agilon health, inc. (AGL) 2023年年度報告「NYSE」.pdf

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1、Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549_FORM 10-K(Mark One)xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934.For the fiscal year ended December 31,2023oroTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES

2、 EXCHANGE ACT OF 1934For the transition period from to Commission file number 001-40332_agilon health,inc.(Exact name of registrant as specified in its charter)Delaware37-1915147(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification No.)6210 E Hwy 290,Suite 450Aus

3、tin,Texas78723(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code(562)256-3800Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading symbol(s)Name of each exchange on which registeredCommon stock,$0.01 par valueAGLThe New Y

4、ork Stock Exchange_Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes x No oIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes o No xIndicate by check ma

5、rk whether the registrant;(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for

6、the past 90 days.Yes x No oIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was

7、required to submit such files).Yes x No oIndicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company or an emerging growthcompany.See the definitions of“large accelerated filer,”“accelerated filer”,“smaller repor

8、ting company”and emerging growth company in Rule 12b-2 of the Exchange Act.Large accelerated filer xAccelerated filer oNon-accelerated filer oSmaller reporting company oEmerging growth company oIf an emerging growth company,indicate by check mark if the registrant has elected not to use the extended

9、 transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a)of the Exchange Act.oIndicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control

10、 over financialreporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.xIf securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of the re

11、gistrant included in the filing reflect thecorrection of an error to previously issued financial statements.oIndicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of theregistrants executive of

12、ficers during the relevant recovery period pursuant to 240.10D-1(b).oIndicate by check mark whether the registrant is a shell company(as defined by Rule 12b-2 of the Act.)Yes o No xState the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by referenc

13、e to the price at which the common equity was lastsold,or the average bid and asked price of such common equity,as of the last business day of the registrants most recently completed second fiscal quarter:$5.2 billion.As of February 24,2024,there were 409,541,664 shares of common stock outstanding.D

14、OCUMENTS INCORPORATED BY REFERENCEPortions of the definitive Proxy Statement for the registrants 2024 Annual Meeting of Stockholders have been incorporated by reference into Part III of this Report.Table of Contentsagilon health,inc.Form 10-KFor the Fiscal Year Ended December 31,2023Table of Content

15、sCautionary Language Regarding Forward-Looking Statements1Part I3Item 1.Business3Item 1A.Risk Factors18Item 1B.Unresolved Staff Comments49Item 1C.Cybersecurity49Item 2.Properties51Item 3.Legal Proceedings51Item 4.Mine Safety Disclosures51Part II52Item 5.Market for Registrants Common Equity,Related S

16、tockholder Matters and Issuer Purchases of Equity Securities52Item 6.Reserved53Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations54Item 7A.Quantitative and Qualitative Disclosures About Market Risk70Item 8.Financial Statements and Supplementary Data71Item 9.C

17、hanges in and Disagreements with Accountants on Accounting and Financial Disclosure76Item 9A.Controls and Procedures76Item 9B.Other Information79Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections79Part III80Item 10.Directors,Executive Officers and Corporate Governance80Item

18、11.Executive Compensation80Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters80Item 13.Certain Relationships and Related Transactions,and Director Independence80Item 14.Principal Accounting Fees and Services80Part IV81Item 15.Exhibits and Financial

19、 Statement Schedules81Item 16.Form 10-K Summary83Signatures84Table of ContentsAll references in this report to“agilon,”“the Company”,“we,”“us”or“our”mean agilon health,inc.,together with its consolidated subsidiaries.Unlessthe context suggests otherwise,references to“agilon health,inc.”mean the pare

20、nt company without its subsidiaries.Cautionary Language Regarding Forward-Looking StatementsStatements in this Annual Report on Form 10-K(the“Report”)that are not historical factual statements are“forward-looking statements”withinthe meaning of Section 27A of the Securities Act of 1933,as amended(th

21、e“Securities Act”),and Section 21E of the Securities Exchange Act of 1934,asamended(the“Exchange Act”).Some of the forward-looking statements can be identified by the use of forward-looking terms such as“believes,”“expects,”“may,”“will,”“shall,”“should,”“would,”“could,”“seeks,”“aims,”“projects,”“is

22、optimistic,”“intends,”“plans,”“estimates,”“anticipates”or the negativeversions of these words or other comparable terms.Forward-looking statements include,without limitation,all matters that are not historical facts.They appearin several places throughout this Report and include,without limitation,s

23、tatements regarding our intentions,beliefs,assumptions or current expectationsconcerning,among other things,our financial position,results of operations,cash flows,prospects,and growth strategies.Forward-looking statements are subject to known and unknown risks and uncertainties,many of which may be

24、 outside our control.We caution youthat forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes,including,without limitation,our actual results of operations,financial condition and liquidity,and the development of the market in which

25、we operate,may differ materially from thosemade in or suggested by the forward-looking statements contained in this Report.In addition,even if our results of operations,financial condition,and cashflows,and the development of the market in which we operate,are consistent with the forward-looking sta

26、tements contained in this Report,those results ordevelopments may not be indicative of results or developments in subsequent periods.A number of important factors,including,without limitation,the risksand uncertainties discussed under“Item 1A,Risk Factors”in this Report,could cause actual results an

27、d outcomes to differ materially from those reflected inthe forward-looking statements.Furthermore,new risks and uncertainties emerge from time to time,and it is not possible for us to predict all risks anduncertainties that could have an impact on the forward-looking statements contained in this Rep

28、ort.Factors that could cause actual results and outcomes todiffer from those reflected in forward-looking statements include,without limitation:our history of net losses and the expectation that our expenses will increase in the future;failure to identify and develop successful new geographies,physi

29、cian partners and payors,or execute upon our growth initiatives;success in executing our operating strategies or achieving results consistent with our historical performance;medical expenses incurred on behalf of our members may exceed revenues we receive;our ability to secure contracts with Medicar

30、e Advantage(“MA”)payors;our ability to grow new physician partner relationships sufficient to recover startup costs;availability of additional capital,on acceptable terms or at all,to support our business in the future;significant reduction in our membership;transition to a Total Care Model may be c

31、hallenging for physician partners;public health crises,such as COVID-19,could adversely affect us;inaccuracy in estimates of our members risk adjustment factors,medical services expense,incurred but not reported claims,and earningspursuant to payor contracts;the impact of restrictive clauses or excl

32、usivity provisions in some of our contracts with physician partners;our ability to hire and retain qualified personnel;our ability to realize the full value of our intangible assets;security breaches,cybersecurity attacks,loss of data and other disruptions to our information systems;our ability to p

33、rotect the confidentiality of our know-how and other proprietary and internally developed information;1Table of Contentsreliance on our subsidiaries;Environmental,Social,and Governance(“ESG”)issues;reliance on a limited number of key payors;the limited terms of contracts with our payors and our abil

34、ity to renew them upon expiration;reliance on our payors,physician partners and other providers to operate our business;our ability to obtain accurate and complete diagnosis data;reliance on third-party software,data,infrastructure and bandwidth;consolidation and competition in the healthcare indust

35、ry;the impact of changes to,and dependence on,federal government healthcare programs;uncertain or adverse economic and macroeconomic conditions,including a downturn or decrease in government expenditures;regulation of the healthcare industry and our physician partners ability to comply with such law

36、s and regulations;federal and state investigations,audits and enforcement actions;repayment obligations arising out of payor audits;negative publicity regarding the managed healthcare industry generally;our use,disclosure and processing of personally identifiable information,protected health informa

37、tion(“PHI”),and de-identified data;failure to obtain or maintain an insurance license,a certificate of authority or an equivalent authorization;lawsuits not covered by insurance;changes in tax laws and regulations,or changes in related judgments or assumptions;our indebtedness and our potential to i

38、ncur more debt;dependence on our subsidiaries for cash to fund all of our operations and expenses;provisions in our governing documents;ability to achieve a return on investment depends on appreciation in the price of our common stock;andthe material weakness in our internal control over financial r

39、eporting and our ability to remediate such material weakness.Except as required by law,we do not undertake,and hereby disclaim,any obligation to update any forward-looking statements,which speak onlyas of the date on which they are made.2Table of ContentsPART IITEM 1.BusinessOverviewOur business is

40、transforming healthcare by empowering the primary care physicians(“PCP”)to be the agents for change in the communities theyserve.We believe that PCPs,with their intimate patient-physician relationships,are best positioned to drive meaningful change in quality,cost and patientexperience when provided

41、 with the right infrastructure and payment model.Through our combination of the agilon platform,a long-term partnership modelwith existing physician groups and a growing network of like-minded physicians,we believe we are poised to revolutionize healthcare for seniors acrosscommunities throughout th

42、e United States(“U.S.”).We believe our purpose-built model provides the necessary capabilities,capital and business model forexisting physician groups to create a Medicare-centric,globally capitated line of business.Our model operates by primarily forming risk-bearing entities(“RBEs”)within local ge

43、ographies,that enter into arrangements with payors providing for monthly payments to manage the total healthcare needs of ourphysician partners attributed patients(or global capitation arrangements).The RBEs also contract with agilon to perform certain functions and enter into long-term professional

44、 service agreements with one or more anchor physician groups pursuant to which the anchor physician groups receive a base compensationrate and share in the savings from successfully improving quality of care and reducing costs.Our company was formed in 2016,and we established our inaugural partnersh

45、ip with an anchor physician group in 2017.Our ability to rapidlybuild scaled positions in local communities has allowed us to grow to 25 anchor physician groups and 24 geographies as of December 31,2023.Our platformhas enabled us to grow our total membership by 68%and revenue by 81%from December 31,

