' quality of life while reducing avoidable hospital utilization and medical expense. I want to share 1 particular patient story with you, which I believe demonstrates the effectiveness of this end-to-end clinical pathway. 72 year-old patient with hypertension and diabetes had quietly accepted leg swelling and shortness of breath as normal aging and never reported them as symptoms -- through Agilon's foundation the patient was identified as a candidate or a risk-based ecocardiogram screening and was proactively skilled.

That screening identified significant structural heart disease, which had previously gone undiagnosed. Following the results, the physician had a structured conversation with the patient to further assess the patient's daily symptoms, which in combination with echo findings revealed that the patient was experiencing symptomatic heart failure. The appropriate treatment began promptly with medications optimized in line with guideline-directed medical therapy or GDMT. At the 1-month follow-up, the patient said the swelling and professes have resolved, and they have felt better than they had in years.

This individual's experience demonstrates how Agilon's technology-enabled screening, physician training and a trusted PCP relationship concern an overlook condition into earlier treatment, a meaningful improvement in daily life, and reduce unnecessary medical utilization. While CHF pathways have been successful, there are still more opportunities to provide improved care and drive enhanced outcomes. We are continuing to roll out virtual pharmacy across our markets to drive greater adherence to GDMT and further improve performance. Similarly, we are executing a consistent framework for our other end-to-end pathways, including dementia. We are also investing in technology and AI-enabled capabilities that can serve as relevant information at the point of care, reduce administrative work, engage with their patients and help physicians focus their time and those with the greatest needs.

We view these tools as force multipliers for primary care. Their value comes from combining technology with the judgment and experience of a trusted position who understands the patient, the family and the local community. It is integrating diverse structure and unstructured patient data to drive actionable insights embedded in both Agilon and PCP workflows to support improved patient care and outcomes and reduce unnecessary medical cost. Through increased performance visibility across markets and payers, we believe we can never patterns earlier, performance variability, more effectively leverage best practices nationwide.

Quality remains central to our model and to the value we create for patients, physicians and health plan partners. Our physician partners show up every day to deliver better, more coordinated care for their patients. This is supported by timely data and insights accurate attribution and proactive collaboration, so care gaps are addressed before they become health issues. That commitment shows up in outcomes. Outcomes result in better management of chronic diseases such as hypertension, cardiovascular disease and diabetes. More cancer screenings, stronger medication adherence and more consistent preventative care.

To us, these are not metrics but said are real people getting healthier. Agilon Stars performance is a result of a highly integrated quality operating model that combines data infrastructure, physician engagement and payer alignment each and every day. Following the publication of the measurement year 2025 quality cut points on a consolidated basis, Agilon increased GAAP closure by 3% versus prior year and consistent with prior year, achieved a 4.2 star performance for quality measures used by our contracted health plans.

Based on healthcare plans overall performance, -- in measurement year 2025, nationally, we expect 75% of our members to be in 4-plus star plans for payment year 2028 compared with 71% nationally and 77% in payment year 2027. We achieved 5 star performance and measures for cardiovascular disease, hypertension and cancer screenings as well as 4-star performance in measures for diabetes management, all of which reflect the impact of our work in preventative care, chronic disease management, and medication adherence.

Looking beyond the quarter, we are encouraged by the continued development of our ACO business and the opportunities we see for 2027 and beyond. We are seeing positive traction and strong interest from both existing and prospective physician partners. Based on the opportunities we've recently announced, we expect ACO membership to grow approximately $40 million to 50% in 2027, with the majority of that growth expected to come through the Medicare Shared Savings Program or MSSP -- and we'll enter 2027 with a balance between the 2 models.

During the quarter, we announced 3 relationship expansions for nearly 50,000 MSSP members. In each case, the physician partner already held full risk Medicare Advantage contracts with Agilon, so they know our process as well, and have seen firsthand our model supported by our clinical and quality programs can help improve care delivery and positively impact medical out patients. Through these expansions, we are extending our value-based care approach to traditional Medicare beneficiaries in addition to their previously contracted Medicare Advantage patients.

