Agilon Health at Bank of America Conference: Strategic Shift to Profitability

On Wednesday, 14 May 2025, Agilon Health (NYSE:AGL) participated in the Bank of America 2025 Health Care Conference, where CEO Steve Sell and CFO Jeff Szaneki outlined the company’s strategic transition towards profitability, focusing on its Medicare Advantage business. The discussion highlighted both the challenges and positive strides in the company’s journey, emphasizing the importance of long-term physician-patient relationships and strategic exits from certain partnerships to enhance profitability.

Key Takeaways

• Agilon Health is transitioning towards profitability by focusing on Medicare Advantage and reducing risk, particularly in Part D exposure.
• The company reported a 13% savings from its ACO REACH program, equating to $150 million in gross savings.
• Strategic initiatives include quality-focused programs and investments in data forecasting to improve cost trend predictions.
• Agilon Health is slowing growth intentionally to focus on profitability, with a smaller class of new members in 2025.
• Constructive conversations with payers are underway, focusing on quality incentives and value-based care expansion.

Financial Results

• Q1 2024 Cost Trends:

- 5.5% cost trend in year two plus markets.

- Adjusted cost trend approximately 7% after accounting for payer bidding and the two midnight rule.

- Full year cost trend is 5.3%.

• Historical Cost Trends:

- Around 7% cost trend in both 2024 and 2023.

• First Year Economics:

- Typical first-year economics range from $30 to $60 PMPM, with a breakeven between $35 and $40 PMPM.

• Terminal Margin:

- Target terminal margin is $150 to $200 PMPM.

• Part D:

- Aiming to reduce Part D exposure from 70% to less than 30% for 2025.

- Remaining 30% of Part D risk has doubled losses from 2024 levels to mitigate financial exposure.

• Quality Incentives:

- Secured $25 million of incremental quality incentives for 2025, with growth expected in 2026.

Operational Updates

• Partnership Model:

- Long-term exclusive partnerships with primary care physicians in scaled groups.

• Membership Base:

- The patient base remains unchanged from 2024 to 2025, promoting continuity.

• Growth Strategy:

- Intentional slowing of growth in 2025, with a smaller class of 20,000 members compared to over 100,000 previously.

• Exiting Partnerships:

- Exited certain partnerships in Q1 to improve profitability.

• Underwriting Changes:

- Implementing a no-downside care management fee for the 2025 class.

• Supplemental Benefits:

- 97% of membership saw reduced exposure to supplemental benefits for 2025.

• Quality Programs:

- Rolling out programs focusing on palliative care, heart failure, and COPD.

• Data Pipeline:

- Financial data pipeline went live at the end of Q1, covering 85% of membership.

Future Outlook

• 2026 Renewal:

- 50% of members up for renewal in 2026, with early discussions focused on quality incentives and value-based care.

• Class of 2026:

- Expected to include 30,000 to 45,000 members, focusing on existing geographies.

• Growth Levers:

- Continued investment in clinical areas and chronic condition management while maintaining disciplined growth.

Q&A Highlights

• Medical Cost Trends:

- Discussed current views on medical cost trends with specific figures and adjustments.

• Final Rate Notice:

- Addressed potential impacts on margins, considering physician partner payments and payer bidding.

• Part D Management:

- Outlined strategies to reduce Part D exposure and manage costs.

• Incentive Plans:

- Detailed discussions with payers about incentive plans and star ratings.

• Data and Forecasting:

- Investments in data and forecasting programs to improve medical cost trend predictions.

For a detailed understanding, readers are encouraged to refer to the full conference call transcript.

Full transcript - Bank of America 2025 Health Care Conference:

Craig Jones, Healthcare Analyst, Bank of America: My name is Craig Jones. I’m one of healthcare analysts here at Bank of America. Today I have the pleasure of hosting Steve Sell, CEO, and Jeff Szaneki, CFO of Agilent Health. So first of all, thanks for coming. And it’s probably helpful for everyone if we would just first just start with a quick overview of Agilent’s business and maybe just a few quick key differentiators versus competitors.

