agilon health, inc. - Annual Report: 2023 (Form 10-K)

Payor E* %Payor F %*

_____________________________________________________________________

*Less than 10% of total receivables.

$ $()$ $ $ $()$ U.S. Treasury notes () () Other () () $ $ $()$ $ $ $()$

For the year ended December 31, 2023, the Company recognized total interest income of $ million, of which $ million was related to its marketable securities investments and $ million was related to interest on cash and cash equivalent balances. For the year ended December 31, 2022, the Company recognized total interest income of $ million, of which $ million was related to its marketable securities investments and $ million was related to interest on cash and cash equivalent balances.

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$ 2025 2026 $ $ $ $ $ U.S. Treasury notes Other $ $ $ $

The following table summarizes the Company’s marketable securities with gross unrealized losses by security type aggregated by the length of time the investments have been in a continuous unrealized loss position as of December 31, 2022 (in thousands):

Less Than 12 Months

12 Months or Greater

Fair Value

Gross Unrealized Losses

Fair Value

Gross Unrealized Losses

Marketable securities:

Corporate debt securities

U.S. Treasury notes

Other

The Company’s unrealized losses from marketable securities as of December 31, 2023 and 2022 were caused primarily by interest rate increases. The Company does not intend to sell marketable securities that are in an unrealized loss position, and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity. There were allowances for credit losses on available-for-sale marketable securities at December 31, 2023 and 2022.

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$ $ $ $ $ U.S. Treasury notes Other $ $ $ $ $ $

$ Furniture and fixtures Leasehold improvements Less: accumulated depreciation()()Property and equipment, net$ $

For the years ended December 31, 2023, 2022, and 2021, the Company recognized $ million, $ million, and $ million, respectively, in depreciation expense, which is included in depreciation and amortization expense in the consolidated statements of operations.

$ Lease liabilities:Accounts payable and accrued expenses$ $ Other liabilities Total operating lease liabilities$ $ $ $ Short-term lease costs Variable lease costs Total lease costs$ $ $

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$ $ ROU asset obtained in exchange for new lease liability:Operating leases$ $ $


	December 31,
Weighted Average Lease Term and Discount Rate	2023		2022
Weighted average remaining lease term (years):
Operating leases
Weighted average discount rate:
Operating leases		%		%

2025 2026 2027 2028 Thereafter Undiscounted minimum lease payments payable Less: imputed interest()Present value of lease liability$

impairment was recognized.

Acquisition

On February 28, 2023, the Company completed the acquisition of My Personal Health Record Express, Inc. (the “Acquisition”), a leading provider of value-based care technology and interoperability solutions for cash consideration of $ million, net of cash acquired and subject to certain post-closing adjustments. The Company accounted for the Acquisition utilizing the acquisition method of accounting, which requires assets and liabilities to be recognized based on estimates of their acquisition date fair values. The determination of the values of the acquired assets and assumed liabilities, including other intangible assets and deferred taxes, requires significant judgment. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, the Company estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Measurement period adjustments are recorded in the period in which they are determined, as if they had been completed at the acquisition date. Upon the conclusion of the final determination of the values of assets acquired or liabilities assumed, or one year after the date of acquisition, whichever comes first, any subsequent adjustments are recorded within the Company's consolidated results of operations. The following allocation of the purchase price related to the Acquisition based upon the fair value of assets, which primarily included developed technology of $ million, and assumed net liabilities of $ million, with the residual amount being recorded as goodwill of $ million. The intangible assets acquired have a weighted-average life of years.

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-$ $()$ Developed technology

() Noncompete enforcement agreements

() Other

() $ $()$

The following table summarizes the Company’s amortizable intangible assets as of December 31, 2022 (dollars in thousands):

Useful Life
(Years)

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Value

Trade names

()

Debt costs

()

million outstanding surety bonds related to health plan payor risk-bearing capital contributions.

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$ $ $ $

_____________________________________________________________________

billion shares of common stock, par value $ per share. Every holder of record of common shares entitled to vote at a meeting of stockholders is entitled to vote for each share outstanding.