We believe these expansions are significant to our business for a couple of reasons. First, it demonstrates the embedded growth opportunity and trust we build with our partners over time. As partners experience the benefits of the model, we can further deepen our relationships by extending a consistent care approach across a broader portion of their Medicare population, improving support and outcomes for patients with a grid's needs. Second, it demonstrates the scalability and flexibility of the Agilon platform. We can bring our clinical programs, quality capabilities, technology-enabled workflows and care management resources to more physicians and patients across multiple value-based care models within the same organization.

Our confidence in the opportunities ahead is grounded in demonstrated performance through the ACO business. As a reminder, in performance year 2024, our 8 ACOs generated $229 million in gross savings and achieved an average quality score of 96% with 4 earning perfect quality scores and 5 recognized as high performers. These results, combined with our strong platform capabilities and continued interest, reinforce our belief that the ACO business will remain a strong contributor to Agilon's performance in 2027 and beyond.

As we enter 2027, we expect both ACO care models may create additional opportunities for Agilon and physician partners. We are taking a measured approach to that growth, prioritizing partnerships where we see strong alignment, a clear path to improve patient outcomes and the ability to generate sustainable performance over time. We will provide additional detail regarding expected total ACO membership and adjusted EBITDA contribution when we issue our full year 2027 guidance in February.

Taken together, the progress this quarter reinforces our confidence in Agilent's direction. We believe our operational discipline is strengthening. Our clinical programs are becoming more systematic. Our physician partnerships are deepening and our ACO capabilities are enabling us to extend the reach of our model to additional Medicare patients. We still have work ahead of us and remain focused on a few key areas. First, strengthening operational execution across the organization by reducing performance variability, ensuring that our strongest operating practices are consistently adopted across the network, and enhancing our care delivery through the continuation of our clinical and quality programs; second, disciplined payer contracting.

We are in the midst of our 2027 contracting, which will address approximately 50% of our book of business, and we remain focused on reducing risks outside our control, while securing economic supportive of the value we provide our physician and payer partners. Third, we are looking towards measured growth, ways to further enhance our data capabilities to drive actionable insights at the point of patient care and gaining efficiencies while maintaining the market expertise as well as our proximity to the PCP in patient, which differentiates our model.

With regards to growth, I want to remind you that we will take a measured approach. In the near term, we are focused on embedded opportunities. Looking to 2028 and beyond. We are evaluating new markets and physician groups that align with our model. As a reminder, onboarding typically involves a 12- to 18-month implementation time frame -- which allows us to establish the infrastructure, data integration and clinical workflows necessary to position these partnerships for long-term success. This disciplined approach combined with our continued focus on operational execution provides a solid foundation as we move forward.

We believe we are well positioned with the right strategy, the right physician partnerships and an increasingly strong set of capabilities to work towards better outcomes for patients and more predictable performance over time. I want to thank our physician partners, employees and health plan partners for their continued commitment and collaboration -- their work is the foundation of our progress and the reason we remain confident in Agilon long-term opportunity.

With that, I'll turn the call over to Jeff to discuss our financial results and updated outlook in greater detail.

Jeffrey Schwaneke

Thank you, Tim, and good afternoon. As Tim mentioned, we're pleased with the continued strength in our performance and execution by the Agilon team and our PCP partners. Third quarter results were strong and exceeded the high end of our guidance across our key financial metrics. The positive results and increase to our full year guidance were driven by better-than-expected performance in the burden of illness and clinical pathways initiatives and favorable medical expense development in the first half of 2026.

I'll cover 3 things today. First, our strong third quarter financial performance; second, an update on cost trends and the macro environment -- and finally, our increased full year 2026 outlook and what we believe will drive continued performance improvement in 2027. First, let me highlight our third quarter performance. Medicare Advantage membership at the end of the third quarter was 454,000 members compared to 437,000 members at the end of the second quarter 2026 and 503,000 members in the third quarter of 2025.