Steve Sell, CEO, Agilent Health: Yeah, thanks Craig. First of all, it’s great to be here. So I think our belief is the primary care physician is the best positioned within the healthcare landscape to manage total cost care and quality. But historically they haven’t had the business model to do that. And so what we’ve done is created a long term exclusive partnership with primary care physicians who sit in scaled groups, groups who’ve been in their communities for decades, and they have a long term relationship with their patients.

So our PCPs have on average a ten year plus relationship with their patients. And what we do is we move those physicians, their patients, and their health plans from fee for service for the senior population into global risk in which they manage that total cost care and quality. And so that’s what we think is really the differentiator, the partnership, and then the long term relationship between the PCP and the patient.

Craig Jones, Healthcare Analyst, Bank of America: Absolutely. So I think maybe to start here, we got some interesting news out of United. I think you saw yesterday morning. You’re obviously very familiar with the Medicare Advantage space. So maybe if you could just give us what you’re seeing from medical cost perspective there, what you’ve seen year to date, maybe anything quarter to date or any color you provide there, think would be very helpful.

Steve Sell, CEO, Agilent Health: Yeah, maybe I can give you a frame on context a little bit building on our model and Jeff can talk specifically about trends, but I think what’s important is this long term relationship with the patient and physician. And so part of as we look at 2025, an important data point we shared on our earnings call last week is we basically have the exact same patient base in ’twenty five that we had in ’twenty four. They’ve been with their physician for a long time. They’ve been doing the work in ’twenty four in terms of the wellness visits and managing their complex conditions. And so that sets a baseline for us as we move into 2025.

And that continuity helps to give us comfort around risk scores and around trends. But Jeff?

Jeff Szaneki, CFO, Agilent Health: Yeah, just the specifics for Q1, we had 5.5% cost trend on our year two plus markets. And you kind of have to put that in perspective because what we saw is a 1% change from a payer bidding and 50 basis points from the two midnight rule, which happened a year earlier. So really you’re close to that, the way we look at it, you’re close to that adjusted kind of 7% cost trend for Q1. And that’s really what we’ve seen in the last two years. So if you look at 2024, roughly around 7%, you look at 2023, roughly around 7% as well.

There was a little bit of flu in the quarter. And so we had 5.5% versus our full year cost trend, which is 5.3%. And remember, you just have to do that kind of adjustment in order to kind of normalize and compare it to previous years.

Craig Jones, Healthcare Analyst, Bank of America: Got it. Okay. Thank you. So Steve, you just mentioned kind of slowing that growth this year, right? So we’ve seen them, the cohorts, you know, largely in the year two plus this year.

So, you know, think it’s important as you sort of intentionally slow your growth to focus more on profitability. Can you remind us sort of where that year one member is from an MLR perspective, how it improves from year one to year two and maybe how much of a tailwind you’ve seen or expect to experience this year as you have sort of focused more on profitability?

Steve Sell, CEO, Agilent Health: Yeah. I mean, I think we frame this as a transition year all along, right? Moving through a very dynamic period. It’s year three of the spread being upside down as Jeff just talked about. And so there’s a series of kind of discipline actions that have been reflected in our plan.

And those are things like we exited out of some partnerships and we got the benefit of that in Q1. From a payer perspective, we’ve seen a reduction in Part D and some improvement in terms of the overall economics. We’ve been able to get additional quality incentives and rolled out more clinical programs. And then the last one is really what you talked about, which is very measured growth. So twenty three and twenty four, very large classes, 25, a much smaller class, 20,000 in comparison to two classes that were north of a hundred thousand previously.

So very conscious decision. But then the second thing that we did is we also changed the underwriting of that first year class. So it’s a no downside care management fee that allows us to cover the costs of the programs like burden of illness, quality, etcetera, and get going. But then the opportunity across a twenty year partnership to bring those members into full risk as the economics improve. And the final rate notice obviously puts us in a good direction for that.

So long kind of setup on that, but typical first year economics for a cohort is between 30 and $60 PMPM. Our breakeven, just to remind you, is somewhere between 35 and $40 If we’re below that and don’t feel comfortable, we did the care management fee like we taught for the class of 2025. But then across time that moves to what we believe is kind of that terminal margin, 150 to $200 PMPM, Even in a challenging ’24 and ’25, we’re seeing some of our groups at that level. And so with the improvement in ’26 that we expect, we’d get back on that trajectory.

