Alignment Healthcare, Inc. Q4 FY2024 earnings call

• Membership growth: The fourth quarter 2024 membership grew ~59% YOY, and full year 2024 membership was 189,100. Total revenue for full year 2024 was $2.7B, up 48% YOY.
• Margin improvement: Adjusted gross profit and EBITDA improved year-over-year. Fourth quarter MBR was 87.5%, full year MBR was 88.8%.
• Clinical approach: Employed over 400 clinical staff, representing ~25% of full-time employees, leveraging AVA for care management.
• Stars performance: Strong Stars results, with 5-star contracts in Nevada and NC, and 98% of members in 4+ star plans by 2026.
• Cohort gross profit: Over 50% of members in year 1 or 2 cohort, with gross profit growing from $90 PMPM for year 1 at-risk members to $230 PMPM for year 5+ at-risk members.

For the fourth quarter 2024, Alignment Healthcare had a health plan membership of 189,100, growing approximately 59% year-over-year. Total revenue in the quarter was $701 million, up ~51% year-over-year and 61% excluding ACO REACH. Adjusted gross profit was $88 million, producing a consolidated MBR of 87.5%, a 200 basis point improvement year-over-year. For the full year 2024, total revenue was $2.7 billion, up 48% year-over-year and 59% excluding ACO REACH. Adjusted gross profit was $303 million, resulting in an MBR of 88.8%. Adjusted EBITDA was positive $1 million. During AEP 2025, the company entered with 209,900 health plan members, representing 35% year-over-year growth, with 28% growth in California and over 100% growth in ex-California markets.

• 2025 membership: Expected to be between 227,000 and 233,000 members.
• Revenue: Midpoint of initial guidance range ~$3.75B, nearly 40% YOY growth, supported by Part D PMPM increases and retention of 2024 members, offset by V28 phase-in.
• Adjusted gross profit: Midpoint $430M, 42% YOY growth, implying MBR of 88.5%.
• Adjusted EBITDA: Range $35M-$60M, midpoint $47.5M, implying 130 basis points of margin expansion YOY.

• Impact of the second phase-in of V28 risk model changes.
• Part D changes under the Inflation Reduction Act.
• Modestly higher utilization volume expectations due to membership mix.
• Competitor actions and market dynamics affecting performance.

Q: Could you unpack the guidance for 2025 adjusted EBITDA and key assumptions?

A: Thomas Freeman mentioned variables like Part D program aspects, utilization, and cohort maturation as key. Low end of range has conservatism on Part D MLR, while high end relies on positive utilization and cohort trends.

Q: What's the split between California and non-California membership growth for 2025?

A: Thomas Freeman expects ex-California to grow materially faster than California, but California to drive over 50% of total net member growth. Engagement with Aeva and care model replicability in non-California markets are areas of focus.

Q: What's the biggest delta versus peers?

A: Thomas Freeman stated the fundamental approach of care delivery and management as the foundation, which flows into various financial variables like V28, Part D, and stars, differentiating from peers.

Q: Thoughts on 2026 rate bonus from CMS?

A: John Kao mentioned the company is well-positioned relative to stars and risk adjustment, expecting a potential higher rate notice based on factors like ACO and fee-for-service increases.