During the year ended December 31, 2023, the Company issued approximately million shares of common stock primarily in connection with exercises and vesting of stock-based awards.

Also in 2023, the Company repurchased million shares of common stock for $ million.

During the year ended December 31, 2022, the Company issued approximately million shares of common stock primarily in connection with exercises and vesting of stock-based awards.

On April 14, 2021, the Company priced the IPO of its common stock at an offering price of $ per share for million shares. On April 15, 2021, the underwriters exercised their option to purchase an additional million shares of common stock. On April 19, 2021, the Company’s sale of an aggregate of million shares of common stock was completed, see Note 1.

Additionally, during 2021, the Company issued and sold approximately million shares of common stock primarily in connection with exercises and vesting of stock-based awards.

Contingently Redeemable Common Stock

Prior to the completion of the IPO in April 2021, certain of the Company’s investment agreements with third-party investors could require the Company to repurchase shares in certain limited circumstances. As the redemption feature was outside the control of the Company, the related capital contributions did not qualify as permanent equity and were

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million shares related to employee stock options, of which million shares remain available for grant as of December 31, 2023. Shares granted are not transferrable, except upon the employee’s death, repurchase by the Company, or with the Company’s consent.

The Omnibus Incentive Plan provides for the grant of stock options, restricted stock awards, restricted stock units ("RSUs"), performance-based awards, and other awards. Stock options expire years after the date of grant and forfeiture of awards is recognized as it occurs. The stock options granted under the Plan generally consist of: (i) stock options that vest in four equal annual installments, subject to the employee’s continued service until the applicable vesting date (the “Base Options”), and (ii) stock options that vest if CD&R realizes a certain return on its investment, subject to the employee’s continuous employment through such date and beyond, in certain grants (the “Upside Options”).

Stock Options

Base Options. Compensation cost for Base Options is recognized on a straight-line basis generally over the requisite vesting period of . The fair value of each Base Option was estimated on the date of grant using the Black-Scholes option pricing model. Expected volatilities are based on the historical equity volatility of comparable publicly traded companies. The expected term of Base Options is calculated via the simplified method and reflects the midpoint between the vesting date and the end of the contractual term, as our historical share option exercise experience does not provide a reasonable basis upon which to estimate the expected term. The risk-free rates utilized for periods throughout the contractual life of Base Options are based on U.S. Treasury security yields at the time of grant.

% -%

% - %

Expected dividends$ $ $ Expected volatility

% -%

% - %

Expected term (in years)$ Granted Exercised() Forfeited() Stock options outstanding as of December 31, 2023$ $ Expected to vest as of December 31, 2023$ $ Exercisable as of December 31, 2023$ $

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, $, and $, respectively, per option. The total intrinsic value of Base Options exercised for the years ended December 31, 2023, 2022, and 2021 was $ million, $ million, and $ million, respectively. During the year ended December 31, 2023, the Company recognized $ million of stock-based compensation expense related to Base Options, of which $ million is recorded in income (loss) from discontinued operations in the consolidated statements of operations. During the year ended December 31, 2022, the total stock-based compensation expense related to Base Options was $ million, of which $ million is recorded in income (loss) from discontinued operations in the consolidated statements of operations. During the year ended December 31, 2021, the total stock-based compensation expense related to Base Options was $ million, of which $ million is recorded in income (loss) from discontinued operations in the consolidated statements of operations.

As of December 31, 2023, the Company had $ million of total unrecognized compensation cost related to non-vested Base Options, which is expected to be recognized over a weighted-average period of approximately .

Additionally, the Company recognized $ million of expense related to stock options that vested upon the completion of the IPO in April 2021, which are included in general and administrative expenses in the statements of operations.

Upside Options. Upside Options vest if CD&R realizes a certain return on its investment, subject to the employee’s continuous employment through such date and beyond, in certain grants. During the year ended December 31, 2021, the Company recognized $ million of stock-based compensation expense as a result of the satisfaction of a performance condition associated with Upside Options. During the years ended December 31, 2023 and 2022, the Company recognized $ million and $ million, respectively, of stock-based compensation expense related to Upside Options. The fair value of Upside Options was estimated on the date of grant using the Monte Carlo simulation model.