Craig Jones, Healthcare Analyst, Bank of America: Okay, great. Yeah, so final rate notice, right? Obviously great news for everyone. Do want to hit on that next. Obviously this would be a tailwind, right, to margins.

No question about that. But when we think about, obviously you have to, it doesn’t all fall through the bottom line, right? Because you do pay your physician partners, everything. If we think about, and we don’t know where the bid should have to come out, right? So excluding that and kind of keeping apples to apples or everything equal, how much of that final rate notice could you potentially see just flow through if bids are relatively stable?

Yeah,

Jeff Szaneki, CFO, Agilent Health: I mean, I think, I mean, to your point, holding all things equal, right? I mean, I think a lot of it would fall to the bottom line. We haven’t really given a number yet because as you said, we’re kind of early in the process here with payer bidding. We don’t even really know what cost trends are for 2025, but assuming a trend that’s been similar to the last few years, again, we believe it’s a net tailwind for us in 2026 encapsulating kind of all the things that you just mentioned. Okay.

Craig Jones, Healthcare Analyst, Bank of America: Yeah, no, totally makes sense. So, all right, Narisa, you made it a priority recently, right? As you have measured growth, more focus on profitability, to take risk off the table for items you can’t control. Like you mentioned things like Part D, benefits cards. So Part D, you got to below 30% recently of members, but you’re still seeing really high costs for the members you are at risk for.

So can you first remind us how much has Part D been increasing over the last couple of years, maybe what you’re seeing year to date and sort of what you’re seeing for 2025?

Steve Sell, CEO, Agilent Health: So stepping back, the overall goal is to reduce the beta through the transition year, a big part of our action plan. Just to remind you, the work we did last year was to take our party exposure from roughly 70% of our membership to less than 30% for 2025. The logic around that is our PCPs don’t write most of the scripts for Part D, but the bigger issue is we don’t have control around the formulary and we don’t have control and we don’t have visibility to the manufacturer rebates. And that leads to a long tail. It doesn’t get settled out until three quarters after the year ends.

So for all of those reasons, we wanted to shrink it on top of the IRA coming on board. For that remaining 30%, you want to give the context on-

Craig Jones, Healthcare Analyst, Bank of America: Yeah.

Jeff Szaneki, CFO, Agilent Health: Yeah. So for the remaining 30% where we retain risk, what we did is we took the losses from 2024 on a PMPM basis, and we doubled those because obviously the IRA increases the amount of risk that’s associated with that. And so substantially, I think mitigating our financial exposure from last year to this year. And then the other thing is just a unique item for us is we record a Part D net in revenue. So it’s not grossed up.

So it doesn’t have a sizable impact on our MLR. Like I think others are struggling to model in the payer space. For us, it’s just net in the revenue line.

Craig Jones, Healthcare Analyst, Bank of America: Got it. Yeah, no, that is helpful. And so when you think about maybe taking this 30 to zero, I don’t know if it’ll be this year, next year, whenever, but let’s say you’re assuming you’re able to do it. How big of a tailwind could just eliminate that be as you can zero that out from a PMPM perspective?

Steve Sell, CEO, Agilent Health: I think the biggest benefit of reducing Part D exposure is to narrow the beta. I think that we don’t necessarily project a significant pickup in terms of margin year over year because we probably trade some Part C, op for that. But it’s worth that as we work our way through it. Because what we’ve found is when we have are being rewarded for quality and for Part C trend, we do very, very well. It’s these uncontrollables that sort of cause some of the volatility around those.

And that’s why we’ve been so focused on Part D and sub benefit and others.

Craig Jones, Healthcare Analyst, Bank of America: Got it. So stability over volatility rather than maybe potential margin expansion. No, it makes sense. All right, then maybe on the benefits cards. I know this isn’t quite as big of a issue as it maybe was a couple of years ago, but I think you are trying to eliminate the risk here as well.

