agl-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________________

FORM 10-Q

_______________________________________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2025


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-40332

_______________________________________________________

agilon health, inc.

(Exact name of registrant as specified in its charter)


Delaware			37-1915147
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

440 Polaris Parkway, Suite 550

Westerville, Ohio 43082

(Address of principal executive offices)

(562) 256-3800

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	AGL	New York Stock Exchange

_______________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x NO o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YES o NO x

At May 2, 2025, there were 413,951,779 shares of the registrant’s $0.01 par value common stock outstanding.

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agilon health, inc.

INDEX


PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements:

	Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024	3

	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2025 and 2024	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2025 and 2024	5

	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2025 and 2024	6

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024	7

	Notes to the Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	35

Item 5.	Other Information	36

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 6.	Exhibits	37

Signatures		38

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

agilon health, inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)


	March 31, 2025		December 31, 2024
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	136,941	$	188,231
Restricted cash and equivalents	1,682		5,629
Marketable securities	230,143		211,737
Receivables, net	1,239,603		1,017,040
Prepaid expenses and other current assets, net	42,353		35,137
Total current assets	1,650,722		1,457,774
Property and equipment, net	28,088		28,169
Intangible assets, net	68,187		72,771
Goodwill	24,133		24,133
Other assets	161,731		151,136
Total assets	$	1,932,861	$	1,733,983
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Medical claims and related payables	$	1,113,084	$	931,664
Accounts payable and accrued expenses	226,693		220,342
Current debt	34,924		—
Total current liabilities	1,374,701		1,152,006
Long-term debt	—		34,904
Other liabilities	57,906		76,121
Total liabilities	1,432,607		1,263,031

Commitments and contingencies

Stockholders' equity (deficit):
Common stock, $0.01 par value: 2,000,000 shares authorized; 413,023 and 412,194 shares issued and outstanding, respectively	4,130		4,122
Additional paid-in capital	2,070,446		2,053,895
Accumulated deficit	(1,574,865)		(1,586,977)
Accumulated other comprehensive income (loss)	543		(88)


Total stockholders’ equity (deficit)	500,254		470,952
Total liabilities and stockholders’ equity (deficit)	$	1,932,861	$	1,733,983

The condensed consolidated balance sheets include assets and liabilities of consolidated variable interest entities (“VIEs”) as agilon health, inc., together with its consolidated subsidiaries and VIEs (the “Company”), is the primary beneficiary of these VIEs. The condensed consolidated balance sheets include total assets that can only be used to settle obligations of the Company’s consolidated VIEs totaling $1.38 billion and $1.17 billion as of March 31, 2025 and December 31, 2024, respectively, and total liabilities of the Company’s consolidated VIEs for which creditors do not have recourse to the general credit of the primary beneficiary of $1.31 billion and $1.13 billion as of March 31, 2025 and December 31, 2024, respectively. See Note 14 for additional details.

See accompanying Notes to the Condensed Consolidated Financial Statements.

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agilon health, inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)


	Three Months Ended March 31,
	2025		2024
Revenues:
Medical services revenue	$	1,529,879	$	1,601,195
Other operating revenue	2,903		3,159
Total revenues	1,532,782		1,604,354
Expenses:
Medical services expense	1,401,867		1,443,842
Other medical expenses	80,193		85,424
General and administrative	65,956		76,422
Depreciation and amortization	6,876		5,844
Total expenses	1,554,892		1,611,532
Income (loss) from operations	(22,110)		(7,178)
Other income (expense):
Income (loss) from equity method investments	12,672		5,684
Other income (expense), net	9,261		5,892

Interest expense	(1,515)		(1,284)
Income (loss) before income taxes	(1,692)		3,114
Income tax benefit (expense)	(196)		133
Income (loss) from continuing operations	(1,888)		3,247
Discontinued operations:
Income (loss) before gain (loss) on sales	—		(518)
Adjustments on sale of assets, net	14,000		(8,763)
Total discontinued operations	14,000		(9,281)
Net income (loss)	12,112		(6,034)
Noncontrolling interests’ share in (earnings) loss	—		(30)
Net income (loss) attributable to common shares	$	12,112	$	(6,064)

Net income (loss) per common share, basic and diluted
Continuing operations	$	—	$	0.01
Discontinued operations	$	0.03	$	(0.02)

Weighted average shares outstanding – basic and diluted	412,936		408,938

See accompanying Notes to the Condensed Consolidated Financial Statements.