$ Exercised() Forfeited() Stock options outstanding as of December 31, 2023$ $ Expected to vest as of December 31, 2023$ $ Exercisable as of December 31, 2023$ $

The weighted-average grant-date fair value of Upside Options granted during the year ended December 31, 2021 was $ per option. Upside Options were granted in 2022 and 2023. As of December 31, 2023, the Company had $ million of total unrecognized compensation cost related to non-vested Upside Options, which is expected to be recognized over a weighted-average period of approximately .

Restricted Stock Units

Restricted stock awards, including RSUs and performance stock units are granted subject to certain restrictions. Conditions of vesting are determined at the time of grant. The fair market value of RSUs, both time vesting and those subject to specific performance criteria, are expensed over the period of vesting. RSUs, which vest based solely upon passage of time and requisite service generally vest over the requisite period of . Performance stock units, which are RSUs that vest dependent upon attainment of various levels of performance that equal or exceed threshold levels, generally vest in their entirety at the end of the relevant performance period, generally . The number of shares that ultimately vest can vary from % to % of target depending on the level of achievement of the performance criteria. The fair value of RSUs and performance stock units are determined based on the closing market price of the Company's shares on the grant date. The value of the shares withheld to settle tax withholding obligations is dependent on the closing market price of the Company’s common stock on the trading date prior to the relevant transaction occurring.

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$ Granted Vested() Forfeited() Unvested as of December 31, 2023

For the years ended December 31, 2023, 2022, and 2021, the Company recognized $ million (of which $ million is recorded in income (loss) from discontinued operations in the consolidated statements of operations), $ million (of which $ million is recorded in income (loss) from discontinued operations in the consolidated statements of operations), and $ million, respectively, of stock-based compensation expense related to RSUs. The weighted-average grant-date fair value of RSUs granted during the years ended December 31, 2023, 2022, and 2021 was $, $, and $, respectively. The total fair value of RSUs vested during 2023 was $ million. As of December 31, 2023, the Company had $ million of total unrecognized compensation cost related to RSUs, which is expected to be recognized over a weighted-average period of approximately .

Certain of the Company’s agreements provide for the granting of certain stock-based instruments to third parties (the “Physician Partners Equity Awards”). The Company's Board of Directors approved million shares to be granted as Physician Partners Equity Awards, of which million shares remain available for grant as of December 31, 2023. The fair market value of restricted stock units, both time vesting and those subject to specific performance criteria, are expensed over the period of vesting. RSUs, which vest based solely upon passage of time and requisite service generally vest over the requisite period of . Performance stock units, which are restricted stock units that vest dependent upon attainment of various levels of performance that equal or exceed threshold levels, generally vest in their entirety at the end of the relevant performance period, from one to . The number of shares that ultimately vest can vary from % to % of target depending on the level of achievement of the performance criteria. The fair value of RSUs, including performance stock units, are determined based on the closing market price of the Company's shares on the grant date. shares are withheld to settle tax withholding obligations of the physician partners.

$ Granted Vested() Unvested as of December 31, 2023

For the years ended December 31, 2023, 2022, and 2021 the Company recognized $ million, $ million, $ million, respectively, of stock-based compensation expense related to Physician Partner Equity Awards. The weighted-average grant-date fair value of Physician Partner Equity Awards granted during the years ended December 31, 2023, 2022, and 2021 was $, $, and $, respectively. As of December 31, 2023, the Company had $ million of total unrecognized compensation cost related to Physician Partner Equity Awards, which is expected to be recognized over a weighted-average period of approximately .

