5 things to know about Agilon Health’s proposed IPO

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Health tech startup Agilon Health aims to raise $1 billion through an initial public offering, according to updated registration paperwork filed on Wednesday with the Securities and Exchange Commission. Its entrance into the public market follows a string of recent Medicare Advantage-focused startups seeking IPOs.

Founded in 2016, the Long Beach, Calif.-based Agilon aims to help primary care physicians cap the care costs of their Medicare Advantage patients by grouping providers into regional networks, helping them run their practices and approving medical claims requests. These regional networks allow physicians to share advice and resources, which Agilon said translates into better patient outcomes and lower medical costs. Any savings achieved are shared across the regional network of providers. Agilon also pockets a portion of the revenue for itself.

The startup also partners with insurers in the regions where it operates, essentially acting as a subcontractor in managing Medicare Advantage patients’ care. The company receives a cut of their capitated payments.

Agilon is controlled by an investment fund associated with Clayton Dubilier & Rice, a New York-based private equity firm.

The company’s public offering follows a string of recent Medicare Advantage startups going public—Clover Health went public through a SPAC in January and Oscar Health and Alignment Healthcare made their public debuts in March. Last week, Bloomberg reported that Bright Health could go public as soon as the second quarter.

Here are five things to know about Agilon Health’s plans:

1. Agilon plans to trade on the New York Stock Exchange under the symbol “AGL.” The company aims to sell 46.6 million shares for up to $23 each. After its IPO, the company said it will be a “controlled company,” meaning that funds managed or affiliated with its private equity owner will hold up to 58% of common stock.

2. The company said the primary care physicians on its platform currently care for 210,000 Medicare Advantage members across eight states, including 49,000 that will go live at the start of 2022. Its membership has increased 132% from 90,200 at the end of 2019. By participating in CMMI’s Direct Contracting model, its clinicians will also serve 50,000 traditional Medicare patients in 2021. The company has partnered with 15 insurers across its regional networks.

3. The company had $1.2 billion in revenue in 2020, up 51% from $794.4 million in 2019. Agilon’s operating loss narrowed in 2020 to $60 million, down 78.7% from $282.7 million in 2019. The company attributed much of its 2019 loss to its California business, which it decided to sell off in 2020. With the divestiture of these operations, Agilon said it no longer serves Medicaid enrollees. In the near-term, Agilon expects its costs to increase “substantially” and losses to continue through 2021 as it invests in growing its physician and payer partnerships, hiring and expanding its operations.

4. The startup is banking on its membership growing as an increasing number of individuals age into Medicare and switch to Advantage plans from traditional fee-for-service. Agilon also aims to grow by adding new physician partners. Focusing on community providers is a key part of its business, as it said the “sticky” relationship between patients and local physicians adds sustainability to its business model. This strong relationship—and its subscription-like partnership with payers—helps Agilon in January of each year project 90% of its revenue.

5. Agilon said it pockets $10,000 in revenue for every member it serves. Seventy percent of its members have been on its platform for less than three years. As Agilon gains more experience managing these members’ care, the company believes it will be able to cut their healthcare costs. Agilon said its typical partnership with physician groups spans 20 years.



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