With Revenue Up 75 Percent, Agilon Sells Hawaii Subsidiary

Nov. 17, 2023
CEO Steve Sell says sale of MDX Hawaii enables Agilon to focus on its full-risk partnership model in core partner markets

Announcing revenue growth of 75 percent in its third quarter, Agilon Health (NYSE: AGL), a physician enablement company for value-based care, recently sold MDX Hawaii, a wholly owned subsidiary, and its related operations to a private buyer.

Acquired by Austin, Texas-based Agilon in 2016, MDX Hawaii is a provider network supporting approximately 600 physicians with fully delegated risk contracts and management services organization capabilities, including claims processing and utilization management. MDX Hawaii’s physician network provides care to approximately 36,000 members covered by two Medicare Advantage health plans on the islands of Oahu, Maui, and Kauai.

During the company’s third-quarter conference call, CEO Steve Sell explained why Agilon decided to sell MDX Hawaii. “Hawaii operates very differently compared to our core partner markets in the continental U.S. In our core partner markets, we leverage a common operating structure. This operating structure is centered around a long-term joint venture with a skilled physician group and non-delegated multi-payer relationships with health plans and CMS,” he said. “The key differences in Hawaii's operations, namely the lack of a joint venture partnership with a large physician group, a much smaller senior patient-physician panel size, and Hawaii's delegated MSO [management services organization] infrastructure made our Hawaii business increasingly less strategic to Agilon and created a drag on our financial results.”

Sell said the company was pleased to transition MDX Hawaii to a new owner that is better positioned to invest into the business and optimize its delegated infrastructure, which should benefit patients and the community at large. “The sale of Hawaii will enhance our ability to focus even more specifically on our partner markets at a point in time when we are driving increasing success across PCP's entire senior panel,” Sell added. “This quarter and going forward, you will hear us consistently highlight the power and importance of our integrated senior business across Medicare Advantage and the traditional Medicare populations. Our ability to generate successful outcomes for patients, PCPs and the system in a multi-payer full risk model is increasingly unique. Our focus on this opportunity will pay dividends in the years to come.”

The company’s management believes the sale of MDX Hawaii will allow it to focus on the company’s core partner markets in the continental United States. In these markets, Agilon leverages a common operating structure centered around long-term, joint venture partnerships with physician groups and health systems, and non-delegated, full-risk contracts across multiple health plans in a geography. Select Agilon physician partners also participate in the ACO REACH program. 

The sale of MDX Hawaii and its related operations closed on Tuesday, October 31. Financial terms were not being disclosed.

Here are highlights of the company’s third-quarter 2023 results: 

Total members live on the Agilon platform increased to 508,000 as of September 30, 2023, including 420,300 Medicare Advantage members and 87,700 ACO REACH beneficiaries. Medicare Advantage membership increased 58 percent, with 9 percent growth across same geographies. 

Total revenue of $1.22 billion increased 75 percent during the third quarter 2023, compared to $695 million in the third quarter 2022. Gross profit of $30 million in the third quarter 2023, compared to $26 million in the third quarter 2022. Net loss of $31 million in the third quarter 2023, compared to a net loss of $31 million in third quarter 2022. 

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