46、2022 to December 31,2023.As of December 31,2023,thePCPs on our platform serve approximately 388,400 MA members and 89,300 Medicare fee-for-service(“FFS”)beneficiaries through eight Accountable CareOrganizations(“ACOs”)through our participation in the Centers for Medicare&Medicaid Services(“CMS”)Acco

47、untable Care Organization RealizingEquity,Access,and Community Health(“ACO REACH”)Model.The ACO REACH Model was formerly known as the CMS Innovation Center DirectContracting Model and was redesigned and renamed the ACO REACH Model on January 1,2023.For a description of our significant activities dur

48、ing 2023,see“Item 7.Managements Discussion and Analysis of Financial Condition and Resultsof Operations2023 Results”in this Report.Our business model is differentiated by its focus on existing community-based physician groups and is built around three key elements:(1)agilons platform;(2)agilons long

49、-term physician partnership approach;and(3)agilons network.With our model,our goal is to remove the barriers thatprevent community-based physicians from evolving to a Total Care Model,where the physician is empowered to manage health outcomes and the totalhealthcare needs of their attributed Medicar

50、e patients.The agilon Platform:The agilon platform is holistic in supporting the rapid transition to a Total Care Model with technology,people,process andcapital.Our purpose-built platform is comprised of an integrated set of capabilities designed to continuously improve.Our platform is delivered to

51、 our anchorphysician groups through a long-term partnership model to support the adoption and success of a Medicare-centric,globally capitated line of business.agilons Long-term Physician Partner Model:We built the agilon platform to be deployed through an aligned long-term partnership model withcom

52、munity-based physician groups to move healthcare closer to the physician,be outcome-centric and optimize the long-term sticky relationship between apatient and their existing physician.Through this partnership,our physician partners existing MA patient panels are attributed to our platform through o

53、ursubscription-like per-member per-month(PMPM)agreements with payors.The combination of these subscription-like agreements,the sticky patient-physician relationship and our long-term partnership model,which is typically 20 years in duration,results in a growing and recurring revenue stream andprovid

54、es visibility into the near-term and long-term financial trajectory for both agilon and our anchor physician groups.In January of each year,we typicallyhave visibility into greater than 90%of that years projected revenue.As earnings are generated at the local level due to improvements in quality of

55、care andmanagement of healthcare costs,we share those earnings with our anchor physician groups.agilons Network:Enhancing the power and growth of the agilon platform is the rapidly expanding group of leading community-based physicianpartners,functioning as a collaborative group through the agilon ne

56、twork.We believe the value of this network is demonstrated by our ability to add newphysician partners and to attract additional PCPs to our physician partners.The ability to share best practices,influence the development of the platform,compare notes on the3Table of Contentstransition to a Total Ca

57、re Model and learn from one another represents a valuable opportunity for physicians.We believe this like-minded group of community-based physicians,many of whom are leaders in their community,will enhance innovation,growth,quality of care and patient experience,and ultimatelystrengthen the power of

58、 the independent physician business model in local communities across the country.Reimbursement Model and OrganizationUnder a traditional FFS reimbursement model,physicians are paid a fixed amount for services provided during a patient visit,regardless of apatients medical need or health outcome.As

59、a result,physician reimbursement is solely related to the volume of patient visits and procedures performed,thereby offering limited financial incentive to focus on preventative care and cost containment.Value-based care models offer alternative reimbursementmodels,which typically incentivize physic

60、ians for improving the cost and quality of healthcare provided for an attributed patient population.Various types ofvalue-based care reimbursement models exist,including capitation,bundled payments,or payments for attainment of improved quality metrics or medical costefficiency.Under our Total Care

61、Model,which is a type of value-based care reimbursement model,we are responsible for managing the medical costsassociated with our attributed members.This structure empowers physicians to focus on the improvement of the quality of care provided,and to share in thefinancial surplus created to the ext

62、ent premiums received exceed the cost of medical care.Under such a structure,physicians are incentivized to improve thequality and efficiency of care as well as health outcomes for their patients.Physician and Payor Contractual RelationshipsPhysiciansOur business model combines the agilon platform,a

63、 network of like-minded physicians and a long-term partnership model in order to providephysician groups with the necessary capabilities,capital and business model to create a Medicare-centric,globally capitated line of business.We believe thatfailing to empower PCPs to drive meaningful change in qu

64、ality,cost and patient experience has historically fostered waste,unnecessary variability in care andpoor patient experience and health outcomes.We seek to partner with leading community-based physician groups under a Total Care Model.We have formedlong-term partnerships with diverse leading communi

65、ty-based physician groups in geographies such as Ohio,Connecticut,Maine,Michigan,Minnesota,NewYork,North Carolina,Pennsylvania,South Carolina,Tennessee,and Texas.By providing technology,people,process and capital,we aim to improve thequality and cost of healthcare and drive long-term growth while cr

66、eating a sustainable business model for our physician partners.Under the Total Care Model,we typically operate by forming RBEs within local geographies.These wholly-owned RBEs enter into risk-bearing,global capitation agreements with payors,contract with agilon to perform certain functions and enter

67、 into long-term professional service agreements with oneor more partner primary care or multi-specialty physician groups.We refer to these groups as our“anchor physician groups.”Individual MA members whosecare is provided by PCPs employed or affiliated with our anchor physician groups are attributed

68、 to the RBE,which bears financial responsibility for theassociated medical costs of such members.We have entered into long-term professional services agreements with our anchor physician groups,which typicallyhave a contractual duration of 20 years.In accordance with relevant accounting guidance,eac

69、h of these RBEs is determined to be a variable interest entityconsolidated by agilon,as we have:(i)the ability,through the management services and governance arrangements,to direct the activities(excluding clinicaldecisions)that most significantly affect the RBEs economic performance;and(ii)the obli

70、gation to absorb losses of or the right to receive benefits that couldbe potentially significant to the RBE.Through incentive compensation arrangements,we share a portion of the RBEs savings from successfully improving the quality of care andreducing costs with our anchor physician groups.Typically,

71、our anchor physician groups receive a FFS base compensation rate for services rendered which ispaid directly by health plan payors to our anchor physician groups or,in certain arrangements,paid from the health plan payor to the applicable RBE,who paysthe compensation received to our anchor physician

72、 groups.In certain cases,our anchor physician groups may be entitled to a guaranteed minimum FFS basecompensation rate from the RBE in the event that the FFS base compensation rate paid by the health plan payor does not meet the negotiated basecompensation rate as agreed between the RBE and the anch

73、or physician group,or if the FFS base compensation rate paid by the health plan payor falls belowwhat the anchor physician group had received prior to joining our platform.Historically,the base compensation rates paid directly by the health plan payors toour anchor physician groups have met or excee

74、ded applicable guaranteed minimum FFS base compensation rates.This base compensation is initiallynegotiated with the RBE for the first ten years of each agreement,subject to annual increases based on current market rates and other agreed upon adjustmentfactors,after which it is subject to renegotiat

75、ion.4Table of ContentsAlthough our RBEs are wholly-owned subsidiaries of agilon,our anchor physician groups participate in each RBEs governance,with individuals designated ornominated by the applicable anchor physician groups having representation on each RBEs board of directors.Most of our contract

76、s with our anchor physiciangroups contain exclusivity or other provisions intended to promote interconnectedness with our physician partners for applicable lines of business in order tofacilitate the longevity and stability of the partnership.Typically,these contracts provide for termination rights

77、that are triggered upon certain events,subject toapplicable cure periods,including bankruptcy or insolvency events,exclusion,suspension or debarment from state or federal government programs and theoccurrence of government action that can be reasonably expected to negatively influence our business.W

78、e have historically issued certain stock-basedinstruments,which we refer to as“partner physician group equity agreements,”to our anchor physician groups pursuant to which they are entitled to receiveequity of their local RBE or agilon health,respectively,in the future only upon the occurrence of cer

79、tain events deemed a“change of control”of the RBE.Foradditional discussion related the agilon health related instruments,see“Critical Accounting Estimates Stock-Based Compensation.”In addition to our contractual arrangements with our physician partners,we also maintain relationships with other provi

80、ders who care for ourmembers,including hospitals,specialists and ancillary providers.Such providers either contract with agilon or directly with payors.We and our physicianpartners maintain effective working relationships with the majority of the higher-volume providers in our geographies in order t

81、o retain insight into theprovision of care to our members and ensure care is rendered effectively and in a manner which supports the achievement of appropriate clinical outcomes.Health Plan PayorsWe enter into contractual agreements with health plan payors in each of our geographies,under which we a

82、re financially responsible for ourphysician partners provision of a defined spectrum of healthcare services to our members,in exchange for a defined PMPM fee for each of our members(which is also referred to as“global capitation”).The healthcare services for which we are responsible under such arran

83、gements generally include all healthcarecosts which CMS considers as Part A and B costs,including hospitalization and facility costs,primary and specialty care provider costs,and ancillary servicescosts.In certain of our payor arrangements,we are also financially responsible for Part D pharmaceutica

84、l costs for prescriptions rendered to our members.Through these payor agreements,we help to create access for our physician partners to value-based care reimbursement structures through our Total CareModel,which allow our physician partners to focus on the improvement of the quality of care provided

85、 to their patients,and to share in the financial surpluscreated to the extent premiums received exceed the cost of medical care and certain operating costs.The global capitation fees we are entitled to receive from our health plan payor contracts are typically based on a defined percentage of thecor

86、responding monthly premium payments which the payor receives from CMS for members attributed to our PCPs and covered under such contracts.Thepremium payments to payors are based on county-level benchmark rates established by CMS and payors annual bid of amounts necessary to cover the cost ofa standa

87、rd MA patient,and are influenced by several factors,including,but not limited to,the applicable MA plans STAR rating and CMS risk-adjustmentmodel,which compensates payors based on the health status(acuity)of each individual patient in the preceding calendar year.For agreements where the payorretains