Membership in the current period and year-to-date includes approximately 39,000 members in care coordination fee arrangements. As a reminder, the year-over-year decline of approximately 10% reflects previously disclosed market exits related to our disciplined, profitability-focused approach to contracting in 2026 and measured approach to growth.

ACO membership for the third quarter was $112,000 compared to $112,000 in the second quarter of 2026 and $115,000 in the third quarter of 2025. The Revenue for the third quarter was approximately $1.5 billion compared to $1.4 billion in the third quarter of 2025. The 6% increase reflects the membership decline I just mentioned which was more than offset by more constructive rates for 2026 from the CMS benchmark, favorable payer contracting and higher revenue associated with improved diagnosis, assessment and treatment of our members' health conditions.

Our burden of illness program serves as the foundation for our clinical and quality programs through earlier identification, diagnosis and treatment of patients comprehensive health conditions. This program drove higher-than-expected revenue in the third quarter, driven by favorable final year risk adjustment and completion of midyear risk adjustment data. Moving on to medical expense. Medical costs in the third quarter reflect favorable development for the first half of 2026, which is now estimated in the low 6% range. While we have seen some moderation in cost trends in the first half of the year, we recorded a third quarter cost trend in the low 7% range, which reflects our prudent reserving approach.

As indicated in our press release, -- we will now be providing a medical services expense ratio or MSER as a core metric. The MSER uses the components of medical margin and represents costs incurred for medical services provided directly to our members divided by total medical services revenue. For the third quarter, the MSER was 88.5% compared to 104% in the third quarter of 2025. The medical services expense ratio for the third quarter was better than our expectations driven by higher medical services revenue associated with our burden of illness programs, including both final year risk adjustment true-ups and midyear risk adjustment true-ups -- the higher revenue in addition to lower medical services expense, including the cost trends previously mentioned, drove the medical services expense ratio lower for the third quarter.

Adjusted EBITDA for the third quarter was $64 million compared to negative $91 million in the third quarter of 2025. This exceeded the midpoint of our third quarter guidance by approximately $64 million. This was driven by favorable prior year development of $14 million the year-to-date impact from the increase in our revised estimate for risk adjustment of $23 million, performance in ACO of $11 million and favorable development of the first half of 2026 cost trends of $12 million.

Additionally, the third quarter benefited from approximately $4 million related to timing of geo entry costs and operating expenses which we expect to incur in the fourth quarter. ACO reach continues to perform well, and the results exceeded our third quarter guidance range. Adjusted EBITDA was $11 million in the quarter compared to our previous guidance of approximately breakeven. This includes approximately $7 million related to prior year performance. On the balance sheet, we ended the quarter with $312 million in cash and marketable securities and $74 million of off-balance sheet cash held by our ACO entities.

We continue to execute initiatives intended to improve cash flow and those initiatives in combination with positive prior year development, have improved our cash flow outlook for the year end of this year. We are increasing our year-end cash outlook and now expect year-end 2026 cash of at least $175 million.

Now let me turn to our outlook. We are revising our full year 2026 guidance to reflect the strength of the third quarter results, including higher-than-expected revenue associated with higher estimated risk scores for the year and favorable cost trend for the first half of 2026. Using the midpoint of our guidance ranges for the full year 2026, we now expect revenue of approximately $5.88 billion medical services expense ratio of 90.4% and adjusted EBITDA of approximately $150 million. The increased full year 2026 guidance reflects the year-to-date performance a prudent assumption for cost trends in the 7% range for the remainder of the year and the expected impact for the fourth quarter from the increase in our revenue associated with the higher-than-expected risk adjustment in Q3.