Upon the completion of the IPO, the Company issued million shares of common stock under partner physician group equity agreements and recognized stock-based compensation expense of $ million in April 2021. Various of the Company’s agreements provided for the vesting of certain stock-based instruments to third parties (physician partners) at the time of an initial public offering, or upon the occurrence of certain events deemed a “change of control” in the Company or certain of the Company's subsidiaries (“Change of Control Event”). The stock-based

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$ $ State Foreign Deferred:Federal() ()State() ()Foreign() () ()Income tax expense (benefit)$ $ $ )$()$()Increase (decrease) in taxes resulting from:Foreign rate differential State taxes, net of federal impact Stock-based compensation()()()Nondeductible compensation Unrecognized tax benefit Permanent differences () Valuation allowance Other, net ()()Income tax expense (benefit)$ $ $

The net deferred tax liability comprises the tax effect of temporary differences between U.S. GAAP and tax reporting related to the recognition of income and expenses. The net deferred income tax liabilities are included in other

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$ State taxes Accrued expenses Transaction costs Stock-based compensation Lease liabilities Interest limitation Other, net Total deferred income tax assets$ $ Deferred income tax liabilities:ROU assets$()$()Intangible assets()()Investments in marketable securities() Investments in partnerships and affiliates()()Total deferred income tax liabilities$()$()Valuation allowance()()Net deferred income tax liabilities$()$()

The Company regularly reviews its deferred tax assets for recoverability and establishes a valuation allowance when it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. In making this assessment, the Company is required to consider all available positive and negative evidence to determine whether, based on such evidence, it is more likely than not that some portion or all of the net deferred tax assets will not be realized in future periods. As of December 31, 2023 and 2022, the Company believed that it is more likely than not that its deferred tax assets in excess of deferred tax liabilities will not be realized. Accordingly, the Company has provided a valuation allowance of $ million and $ million on the Company’s deferred tax assets as of December 31, 2023 and 2022, respectively. The increase in valuation allowance of $ million recorded in current year activities is primarily attributable to current year losses. The net deferred tax liability as of December 31, 2023 principally relates to deferred tax liabilities associated with long-term investments in partnerships and affiliates, which are expected to reverse against net operating losses which can only offset % of taxable income.

As of December 31, 2023, the Company has federal and state net operating losses of $ billion and $ million, respectively. As of December 31, 2022, the Company has federal and state net operating losses of $ billion and $ million, respectively. As of December 31, 2023, $ billion of the total federal net operating losses are carried forward as indefinite-lived net operating losses. The remaining net operating losses are carried forward and will expire beginning in 2027 if utilized. Utilization of these operating loss carryforwards may be subject to an annual limitation based on changes in ownership, as defined by Section 382 of the Internal Revenue Code of 1986, as amended. As of December 31, 2023, $ million and $ million of the Company’s federal and state net operating loss carryforward, respectively, are attributable to prior acquisition transactions and are subject to Section 382 limitations. The Company’s analysis indicates that none of the acquired net operating loss carryforwards will expire unutilized solely as a result of the Section 382 limitations.

Unrecognized Tax Benefits

As of December 31, 2023, the Company had unrecognized tax benefits of $ million, $ million of which, if recognized, would impact its effective tax rate. As of December 31, 2022, the Company had unrecognized tax benefits of $ million, $ million of which, if recognized, would impact its effective tax rate. As of December 31, 2021, the

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million, $ million of which, if recognized, would impact its effective tax rate. $ $ Additions related to current year acquisition Additions related to current year Additions (reductions) related to prior years () Reductions related to settlements with taxing authorities()()()Balance at end of the year$ $ $