88、 responsibility for paying claims on our behalf,as is the case today in the majority of our payor agreements,funding under the applicable agreement isutilized by the payor to pay such claims,and we receive surplus distributions on a monthly or quarterly basis.In these arrangements,the payor maintain

89、s theresponsibility for entering into contractual agreements with network hospitals,network specialty physicians,and ancillary or other providers.Additionally,certain of our contracts with payors incorporate provisions in which we are eligible to earn additional payments on top of our capitation pay

90、ments based uponthe attainment of defined quality performance criteria correlated to applicable STAR ratings criteria.Premiums received may be subject to future adjustment.We have developed local contracts across multiple payors,along with national form contracts with certain key payors,which provid

91、e a consistencyof non-financial contract terms,data sharing,operational processes and governance structures and support portability of the agilon platform.We typicallymaintain various contracts with a single national payor in order to reflect varying economic terms across our geographies,and to prov

92、ide for distinct subsidiaryentities of our company and a national payor as parties to these contracts.As of January 1,2024,we have relationships with 29 health plan payors across 32geographies.Payors with which we contract include large national health plans as well as smaller local and regional ins

93、urers.We believe our ability to offermultiple MA plans and products to our physician partners in each geography creates significant value for our physician partners and the members that theyserve.Members are able to select the plan and benefit design that meets their individual needs while our platf

94、orm enables a seamless experience regardless ofplan or product for all patients and physician groups.5Table of ContentsThe agreements with our payors outline the range of healthcare services for which we are financially responsible and at risk,the services for whichwe are contracted to perform on th

95、e payors behalf and the key financial terms.Our contracts with payors generally have terms of one to three years and aretypically renewed for one-year periods unless terminated in accordance with the terms of such agreements.When we enter into a new payor contract,we aretypically required by the pay

96、or to contribute risk-bearing capital to the local operating subsidiary.This typically takes the form of letters of credit,surety bonds,or restricted deposits,or the payor may retain a percentage of the capitation payments due under the applicable contract.Risk-bearing capital required bypayors vari

97、es by payor and geography,but typically averages between 1.0-3.0%of projected annual gross revenue attributable to the corresponding agreement.Our payor agreements also typically incorporate various termination rights,which are negotiated based on the scope of the market-facing solutionsthat the pay

98、or has adopted and the duration of the contract.Most of our contracts include cure periods during which time we may attempt to resolve any issuesthat would trigger a payors ability to terminate the contract.However,certain of our contracts are also terminable immediately upon the occurrence of certa

99、inevents.For example,some of our contracts may be terminated immediately by the payor if we lose applicable licenses,go bankrupt,lose our liability insuranceor receive an exclusion,suspension or debarment from state or federal government authorities.The contracts with our payors impose other obligat

100、ions on us.For example,we typically agree that all services provided under our contract and allemployees,including affiliated and contracted providers,providing such services will comply with such payors policies and procedures.We also typicallyagree to indemnify our payors against certain third-par

101、ty claims.ACO REACHagilon,in conjunction with some of our physician partners,participated in the ACO REACH Model in certain geographies,through eight approvedACOs.The ACO REACH Model is a voluntary payment model option aimed at reducing expenditures and preserving or enhancing quality of care forben

102、eficiaries in traditional Medicare FFS established by the CMS Innovation Center.Under the ACO REACH Model,CMS contracts directly with each ACO pursuant to participation agreements,in which such ACO selects risk-sharing and fee payment options.The participation agreements included various terms and c

103、onditions each ACO must comply with,including meeting certainoperational requirements.Each of the ACOs selected the Global risk-sharing option,in which the ACO assumes accountability for the total cost of care of theFFS beneficiaries aligned to such ACO.In addition,each of our ACOs selected the Prim

104、ary Care Capitation Payment(the“PCC”)option.The participationagreements between our ACOs and CMS expire two years after the“Model Performance Period”established by CMS,which lasts from April 1,2021 throughDecember 31,2026.The ACO may terminate its participation agreement with CMS at any time upon ad

105、vance written notice.CMS has certain additionaltermination rights,including in connection with the termination of the ACO REACH Model or non-compliance of the ACO.Additionally,CMS has the right toamend a participation agreement without the consent of the ACO for good cause,or as necessary to comply

106、with applicable federal or state law,regulatoryrequirements,accreditation standards or licensing guidelines or rules.The ACOs operate in partnership pursuant to participating medical group agreements with one or more of our physician partners in certaingeographies.Our contracted physician partners p

107、rovide Medicare services to their aligned beneficiaries,and bill CMS on a FFS basis for such services.In turn,in accordance with the PCC option,CMS compensates each physician partner for a portion of their billed services based on the applicable rate,and theremaining portion is paid to each ACO on a

108、 per Medicare beneficiary per month(“PBPM”)basis based on a prospective estimate of such remaining portion ofbilled services.By 2025,CMS will no longer pay any portion to such physician partner based on FFS compensation rates,and will transition to compensatingphysician partners through their applic

109、able ACO on a PBPM basis.Each ACO then remits payment out of the PBPM payments from CMS to its contractedphysician partners on a monthly or quarterly basis pursuant to the applicable participating medical group agreement,which agreement also includes incentivecompensation tied to the ACOs net profit

110、s received for aligned beneficiaries.Our ACOs participating medical group agreements provide for mutualindemnification rights,and have an initial term through December 31,2026,unless earlier terminated.All ACOs are subject to the following requirements:(i)to develop and implement a robust health equ

111、ity plan to identify and better serveunderserved communities;(ii)75%control of each ACOs governing body must be held by participating providers or their designated representatives and(iii)each ACO must have at least two beneficiary representatives on its governing board(at least one Medicare benefic

112、iary and at least one consumer advocate),both of6Table of Contentswhom must hold voting rights.agilon implemented these changes for the 2023 performance year with minimal disruption.In addition,the CMS InnovationCenter announced that ACO REACH would include technical adjustments to the models parame

113、ters,including changes to benchmark calculations,and theadjustments will continue into 2024.The overall effect of these changes on our ACOs benchmarks has been minimal.The ACO REACH model,whichformally launched on January 1,2023,is largely the same as its predecessor model,Direct Contracting Model o

114、r Global and Professional Direct ContractingModel,which we participated in since April 2021.Marketing and DistributionIn accordance with Medicare marketing guidelines,health plan payors are responsible for marketing directly to patients.Our focus is on outreachto existing community-based physician g

115、roups to join our platform,establishing and maintaining our local branding and strategies to support education for ourMedicare-eligible members in evaluating their Medicare options.Through our long-term partnership model,we partner with leading community-based physician groups in our existing geogra

116、phies and aim toexpand our geographic reach by partnering with community-based physician groups in new geographies,across the United States.Our growth strategy issupported by a dedicated business development team that works closely with physician groups,senior management and key stakeholders to iden

117、tify potentialphysician groups to partner with and integrate onto our platform and into our network.Additionally,we believe our network of like-minded physician partnersalso attracts new physicians to join,as access to cross-market know-how and best practices encourages success in a Total Care Model

118、.Our enterprise marketing team develops branding strategies and identities in our geographies and supports the development of communication andbranding materials to support the local growth of our physician partners and their Medicare patient population.This begins with our entry into a newgeography

119、.We create a local brand that embodies the value of the Total Care Model for patients as well as the history and culture of our physician partner.Eachgeography includes the anchor partners name and“Senior Health Connect”as part of the naming convention to help reinforce the value of our nationalnetw

120、ork to payors,policy makers and other industry constituents.To empower patients to make informed decisions about their coverage options,educationalopportunities and materials are offered throughout the year,including educational physician presentations,monthly“Medicare 101”sessions across everygeogr

121、aphy,on-line resources,in-office materials that explain the difference between traditional Medicare and MA,and patient communications that highlightMedicare election coverage windows.CompetitionThe healthcare industry is highly competitive and fragmented.We currently face competition in every aspect

122、 of our business,including in offeringa favorable reimbursement structure for existing physician partners and attracting health plan payors and physician partners who are not contracted with us,from a range of companies that provide care under a variety of models that could attract patients,provider

123、s and payors.We compete against other entities thatprovider value-based care services,in addition to numerous local provider networks,hospitals and health systems.Moreover,large,well-financed payors havein some cases developed their own managed care services tools and may provide these services to t

124、heir physicians and patients at discounted prices or mayseek to expand their relationships with additional competing physicians or physician networks.Other organizations may also seek to apply specialized servicesor programs,including providing data analytics or disease-based programs,designed to en

125、able physicians or payors to operate successfully under value-basedcare arrangements.Although some of our competitors utilize elements of our MA multi-payor,globally capitated risk model deployed with community-basedphysician groups,including in certain of the geographies we serve,we do not believe

126、any of our competitors offer a model that captures all elements of theagilon model.Our competitors typically vary by geography,and we may also encounter competition in the future from other new entrants.Our growth strategyand our business could be adversely affected if we are not able to continue to

127、 access existing geographies,successfully expand into new geographies ormaintain or establish new relationships with payors and physician partners.The competitive factors in our business include the nature and caliber of relationships with physicians;patient healthcare quality,outcomes andcost;the s

128、trength of relationships with payors;the quality of the physician experience;local geography leadership position;and the strength of the underlyingeconomic model.We believe our first-of-its-kind platform,partnership and network model enables us to compete favorably.7Table of ContentsIntellectual Pro

129、pertyWe rely on a combination of international and U.S.trademark law as well as confidentiality procedures and contractual provisions to protect ourtrade secrets,including proprietary technology,databases and our brand.We have registered“agilon”and our logo as trademarks in the U.S.We also have file