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agilon health, inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2025		2024
Net income (loss)	$	12,112	$	(6,034)
Other comprehensive income (loss):
Net unrealized gain (loss) on marketable securities, net of tax	612		(457)
Foreign currency translation adjustment	19		8
Total comprehensive income (loss)	12,743		(6,483)
Comprehensive (income) loss attributable to noncontrolling interests	—		(30)
Total comprehensive income (loss) attributable to agilon health, inc.	$	12,743	$	(6,513)

See accompanying Notes to the Condensed Consolidated Financial Statements.

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agilon health, inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands)

(unaudited)

For the three months ended March 31, 2025:


	Total Stockholders’ Equity (Deficit)
	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity (Deficit)
	Shares	Amount
January 1, 2025	412,194	$	4,122	$	2,053,895	$	(1,586,977)	$	(88)	$	470,952
Net income (loss)	—	—		—		12,112		—		12,112
Other comprehensive income (loss)	—	—		—		—		631		631

Vesting of restricted stock units	871	8		(8)		—		—		—
Shares withheld related to net share settlement	(42)	—		(161)		—		—		(161)

Stock-based compensation expense	—	—		16,720		—		—		16,720

March 31, 2025	413,023	$	4,130	$	2,070,446	$	(1,574,865)	$	543	$	500,254

For the three months ended March 31, 2024:


	Total Stockholders’ Equity (Deficit)
	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total Stockholders’ Equity (Deficit)
	Shares	Amount
January 1, 2024	406,387	$	4,064	$	1,986,899	$	(1,326,826)	$	(2,298)	$	(818)	$	661,021
Net income (loss)	—	—		—		(6,064)		—		30		(6,034)
Other comprehensive income (loss)	—	—		—		—		(449)		—		(449)
Exercise of stock options	1,434	14		2,441		—		—		—		2,455
Vesting of restricted stock units	1,170	11		(11)		—		—		—		—
Shares withheld related to net share settlement	(122)	(1)		(645)		—		—		—		(646)
Issuance of common stock	1,974	20		15,210		—		—		—		15,230
Stock-based compensation expense	—	—		16,909		—		—		—		16,909
March 31, 2024	410,843	$	4,108	$	2,020,803	$	(1,332,890)	$	(2,747)	$	(788)	$	688,486

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agilon health, inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2025		2024
Cash flows from operating activities:
Net income (loss)	$	12,112	$	(6,034)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	6,876		5,844
Stock-based compensation expense	16,720		16,909
Loss (income) from equity method investments	(12,672)		(5,684)

Adjustments on sale of assets, net	(14,000)		4,996
Other noncash items	(2,229)		(472)
Changes in operating assets and liabilities:	(38,794)		(63,335)
Net cash provided by (used in) operating activities	(31,987)		(47,776)
Cash flows from investing activities:
Purchase of property and equipment	(3,849)		(3,139)
Purchase of intangible assets	(7,034)		(11,438)
Investment in loans receivable and other	—		(8,508)
Investments in marketable securities	(47,517)		—
Proceeds from maturities of marketable securities and other	35,311		74,523


Net cash provided by (used in) investing activities	(23,089)		51,438
Cash flows from financing activities:
Proceeds from equity issuances, net	(161)		1,809

Repayments of long-term debt	—		(1,250)
Net cash provided by (used in) financing activities	(161)		559
Net increase (decrease) in cash, cash equivalents and restricted cash and equivalents	(55,237)		4,221


Cash, cash equivalents and restricted cash and equivalents, beginning of period	193,860		114,329


Cash, cash equivalents and restricted cash and equivalents, end of period	$	138,623	$	118,550

See accompanying Notes to the Condensed Consolidated Financial Statements.

