agilon health heads into its third-quarter report after three straight guidance raises. Management has also told investors to expect a quieter quarter. After a second quarter that produced $70 million of adjusted EBITDA and $197 million of medical margin, the company guided the September period to roughly breakeven EBITDA. It built in a 7% medical cost trend assumption that it called prudent. The question now is whether that caution was conservative bookkeeping or a real reflection of rising costs. The answer will shape how much credibility the turnaround story carries into 2027.
The Street is looking for revenue of about $1.45 billion, roughly 1% above the year-ago $1.44 billion. That figure sits near the low end of management's $1.445 billion to $1.475 billion range. On earnings, consensus calls for a loss of $2.01 per share. That compares with a loss of $0.27 a year ago and a profit of $1.04 last quarter. A swing of that size means analysts have absorbed the guided step-down and then some, so the bar on the bottom line looks undemanding. Revenue growth is essentially flat, which fits a company still shrinking its Medicare Advantage membership. Membership stood at 437,000 last quarter versus 498,000 a year earlier, after disciplined contracting and market exits.
The most important evidence will come from cost trend. Over the past several quarters, agilon has repeatedly revised its trend estimates lower. Its 2025 estimate fell from 6.5% to 6.2% and then to 5.8%. First-quarter 2026 trend, first booked at 7.4%, was later marked down to the low 6% range. If third-quarter claims again come in below the 7% placeholder, the company has room to post better-than-guided results. It could also raise full-year EBITDA above the current midpoint of about $85 million. If trend lands at or above 7%, the pattern of favorable restatements would break, and investors would have reason to question how much of this year's improvement is durable.
Risk adjustment is the second pillar. Management lifted its 2026 estimate, net of V28, from 0.4% to 1.5% and then to about 3%. It credited a data pipeline now covering more than 80% of payers, along with its Burden of Illness program. Management also warned that the tailwind will remain positive in 2027 but smaller. Any further upward revision would help this year, but the more useful signal is what the company says about next year. About half of 2027 payer contracts were still open last quarter, and payer bids had not yet arrived. Progress on those negotiations will matter more than one quarter's margin. So will early color on how the MSSP and ACO LEAD programs, plus conversions of care-coordination members to full risk, could offset a fading risk-adjustment lift. The new payer contract worth about $200 million in revenue, modeled at breakeven, should also keep tracking to plan.
The stock has not rewarded the operational progress. Shares have fallen about 10% since the last report, while the S&P 500 was roughly flat. Sentiment has slipped from mildly bullish to essentially neutral. At about $90, the stock still trades well above its 200-day moving average near $63.50. It sits in the upper middle of its post-earnings range of roughly $72 to $104. That range is far narrower than the prior quarter's $42 to $133 swing, a sign the frenzy has cooled into a wait-and-see posture.
This is CEO Tim O'Rourke's second report, and his message last time was that the strategy is working. To confirm that, agilon needs to clear the low EBITDA bar and show cost trend running below its cautious assumption. It also needs to show enough progress on 2027 contracts to convince investors that this year's gains do not rest mainly on risk adjustment. If it does, a fourth raise is plausible. If costs run hot, the guide's conservatism may prove to have been accurate rather than cautious.