130、d other trademark applications that are meaningful to ourbusiness in the U.S.across various states and local jurisdictions,including for the use of the local brand created within each of our geographies,and will pursueadditional trademark registrations to the extent we believe it would be beneficial

131、 and cost-effective.We are the registered holder of a variety of domain names that include“agilon”and similar variations.We have developed proprietary technology and processes that support our operational programs and clinical insights,including our“CORE”technology platform and HCC Manager risk adju

132、stment software application,both of which are proprietary systems that aid in the aggregation and analysis ofthird-party data we collect.Our internally developed technology is continuously refined to support the needs of our platform and partners.Although we do notcurrently hold a patent for CORE or

133、 HCC Manager,we continually assess the most appropriate methods of protecting our intellectual property and may decideto pursue available protections in the future.We maintain our intellectual property and confidential business information in a number of ways.For instance,all employees and consultan

134、ts signagreements and/or acknowledgments reminding them of their confidentiality obligations upon the commencement of an employment or consulting relationshipwith us.In addition,we have a policy of requiring individuals and entities with which we discuss potential business relationships to sign non-

135、disclosureagreements.Lastly,our agreements with physician partners include confidentiality and non-disclosure provisions.We may be unable to obtain,maintain and enforce our intellectual property rights,and assertions by third parties that we violate their intellectualproperty rights could have a mat

136、erial adverse effect on our business,financial condition and results of operations.Human CapitalOverviewPeople join agilon because of our vision:To transform the future of healthcare in communities across the country by empowering exceptionalpatient-physician relationships.Together with our employee

137、s and physician partners,we have defined our company values and commitments to guide oureveryday actions in executing our mission:Partnership and Collaboration:We are One Team.We collaborate deeply.We embrace diversity.Together with our physician partners,weempower the care that our families and fri

138、ends deserve.Innovation:We rapidly adapt to our changing world and embrace the creativity of our physician partners and each other.Quality and Service Excellence:We value results,not activity.We serve others with passion and humility.Continuous Improvement:We are agile and move fast.We actively seek

139、 out and share feedback.We learn and improve every day.Expertise:We are curious.We aspire to be experts and share our knowledge.Accountability and Integrity:We celebrate our successes.We take ownership in everything we do.Our human capital efforts are supported by our dedicated human resources team.

140、This team supports the business in identifying and recruiting toptalent,supporting the onboarding and orientation of new hires through a comprehensive new employee orientation,a managers toolkit and resources to supportonboarding,goal setting,and in-year management,as well as a comprehensive semi-an

141、nual review process that ties to our company values and supportscontinuous learning and improvement.Our efforts to promote a positive employee experience and build culture are further supported and enhanced by localand national in-person and virtual events,including town halls,in-office and/or virtu

142、al celebrations,employee activity committees and recognition awards,meant to champion our employees and create a sense of community.We conduct annual employee engagement surveys to solicit feedback and help guideannual planning on efforts and initiatives to support our team members.8Table of Content

143、sTotal RewardsWe recognize how vital our employees are to our success and strive to offer comprehensive and competitive compensation and benefits to meet thevarying needs of our employees.Our Total Rewards programs include short-term and long-term incentives,recognition programs,a 401(k)plan,health

144、andwelfare insurance benefits,unlimited paid time off for exempt employees and accrued paid time off for hourly employees,flexible work schedules,and familyleave,among many others,depending on eligibility.As part of our efforts to promote pay equity,we have implemented measures in our U.S.offices su

145、ch as routinely benchmarking roles againstmarket comparables,increasing pay transparency for applicants and associates,setting pay ranges based on role and experience,applying consistent processesfor annual merit increases and bonuses and driving additional ongoing and future improvements.Diversity,

146、Equity,Inclusion&Belonging(“DEIB”)We believe a great workplace fosters an environment where all employees can thrive and grow,and where differences are both encouraged andcelebrated.We aim to attract,develop,retain and support a diverse workforce that reflects the many members,physician partners,and

147、 communities we serve.Under our DEIB Senior Executive Council each direct report to our CEO is responsible for supporting strategic direction and championing efforts and fundingfor programs and initiatives connected to one of the four pillars of our DEIB strategy.Our DEIB programs include a leadersh

148、ip development workshop andcoaching program for high potential employees including those who have not previously had opportunities to develop leadership skills,employee resourcegroups to foster sense of community and inclusion,an unconscious bias curriculum,and other community-building events to dee

149、pen understanding andappreciation of our global workforce.Training and DevelopmentWe prioritize and invest in creating opportunities to help employees grow and build their careers through a multitude of training and developmentprograms.These programs,in addition to focusing on career development,and

150、 professional development,reinforce the importance of compliance and ethicalbehavior embodied in our Code of Conduct and related policies and training,which all employees must complete upon hire and annually thereafter.We alsoinclude online courses designed to strengthen technical and hard-skills an

151、d enhance leadership development.We support career coaching,mentorship andaccelerated leadership development programs to ensure mobility and advancement for our employees.Our employees are also encouraged to participate inmentoring programs with people of various backgrounds and cultures.We view men

152、toring as an essential development tool for sharing skills and knowledge sowe can all succeed.Our commitment to mentoring feeds the successful future of our company.Health&SafetyThe health,safety,and wellness of our employees are vital to our success.We have a strong commitment to providing a safe w

153、orking environment.As of December 31,2023,agilon and its subsidiaries had 1,117 employees;substantially all were full-time.None of our employees are members ofa labor union,and we have not experienced a work stoppage.Our employees do not include our physician partners,whom we do not directly employ.

154、Healthcare and Other Applicable Regulatory MattersThe healthcare industry is highly regulated under state,federal,and international laws and regulations.Our operations and relationships withhealthcare plans and providers are also subject to extensive and increasing regulation by numerous federal,sta

155、te,and local government agencies including theOffice of Inspector General(“OIG”),the Department of Justice(“DOJ”),CMS,the Office of Civil Rights(“OCR”),and various other authorities.Healthcarelaws and regulations change frequently.Regulatory agencies have broad discretion to issue new regulations an

156、d enforce the laws and regulations and have beenincreasingly active in enforcing the laws and regulations against healthcare companies,including companies that provide managed care.Corporate Practice of MedicineSome states in which we operate have laws prohibiting the corporate practice of medicine(

157、“CPOM”);such laws generally prohibit businessentities with non-physician owners,such as agilon and certain of its subsidiaries,from practicing medicine.States with CPOM laws limit the practice ofmedicine to licensed individuals or professional9Table of Contentsorganizations comprising licensed indiv

158、iduals;therefore,non-medical professional entities are prohibited from employing or contracting with physicians(unless the entity satisfies limited exceptions),exercising control over medical decisions,or engaging in certain arrangements with other physicians,such asfee-splitting.These laws vary fro

159、m state to state and change frequently based on new case law,opinions from state attorneys general and regulationspromulgated by medical boards.A majority of states have adopted express corporate practice of medicine prohibitions,and several states that have notexplicitly adopted the doctrine,noneth

160、eless,have regulations that echo CPOM principles.A violation of the CPOM prohibition constitutes the unlawfulpractice of medicine,which is a public offense punishable by fines or criminal penalties.A violation could also result in civil penalties or damages.In addition,any medical professional who p

161、articipates in a scheme that violates a states CPOM prohibition may be subject to disciplinary action,license revocation,orpotential forfeiture of revenues from payors for services rendered or may be punished for aiding and abetting a non-medical professional entity in the unlawfulpractice of medici

162、ne.We typically operate by forming RBEs that contract with payors on the one hand and provide professional services through contractualrelationships with PCPs on the other hand.While we believe that our practices are in substantial compliance with the CPOM laws to which we are subject,if astate dete

163、rmines that we are not in compliance that may result in a material adverse effect on our business,results of operations or financial condition.Fee-Splitting ProhibitionsThe laws of some states prohibit medical professionals from splitting with anyone,other than providers who are part of the same gro

164、up practice,any professional fee,commission,rebate or other form of compensation for any services not actually and personally rendered.Fee-splitting laws and theirinterpretations vary and are enforced by state courts and regulatory authorities that have broad discretion in their enforcement.Courts i

165、n some states haveinterpreted fee-splitting statutes as prohibiting all percentage of gross revenue and percentage of net profit fee arrangements,despite the performance oflegitimate services.In addition,courts have refused to enforce contracts found to violate state fee-splitting prohibitions.Furth

166、er,fee-splitting arrangementscould implicate other laws applicable to our business,such as anti-kickback and CPOM laws and regulations.While we believe we are in substantial compliance with fee-splitting laws in the states in which we operate,if we are found to be non-compliant,penalties for violati

167、ng fee-splitting statutes or regulations may include medical license revocation,suspension,probation or other disciplinary action against ouraffiliated providers.It could also result in monetary damages and penalties.False Claims ActsWe are subject to numerous federal and state laws that prohibit th

168、e presentation of false information,or the failure to disclose information,inconnection with the submission and payment of medical claims for reimbursement.The federal civil and criminal false claims laws and civil monetary penalties laws,such as the federal False Claims Act,31 U.S.C.37293733(“FCA”)

169、,impose civil liability on individuals or entities that submit false or fraudulent claims for payment to the federal government.The FCA provides,inpart,that the federal government may bring a lawsuit against any person whom it believes has knowingly or recklessly:presented,or caused to be presented,

170、afalse or fraudulent claim for payment or approval to the federal government;made,used or caused to be made or used a false statement or a false record to geta claim for payment approved,including a false or fraudulent claim;concealed,or knowingly and improperly avoided or decreased,an obligation to

171、 pay ortransmit money or property to the federal government;or conspired to commit any of the foregoing.The government may deem entities to have“caused”thesubmission of false or fraudulent claims by,for example,providing inaccurate billing or coding information,billing for services not rendered,bill