As of December 31, 2023, the Company recorded a liability for unrecognized tax benefit of $ million, inclusive of $ million of accrued interest and penalties. As of December 31, 2022, the Company recorded a liability for unrecognized tax benefit of $ million, inclusive of $ million of accrued interest and penalties. As of December 31, 2021, the Company recorded a liability for unrecognized tax benefit of $ million, inclusive of $ million of accrued interest and penalties. As of December 31, 2023 and 2022, $ million and $ million of unrecognized benefits, respectively, were reflected as a reduction in deferred tax asset balances. During the year ended December 31, 2023, the Company reversed $ million of tax liability, $ million of accrued interest, and $ million of penalties on unrecognized tax benefits due to payments of an amended state return related to the period ended June 30, 2016. During the year ended December 31, 2022, the Company reversed $ million of tax liability and $ million of accrued interest on unrecognized tax benefits due to payments of an amended state return related to the period ended June 30, 2016. During the year ended December 31, 2021, due to expiration of the 2015 state statute of limitations, the Company reversed $ million of tax liability, $ million of accrued interest and $ million of accrued penalties on unrecognized tax benefits and realized a tax benefit of $ million attributable to discontinued operations due to the settlement of the IRS exam for the period ended June 30, 2016. It is reasonably possible that during the next 12 months the Company may realize a $ million decrease in its liability for uncertain tax positions, inclusive of $ million related to the reversal of interest and penalties on uncertain tax positions, as a result of closing of the tax years.

The Company operates in several taxing jurisdictions, including U.S. federal, multiple U.S. states, and foreign jurisdictions. The statute of limitations has expired for all tax years prior to 2020 for federal, prior to 2016 for various state tax purposes, and prior to 2018 for non-U.S. jurisdictions. However, the net operating loss generated on the Company’s federal and state tax returns in prior years may be subject to adjustments by the federal and state tax authorities.

For additional discussion regarding income taxes and unrecognized tax benefits related to discontinued operations, see Note 20.

On August 16, 2022, the Inflation Reduction Act was signed into law. The Inflation Reduction Act includes various tax provisions, which are effective for tax years beginning on or after January 1, 2023. For tax years beginning after December 31, 2021, the Tax Cuts & Jobs Act of 2017 eliminated the option to deduct research and development expenditures as incurred and instead required taxpayers to capitalize and amortize them over five or 15 years beginning in 2022. These changes in tax laws did not have a material impact on the Company’s results of operations for the years ended December 31, 2023, 2022, and 2021. The Company will continue to monitor possible future impact of changes in tax legislation.

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)$()$()Noncontrolling interests’ share in (earnings) loss from continuing operations Net income (loss) attributable to common stockholders before discontinued operations()()()Income (loss) from discontinued operations()()()Net income (loss) attributable to common stockholders$()$()$()DenominatorWeighted average shares outstanding, basic and dilutedNet income (loss) per share attributable to common stockholdersNet income (loss) per common share from continuing operations, basic and diluted$()$()$()Net income (loss) per common share from discontinued operations, basic and diluted$()$()$()

Basic net income (loss) per share is the same as diluted net income (loss) per share for the years ended December 31, 2023, 2022, and 2021 as the inclusion of all potential common shares outstanding would have been anti-dilutive.

Stock options - market and performance condition(1)

Restricted stock units

_____________________________________________________________________

(1)Market and performance conditions were satisfied during 2021.

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$ $ Income taxes paid (refunded), net Supplemental disclosure of non-cash financing activities:Reclassification of contingently redeemable common stock in connection with IPO Issuance of common stock under partner physician group equity agreements upon IPO Offering costs accrued at end of period Non-cash investment in unconsolidated subsidiaries

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ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

ITEM 9A. Controls and Procedures

Management’s Evaluation of Disclosure Controls and Procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosure.

As of December 31, 2023, our management, under the supervision and with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e) and 15d-15(e). Based upon this evaluation, as of December 31, 2023, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as a result of a material weakness in our internal control over financial reporting discussed below.

Notwithstanding the identified material weakness described below, management does not believe that these deficiencies had an adverse effect on our reported operating results or financial condition and management has determined that the financial statements and other information included in this report and other periodic filings present fairly in all material respects our financial condition, results of operations, and cash flows at and for the periods presented in accordance with U.S. GAAP.

Management’s Annual Report on Internal Control over Financial Reporting. Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control system is designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on our consolidated financial statements.

Management used the criteria described in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) to evaluate the effectiveness of our internal control over financial reporting as of December 31, 2023. Based on this evaluation, management has concluded that controls were not effective as of December 31, 2023, due to an identified material weakness in internal control over financial reporting, which is disclosed below.