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agilon health, inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


NOTE 1. Business

Description of Business

agilon health, inc., together with its consolidated subsidiaries and VIEs (the “Company”), through its partnerships and platform, provides the necessary capabilities, capital, and business model for existing physician groups to create a Medicare-centric, globally capitated line of business. As of March 31, 2025, the Company, through its contracted physician networks, provided care to approximately 490,700 Medicare Advantage members enrolled with private health plans. Additionally, the Company participates in the Centers for Medicare & Medicaid Services' (“CMS”) Accountable Care Organization Realizing Equity, Access, and Community Health (“ACO REACH”) Model and Medicare Shared Savings Program (“MSSP,” and together with ACO REACH, the “CMS ACO Models”) through its equity method investments.

See Note 14 for additional discussions related to the Company’s involvement with VIEs.

The Company’s largest shareholder is an investment fund associated with Clayton Dubilier & Rice, LLC (“CD&R”), a private equity firm. All funds affiliated with CD&R are considered related parties.


NOTE 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The condensed consolidated financial statements include the accounts of agilon health, inc., its wholly-owned subsidiaries, and joint ventures and VIEs that it controls through voting rights or other means. Intercompany transactions and balances have been eliminated upon consolidation. All adjustments (consisting of normal recurring adjustments unless otherwise indicated), which the Company considers necessary to present fairly its financial position, results of operations, and cash flows, have been included. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. The accompanying condensed consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Use of Estimates

Management is required to make estimates and assumptions in the preparation of financial statements. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates can include, among other things, those used to determine revenues and related receivables from risk adjustments, medical services expense and related payables (including the reserve for incurred but not reported (“IBNR”) claims), and the valuation and related recognition of impairments of long-lived assets, including goodwill. Management’s estimates for revenue recognition, medical services expense, and other estimates, judgments, and assumptions, may be materially and adversely different from actual results. These estimates are based on knowledge of current events and anticipated future events, and accordingly, actual results may ultimately differ materially from those estimates.

Property and Equipment

As of March 31, 2025 and December 31, 2024, the Company’s gross carrying amount of property and equipment was $55.5 million and $52.9 million, with accumulated depreciation of $27.4 million and $24.7 million, respectively. For the three months ended March 31, 2025 and 2024, the Company recognized $3.8 million and $2.8 million, respectively, in depreciation expense, which is included in depreciation and amortization expense in the condensed consolidated statements of operations.

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Income Taxes

The Company determines the income tax provision for interim periods using an estimate of the Company’s annual effective tax rate, applied to year-to-date results, adjusted for discrete items arising in that quarter. In each quarter, the Company updates its estimated annual effective tax rate, and if the estimated annual effective tax rate changes, a cumulative catch-up adjustment is recorded in that quarter. The Company applied the intra-period tax allocation rules to allocate income taxes between continuing operations and discontinued operations as prescribed in U.S. GAAP, where the tax effect of income (loss) before income taxes from continuing operations is computed without regard to the tax effects of income (loss) before income taxes from the other categories.

