아길론 헬스(AGL) 2026년 3분기 실적 발표 컨퍼런스 콜: EBITDA 개선으로 가이던스 상향

핵심 요약

• 아질론 헬스(AGL)는 요율 개선과 위험 조정 매출 증가가 가입자 수 감소를 상쇄하면서 2026년 3분기 매출이 2025년 3분기 14억 달러에서 6% 증가한 약 15억 달러를 기록했다고 발표했습니다.
• 조정 EBITDA는 전년 동기의 9,100만 달러 손실에서 6,400만 달러를 기록했습니다. 경영진은 이 결과가 3분기 가이던스 중간값을 약 6,400만 달러 상회했다고 밝혔습니다.
• 의료 서비스 비용 비율은 104.0%에서 88.5%로 개선되었습니다. 상반기 우호적인 의료비 추이, 위험 조정 매출, 그리고 낮아진 의료 서비스 비용이 이러한 개선을 뒷받침했습니다.
• 경영진은 각각의 가이던스 중간값 기준으로 2026년 연간 전망을 매출 약 58억 8,000만 달러, 의료 서비스 비용 비율 90.4%, 조정 EBITDA 약 1억 5,000만 달러로 상향 조정했습니다.
• 메디케어 어드밴티지 가입자 수는 이전에 발표된 시장 철수로 인해 전년 동기 대비 약 10% 감소한 45만 4,000명으로 분기를 마감했습니다. ACO 가입자 수는 11만 2,000명이었습니다.
• 회사는 3곳의 확장된 의사 네트워크로부터 유입된 5만 명에 가까운 MSSP 회원에 힘입어 2027년 ACO 가입자 수가 약 16만 명으로 증가할 것으로 예상합니다.

주요 재무 데이터

경영진은 3분기 가이던스 중간값 대비 약 6,400만 달러의 조정 EBITDA 상회 실적 원인으로 우호적인 전년도 정산 1,400만 달러, 위험 조정 추정치 수정 2,300만 달러, ACO 실적 1,100만 달러, 2026년 상반기 우호적인 비용 추이 1,200만 달러를 꼽았습니다. 나머지 400만 달러는 4분기 예상 시장 진입 비용 및 영업비용의 시점 차이가 반영된 것입니다.

사업 및 영업 실적

아질론의 질병 부담(burden-of-illness) 프로그램은 우호적인 최종 연도 위험 조정 및 연중 위험 조정 데이터 완성을 통해 3분기 예상보다 높은 매출을 창출했습니다. 경영진은 이 프로그램이 가입자의 건강 상태를 더 일찍 확인, 진단 및 치료하도록 지원한다고 밝혔습니다.

2026년 상반기 의료비 증가율은 6%대 초반으로 우호적인 추이를 보였습니다. 3분기의 경우 회사는 분기말 지급 청구액에 대한 가시성이 제한적인 상황에서 경영진이 보수적인 충당금 적립이라고 설명한 내용을 반영해 7%대 초반의 비용 증가율을 기록했습니다.

회사는 울혈성 심부전, 폐 건강, 치매에 대한 임상 경로(clinical pathways)를 지속적으로 확대하고 있습니다. 가이드라인에 따른 약물 치료 준수율을 높이기 위해 설계된 가상 약국 프로그램은 현재 협력 의사의 약 25%에 적용되고 있습니다. 폐 건강 및 치매 프로그램은 시장과 협력 네트워크의 약 3분의 1에 도입되었습니다.

품질 실적은 지속적으로 주력하는 분야입니다. 2025 측정 연도에 아질론은 계약된 건강보험이 사용하는 품질 평가 항목 전반에서 4.2성 등급을 달성했습니다. 경영진은 2028 지급 연도에 가입자의 75%가 4성 이상 등급의 플랜에 가입할 것으로 예상하며, 이는 2027 지급 연도의 77%와 비교됩니다.

ACO 사업은 핵심적인 내재적 성장 기회로 남아 있습니다. 아질론의 8개 ACO는 2024 실적 연도에 2억 2,900만 달러의 총절감액을 기록하고 평균 96%의 품질 점수를 달성했습니다. 최근 발표된 3건의 파트너십 확장 계약을 통해 다년간 계약 하에 5만 명에 가까운 MSSP 가입자가 추가됩니다.

경영진 가이던스

업데이트된 전망에는 올해 현재까지의 견조한 실적, 높아진 추정 위험 점수, 우호적인 상반기 비용 추세가 반영되어 있습니다. 또한 2026년 잔여 기간 동안 약 7%의 의료비 증가율을 가정하고 있습니다.