It also includes an increase in ACO reach adjusted EBITDA expectations to between $40 million to $45 million which includes the additional year-to-date contribution of approximately $18 million from strong 2025 performance. We remain confident in our increased 2026 outlook as well as our ability to deliver continued improvement in 2027. While it is still early and subject to a number of factors, we wanted to provide some preliminary color on how we are thinking about 2027. Based on our initial review of payer bids and ongoing contracting discussions, we currently anticipate we will see a favorable benefit in 2027, albeit more modest than we saw in 2026 when we recontracted approximately 80% of our membership.

Beyond contracting, we expect to have additional opportunities to drive revenue and make potential impacts to medical costs as we further strengthen our CHF program and advance additional clinical pathways and quality initiatives. Within our ACO business, we anticipate growing from approximately 110,000 members today to approximately $160,000 in 2027 due to the expanded partnerships Tim previously outlined. We anticipate ratable improvement in baseline ACO adjusted EBITDA performance based on this growth. As we look ahead, -- we intend to remain focused on operational efficiency and continue to take a measured approach towards our cost trend outlook.

I'll close by saying we are proud of the progress across the business, and we believe there is further opportunity ahead. The work our physician partners and employees are doing every day is reflected in our results, and we believe the foundation we're building supports durable performance into 2027 and beyond.

With that, operator, let's move to the Q&A portion of the call.

Operator

[Operator Instructions] Your first question comes from the line of GilendraSingh with Truist Securities. .

質疑応答

Unknown Analyst

This is Eduardo Ron on for Gilendra. Just on the comment about focusing on external growth in 2028 and beyond, does that mean that you guys are signing contracts in 2027 and given the 12- to 18-month onboarding lag that the numbers end up showing up in 2029? Or did they show up in 2028?

Timothy O’Rourke

Eduardo, Tim. I appreciate the question. I think if you think about external or new market, new partner growth. I would think of it as First of all, demand continues to be really high. We get inbound every day. We were talking to physicians and physician rooms before we put it down. So pipeline is strong. I would think about it as signing in 2027 for 2028 impact.

Unknown Analyst

Great. That's helpful. And just 1 more for me. Just the on the cost trend, I mean, I think you guys were accruing for second quarter cost trends in the low 7s, and it sounds today like that's continuing. Did you guys -- for at least 3Q, did you guys provide an update for the Q2 trend?

Jeffrey Schwaneke

No, no. What we said was that the first half has restated favorably into the low 6% range. And you're correct on the Q3, again, we've recorded roughly 7% cost trend again, just recall that we have limited paid claims visibility sitting here at the end of the quarter for the third quarter.

Operator

Your next question comes from the line of Ryan Langston with TD Cowen. .

Ryan Langston

In terms of the 2028 growth commentary, for these new markets, are you looking to jump right into the full risk sharing arrangements for these potential deals? Or would you sort of use the care coordination fee structure at least maybe upfront for the first year?

Timothy O’Rourke

Ryan, I appreciate the question. As we kind of think about the time line -- if you remember, we've got about a 12- to 18-month implementation time line. We would not be looking at care coordination. -- part of that implementation time line we have is setting up the right operations, the connectivity, the risk-bearing entity, there's a lot of work that gets done before you move to risk, but I would not look at us moving into care coordination fees, but looking at risk.

Unknown Analyst

Yes. And Ryan, as you think about, obviously, the improvement we've had in profitability. I think our underwriting model, we have confidence in our underwriting model as we head into 2020 and think about growth.

Ryan Langston

Okay. And then I appreciate the commentary on improving clinical pathways. I think you mentioned, obviously, the story about CHF. Maybe touch on some of the areas of additional opportunities you see from a clinical perspective that you could look to kind of implement here over the next maybe 1 to 2 years?

Timothy O’Rourke

I think if you start, we still have plenty of room to go with our CHF clinical pathway. Talked a little bit about the performance that we're having. But again, still room to go deeper there as we look at '27 and '28. Think about the variability between partners, the variability within a partner and different positions, we've got work to do to reduce that variability. We still have patients to screen preventative screening where they sit in disease progression. So work to do there.