Segment Reporting

The Company operates a Medicare-centric, capitated line of business and is organized as a single operating and reportable segment based on the manner in which the Chief Executive Officer, who is the Chief Operating Decision Maker (“CODM”), evaluates performance and makes decisions about how to allocate resources. Segment asset information, which is presented on the consolidated balance sheet, is not used by the CODM to assess performance and make decisions about how to allocate resources. The Company's segment measure of profit or loss is consolidated net income (loss). The CODM uses the segment measure of profit or loss to assess performance and make resource allocation decisions, primarily through periodic budgeting and company performance reviews. Significant expense categories included within the segment measure of profit or loss that are regularly provided to the CODM include medical services expense, other medical expense, and platform support costs. Medical services expense and other medical expense amounts are included in the consolidated statements of operations. Platform support costs were $44.2 million and $45.7 million for the three months ended March 31, 2025 and 2024, respectively. For the three months ended March 31, 2025 and 2024, other segment items, which consists of general and administrative expenses (excluding platform support costs), depreciation and amortization, other income (expense), net, income tax benefit (expense), and results from discontinued operations, were net profits of $5.6 million and net expenses of $35.4 million, respectively.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes—Improvements to Income Tax Disclosures (“ASU 2023-09”), which amends certain disclosure requirements related to income taxes. The amendments in ASU 2023-09 require public business entities on an annual basis to: (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative threshold. The amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024. The amendments in ASU 2023-09 can be applied on a prospective basis or retrospective application. Early adoption is permitted. The Company is currently evaluating the potential impact of the adoption of ASU 2023-09 on its disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). In January 2025, the FASB issued Accounting Standards Update (“ASU”) 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). The amendments in ASU 2024-03 require public business entities to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items by breaking down certain expense line items into specified natural expense categories, including purchases of inventory, employee compensation, deprecation, intangible asset amortization, and depletion. The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The amendments in ASU 2024-03 can be applied on a prospective basis or retrospective basis and early adoption is permitted. The amendments in ASU 2025-01 clarify the effective date of ASU 2024-03 stating that all public business entities are required to adopt the update in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. ASU 2025-01 does not change the effective date of ASU 2024-03 but was issued to provide clarity on the effective date for public business entities that do not have a calendar year-end. The Company is currently evaluating the potential impact of the adoption of ASU 2024-03 and ASU 2025-01 on its disclosures.

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NOTE 3. Revenue, Receivables, and Concentration of Credit Risk

Medical Services Revenue

Medical services revenue consists of capitation fees under contracts with various Medicare Advantage payors (“payors”). Under the typical capitation arrangement, the Company is entitled to monthly per-member, per-month (“PMPM”) fees to provide a defined range of healthcare services for Medicare Advantage health plan members (“members”) attributed to the Company’s contracted primary care physicians. In certain of the Company’s payor arrangements, it is also financially responsible for Medicare Part D pharmaceutical costs for prescriptions rendered to members. PMPM fees are determined as a percent of the premium payors receive from CMS for these members. The Company generally accepts full financial risk for members attributed to its contracted primary care physicians and therefore is responsible for the cost of all healthcare services required by those members. Fees are generally recorded gross in revenue because the Company is acting as a principal in coordinating and controlling the range of services provided (other than clinical decisions) under its capitation contracts with payors. Capitation contracts with payors are generally multi-year arrangements and have a single performance obligation that constitutes a series, as defined by Accounting Standards Codification (“ASC”) 606, Revenue From Contracts With Customers (“ASC 606”), to stand ready on a monthly basis to provide all aspects of necessary medical care to members for the contracted period. The Company recognizes revenue in the month in which eligible members are entitled to receive healthcare benefits during the contract term.

The transaction price for the Company’s capitation contracts is variable, as the PMPM fees to which the Company is entitled are subject to periodic adjustment under CMS’s risk adjustment payment methodology. CMS deploys a risk adjustment model that determines premiums paid to all payors according to each member’s health status and certain demographic factors. Under this risk adjustment methodology, CMS calculates the risk adjusted premium payment using diagnosis data from various settings. The Company and healthcare providers collect and submit the necessary and available diagnosis data to payors and such data is utilized by the Company to estimate risk adjustment payments to be received in subsequent periods. Risk adjustment-related revenues are estimated using the most likely amount methodology and amounts are only included in revenue to the extent that it is probable that a significant reversal of cumulative revenue will not occur once any uncertainty is resolved. PMPM fees are also subject to adjustment for incentives or penalties based on the achievement of certain quality metrics defined in the Company’s contracts with payors. The Company recognizes incentive revenue as earned using the most likely amount methodology and only to the extent that it is probable that a significant reversal of cumulative revenue will not occur once any uncertainty is resolved.

Neither the Company nor any of its affiliates is a registered insurance company because state law in the states in which it operates does not require such registration for risk-bearing providers.

