A class action lawsuit was filed against Agilon Health (NYSE:AGL) on March 19, 2024. The plaintiffs (shareholders) alleged that they bought AGL stock at artificially inflated prices between January 9, 2023 and January 4, 2024 (Class Period) and are now seeking compensation for their financial losses. Investors who bought AGL stock during that period can learn about joining the lawsuit here: https://zlk.com/pslra-1/agilon-health-lawsuit-submission-form?wire=16
Agilon is a medical cost management company that collaborates with Medicaid Advantage plans (MA) as well as traditional Medicare and commercial managed care organizations. Consequently, it receives a fixed monthly payment from the payers for each patient under its care.
The plaintiffs maintain that the company and two of its senior officers deceived investors by repeatedly lying and withholding vital information about the efficacy of Agilon’s business model, key financial metrics, and ancillary issues.
The truth became clear on November 2, 2023, during AGL’s Q2 FY23 earnings call. Agilon missed analysts’ estimates on both revenue and earnings and cut its full-year Fiscal 2023 revenue guidance, citing increased utilization and medical costs. Further, on January 5, 2024, AGL lowered its 2023 medical margin and adjusted EBITDA guidance owing to accelerated medical costs.
Interestingly, during the class period, Agilon stated that its estimates of liabilities (medical services that have been incurred but not reported) could be inadequate and affect its future results. Despite this, it appears that the company didn’t maintain enough IBNR (incurred but not reported) reserves to account for the high medical costs.
Notably, since November 2, 2023, AGL stock has cratered more than 70%, causing massive damage to shareholders’ returns.