172、ing services ata higher payment rate than appropriate and billing for care that is not considered medically necessary.Suits filed under the FCA are also known as“qui tam”actions.They are frequently brought by individuals known as“relators”or“whistleblowers,”who may file a FCA lawsuit on behalf of th

173、e government.Relators and whistleblowers are incentivized to file such lawsuits because they may share in a percentage of any recovery.Healthcare-related fraud continues to be the leading source of recoveries in FCA settlements and judgments.The federal government has used the FCA to prosecute a wid

174、e variety of alleged false claims and fraud allegedly perpetrated against Medicare andother federal healthcare programs.The federal government,including as a result of the passage of the ACA,and a number of courts have taken the position thatclaims presented in violation of certain other statutes,in

175、cluding the federal Anti-Kickback Statute(“AKS”)or the federal physician referral law,42 U.S.C.1395nn(the“Stark Law”),are a violation of the FCA.Some government healthcare programs,including,but not limited to,10Table of Contentsthe MA program,use a risk-adjustment model that adjusts premiums paid t

176、o contracted payors to reflect the specific characteristics of each enrolled member(including demographics,government program eligibility and health status).Many payors and government healthcare programs have set forth specificdocumentation rules that must be followed in compliantly selecting allowa

177、ble codes.We rely on physician partners to follow the CMS documentation rules andcode their claim submissions with accurate and substantially documented diagnoses,which we send to the payors,some of whom,in turn,submit the data togovernment healthcare agencies including CMS.In recent years,the DOJ h

178、as brought a number of investigations and actions under the federal FCA against both payors and providers for allegedupcoding or improper coding of diagnosis coding under the risk-adjustment methodology.The FCA and Social Security Act also prohibits the knowingretention of identified overpayments(kn

179、own as“reverse false claims”).A number of states have enacted laws that are similar to the federal FCA.UnderSection 6031 of the Deficit Reduction Act of 2005,as amended,if a state enacts a false claims act that is at least as stringent as the federal statute and that alsomeets certain other requirem

180、ents,the state will be eligible to receive a greater share of any monetary recovery obtained pursuant to certain actions broughtunder the states FCA.As a result,more states are expected to enact laws that are similar to the federal FCA in the future along with a corresponding increase instate false

181、claims enforcement efforts.Penalties for violations of the federal and state FCAs are severe.For example,if an entity violates the federal FCA,the government may seek up tothree times the actual damages(known as“treble damages”),plus substantial penalties for each false claim.Exclusion from federal

182、healthcare programs is alsopossible.Violations of federal and state fraud and abuse laws may be punishable by criminal and/or civil sanctions,including significant penalties,fines,disgorgement,additional reporting requirements and oversight under a corporate integrity agreement or similar agreement

183、to resolve allegations ofnoncompliance with these laws,and/or exclusion or suspension from federal healthcare programs,such as Medicare,and debarment from contracting with theU.S.government.In addition to the provisions of the FCA,which provide for civil enforcement,the federal government also can u

184、se several criminal statutesto prosecute persons who are alleged to have submitted false or fraudulent claims to the government for payments.Federal and State Anti-Kickback StatutesThe AKS,set forth in Section 1128B of the Social Security Act,is a criminal statute that prohibits the knowing and will

185、ful offer,payment,solicitation or receipt of any form of remuneration in return for,or to induce,(i)the referral of a person for items or services reimbursable under federalhealthcare programs,(ii)the furnishing or arranging for the furnishing of items or services reimbursable under federal healthca

186、re programs or(iii)the purchase,lease or order or arranging or recommending purchasing,leasing or ordering of any item or service reimbursable under federal healthcare programs.The coreof a violation of the AKS is an“inducement”to refer patients for services or items that are reimbursed under a fede

187、ral healthcare program,such as Medicare,Medicaid,or Tricare(which covers military personnel).The AKS is based on the theory that kickbacks undermine the integrity of federal healthcare programsby tainting medical decision-making,increasing healthcare costs and negatively impacting competition.The AC

188、A amended the AKS to make it clear that aperson need not have actual knowledge of the statute,or specific intent to violate the statute,as a predicate for a violation.Court cases have resulted in theinterpretation that a violation may occur even when only one of many purposes of the remuneration is

189、to induce or reward referrals,and the OIG,which has theauthority to impose administrative sanctions for violation of the statute,has adopted a similar standard.There are certain AKS“safe harbors”which,if the respective requirements are met,would afford protection from the AKS.Failure to meet allrequ

190、irements of an AKS safe harbor does not necessarily mean the arrangement violates the AKS,but it may be subject to scrutiny by legal authorities,in lightof the parties intent and arrangements.In other words,if an arrangement does not fit within a safe harbor,it does not necessarily mean that the arr

191、angement isper se illegalonly that it is not shielded from regulatory scrutiny.The federal AKS provides criminal penalties for individuals or entities that knowingly andwillfully solicit or receive any remuneration.A violation of the AKS is punishable by imprisonment of up to ten years,fines of up t

192、o$100,000 per offense,orboth.Violation can also give rise to federal healthcare program exclusion,liability under the FCA and civil penalties,which may include monetary penalties ofup to$100,000 per offense,repayments of up to three times the total payments between the parties to the arrangement and

193、 suspension from future participationin Medicare and Medicaid.We have endeavored to structure our business arrangements with healthcare providers to comply with the AKS or fit within an AKS safe harbor.For example,a key managed care safe harbor under the AKS upon which we regularly rely allows for p

194、ayments to providers for“healthcare services anditems,”but does not allow incentive payments for marketing or to encourage member enrollment.We therefore carefully analyze all payment structures toensure that they11Table of Contentsconstitute“services and items”that fall within this safe harbor or a

195、re otherwise in compliance with the AKS.We similarly analyze other financial arrangementswith healthcare providers to seek to comply with the AKS,including through application of other safe harbors and assessment of whether the arrangementreflects fair market value for the value of services provided

196、 without regard for the volume or value of referrals generated between the parties.Additionally,some states have enacted statutes and regulations similar to the AKS,but which may be applicable regardless of the payor source forthe patient.These state laws may contain exceptions and safe harbors that

197、 are different from and/or more limited than those of federal law and that may varyfrom state to state.To help accelerate the U.S.healthcare systems transition from a FFS to a value-based system,the U.S.Department of Health and Human Services(“HHS”)launched the“Regulatory Sprint to Coordinated Care”

198、initiative(“Regulatory Sprint”)in 2018,which aims to change the manner in which thehealthcare regulatory framework has traditionally been applied to stakeholder arrangements.In connection with the Regulatory Sprint,the OIG issued finalrules amending the AKS by adding new safe harbors and modifying e

199、xisting safe harbors that protect certain payment practices and business arrangementsfrom sanctions under the AKS in order to remove potential barriers to more effective coordination and management of patient care and delivery of value-basedcare.Among other changes,the new regulations contain safe h

200、arbors for value-based arrangements centering around value-based enterprises,which areenterprises composed of participants collaborating to achieve one or more value-based purposes,including coordinating and managing the care of a targetpatient population and coordinating and managing the care of a

201、target population.These new final rules provide additional protections to our payment modelswith providers.We have also endeavored to structure our participation in the ACO REACH Model to comply with waivers of the AKS issued by the Secretary ofHHS.The conditions of such waivers are to ensure that p

202、rotected arrangements:(i)are consistent with the quality,care coordination,and cost-reduction goalsof the ACO REACH Model,(ii)are subject to safeguards designed to mitigate the risk of fraud and abuse;and(iii)can be readily monitored and audited.Stark LawThe Stark Law generally prohibits a physician

203、 from referring Medicare and Medicaid patients to an entity providing designated health services(“DHS”)if such physician,or a member of the physicians immediate family,has a financial relationship with the entity,unless a specific exception applies.DHS is defined to mean any of the following enumera

204、ted items or services:clinical laboratory services;physical therapy services;occupational therapyservices;radiology services,including magnetic resonance imaging,computerized axial tomography scans and ultrasound services;radiation therapy servicesand supplies;durable medical equipment and supplies;

205、parenteral and enteral nutrients,equipment and supplies;prosthetics,orthotics and prosthetic devicesand supplies;home health services;outpatient prescription drugs;inpatient and outpatient hospital services;and outpatient speech-language pathology services.The types of financial arrangements between

206、 the referring physician and an entity providing DHS that trigger the Stark Law are broad,including direct andindirect ownership and investment interests,and compensation arrangements.The Stark Law also prohibits any entity providing DHS and receiving aprohibited referral from presenting,or causing

207、to be presented,a claim or billing for the services arising out of the prohibited referral.Similarly,the Stark Lawprohibits an entity from“furnishing”a DHS to another entity in which it has a financial relationship when that entity bills for the service.The Stark Law alsoprohibits self-referrals wit

208、hin an organization by its own physicians,although broad exceptions exist that cover employed physicians and those referring DHSthat are ancillary to the physicians practice to the physician group.The prohibition applies regardless of the reasons for the financial relationship and thereferral;intent

209、 to induce referrals is not required.Like the federal AKS,the federal Stark Law contains statutory and regulatory exceptions intended to protect certain types of transactions andarrangements.If the Stark Law is implicated,the financial relationship must fully satisfy a Stark Law exception;if an exce

210、ption is not satisfied,then the partiesto the arrangement could be subject to sanctions.Sanctions for violation of the Stark Law include denial of payment for claims for services provided inviolation of the prohibition,refunds of amounts collected in violation of the prohibition,a civil penalty of u

211、p to$15,000 for each service arising out of theprohibited referral,a civil penalty of up to$100,000 against parties that enter into a scheme to circumvent the Stark Law prohibition,civil assessment of up tothree times the amount claimed,and potential exclusion from the federal healthcare programs,in