I think you’re still early in the conversations though. Why has it been more difficult, I guess, to eliminate this risk versus the Part D?

Steve Sell, CEO, Agilent Health: Yeah, so stepping back, we renewed 40% of the book of business for January and we saw a lot of progress at the top of our list was Part D. Next was quality incentives. We’ve got $25,000,000 of incremental incentive for 2025. Overall economics and data was kind of number three, and number four was supplemental benefit. I think we’ve made progress on all of those, and those are the same priorities as we do the renewal in ’25 for 26% of the January 26 membership.

And so specifically on supplemental benefit, we did make progress this year. One of the ways that we do it besides just the negotiation is the payer bid cycle. So each year, payers submit their bids about this time of the year, and then we have a dialogue with them through the summer into the fall. And then we have the ability to accept or not accept those benefit plans to take risk for them, or to just not work with them overall. And so that’s, as we narrowed some of our payer pipeline, some of that has been reflective of those discussions.

But what we found for 01/01/2025 is 97 of our membership based on those payer bids saw a step down in terms of exposure to supplemental benefits. So it’s on the list. Ultimately, we’d like to carve it or corridor it, but in rank order relative to D that Jeff talked about, to quality and overall economics and data, it’s number four right now.

Craig Jones, Healthcare Analyst, Bank of America: Okay, makes sense. So let’s talk about the incentive plans or the incentives, you’re kind of building into contracting. So it’s around achieving certain star ratings, right? So can you walk us through those conversations with payers? And is this one more of a potential margin tailwind, right?

I would imagine versus the other two or maybe more stability and where are you on a, I guess penetration of your payer base?

Steve Sell, CEO, Agilent Health: Yeah, so, I mean, good question. I would say quality, real area of strength for us. Consistently over four, most of our markets at 4.25. And what I would say is one of the biggest changes relative to a couple years ago is you are seeing almost every payer having this at the very top of their list, or if not number one, it’s number two. And I think it’s just the world of MA with the cut points raising and that payer needs to be at four stars.

It’s kind of table stakes. What they’re looking for is their value based care partners to be at four and a quarter or even four and a half because that has the ability to raise their entire PDP that they’re filing above above that four star threshold. Specifically to your question, the $25,000,000 for this year isn’t a small subset of payers that we’re getting incentives from. We anticipate that number for 26 growing pretty significantly. And in particular, I think it’ll be sort of a ramped model in which if you can get over four and a half, there could be sort of outsized impact on We’ll update on our Q2 call in August, probably more definitively around the Q3 call in November.

But Craig, I appreciate the question because I think it’s an area we do well and it’s super important to our payers.

Craig Jones, Healthcare Analyst, Bank of America: Yeah, absolutely. Yeah. And so I guess, like you said, going in ’26, you have 50% off renewal, right? Of your members. And I would think the final rate notice would even help you with, I guess the Part D and the rate cards, right?

And then the incentives should, everyone wants the incentives. So, I mean, have you started these conversations? It sounds like maybe you’re just sort of getting into it, but any color you can provide as go into ’26 with this huge chunk up again?

Steve Sell, CEO, Agilent Health: It’s early and Jeff is closely involved in these just given his background in the payer world and sort of understanding their priorities and how they think about it. But what I would say is they’re very constructive. I think there’s a few goals they have. One is to reward us for quality and set the incentives around that. Two is to move more of their senior members into value based care because of quality, because of cost control, because of the world of V-twenty eight that really puts an emphasis on these higher acuity chronic conditions and the ability to identify those and manage those.

So it’s early. Think we’re encouraged by that, but we’ll update as we get to the calls. Anything you’d add on there?

Jeff Szaneki, CFO, Agilent Health: No, agree. Constructive, I do quality is at the top of the list, I think, and that’s something we can deliver on it. So those are good conversations. Okay, great.

Craig Jones, Healthcare Analyst, Bank of America: So maybe moving on to these, you’re rolling out some programs, I think around quality, right? These palliative care, heart failure, COPD among others. So first on palliative, I think you’ve rolled this out to most of your geographies. I’m not sure exactly what percentage, but maybe you want to walk us through how this program works, what kind of reception you’ve gotten from patients and doctors and how big of a potential impact is it on margins this year and going forward?