Receivables

Receivables primarily consist of amounts due under capitation contracts with various payors. Receivables due under capitation contracts are recorded monthly based on reports received from payors and management’s estimate of risk adjustment payments to be received in subsequent periods for open performance years. Receivables are recorded at the amount expected to be realized.

Concentration

The Company contracts with various payors whereby the Company is entitled to monthly PMPM fees to provide a defined range of healthcare services for members attributed to its contracted primary care physicians. The Company generally accepts full financial risk for such members and therefore is responsible for the cost of all healthcare services required by them. Substantially all of the Company’s receivable balances are from a small number of payors. Revenue from Medicare Advantage payors constitutes substantially all of the Company’s total revenue for the three months ended March 31, 2025 and 2024.

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The following table provides the Company’s revenue concentration with respect to major payors as a percentage of the Company’s total revenues:


	Three Months Ended March 31,
	2025		2024
Payor A	17	%	22	%
Payor B	17	%	15	%
Payor C	11	%	14	%

The following table provides the Company’s concentration of credit risk with respect to major payors as a percentage of receivables, net:


	March 31, 2025		December 31, 2024
Payor A	12	%	*
Payor B	*		11	%
Payor C	12	%	12	%
Payor D	*		13	%
Payor E	*		15	%

___________________________________________

*Less than 10% of total receivables.


NOTE 4. Marketable Securities and Fair Value Measurements

Marketable Securities

The following table summarizes the Company’s marketable securities (in thousands):


	March 31, 2025								December 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

Corporate debt securities	$	93,562	$	59	$	(54)	$	93,567	$	110,820	$	91	$	(204)	$	110,707
U.S. Treasury notes	136,111		569		(104)		136,576		101,059		184		(213)		101,030

	$	229,673	$	628	$	(158)	$	230,143	$	211,879	$	275	$	(417)	$	211,737

For the three months ended March 31, 2025, the Company recognized total interest income (included in other income (expense), net in the condensed consolidated statements of operations) of $4.3 million, of which $3.1 million was related to its marketable securities investments and $1.2 million was related to interest on cash and cash equivalent balances. For the three months ended March 31, 2024, the Company recognized total interest income (included in other income (expense), net in the condensed consolidated statements of operations) of $5.4 million, of which $4.0 million was related to its marketable securities investments and $1.4 million was related to interest on cash and cash equivalent balances.

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The following table summarizes the Company’s marketable securities maturity as of March 31, 2025 (in thousands):


Year	Amortized Cost		Fair Value
2025	$	127,374	$	127,287
2026	54,774		55,063
2027	27,962		28,125
2028	19,563		19,668
	$	229,673	$	230,143

The following table summarizes the Company’s marketable securities with gross unrealized losses by security type aggregated by the length of time the investments have been in a continuous unrealized loss position as of March 31, 2025 (in thousands):


	Less Than 12 Months				12 Months or Greater
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses

Corporate debt securities	$	9,962	$	1	$	56,070	$	53
U.S. Treasury notes	25,472		60		25,920		44

	$	35,434	$	61	$	81,990	$	97


	Less Than 12 Months				12 Months or Greater
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses

Corporate debt securities	$	—	$	—	$	73,128	$	204
U.S. Treasury notes	25,295		104		38,787		109

	$	25,295	$	104	$	111,915	$	313

The Company’s unrealized losses from marketable securities as of March 31, 2025 and December 31, 2024 were caused primarily by interest rate increases. As of March 31, 2025, all of the Company’s marketable securities carry an investment grade rating by nationally recognized statistical rating organizations. The Company does not intend to sell marketable securities that are in an unrealized loss position, and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity. There was no allowance for credit losses on available-for-sale marketable securities at March 31, 2025 or December 31, 2024.