And then if you think about the end-to-end process, Ryan, on the clinical pathway, we talked a little bit about GDMT -- so work to do to continue to roll out that virtual pharmacy where we've got about 25% of our partners in that virtual pharmacy today. If you think about some of the other areas, we talked a little bit about dementia and lung health. I would say those are the 2 primary ones as we sit here today and think about the fact that we've got that rolled out to about 1/3 of our markets on our partners today with more room to go over the next couple of years.

Operator

Your next question comes from the line of Andrew Mok with Barclays.

Ye Yuan

This is Tiffany Yuan on for Andrew. You've previously talked about structuring contracts to protect the overall economics when a payer partner experiences a decline in Stars bonus revenue. As some of your payer partners now recover Star, how should we think about the reverse dynamic you participate in the upside as well as revenue recovery?

Jeffrey Schwaneke

Yes, is what I would say. I would say in the past, what we have said is we want to get compensated for the value that we deliver to our payer partners. And so -- if there was a Starz issue that wasn't associated with any of the metrics or measures that we performed very well on and we saw it relief. And in the past, I would say we've been successful at getting that relief from payers. So on a going-forward basis, yes, we -- as you know, we contract based on a percent of premium. And so without those relief dollars, yes, we would participate in that as well on a going-forward basis.

Ye Yuan

Okay. Got it. And then just a quick numbers question. I think the updated full year guidance implies a somewhat deeper sequential decrease in for medical margin than we've historically seen even after adjusting for some of the out-of-period items, particularly considering you have lower Part D exposure this year. Can you walk through the 4Q seasonality assumptions and any other factors we should be considering?

Jeffrey Schwaneke

Yes. I think the first and foremost, you have to remember that for us, when we think about Part D, -- it's recorded net in revenue for us and the risk we have there is substantially reduced year-over-year, right? We were 30% with full risk in Part D on 2025 down to roughly 15% this year. And obviously, we will make reductions in that next year as well. We're pretty confident that we're through a contracting process and we'll substantially reduce that risk as we go into next year. I would say, as you think about fourth quarter, so we have a normal seasonality and fourth quarter is generally our lowest earnings quarter -- and I would say the only thing I would point to is just we have a 7% cost trend embedded in our guide in that quarter.

Operator

Your next question comes from the line of Jack Slevin with Jefferies.

Jack Slevin

Congrats on the really strong results. I wanted to talk a little bit about what you've seen in the first half results that are sort of driving some of the performance. So maybe just looking a little more granularly at the revenue strength and perhaps if that's coming from better pull-through on some of the clinical programs that you guys have been talking about or generally sort of what the pockets of strength have been as you sort of revise that higher? And then similarly, with Cost right now landing towards the lower 6% range and a little bit better claims development in the first half? Are there any things you're picking up across different categories of cost spend that are worth noting?

Jeffrey Schwaneke

Yes. I think, Jack, you've called out the 2 points is what I would say, the largest drivers of the performance this year. Absolutely, the clinical pathways and our success there really caring for the members earlier and getting them on the appropriate medication is extremely important, and we're proud of the success there. And you're right, that has delivered, I would say, higher revenue performance this year. If you go back to our original guide, I think we had roughly 40 basis points of improvement in there. And obviously, we're in a much different position this year.

So the success of those programs has been great. The other piece you mentioned is medical cost -- and a couple of things. Number one, we've had favorable development from 2025 date of service. So as you recall, our 2025 is setting around 5.8% cost trend for the year, but it developed favorably. So there is a benefit from prior year development that's in our numbers this year as well as -- we started the year with roughly a 7% cost trend, and that's come in a little bit lower for the first half. So those are the 2 pieces I would point to that's really driving the outperformance this year compared to when we started.

Jack Slevin

Okay. That's helpful. And then as a follow-up, I just want to touch on some of the comments on the ACO business. Is there any way to think about penetration within existing partners on the ACO front, as you look at '27, I guess, changeover in models, MSSPs, which you guys are talking about, like -- has that created more opportunities to maybe drive that penetration higher? Would love to just get another level of color on how you're thinking about the ACO business?