Steve Sell, CEO, Agilent Health: Yeah, so going back to this long term trusted PCP patient relationship, that kind of sits at the heart of everything we do, whether it’s chronic condition management or whether, as you just asked about palliative care, which is advanced illness management. I mean, folks who are identified as most likely being at the end of life, And that’s a difficult conversation. For sure. And so the fact that you have this trusted relationship, the fact that you have the support of a partner who specializes in this area gives those PCPs much more comfort around that. It’s a conversation, multiple conversations with the family and with the patient.

Ultimately, there’s a decision made to enroll. And part of what we shared on our call last week is we saw a meaningful step up in terms of the enrollment in that program. We also shared that we’ve seen a significant reduction in terms of the days per thousand for folks that are enrolled in that program. And I think a big part of it is by getting in front of it, by having an advanced care plan, by having resources that have the ability to go into the home and manage the overall conditions with that patient, it puts you on a glide path that eventually is probably going to end up in hospice, could be hospice at home, could be hospice in the outpatient setting, but all of that leads to a better experience, better quality outcomes, and then the reduction in the hospital days that I talked about.

Craig Jones, Healthcare Analyst, Bank of America: Right, right. And then, so maybe to touch again on heart failure and COPD, I think you’re much earlier here, right? No one is out, but hopefully very promising similar to palliative. Can you walk us through again exactly what these programs are, how the doctors, patients are receiving it and is it similar in margin sort of to the palliative one or anything, maybe it’s too early, but anything you can call out around potential impact?

Steve Sell, CEO, Agilent Health: Yeah, so the majority of our spend sits with multi chronic patients. I mean, that’s just true in healthcare in general. And so the idea of focusing around those biggest conditions that drive the majority of ER and inpatient spend is the idea behind this. Congestive heart failure is that one that we’ve rolled out and we’ve got that in the majority of our markets now, but it’s very early days to your point. The idea is, can this primary care physician identify congestive heart failure earlier in the office, whether it’s an in office diagnostic using a blood test, having the patient come back versus having it be identified later when that same patient would crash into the ER or the inpatient setting.

And so in the near term, there is a cost around the diagnostic to it, but you’re gonna be able to manage that progression, hopefully alleviate the rise in that disease burden and prevent, or at least delay that ER or inpatient setting that’s needed around that. And our physicians really align around the concept. This idea of what we started the company around really comes through in that program. I also think, Craig, it aligns with kind of V28 and sort of from a policy perspective where people are trying to focus the care.

Craig Jones, Healthcare Analyst, Bank of America: Sounds like value based care is sort of at its core, really. That’s right. So I guess any other programs maybe that are potentially can roll out soon or anything else you want to call out that’s

Steve Sell, CEO, Agilent Health: like- Well, I mean, look, we’re trying to be really methodical about them, but I mean, the punch list just goes down those big categories, COPD, dementia, cancer. I mean, those areas that really drive the majority of the cost and quality opportunity that’s out there. And again, we’re going to try and structure them in a way that you’re really taking advantage of the PCP and the care team around them to identify that early.

Craig Jones, Healthcare Analyst, Bank of America: Got it. Okay. So maybe we shift now to your data and forecasting programs, you’ve spent a lot of investment in the last couple of years. So I think you’d agree that one thing Agilent really struggled with maybe a couple of years ago was this forecasting medical cost trend, but you’ve put a lot of investment into it. So you just launched some new programs in the first quarter to try to achieve some better foresight and forecasting.

Can you give us some details on exactly how these programs work? What’s your data visibility now versus say a couple of years ago? And yeah, just any color that’d be great.

Steve Sell, CEO, Agilent Health: I mean, I’ll go ahead, Jeff.

Jeff Szaneki, CFO, Agilent Health: Yeah, yeah. A couple of things. It’s a journey, right? So we’ve been talking about the financial data pipeline for over a year and we finally went live on that at the end of this first quarter. And it was a significant step forward for us.