A material weakness is a control deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In connection with the assessment of our internal control over financial reporting described above, management identified the following deficiencies that individually, or in the aggregate, constituted a material weakness in our internal control over financial reporting as of December 31, 2023:

•Management has identified a material weakness in controls related to the completeness and accuracy of information produced by the entity (IPE) and the level of precision and documentation around its management review controls to address the IPE for medical claims and related payables, risk adjusted premium revenue and certain care management expenses.

Management have invested significantly in addressing our previously reported material weaknesses. We have allocated significant incremental internal personnel resources, outside consulting resources and invested in technology solutions to enhance the internal control environment in fiscal 2023. We have assessed, redesigned, and implemented internal controls to address the material weaknesses in information technology general controls (ITGC’s), and revenue. Specifically, as it relates to information technology that support our financial reporting relevant applications, we have

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successfully remediated the material weakness, ensuring the design and operating effectiveness of the logical access, change management and computer operations controls are effective. Additionally, we have remediated the design and operating effectiveness of capitation revenue through a thorough enhancement to our capitation revenue related internal controls.

In 2023, we identified certain sources of information utilized in our medical claims and related payables, risk adjusted premium revenue, and care management expense processes that contained specific data attributes utilized in executing an internal control by management. Management did not sufficiently design controls or control activities to ensure the completeness and accuracy of the related IPE in executing certain controls associated with these processes.

Remediation Plan for Existing Material Weakness. Management is committed to the remediation of the material weakness described above, as well as the continued improvement of our internal control over financial reporting. We are implementing process and control improvements to address the above material weakness that include, but are not limited to:

•Designing and implementing specific management review procedures to ensure completeness and accuracy of key financial and non-financial data utilized in the recognition of medical claims and related payables, risk adjusted premium revenue and care management expenses;

•Implementing improved policies, procedures, and control activities over key financial data to ensure accuracy and completeness of this data as used in aforementioned management review procedures; and

•Establishing additional training related to validating the accuracy of data used in review controls and the level of review precision and documentation required.

When fully implemented and operational, we believe the measures described above will remediate the underlying causes of the control deficiencies that gave rise to the material weakness and strengthen our internal control over financial reporting. However, material weaknesses are not considered remediated until the new controls have been operational for a period of time, are tested, and management concludes that these controls are operating effectively. This remediation process will require resources and time to implement. We will continue to monitor the effectiveness of these remediation measures, and we will make any changes to the design of this plan and take such other actions that we deem appropriate given the circumstances.

Audit Opinion on Internal Control over Financial Reporting. The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, which is included herein.

Changes in Internal Control Over Financial Reporting. Except for the material weakness and remediation actions described above, there were no significant changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act, as amended) during our fourth quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the year ended December 31, 2023.

Limitations on the Effectiveness of Controls. Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based on certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud have been prevented or that all control issues and instances of fraud, if any, have been detected.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of agilon health, inc.

Opinion on Internal Control Over Financial Reporting

We have audited agilon health, inc.’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“2013 framework”) (the COSO criteria). In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, agilon health, inc. (the Company) has not maintained effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment.

Management has identified a material weakness in controls related to the completeness and accuracy of information produced by the entity (IPE) and the level of precision and documentation around its management review controls to address the IPE for medical claims and related payables, risk adjusted premium revenue and certain care management expenses.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), contingently redeemable common stock and stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule in Item 15. This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2023 consolidated financial statements and this report does not affect our report dated February 27, 2024, which expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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/s/ Ernst & Young LLP

Los Angeles, California

February 27, 2024

ITEM 9B. Other Information

None.

ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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PART III

ITEM 10. Directors, Executive Officers and Corporate Governance

We have adopted a Code of Conduct and a Code of Financial Ethics that apply to all of our directors and employees, including our Chief Executive Officer and all senior financial officers, including our principal financial officer, and principal accounting officer. Current copies of our Code of Conduct and Code of Financial Ethics are posted on our website at https://investors.agilonhealth.com/governance/governance-documents. In addition, waivers from, and amendments to, our Code of Conduct that apply to our directors and executive officers, including our principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions, will be timely posted in the Investor Relations section of our website at www.agilonhealth.com.