212、cluding Medicare and Medicaid.Amounts collected on claimsrelated to prohibited referrals must be reported and refunded generally within sixty(60)days after the date on which the overpayment was identified.Furthermore,Stark Law violations and failure to return overpayments in a timely manner can form

213、 the basis for FCA liability,as further discussed herein.Additionally,several states have enacted physician self-referral laws.12Table of ContentsNotably,compensation pursuant to a risk-sharing arrangement between a managed care organization or an independent practice association and aphysician(eith

214、er directly or indirectly through a contractor)for services provided to enrollees of a health plan(an MA plan,for example)does not constitute afinancial arrangement for Stark purposes.Further,physician incentive plans(“PIPs”)are allowable provided that(i)the compensation is not determined in anymann

215、er(withhold,capitation,bonus,or otherwise)that takes into account,directly or indirectly,volume or value of referrals and(ii)the PIP does not inducethe reduction of medically necessary care to individual patients and does not place the physician at substantial financial risk for services not provide

216、d by thephysician.As part of the Regulatory Sprint,CMS also issued a sweeping set of regulations that introduce significant new value-based terminology andexceptions to the Stark Law.CMS has implemented new exceptions for certain remuneration exchanged between or among eligible participants in value

217、-basedarrangements.These exceptions and their various requirements apply based on the level of risk assumed by the arrangements participants.These newregulations purport to ease the compliance burden for healthcare providers across the industry while maintaining strong safeguards to protect patients

218、 andprograms from fraud and abuse.These or other changes may change the parameters of the Stark Law exceptions that we rely upon and impact our business,results of operations and financial condition.Section 1876 of the Social Security ActSection 1876 of the Social Security Act prohibits MA plans and

219、 their downstream entities from entering into compensation arrangements withphysicians that may directly or indirectly have an effect of reducing or limiting services to individual members.We have sought to structure our compensationarrangements with physicians to ensure compliance with this require

220、ment.Health Care Fraud StatuteThe Health Care Fraud Statute,18 U.S.C.1347,is a criminal statute that prohibits any person from knowingly and willfully executing,orattempting to execute,a scheme to defraud any healthcare benefit program,which can be either a government or private payor plan.Violation

221、 of this statute,even in the absence of actual knowledge of or specific intent to violate the statute,may be charged as a felony offense and may result in imprisonment,fines orboth.The False Statement Statute,18 U.S.C.1035,prohibits,in any matter involving a federal healthcare program,anyone from kn

222、owingly and willfullyfalsifying,concealing or covering up,by any trick,scheme or device,a material fact,or making any materially false,fictitious,or fraudulent statement orrepresentation,or making or using any materially false writing or document knowing that it contains a materially false or fraudu

223、lent statement.A violation ofthis statute may be charged as a felony offense and may result in imprisonment,fines,or both.Other federal criminal statutes similarly apply to healthcare,including Mail Fraud,18 U.S.C.1341 and Wire Fraud,18 U.S.C.1343.A violation of these statutes may be charged as a fe

224、lony offense and may result inimprisonment,fines or both.Civil Monetary Penalties StatuteThe Civil Monetary Penalties Law(“CMPL”),42 U.S.C.1320a-7a,authorizes the imposition of civil monetary penalties,assessments,andexclusions against an individual or entity based on a variety of prohibited conduct

225、,including,but not limited to:(i)presenting,or causing to be presented,claims for payment to Medicare,Medicaid,or other third-party payors that the individual or entity knows or should know are for an item or service that was notprovided as claimed or is false or fraudulent;(ii)offering remuneration

226、 to a federal healthcare program beneficiary that the individual or entity knows or shouldknow is likely to influence the beneficiary to order or receive healthcare items or services from a particular provider;(iii)arranging contracts with an entity orindividual excluded from participation in a fede

227、ral healthcare program;(iv)violating the federal AKS;(v)making,using,or causing to be made or used,a falserecord or statement material to a false or fraudulent claim for payment for items and services furnished under a federal healthcare program;(vi)making,using,or causing to be made any false state

228、ment,omission,or misrepresentation of a material fact in any application,bid,or contract to participate or enroll as aprovider of services or a supplier under a federal healthcare program;and(vii)failing to report and return an overpayment owed to the federal government.Wecould be exposed to a wide

229、range of allegations to which the federal CMPL would apply.We perform monthly checks on our employees,affiliated providersand certain affiliates and vendors using government databases to confirm that these individuals have not been excluded from federal programs.However,should an individual become e

230、xcluded,and we fail to detect it,a federal agency could require us to refund amounts attributable to all claims or servicesperformed or sufficiently linked to an excluded individual.Thus,we cannot foreclose the possibility that we will face allegations subject to the CMPL with thepotential for a mat

231、erial adverse impact on our business,results of operations and financial condition.Substantial civil monetary penalties may be imposedunder the federal Civil Monetary Penalty Statute and may vary,depending on the13Table of Contentsunderlying violation.In addition,an assessment of not more than three

232、(3)times the total amount claimed for each item or service may also apply,and aviolator may be subject to exclusion from federal and state healthcare programs.Federal and State Insurance and Managed Care LawsRegulation of downstream risk-sharing arrangements,including,but not limited to,global risk

233、and other value-based arrangements,variessignificantly from state to state.Some states require downstream entities and RBEs to obtain an insurance license,a certificate of authority,or an equivalentauthorization,in order to participate in downstream risk-sharing arrangements with payors.In some stat

234、es,statutes,regulations and/or formal guidanceexplicitly address whether and in what manner the state regulates the transfer of risk by a payor to a downstream entity.However,the majority of states do notexplicitly address the issue,and in such states,regulators may nonetheless interpret statutes an

235、d regulations to regulate such activity.If downstream risk-sharing arrangements are not regulated directly in a particular state,the state regulatory agency may nonetheless require oversight by the licensed payor as theparty to such a downstream risk-sharing arrangement.Such oversight is accomplishe

236、d via contract and may include the imposition of reserve requirements,aswell as reporting obligations.Further,state regulatory stances regarding downstream risk-sharing arrangements can change rapidly and codified provisions maynot keep pace with evolving risk-sharing mechanisms.Healthcare ReformIn

237、March 2010,the Patient Protection and Affordable Care Act(the“ACA”)and the accompanying Health Care and Education AffordabilityReconciliation Act,collectively referred to as the ACA,were enacted.The ACA includes a variety of healthcare reform provisions and requirements,whichcontinue to be implement

238、ed and substantially changed the way healthcare is financed by both governmental and private insurers.However,due to government action over the last several years,a number of changes have been made to the provisions of the ACA since 2010,including reduced funding.Looking forward,the future of the AC

239、A and its underlying programs are subject to continuing and substantial uncertainty,makinglong-term business planning exceedingly difficult.Because of the continued uncertainty about the implementation of the ACA,including the timing of andpotential for further legal challenges,repeal or amendment o

240、f that legislation and the future of the health insurance exchanges,we cannot quantify or predictwith any certainty the likely impact of the ACA on our business,financial condition,operating results and prospects.The CMS Innovation Center continues to test an array of alternative payment models,incl

241、uding the ACO REACH Model,to allow ACOs tonegotiate directly with the government to manage traditional Medicare beneficiaries and share in the savings and losses generated from managing suchbeneficiaries.State regulation of ACOs will likely be variable.For example,certain states may require ACOs to

242、obtain specific licensure to participate in theACO REACH Model and assume risk directly from CMS.There likely will continue to be regulatory proposals directed at containing or lowering the cost ofhealthcare.Further,CMS also routinely adjusts the risk adjustment factor which is central to payment un

243、der the MA program.The monetary“coefficient”values associated with diseases that we manage in our population are subject to change by CMS.Such changes could have a material adverse effect on ourfinancial condition.Federal,State,and International Privacy and Security RequirementsWe are subject to var

244、ious federal,state and local laws and rules regarding the use,security and disclosure of PHI,personally identifiableinformation,de-identified data and other categories of confidential or legally protected data that our businesses may handle.Such laws and rules include,without limitation,the Health I

245、nsurance Portability and Accountability Act of 1996(“HIPAA”),the Federal Trade Commission Act,15 U.S.C.45(“FTCAct”)and the California Consumer Privacy Act,the California Privacy Rights Act,and other applicable state and international privacy and security laws,including Brazil and India.Privacy and s

246、ecurity laws and regulations often change due to new or amended legislation,regulations or administrativeinterpretation.We are highly dependent on information technology networks and systems,including the internet,to securely process,transmit and store thisinformation.We also utilize third-party ser

247、vice providers for important aspects of the collection,storage and transmission of such sensitive information.Congress enacted HIPAA,in part,to combat healthcare fraud and to protect the privacy and security of patients individually identifiable healthcareinformation.Among other things,HIPAA require

248、s healthcare providers and their business associates to maintain the privacy and security of individuallyidentifiable PHI.The HIPAA Security Rule requires both covered entities and business associates to develop and maintain policies and procedures with respectto PHI,including adherence to HIPAAs se

249、curity standards through the implementation of administrative,physical and technical14Table of Contentssafeguards to protect PHI.Additionally,the Privacy Rule contains requirements with respect to the use and disclosure of individuals PHI,including aprohibition on a covered entity or business associ

250、ate using or disclosing an individuals PHI unless the use or disclosure is authorized by the individual or isspecifically required or permitted under the Privacy Rule.The Health Information Technology for Economic and Clinical Health of 2009(“HITECH”)dramatically expanded,among other things,(1)the s

251、cope of HIPAA to now apply directly to“business associates,”or independent contractors who receive,create,maintain or obtain PHI in connection with providing a service to a covered entity or another business associate,(2)substantive security and privacyobligations,including a new federal security br