2027년의 경우 경영진은 지불자와의 계약이 2026년보다는 완만하지만 여전히 긍정적인 수혜를 제공할 것으로 예상합니다. 회사는 이전 계약 주기 동안 가입자의 약 80%에 대해 가격을 재산정하여 2026년에 1억 2,700만 달러의 가치를 창출한 반면, 현재 협상은 전체 계약 대상 포트폴리오의 약 50%를 다루고 있습니다.

ACO 가입자 수는 현재 약 11만 명에서 2027년 약 16만 명으로 증가할 것으로 예상됩니다. 경영진은 오는 2월 2027 연간 전망 발표와 함께 전체 ACO 가입자 수 및 조정 EBITDA 가이던스를 제시할 계획입니다.

외형 성장을 위해 아질론은 2028년 이후를 바라보고 신규 시장과 의사 그룹을 검토하고 있습니다. 경영진은 통상 12~18개월의 구축 기간을 거쳐 2027년에 체결된 계약이 2028년에 실적에 기여할 수 있다고 밝혔습니다.

리스크 및 주요 점검 사항

• 3분기 의료비 증가율은 분기말 지급 청구액에 대한 가시성이 제한된 상황에서 약 7%로 기록되었습니다. 4분기 가이던스에도 동일한 비용 증가율 가정이 반영되어 있습니다.
• 경영진은 일반적인 계절성으로 인해 4분기가 통상 회사의 실적이 가장 낮은 분기라고 설명했습니다.
• 메디케어 어드밴티지 가입자 수는 수익성 중심의 시장 철수와 신중한 성장 접근법으로 인해 전년 수준을 하회하고 있습니다.
• 이전 주기에 대부분의 계약 가격이 이미 재산정되었기 때문에 2027년에 예상되는 계약 관련 수혜는 2026년보다 작을 가능성이 높습니다.
• 아질론의 강화된 데이터 파이프라인 커버리지는 80%대 중반에 가깝습니다. 경영진의 장기 목표는 90%대 초중반이지만, 남은 지불자마다 별도의 구축 절차가 필요하므로 진전이 더딜 수 있습니다.
• 풀리스크(Full-risk) 파트 D 익스포저는 2025년 약 30%에서 2026년 약 15%로 감소했습니다. 경영진은 2027년에 추가적인 감소를 예상하고 있습니다.

애널리스트 Q&A 주요 내용

신규 시장 성장: 경영진은 아질론이 향후 신규 진출 시장에서 케어 코디네이션 수수료 구조보다는 풀리스크(full-risk) 계약을 목표로 하고 있다고 밝혔습니다. 회사는 출시 전 필요한 운영 체계, 데이터 연결성 및 리스크 부담 법인을 설립하기 위해 12~18개월의 구축 기간이 소요될 것으로 예상합니다.

임상 경로 확대: 아질론은 울혈성 심부전(CHF) 프로그램 내 실적 변동성을 줄이고 예방 검진을 확대할 수 있는 추가적인 기회가 있다고 보고 있습니다. 치매와 폐 건강은 향후 2년 동안 더 광범위하게 도입될 주요 대상 임상 경로입니다.

스타 등급(Stars) 수익성: 계약이 일반적으로 보험료의 일정 비율을 기준으로 체결되기 때문에, 경영진은 지불자 파트너가 스타 등급 관련 보너스 매출을 회복할 때 아질론도 매출 회복에 참여할 수 있으며, 하락이 아질론 자체의 품질 실적과 무관한 경우 보호 조치를 지속적으로 모색하고 있다고 밝혔습니다.

ACO 침투율: ACO 사업은 현재 아질론 협력 의사의 약 절반에 도달해 있습니다. 경영진은 상호 조율 및 지속 가능한 수익성을 조건으로 MSSP 및 기타 ACO 모델을 통해 기존 파트너 대상 침투율을 높일 수 있는 추가 기회가 있다고 보고 있습니다.

4분기 전망 연결(Bridge): 경영진은 연간 조정 EBITDA 중간값 상향 조치가 4분기로 이월된 400만 달러의 비용과 위험 조정 개선에 따른 약 700만 달러의 4분기 추가 수혜를 고려한 후, 주로 3분기 실적 호조를 반영한 것이라고 설명했습니다.

실적발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

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. .

질의응답

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.