The information required by this item will be included in our 2024 Proxy Statement to be filed with the SEC within 120 days of the end of our fiscal year covered by this Annual Report and is incorporated herein by reference.

ITEM 11. Executive Compensation

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

ITEM 13. Certain Relationships and Related Transactions, and Director Independence

ITEM 14. Principal Accounting Fees and Services

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PART IV

ITEM 15. Exhibits, Financial Statement Schedules

(a)The following documents are filed as part of this Annual Report on Form 10-K:

1.Consolidated Financial Statements

Our consolidated financial statements are included in Part II, Item 8-Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

2.Financial Statement Schedules

The following Consolidated Financial Statements are included in Part II, Item 8- Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

Schedule I—Registrant’s Condensed Financial Statements

3.Exhibits

The information called for by this paragraph is set forth in Item 15(b) below.

(b)The documents listed in the Exhibit Index of this Annual Report on Form 10-K are filed, furnished, or incorporated by reference in this Annual Report on Form 10-K, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K).


Exhibit Number						Description
3.1						Amended and Restated Certificate of Incorporation of agilon health (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed April 19, 2021).

3.2						Amended and Restated By-laws of agilon health (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed April 19, 2021).

4.1						Description of Securities Registered Pursuant to Section 12(b) of the Exchange Act (incorporated by reference to Exhibit 4.1 to the Annual Report on Form10-K filed March 3, 2022).

10.1						Registration Rights Agreement, by and among agilon health, inc. and CD&R Vector Holdings, L.P., dated as of April 16, 2021 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed April 19, 2021).

10.2						Stockholders Agreement, by and among agilon health, inc. and CD&R Vector Holdings, L.P., dated as of April 16, 2021 (incorporated by reference to Exhibit 10.2 the Current Report on Form 8-K filed April 19, 2021).

10.3						Termination Agreement, by and between Agilon Health Holdings, Inc., Primary Provider Management Co., Inc. and Clayton, Dubilier & Rice, LLC, dated as of April 16, 2021 (incorporated by reference to Exhibit 10.3 the Current Report on Form 8-K filed April 19, 2021).

10.4						Credit Agreement, dated as of February 18, 2021, by and among agilon management, Agilon Health Intermediate Holdings, Inc., the Lenders party thereto, the Issuers party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent and JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Securities, LLC. Deutsche Bank Securities Inc. and Nomura Securities International, Inc., as joint lead arrangers and joint bookrunners (as amended by the First Amendment to Credit Agreement dated as of March 1, 2021) (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-1 (Registration No. 333-254435) filed March 18, 2021).

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10.5						First Amendment to Credit Agreement, dated as of March 1, 2021, by and between agilon management, inc., and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1.1 to the Registration Statement on Form S-1 (Registration No. 333-254435) filed March 18, 2021).

10.6						Second Amendment to Credit Agreement, dated May 25, 2023, by and Among agilon management, inc., the Lenders named therein and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed August 3, 2023).

10.7						Employment Agreement, dated as of May 4, 2020, by and among Steven J. Sell, agilon health and agilon management (incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 (Registration No. 333-254435) filed March 18, 2021).†

10.8						Employment Agreement, dated as of January 11, 2021, by and between Timothy Bensley and agilon management (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-1 (Registration No. 333-254435) filed March 18, 2021).†

10.9						Employment Agreement, dated as of April 4, 2022, by and between Benjamin Shaker and agilon health, inc. (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed May 5, 2022).†

10.10						Employment Agreement, dated as of March 31, 2022, by and between Girish Venkatachaliah and agilon health, inc. (incorporated by reference to Exhibit 10.2 to the Form 10-Q filed May 5, 2022).†

10.11						Employment Agreement, dated as of March 5, 2017, by and between Veeral Desai and Agilon Health Holdings, Inc. and agilon management (incorporated by reference to Exhibit 10.2 to the Form 10-K filed Ma rch 1 , 202 3 )† *