252、each notification requirement that unauthorized acquisitions,access,use or disclosure of unsecured PHI thatcompromise the security or privacy of the PHI be reported to,depending on the number of people affected and their location,affected individuals,theDepartment of Health and Human Services and lo

253、cal media outlets,(3)restrictions on certain marketing communications,a prohibition on business associatesfrom receiving remuneration in exchange for PHI,and a prohibition on covered entities from receiving remuneration in exchange for PHI without expresspatient authorization or applicable exception

254、 and(4)the civil and criminal penalties that may be imposed for HIPAA violations.Pursuant to HIPAA,asamended by HITECH,we are required to report breaches of unsecured PHI to our covered entity clients,such as our physician group partners,within the timeperiod specified in our applicable business ass

255、ociate agreement,but in no case later than 60 days from the discovery of the breach,and notify certain agenciesand potentially the media in accordance with clause(2)above.We have experienced cybersecurity incidents in the past and may experience them in the future.Any interruption in access to membe

256、r information,unauthorized use of or access to information,improper disclosure or other loss of information could resultin,among other things,federal or state government investigations and liability under laws and regulations that protect the privacy of member information,suchas HIPAA,potentially re

257、sulting in damages and regulatory penalties.HIPAA mandates that the Secretary of HHS conduct periodic audits of covered entities and business associates for compliance with the HIPAAPrivacy and Security Rules.HIPAA imposes penalties for certain violations,subject to a cap of$1.5 million for violatio

258、ns of the same standard in a singlecalendar year.A single data privacy or data security incident can,in the view of HHS,result in violations of multiple standards.HIPAA,as amended by theHITECH Act,also authorizes state attorneys general to file suit on behalf of their states residents.While HIPAA do

259、es not create a private right of actionallowing individuals to sue us in federal court for violations of HIPAA,its standards have been used as a basis for establishing a duty of care in state-law civilsuits alleging negligence or recklessness for the misuse of PHI.A finding of liability under HIPAA

260、could have a material adverse effect on our business,financial condition and results of operations.In order to ensure compliance,we encrypt and back up data,maintain company-wide security awareness training,enter into business associate agreements with our partners and vendors,as well as ensure our

261、partners and vendors have implemented physical security andsafeguards at the data centers where our data is stored and conduct regular security audits.Although we employ administrative,physical and technologicalsafeguards to help protect confidential and other sensitive information from unauthorized

262、 access,use or disclosure,our information technology andinfrastructure,and that of our third-party service providers,may be vulnerable to attacks by hackers or viruses,failures or breaches due to third-party actionand employee(including contractor)negligence,error or malfeasance.Additionally,many st

263、ates and foreign jurisdictions have also enacted laws that protect the privacy and security of confidential,personal and healthinformation,which may be even more stringent than HIPAA and may add additional compliance costs and legal risks to our operations.Some state privacy andsecurity laws overlap

264、 with federal law,some of which are preempted,in part,by federal laws,whereas others are not.States have also passed privacy andsecurity laws and regulations that apply across sectors and go beyond federal law,such as data security laws,secure destruction,Social Security numberprivacy,online privacy

265、,biometric information privacy,data breach notification laws.Some of these state and international laws may impose fines and penaltieson violators and may afford private rights of action to individuals who believe their personal information has been misused.We are also subject to a provision of the

266、federal 21st Century Cures Act that is intended to facilitate the appropriate exchange of healthinformation.In May 2020,the U.S.Department of Health and Human Services Office of the National Coordinator for Health Information Technology andCMS issued complementary new rules that are intended to clar

267、ify provisions of the 21st Century Cures Act.The rules,intended to enhance interoperability andprevent information blocking,create significant new requirements for healthcare industry participants,including requirements to(i)provide patients withconvenient access to health care information,(ii)suppo

268、rt electronic exchange of data for transitions of care and(iii)require participation in trust networks toimprove interoperability.The 21st Century Cures Act authorizes civil monetary penalties up to$1 million per information blocking“violation.”It is unclearwhat the costs of compliance with the rule

269、s will be,and what additional risks there may be to our business.It is possible that the American Data Privacy andProtection Act(“ADPPA”),a landmark federal privacy bill with significant bipartisan support,may gain traction.Although ADPPA would not apply to healthdata covered by HIPAA,it would apply

270、 to other health data,such as health data controlled by certain entities in the digital health space.Various other federal,state and foreign laws may apply that restrict the use and protect the privacy and security of individually identifiable information,as well as employee personal15Table of Conte

271、ntsinformation,including laws modeled to some extent on the European Unions GDPR.Federal and state consumer protection laws,including laws that do not,on their face,specifically address data privacy or security,have been applied to data privacy and security matters by a range of government agencies

272、andcourts.Consumer Protection Lawsagilon may be subject to the Telephone Consumer Protection Act(“TCPA”),which regulates the manner in which a business may advertise itsproducts and services to consumers by phone,text and fax.The TCPA was enacted by Congress to combat aggressive telemarketing and fa

273、x advertisingpractices believed to invade consumer privacy.The TCPA also regulates the use of automated equipment to deliver calls or text messages to mobile phoneswithout prior express consent.Congress empowered the FCC to interpret the TCPA through rules,regulations and declaratory rulings.A 2015

274、order from theFCC clarified that calls or text messages that have an express healthcare-related purposesuch as treatment follow-up,appointment confirmations andreminders or pre-operative instructionsare exempt from the TCPA.In these instances,providers are not required to receive prior express conse

275、nt frompatients before reaching out by phone or text.As healthcare companies,such as ourselves,increasingly rely on mobile delivery platforms and othertechnologies to communicate with patients about appointments,billing and other issues,the potential for legal exposure under the TCPA also increases.

276、Eachcall or text made in violation of the TCPA can cost up to$1,500 per instance in fines and damages.Because there is no cap on statutory damages,violations canresult in millions of dollars in penalties.Competition and Antitrust LawsWe are subject to numerous statutes that govern competition in our

277、 industry,including the Sherman Act,the FTC Act and the Clayton Act.TheSherman Act,15 U.S.C.1-7,outlaws“every contract,combination,or conspiracy in restraint of trade,”and any“monopolization,attemptedmonopolization,or conspiracy or combination to monopolize.”The penalties for violating the Sherman A

278、ct can be severe.Most enforcement actions are civil,but individuals and businesses that violate the Sherman Act may be prosecuted criminally by the DOJ.Criminal prosecutions are typically limited to clearviolations,such as when competitors fix prices,allocate markets or rig bids.The Sherman Act impo

279、ses criminal penalties of up to$100 million for acorporation and$1 million for an individual,along with up to 10 years in prison.Under federal law,the maximum fine may be increased to twice the amountthe conspirators gained from the illegal acts or twice the money lost by the victims of the crime,if

280、 either of those amounts is more than$100 million.The FTC Act,15 U.S.C.41-58,bans“unfair methods of competition”and“unfair or deceptive acts or practices.”The Supreme Court has saidthat all violations of the Sherman Act also violate the FTC Act.Thus,although the FTC does not technically enforce the

281、Sherman Act,it can bring cases underthe FTC Act against the same kinds of activities that violate the Sherman Act.The FTC Act also reaches other practices that harm competition,but that may notfit neatly into categories of conduct formally prohibited by the Sherman Act.Only the FTC brings cases unde

282、r the FTC Act.The Clayton Act,15 U.S.C.12-27,addresses specific practices that the Sherman Act does not clearly prohibit,such as mergers and interlockingdirectorates(that is,the same person serving as an officer or director of two competing companies).Section 7 of the Clayton Act prohibits mergers a

283、ndacquisitions where the effect“may be substantially to lessen competition,or to tend to create a monopoly.”As amended by the Robinson-Patman Act of 1936,15 U.S.C.13,the Clayton Act also bans certain discriminatory prices,services and allowances in dealings between merchants.The Clayton Act was amen

284、dedagain in 1976 by the Hart-Scott-Rodino Antitrust Improvements Act,15 U.S.C.18a,to require companies planning large mergers or acquisitions to notify thegovernment of their plans in advance.The Clayton Act also authorizes private parties to sue for treble damages when they have been harmed by cond

285、uct thatviolates either the Sherman or Clayton Act and to obtain a court order prohibiting the alleged anticompetitive practice in the future.In addition to these federal statutes,most states have antitrust laws that are enforced by state attorneys general or private plaintiffs.Many statestatutory p

286、rovisions are based on federal antitrust law,namely,Sections 1 and 2 of the Sherman Act,and Sections 3 and 7 of the Clayton Act.Furthercomplicating matters,state lawmakers are increasingly seeking to exercise oversight over healthcare transactions and allow state agencies to analyze potentialanticom

287、petitive effects of healthcare consolidation,including smaller transactions that do not meet federal reporting thresholds.Private parties may also bringlawsuits to enforce antitrust laws.As the healthcare industry has continued to evolve in response to consumer demand and competition in the marketpl

288、ace,the effect of the antitrustlaws in healthcare is also changing.We have expanded our operations significantly since our inception,organically as well as through acquisitions.Suchgrowth,and our long-term contracts with physician16Table of Contentspartners,could expose us to risks related to antitr

289、ust investigations and litigation.Competition and antitrust law inquiries often continue for several years and,ifviolations are found,can result in substantial financial exposure.U.S.Foreign Corrupt Practices Act of 1977 and Various Anticorruption Lawsagilon is subject to the U.S.Foreign Corrupt Pra

290、ctices Act,as amended,15 U.S.C.78dd-1,et seq.(“FCPA”).The FCPA prohibits offering,promising,providing or authorizing others to give anything of value to a foreign government official to obtain or retain business or otherwise secure a businessadvantage.The FCPA also requires public companies like agl