I mean, we completely changed our reserving process for claims based on data from the new financial data pipeline, which is something we haven’t had before. The data pipeline has member level revenue details. So bifurcation of revenue down to risk score and claim line information. So similar to the data that a payer would have, historically, were using statements from a payer that didn’t have that much granularity. So happy to have that information on a going forward basis, But went live in Q1, which is good.

Now, not all of our payers are on that online pipeline. There’s still more work to be done. We’re rolling some more payers on in Q2, some more in Q3. So it’s a rollout phase. But in this quarter we had some development from older dates of service.

The financial data pipeline would solve that. So on a going forward basis, we have better visibility into the longer piece of the tail on claims. So excited to be at this point in time, still have more work to do, but we’re definitely heading in the right direction, as Steve kind of mentioned before, to just reduce variability in the business and ultimately help forecasting process. And we have further

Steve Sell, CEO, Agilent Health: to go on that, Craig. I mean, 85% of the membership in that today, more payers to be added in Q2, more payers to be added in Q3. So that will progress throughout the year. And if you think about the action plan I talked about, but also the guidance, it’s sort of been reflective of where we’re at from an environment perspective, but also where we’re at in this visibility. And so it’s been designed to sort of incorporate some of that volatility.

And I think you saw that in Q1, even with some PYD, the ability to hit the number.

Craig Jones, Healthcare Analyst, Bank of America: Yeah, absolutely. So can you talk about sort of maybe where, we look, you know, PPD, right? It’s always such a pain. But if you look at back now that data programs are in place, maybe, let’s say you just closed the first quarter. How long until now with this new program will you say, we got it, it’s done, nothing more to share versus prior to this, how long would it take to close the quarter?

Jeff Szaneki, CFO, Agilent Health: Yeah, would say a couple of things. I would buy for Kate that a little bit for payers where we had very good data. The data pipeline just provides bifurcated detail, meaning there’s really no acceleration of information, but a lot of payers who were, I would say more delayed in providing us data. There is an acceleration. So we will have more data than we had before, and it’s at a much more granular level.

And so I guess what I would say is for the longer dates of service, it eliminates that tail. We’ll be able to see those claims as they’re paid versus waiting for statements that may take up to a year. So that’s good news. But we still will be on a little bit of a data delay from the payers. Maybe one and a half to two months.

We’ll still have some of that delay, but we’ll eliminate some of the longer dated stuff that’s come back to bite us.

Craig Jones, Healthcare Analyst, Bank of America: Okay. Yeah, that’s great to hear. All right. So maybe talk now on risk sharing, right? So for the first time this year, rather than going all in, we’re doing a glide path to risk.

So when you first brought this idea up with the new partners, what the reception? What’s their expectation on maybe speed to full risk? Is there a likelihood for a middle ground next year or partial risk or kind of how do you see this new idea playing out?

Steve Sell, CEO, Agilent Health: Yeah, look, I think again, back to an action plan that reduces beta for this year, given the environment and given the upside down spread that Jeff talked about, when you looked at the economics with these payers, you weren’t going to be able to negotiate a percentage of premium rate that was high enough to reflect that. And so instead we did this no downside care management fee approach that gives certainty around that, allows us to get going, But it does sort of put 20,000 members in the on deck circle to move into full risk. Right. And we’re in a twenty year partnership. So year one of this, do you move all of them in ’26 or the vast majority of them?

You know, we’ll update as we go through the year, but certainly the final notice helps an awful lot around that. I think the reaction of the partners was they’re getting incentives, they’re doing the work, and they’re looking at a pro form a that says, depending upon what happens with final notice and the things we control like quality and risk adjustment, here’s what this could look like, and here’s what the distribution could look like. Those economics are much more advantageous than what they’re seeing today in the fee for service world or frankly relative to other alternatives out there. So I think there’s good reception. You didn’t ask this, but class of ’26 is 30,000 to 45,000, again, being measured around that, doing this full implementation so we make sure we’re doing the work in ’25 to bring them on board in ’26, and probably weights more towards within existing geographies just because the beta is lower on that.

Got it. Okay.