10.12						Amended and Restated agilon health Stock Incentive Plan, dated as of April 27, 2017 (incorporated by reference to Exhibit 10.7 to the Registration Statement on Form S-1 (Registration No. 333-254435) filed March 18, 2021).†

10.13						Indemnification Agreement between agilon health and Steven J. Sell (and Schedule to Exhibit 10.8) (incorporated by reference to Exhibit 10.8 to the Registration Statement on Form S-1 (Registration No. 333-254435) filed March 18, 2021).†

10.14						agilon health Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-8 (Registration No. 333-255228) filed April 14, 2021).†

10.15						agilon health 2021 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-8 (Registration No. 333-255228) filed April 14, 2021).†

10.16						Form of Employee Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.3 to the Registration Statement on Form S-8 (Registration No. 333-255228) filed April 14, 2021).†

10.17						Form of Employee Performance Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-8 (Registration No. 333-255228) filed April 14, 2021).†

10.18						Form of Stock Option Agreement (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-8 (Registration No. 333-255228) filed April 14, 2021).†

10.19						Form of Director Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.6 to the Registration Statement on Form S-8 (Registration No. 333-255228) filed April 14, 2021).†

21.1						List of Subsidiaries of agilon health as of December 31, 2023.*

23.1						Consent of Independent Registered Public Accounting Firm.*

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31.1						Certification by Steven J. Sell, agilon’s Principal Executive Officer, Pursuant to Securities Exchange Act Rule 13a-14(a).*

31.2						Certification by Timothy Bensley, agilon’s Principal Financial Officer, Pursuant to Securities Exchange Act Rule 13a-14(a).*

32.1						Certification by Steven J. Sell, agilon’s Principal Executive Officer, Pursuant to Securities Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350.**

32.2						Certification by Timothy Bensley, agilon’s Principal Financial Officer, Pursuant to Securities Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350.**

97.1						agilon health, inc. Policy Regarding Recovery of Erroneously Awarded Compensation.

101.INS						Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.*

101.SCH						Inline XBRL Taxonomy Extension Schema Document.*

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.*

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.*

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.*

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.*

104						Cover Page Interactive Data File (embedded within the Inline XBRL document).*

_____________________________________________________________________

*Filed with this report.

**Furnished with this report.

†Identifies each management contract or compensatory plan or arrangement.

(c)

None.

ITEM 16. Form 10-K Summary

None.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: February 27, 2024


			agilon health, inc. (Registrant)

			/s/ STEVEN J. SELL
			Steven J. Sell,
			Chief Executive Officer and President (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ STEVEN J. SELL

Chief Executive Officer and President

February 27, 2024

Steven J. Sell

(Principal Executive Officer), Director

/s/ TIMOTHY S. BENSLEY

Executive Vice President and Chief Financial Officer

February 27, 2024

Timothy S. Bensley

(Principal Financial Officer)

/s/ TIMOTHY GERTSCH

Chief Accounting Officer

February 27, 2024

Timothy Gertsch

(Principal Accounting Officer)

/s/ RONALD A. WILLIAMS

Chairman of the Board

February 27, 2024

Ronald A. Williams

/s/ RAVI SACHDEV

Vice Chairman of the Board

February 27, 2024

Ravi Sachdev

/s/ SHARAD MANSUKANI, M.D.

Director

February 27, 2024

Sharad Mansukani, M.D.

/s/ JEFFREY A. SCHWANEKE

Director

February 27, 2024

Jeffrey A. Schwaneke

/s/ WILLIAM WULF, M.D.

Director

February 27, 2024

William Wulf, M.D.

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Signature

Title

Date

/s/ KAREN MCLOUGHLIN

Director

February 27, 2024

Karen McLoughlin

/s/ DIANA L. MCKENZIE

Director

February 27, 2024

Diana L. McKenzie

/s/ SILVANA BATTAGLIA

Director

February 27, 2024

Silvana Battaglia

agilon health, inc. - Annual Report: 2023 (Form 10-K)

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