Alignment Healthcare, Inc. ((ALHC)) has held its Q4 earnings call. Read on for the main highlights of the call.
Alignment Healthcare’s recent earnings call conveyed a positive sentiment, highlighting robust financial and membership growth. The company demonstrated significant operational improvements and strategic advancements in star ratings, although it acknowledged challenges in managing new membership cohorts and adapting to regulatory changes.
Impressive Membership Growth
Alignment Healthcare reported an impressive 59% year-over-year increase in health plan membership, reaching 189,100 members by the end of 2024. This growth exceeded initial guidance by over 25,000 members, reflecting a 21% growth relative to initial expectations.
Strong Financial Performance
The company achieved a total revenue of $701 million in Q4 2024, marking a 51% year-over-year growth and a 61% increase excluding ACO REACH. For the full year, total revenue reached $2.7 billion, representing a 48% increase year-over-year.
Adjusted EBITDA Milestone
Alignment Healthcare reached a significant milestone by achieving positive adjusted EBITDA of $1 million in Q4 2024 and for the full year, marking its first year of adjusted EBITDA profitability as a public company.
Operational Efficiency
The company improved its operational efficiency, with adjusted SG&A as a percentage of revenue declining from 14.4% in 2023 to 11.1% in 2024. This 330 basis point improvement was attributed to scaled operations and the elimination of one-time costs.
Strong AEP Results
Entering 2025, Alignment Healthcare boasted 209,900 health plan members, a 35% year-over-year increase, with notable growth in markets outside of California.
Star Ratings Advantage
For the 2025 payment year, 95% of California members are in plans rated 4 stars or above, positioning Alignment Healthcare well above its competitors.
Challenges with New Memberships
The company faces challenges as over 50% of its members are in their first or second year, which may impact profitability and the management of medical expenses.
Inflation Reduction Act Impact
Changes related to the Inflation Reduction Act are expected to shift MBR seasonality, potentially affecting profitability in the second half of 2025.
V28 Risk Model Changes
The second phase-in of the V28 risk model presents a headwind that might impact revenue and adjusted gross profit in 2025.
Forward-Looking Guidance
Looking ahead, Alignment Healthcare expects health plan membership to grow to between 227,000 and 233,000 in 2025, with projected revenue ranging from $3.72 billion to $3.78 billion. Adjusted gross profit is anticipated to be between $415 million and $445 million, and adjusted EBITDA is forecasted to range from $35 million to $60 million. The company also highlighted robust growth in markets outside of California.
In summary, Alignment Healthcare’s earnings call reflected a strong overall sentiment, with impressive growth in membership and financial performance. The company achieved key milestones in adjusted EBITDA profitability and operational efficiency, while strategically positioning itself with high star ratings. Despite facing challenges with new memberships and regulatory changes, the forward-looking guidance indicates continued growth and expansion in the coming year.