agilon health (AGL) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01We have a history of net losses, we anticipate increasing expenses in the future, and we may not achieve or maintain profitability
2. 02We may be unsuccessful in executing our operating strategies, or we may not achieve results consistent with our historical performance
3. 03Amounts of medical expenses that are incurred on behalf of our members may exceed the amount of medical revenues we receive to provide care for such members
4. 04As we expand into new geographies, we may be unable to secure contracts with MA payors, or such contracts may be established at less favorable financial terms than are necessary to meet our financial targets
5. 05We incur startup costs during the initial stages of development of our physician partner relationships and program initiatives, and if we are unable to maintain and grow these physician partner relationships or program initiatives over time, we may not recover these costs
6. 06We may require substantial additional capital to support our business in the future, which might not be available on acceptable terms, or at all
7. 07sufficient to meet our future cash requirements, we will need to access additional capital to fund our operations and our continued growth and expansion
8. 08A significant reduction in membership could adversely affect our business, financial condition, cash flows, and results of operations because our payor contracts compensate us on a per-member basis. Many factors that could cause such a reduction are outside our control
9. 09The transition to a Total Care Model may be challenging for physician partners
10. 10Public health crises, such as COVID-19, could adversely affect us
11. 11Our estimates of our members’ risk adjustment factors, medical services expense, incurred but not reported claims, and earnings pursuant to payor contracts could be inaccurate
12. 12forecasted periods. Furthermore, if we are unable to accurately estimate adequate IBNR levels, our ability to take timely corrective actions may be limited, further exacerbating the extent of the negative impact on our results of operations for completed periods or forecasted periods
13. 13Restrictive clauses in some of our contracts with physician partners may prohibit us from establishing new RBEs within certain geographies in the future, and as a result may limit our growth
14. 14Exclusivity provisions in some of our agreements with physician partners could subject us to investigations or litigation
15. 15We rely on our management team and key employees, and our business, financial condition, cash flows, and results of operations could be harmed if we are unable to hire and retain qualified personnel
16. 16We may never realize the full value of our intangible assets, which could cause us to record impairments that may negatively affect our financial condition and results of operations
17. 17Security breaches, cybersecurity attacks, loss of data and other disruptions to our information systems could compromise sensitive information related to our business and expose us to liability, which could adversely affect our operations, financial condition, cash flows and results of operation
18. 18credential stuffing. Additionally, cyber threats and the techniques used in cyberattacks change, develop and evolve rapidly, including from emerging technologies, such as advanced forms of AI and quantum computing
19. 19If we are unable to protect the confidentiality of our know-how and other proprietary and internally developed information, our operations could be adversely affected
20. 20Our subsidiaries’ lack of performance or ability to fund their operations could require us to fund such losses

Risks Related to Our Reliance on Third Parties

1. 21We are economically dependent on maintaining our contracts with a limited number of key payors
2. 22Our contracts with our payors are for limited terms and may not be renewed upon their expiration
3. 23may result in a reduction of our revenues and may have a material adverse effect on our business. With respect to certain of our discontinued operations, we may recognize impairment charges for such terminations
4. 24We rely on our payors for membership attribution and assignment, timely data and reporting accuracy and claims payment
5. 25We are dependent on physician partners and other providers to effectively manage the quality and cost of care and perform obligations under payor contracts
6. 26sufficiently to assist in improving overall quality of care and management of healthcare costs, which could produce results that are inconsistent with our estimates and financial models and negatively impact our growth
7. 27Difficulties in obtaining accurate and complete diagnosis data could have adverse consequences
8. 28We rely on third-party software and data to operate our business and provide services to our members and physician partners, and any restrictions on our use of, or ability to license, such third-party resources could adversely affect our business, financial condition, cash flows, and results of operations