Craig Jones, Healthcare Analyst, Bank of America: So as you You’re now sort of negotiating on different parts of the risk side. I think right now with all of your partners, you’re currently splitting the profits fiftyfifty with no downside risk. Is that right? That’s And then as you have added this new glide path, glide path in, are you considering maybe adjusting that no downside risk to maybe a callback or if underperforming? Like, any any any adjustments maybe to how you’re thinking about that, you know, the no downside the no downside split at all or the fifty fifty split?

Steve Sell, CEO, Agilent Health: No. I mean, I I think we’re we’re continuing with that. I think the big thing is to drive improved performance to reduce that variability. And the final notice is a big

Jeff Szaneki, CFO, Agilent Health: part of that. Yeah, no, I don’t think there’s anything we’re considering changing. I mean, just a finer point on that. I mean, they do have to kind of get their way out of it. It’s not like those are Yeah, so it’s a

Craig Jones, Healthcare Analyst, Bank of America: little So there is some kind of clawback or something where it’s not just if you do horribly flip right back to positive. Okay, well that’s good to know. Okay. All right, so maybe switch to ACO REACH. We’ve a few minutes left here.

Right, Steve and I, you mentioned this great, great news yesterday. So why don’t you walk through the details there, what you’ve heard and yeah, let’s start with that.

Steve Sell, CEO, Agilent Health: Well, I guess I’d just start by saying ACO REACH has really been a success story for us.

Craig Jones, Healthcare Analyst, Bank of America: For sure.

Steve Sell, CEO, Agilent Health: It’s the only full risk program in the Medicare fee for service program overall. You know, I think it’s the easiest data point to look at Agilent’s partnership model and say, how does it work? And that it’s effective. And in that program, you are rewarded for beating the cost benchmark. And what happens is in year, your revenue gets adjusted relative to that benchmark and you get rewarded if you’re beating that and you’re delivering on quality.

And so in the most recent reported period, we beat the benchmark or we generated 13% of savings. It was like $150,000,000 of gross savings overall. So really encouraging. That program is scheduled to be up at the end of twenty twenty six. It’s an innovation center pilot.

And so we’d been lobbying hard to see the expansion of that given the outcomes that we’re seeing. Just yesterday, I mean, I was just saying to see this in a way in, CMMI had a webinar. Dave Sutton, the new head of CMMI, talked about a few things, but one is he said, Hey, our new strategy is gonna focus on evidence based prevention for chronic diseases. Sounds kind of like what we talked about, right? We’re gonna mandate alternative payment models with downside risk.

ACO REACH is the only one in Medicare fee for service. We are going to expand and replicate ACO REACH and programs like it. That we think is good news. And they’re looking for those programs that have the greatest promise around savings and quality. So I think for us, that’s a big step forward.

Now, Devil’s still in the details, high level strategy discussion around that, but an encouraging data point for us.

Craig Jones, Healthcare Analyst, Bank of America: Yeah, absolutely. Mean, Acerity Research has definitely been the bright spot for Agilent, I’d say the last, since you went public really. You’ve been a great job there. So maybe as we kind of close this out, we got about a minute left. Longer term vision.

So Agilent’s changed pretty dramatically over the last couple of years as you’ve implemented all of these data, quality programs, everything. First of all, what would you say is the biggest changes now and then? But then looking forward, I guess, a few years from now, what do you think we’ll look back and say, wow, these are the biggest differences. These are the changes about Agilent that we’ve seen?

Steve Sell, CEO, Agilent Health: I think it’s all the things that we’ve talked about. I think it’s going to build on strength of this long term patient PCP relationship. I think it’s going to focus on investing in the clinical areas and these chronic conditions from identification all the way through the management around that. I think it’s going to be for us being very disciplined about where and how we grow, but as the macro corrects and as we execute tapping into that demand, which is out there. And so I think those adjustments, we feel good about kind of what we’ve done and set us up well for the future.

Craig Jones, Healthcare Analyst, Bank of America: Okay. Great. Well, gentlemen, thanks so much. See you, Jeff. Thanks for that.

Yeah.

Jeff Szaneki, CFO, Agilent Health: Appreciate it. Appreciate it. Yeah. Absolutely. Thanks.

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