Over the last six months, agilon health’s shares have sunk to $2.30, producing a disappointing 5.3% loss - a stark contrast to the S&P 500’s 7.5% gain. This was partly driven by its softer quarterly results and might have investors contemplating their next move.
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Why Does agilon health Spark Debate?
Transforming how doctors care for seniors by shifting financial incentives from volume to outcomes, agilon health (NYSE:AGL) provides a platform that helps primary care physicians transition to value-based care models for Medicare patients through long-term partnerships and global capitation arrangements.
Two Things to Like:
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last four years, agilon health grew its sales at an incredible 45.4% compounded annual growth rate. Its growth beat the average healthcare company and shows its offerings resonate with customers. 
2. Customer Base Skyrockets, Fueling Growth Opportunities
Revenue growth can be broken down into the number of customers and the average spend per customer. Both are important because an increasing customer base leads to more upselling opportunities while the revenue per customer shows how successful a company was in executing its upselling strategy.
agilon health’s total customers punched in at 491,000 in the latest quarter, and over the last two years, their count averaged 34.7% year-on-year growth. This performance was fantastic, reflecting its ability to "land" new contracts and potentially "expand" them later - a powerful one-two punch for sales. 
One Reason to be Careful:
Projected Revenue Growth Is Slim
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect agilon health’s revenue to rise by 2.1%, a deceleration versus its 45.4% annualized growth for the past four years. This projection doesn't excite us and suggests its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.
Final Judgment
agilon health has huge potential even though it has some open questions. After the recent drawdown, the stock trades at $2.30 per share (or a forward price-to-sales ratio of 0.2×). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
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