Fair Value Measurements

The Company’s financial instruments consist of cash and cash equivalents, restricted cash and equivalents, marketable securities, receivables, other liabilities, accounts payable, certain accrued expenses, and borrowings which consist of a term loan and a revolving credit facility. The carrying values of the financial instruments classified as current in the consolidated balance sheets approximate their fair values due to their short-term maturities. The Company's cash and cash equivalents are classified within Level 1 of the fair value hierarchy. The Company may be required, from time to time, to measure its loans to physician partner groups, primarily in connection with taxes payable on shares distributed to them upon completion of the Company's initial public offering (“IPO”), at fair value on a nonrecurring basis. Such measurements are classified within Level 2 of the fair value hierarchy. The carrying values of the term loan and revolving credit facility are a reasonable estimate of fair value because the interest rates on such borrowings approximate market rates as of the reporting date. Such borrowings are classified within Level 2 of the fair value hierarchy. During the three months ended March 31, 2025 and 2024, there were no material transfers of financial assets or liabilities within the fair value hierarchy.

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The Company measures and discloses the fair value of nonfinancial and financial assets and liabilities utilizing a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These inputs have created the following fair value hierarchy:

•Level 1—quoted prices for identical instruments in active markets;

•Level 2—quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

•Level 3—fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The table below summarizes the Company’s financial instruments measured at fair value on a recurring basis (in thousands):


	March 31, 2025						December 31, 2024
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Marketable securities:
Corporate debt securities	$	—	$	93,567	$	—	$	—	$	110,707	$	—
U.S. Treasury notes	136,576		—		—		101,030		—		—

	$	136,576	$	93,567	$	—	$	101,030	$	110,707	$	—


NOTE 5. Other Assets

The following table summarizes the Company’s other assets (in thousands):


	March 31, 2025		December 31, 2024
Loans to physician partners	$	61,790	$	63,155
Health plan deposits	2,051		2,051
Equity method investments(1)	73,035		61,756
Right-of-use lease assets	9,743		8,783
Other	15,112		15,391
	$	161,731	$	151,136

___________________________________________

(1)See Note 14 for additional discussion related to the Company's equity method investments.

Loans to Physician Partners

Loans to physician partners primarily represent loans in connection with taxes payable on shares distributed to them in connection with the IPO. These loans mature between 2026 and 2031 with nominal interest compounding annually and no prepayment penalties. Such loans are stated at the amount expected to be collected.


NOTE 6. Medical Claims and Related Payables

Medical services expense represents costs incurred for medical services provided to members by physicians, hospitals and other ancillary providers for which the Company is financially responsible and are paid by payors with whom the Company has contracted. Medical services expenses are recognized in the period in which services are provided and include estimates of claims that have been incurred but have either not yet been received, processed, or paid and as such, not reported.

Table of Contents

Such estimates are developed using actuarial methods commonly used by health insurance actuaries that include a number of factors and assumptions including medical service utilization trends, changes in membership, observed medical cost trends, historical claim payment patterns and other factors. Generally, for the most recent months, the Company estimates claim costs incurred by applying observed medical cost trend factors to the average PMPM medical costs incurred in prior months for which more complete claims data are available.

Each period, the Company re-examines previously established medical claims payable estimates based on actual claim submissions and other changes in facts and circumstances. As more complete claims information becomes available, the Company adjusts its estimates and recognizes those changes in estimates in the period in which the change is identified. The difference between the estimated liability and the actual settlements of claims is recognized in the period the claims are settled. The Company’s medical claims payable balance represents management’s best estimate of its liability for unpaid medical costs as of March 31, 2025 and 2024. The Company uses judgment to determine the appropriate assumptions for developing the required estimates.

The following table presents the components of changes in medical claims and related payables (in thousands):


	March 31,
	2025		2024
Medical claims and related payables, beginning of the year	$	918,395	$	723,071
Components of incurred costs related to:
Current year	1,369,611		1,427,328
Prior years	32,256		16,514


	1,401,867		1,443,842
Claims paid related to:
Current year	(421,710)		(316,779)
Prior years	(801,235)		(595,250)


	(1,222,945)		(912,029)
Medical claims and related payables, end of the period	$	1,097,317	$

SEC Form 10-Q filed by agilon health inc.