Timothy O’Rourke

I would tell you right now that the the ACO work and Avenue continues to be an attractive opportunity for us for growth in those embedded markets, as we've discussed. If you take a look at our historical performance, again, we continue to 2024 performance, $229 million in gross savings. If you pull forward and look at 2025 in our financials, we can continue that success in our ACO program. So we really like that. I talked about the 3 groups we added. By the way, those are multiyear deals and continue to drive stability as we kind of look in our long-term partnership mentality with our different partners. So if you think about the opportunity ahead, we have the ACO business with about half of our partners today. .

So there's a continued opportunity in 2027 and beyond to get deeper in that space. We continue to be focused on the right timing for the partner, the right partner and making sure that we can drive profitable growth. Again, a reminder, it really highlights the flexibility of our model, thinking about the optionality of our platform, but from Medicare Advantage to the ACO business, including MSSP and the ACO models as we move ahead. So pretty excited about the embedded growth opportunity ahead.

Operator

[Operator Instructions] Your next question comes from the line of Amir Faroni with Evercore.

Unknown Analyst

I just want to better understand the rate. So it looks like it largely reflects the Q3 upside -- is that the right way to think about it? Or have your underlying expectations for Q4 improve as well? And then I have a follow-up after this, please. .

Jeffrey Schwaneke

Yes -- you said rate, right? Yes, yes. So if you think about, yes, where we were before, I'll just bridge you from the mid on EBITDA, right? So we were at roughly $85 million at the previous midpoint adjusted EBITDA. And the Q3 beat was roughly $64 million. $4 million of that was timing related. So geo entry costs shifting from Q3 to Q4. And -- so you have to kind of back that out. And then you're right, the remainder is the risk adjustment improvement. There's a fourth quarter component, roughly $7 million. So that should bridge you back to the midpoint of roughly $150 million.

Unknown Analyst

Okay. Got it. That makes sense. And then on the contracting opportunity, you mentioned a more modest contracting benefit next year. Is that mainly because less of the book is being repriced? Or it's just the improvement available in each contract also smaller.

Jeffrey Schwaneke

Yes. No, I think the comment is we touched 80% of our contracts last year that drove $127 million of value in 2026. And -- and so it's just recognizing that from an economics perspective, we touched the majority of those, and that drove a lot of value for us this year. Again, we've made substantial progress. We're deep into our contracting cycle right now. We are very confident it's going to be a positive contributor for us last year, and it's really that 20% we're focused on getting the economics.

Operator

Your next question comes from Ryan Daniels with William Blair.

Unknown Analyst

This is Matthew Mardula on for Ryan Daniels. So with the enhanced data pipeline, I believe it was around 80% to 85% last quarter. What is it now? And then how are you thinking about the path towards maybe potentially 100% coverage? Is this achievable in 2027? And kind of what still needs to occur to kind of bring the remaining payers onto the program.

Jeffrey Schwaneke

Yes, yes. Certainly, you're right. We are roughly in the -- close to the mid-80% range. Obviously, I think we want to continue down that path. As I've reminded people, though, we really started with the largest payers first. And so the number of incremental payers to get that -- those last few percentages, it's more work, right? These are separate implementations. -- per each of our payer partners. And so I think long term, we'd love to be in the low to mid-90s, but it's just going to be slower progress. So we're still working on it. And I think time we're going to end up in the -- and the real question is what about that remaining 5%? I think at that point in time, we get other information like statement information, and it's going to be a cost benefit analysis for us.

Operator

There are no further questions at this time. I will now turn the call back to Tim O'Rourke for closing remarks.

Timothy O’Rourke

Thank you, operator, and thank you all for joining us today. The third quarter performance showed Agilon's continued progress against our strategic priorities, improved operational execution. I want to thank our employees, along with our physician and payer partners for their dedication and our shareholders for their continued support. We look forward to updating you next quarter, and thanks.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.