291、ion to maintain sufficient internal controls to prevent and detect FCPA violations and to keepbooks,records,and accounts,which,in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company.Violationsof the FCPA can result in imprisonment,significan

292、t criminal and civil fines and penalties,and ongoing government supervision such as a monitorship.Inaddition,agilon is subject to various foreign anticorruption laws in locations in which it operates,including Brazils Clean Companies Act and IndiasPrevention of Corruption Act,1988.Other Laws and Reg

293、ulationsSome states in which we operate require licensing or registration for operations related to,among others,utilization review on behalf of payors,including reviewing medical necessity and appropriateness of healthcare services,or processing claims in connection with insurance or managed care p

294、roducts.Such laws vary from state to state,and our operations may be subject to exemption in certain states.Additionally,our physician partners are subject to numerous federal,state and local licensing laws and regulations,relating to,among other things,professional credentialing and professional et

295、hics.Our physician partners,as well as their nurse practitioners and physician assistants,must satisfy andmaintain their individual professional licensing in each state where they practice medicine.Further,organizations that receive reimbursement from a federal or state government payor are expected

296、 by the federal government to have acompliance program.For those organizations that do not receive reimbursement from any federal or state government payors,a compliance program is notmandatory but is considered best practice.As a result,we maintain a program to monitor compliance with federal and s

297、tate laws and regulations applicable tohealthcare entities.We have a compliance department that is charged with implementing and supervising our compliance program,which includes the adoptionof(i)a Code of Conduct for our employees and affiliates and(ii)a process that specifies how employees,affilia

298、tes and others may report regulatory or ethicalconcerns to our compliance officer.We believe that our compliance program meets the relevant standards provided by the OIG of the Department of Health andHuman Services.An important part of our compliance program consists of conducting periodic audits o

299、f various aspects of our operations.We also conductmandatory educational programs designed to familiarize our employees with the regulatory requirements and specific elements of our compliance program.We are also impacted by federal and state laws and policies that require providers to enroll in the

300、 Medicare program before submitting any claimsfor services,to promptly report certain changes in its operations to the agencies that administer these programs,and to re-enroll in these programs whenchanges in direct or indirect ownership occur or in response to revalidation requests from Medicare.Av

301、ailable InformationOur website address is .We use our website as a routine channel for distribution of information that may be material toinvestors,including news releases,financial information,presentations and corporate governance information.Information contained or connected to ourwebsite is not

302、 incorporated by reference in this Report unless expressly noted.Our Annual Reports on Form 10-K,Quarterly Reports on Form 10-Q,CurrentReports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a)or 15(d)of the Exchange Act are available on ourwebsite,free of c

303、harge,as soon as reasonably practicable after we electronically file such materials with,or furnish them to,the U.S.Securities and ExchangeCommission(“SEC”).Additionally,the SEC maintains a website that contains reports,proxy and information statements,and other information regardingissuers that fil

304、e electronically with the SEC,including us,at www.sec.gov.17Table of ContentsITEM 1A.Risk FactorsSummary Risk Factors.Our business is subject to a number of risks,including risks that may prevent us from achieving our business objectives ormay adversely affect our business,financial condition,cash f

305、lows,and results of operations that you should consider before making a decision to invest in ourcommon stock.These risks include,but are not limited to,the following:Risks Related to Our Businessour history of net losses and the expectation that our expenses will increase in the future;failure to i

306、dentify and develop successful new geographies,physician partners and payors,or execute upon our growth initiatives;success in executing our operating strategies or achieving results consistent with our historical performance;medical expenses incurred on behalf of our members may exceed revenues we

307、receive;inability to secure contracts with MA payors;inability to grow new physician partner relationships sufficient to recover startup costs;availability of additional capital,on acceptable terms or at all,to support our business in the future;significant reduction in our membership;transition to

308、a Total Care Model may be challenging for physician partners;public health crises,such as COVID-19,could adversely affect us;inaccuracy in estimates of our members risk adjustment factors,medical services expense,incurred but not reported claims,and earningspursuant to payor contracts;the impact of

309、restrictive clauses or exclusivity provisions in some of our contracts with physician partners;inability to hire and retain qualified personnel;ability to realize the full value of our intangible assets;security breaches,cybersecurity attacks,loss of data and other disruptions to our information sys

310、tems;ability to protect the confidentiality of our know-how and other proprietary and internally developed information;reliance on our subsidiaries;ESG issues;Risks Related to Our Reliance on Third Partiesreliance on a limited number of key payors;the limited terms of contracts with our payors and o

311、ur ability to renew them upon expiration;reliance on payors for membership attribution and assignment,timely data and reporting accuracy and claims payment;dependence on physician partners and other providers to effectively manage the quality and cost of care and perform obligations underpayor contr

312、acts;ability to obtain accurate and complete diagnosis data;dependence on physician partners to document their services and any inaccuracies could result in overpayments,recoupments or liabilityunder the federal FCA or through RADV audits(defined below);reliance on third-party software,data,infrastr

313、ucture and bandwidth;18Table of ContentsRisks Related to Our Industry and Government Programsconsolidation in the healthcare industry;discontinuance or reductions in federal government healthcare programs reimbursement rates or methodologies applied to derivereimbursement;uncertain or adverse econom

314、ic and macroeconomic conditions,including a downturn or decrease in government expenditures;competition in our industry;dependence on government performance standards and benchmarks;government funding for healthcare programs is subject to statutory and regulatory changes,administrative rulings,inter

315、pretations of policyand determinations by intermediaries and governmental funding restrictions;regulatory proposals directed at containing or lowering the cost of healthcare,including the ACO REACH Model,and our participation,voluntary or otherwise,in such proposed models;federal and state investiga

316、tions,audits and enforcement actions;regulatory inquiries and corrective action plans imposed by our payors;repayment obligations arising out of payor audits;modification the methodology utilized to determine revenue associated with MA members;negative publicity regarding the managed healthcare indu

317、stry generally;Legal and Regulatory Risksregulation of the healthcare industry at the federal,state and local levels and our ability to comply with applicable laws or regulations;our and our physician partners ability to comply with federal and state fraud and abuse laws,including physician incentiv

318、e plan laws andregulations;implication of laws and regulations regarding marketing,beneficiary inducements,telemarketing and use of protected health information;our use,disclosure and processing of personally identifiable information,PHI,and de-identified data is subject to HIPAA and state patientco

319、nfidentiality laws;failure to obtain or maintain an insurance license,a certificate of authority or an equivalent authorization;regulation of the corporate practice of medicine could restrict the manner in which we are permitted to conduct our business,and thefailure to comply with such laws,or any

320、changes to such laws or regulations or similar laws or regulations;inadvertent employment or contract with an excluded person by us or our physician partners;lawsuits not covered by insurance;changes in tax laws and regulations,or changes in related judgments or assumptions;Risks Related to Our Inde

321、btednessincurrence of substantially more indebtedness,which could increase the risks created by our indebtedness;restrictions and limitations in our agreements and instruments governing our indebtedness;19Table of ContentsRisks Related to Our Common Stockdependence on our subsidiaries for cash to fu

322、nd all of our operations and expenses;our Certificate of Incorporation,Clayton,Dubilier&Rice,LLC(“CD&R”)and its affiliates and,in some circumstances,each of ourdirectors and officers who is also a director,officer,employee,member or partner of CD&R and its affiliates,have no obligation to offer usco

323、rporate opportunities;anti-takeover provisions in our Certificate of Incorporation and By-laws;ability to achieve a return on your investment depends on appreciation in the price of our common stock;exclusive forum provisions in our Certificate of Incorporation;andmaterial weakness in our internal c

324、ontrol over financial reporting and our ability to remediate such material weakness.You should carefully consider each of the following risk factors and all of the other information set forth in this report.The risk factors generallyhave been separated into five groups:risks related to our business,

325、risks related to our reliance on third parties,risks related to our industry and governmentprograms,risks related to our indebtedness,and risks related to our common stock.Based on the information currently known to us,we believe that thefollowing information identifies the most significant risk fac

326、tors affecting our company in each of these categories of risks.However,the risks anduncertainties we face are not limited to those set forth in the risk factors described below.Additional risks and uncertainties not presently known to us or thatwe currently believe to be immaterial may also adverse

327、ly affect our business.In addition,past financial performance may not be a reliable indicator of futureperformance and historical trends should not be used to anticipate results or trends in future periods.If any of the following risks and uncertainties develop into actual events,these events could

328、have a material adverse effect on our business,financial condition or results of operations.In such a case,the trading price of our common stock could decline.Risks Related to Our BusinessWe have a history of net losses,we anticipate increasing expenses in the future,and we may not achieve or mainta

329、in profitability.We have incurred significant net losses in prior years and have a substantial accumulated deficit.We expect that our expenses will increasesubstantially in the foreseeable future and our losses may continue,in part as we invest in growing our business,expanding our management team,b

330、uildingrelationships with physician partners and payors,developing new services and complying with the requirements associated with being a public company.Theseexpenses may prove to be more significant than we currently anticipate,and we may encounter unforeseen expenses,difficulties,complications,d

331、elays andother unknown factors that may adversely affect our business.We may not succeed in sufficiently increasing our revenue to offset these expenses.Consequently,we may not be able to achieve and maintain profitability for the current or any future fiscal year.Our prior losses and potential for

332、future losseshave had and will continue to have an adverse effect on our stockholders equity and working capital.Any failure by us to identify and develop successful new geographies,physician partners and payors and to successfully execute upon ourgrowth initiatives and achieve required operational

333、scale to support our growth may have a material adverse effect on our business,financial condition,cash flows,and results of operations.Our business depends on our ability to identify and develop successful geographies and relationships with physician partners and payors,and tosuccessfully execute upon our growth initiatives to increase the profitability of our physician partners.In order to pursu