Risks Related to Our Industry and Government Programs

1. 29Consolidation in the healthcare industry could have a material adverse effect on our business, financial condition, cash flows, and results of operations
2. 30Uncertain or adverse economic and macroeconomic conditions, including a downturn or decrease in government expenditures, could have a material adverse effect on our business, financial condition, cash flows, and results of operations
3. 31We operate in a competitive industry, and if we are not able to compete effectively, our business, financial condition, cash flows, and results of operations will be harmed
4. 32Our compensation and reputation are dependent on government performance standards and benchmarks, some of which depend on factors outside our control
5. 33Regulatory proposals directed at containing or lowering the cost of healthcare, including the ACO REACH Model, and our participation, voluntary or otherwise, in such proposed models, could impact our business, financial condition, cash flows and operations
6. 34We, as well as our physician partners and affiliates, have in the past, and could in the future, be subject to federal and state investigations, audits and enforcement actions
7. 35We may be subject to regulatory inquiries and corrective action plans imposed by our payors and may be required to contribute a material amount of risk-bearing capital to our local operating subsidiaries
8. 36Repayment obligations arising out of payor audits, such as CMS RADV audits, can be significant and adversely impact reimbursement rates
9. 37CMS may modify the methodology utilized to determine revenue associated with MA members, including but not limited to the CMS Risk Adjustment Processing System for calculating risk adjustment factors, which could adversely impact us
10. 38Negative publicity regarding the managed healthcare industry generally could adversely affect our results of operations or business

Legal and Regulatory Risks

1. 39The healthcare industry is heavily regulated at the federal, state and local levels and government authorities may determine that we fail to comply with applicable laws or regulations and take actions against us
2. 40In addition, some of the governmental and regulatory bodies that regulate us may consider enhanced or new regulatory requirements or may seek to exercise their supervisory or enforcement authority in new or more robust ways. Any of these possibilities, if they occur, could adversely affect us
3. 41These and other healthcare laws and regulations that may affect us are further described in “Business—Healthcare and Other Applicable Regulatory Matters” in Item 1 of this Report
4. 42Our business development and member engagement activities may implicate laws and regulations regarding marketing, beneficiary inducements, telemarketing and use of protected health information a violation of which could subject us to significant penalties and have an adverse effect on our business
5. 43Certain failures by our physician partners to comply with these laws could have an adverse effect on us. We do not directly employ or control our physician partners, and accordingly any adverse effects on us regarding their noncompliance are uncertain and unpredictable
6. 44Our physician partners are subject to federal and state healthcare fraud and abuse laws and regulations
7. 45Failure to obtain or maintain an insurance license, a certificate of authority or an equivalent authorization allowing our participation in downstream risk-sharing arrangements with payors could subject us to significant penalties and adversely impact our operations
8. 46If we or our physician partners inadvertently employ or contract with an excluded person, we may face government sanctions
9. 47Changes in tax laws and regulations, or changes in related judgments or assumptions could materially impact our financial condition and results of operation

Risks Related to Our Indebtedness

1. 48Despite our indebtedness levels, we and our subsidiaries may incur substantially more indebtedness, which could increase the risks created by our indebtedness
2. 49The agreements and instruments governing our indebtedness contain restrictions and limitations that could significantly impact our ability to operate our business

Risks Related to Our Common Stock

1. 50agilon health is a holding company with no operations of its own, and it depends on its subsidiaries for cash to fund all of its operations and expenses, including to make future dividend payments, if any
2. 51Our stock price may be volatile or may decline regardless of our operating performance, resulting in substantial losses for investors of our common stock
3. 52If securities or industry analysts do not continue to publish research or reports about our business, if they adversely change their recommendations regarding our shares or if our results of operations do not meet their expectations, our stock price and trading volume could decline
4. 53Under our Certificate of Incorporation, CD&R and its affiliates and, in some circumstances, each of our directors and officers who is also a director, officer, employee, member or partner of CD&R and its affiliates, have no obligation to offer us corporate opportunities
5. 54Anti-takeover provisions in our Certificate of Incorporation and By-laws could discourage, delay or prevent a change of control of our company and may affect the trading price of our common stock
6. 55We do not intend to pay dividends on our common stock for the foreseeable future and, consequently, your ability to achieve a return on your investment depends on appreciation in the price of our common stock
7. 56We may face lawsuits not covered by insurance and related expenses may be material. The costs to defend and pay any judgment or settlement could negatively impact our business, financial condition, cash flows, and results of operations
8. 57We are currently subject to and could in the future be subject to securities class action litigation
9. 58Sustainability issues may impact our business, our financial outcomes, and our reputation