Earnings call transcript Q3 2022

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Operator

Good afternoon, and welcome to Alignment Healthcare Third Quarter 2022 Earnings Conference Call and Webcast. [Operator Instructions] Please note that this event is being recorded. Leading today’s call are John Kao, Founder and CEO; and Thomas Freeman, Chief Financial Officer.

Before we begin, we would like to remind you that certain statements made during this call will be forward-looking statements as defined by the Private Securities Litigation Reform Act. These forward-looking statements are subject to various risks and uncertainties, and reflect our current expectations based on our beliefs, assumptions and information currently available to us. with the from could discussed these detail our of to actual Factor in quarter for fiscal section XXXX. ended some and the quarterly in materially including September differ year forward-looking filings XX-K of factors cause Form that results the XXXX, the report XX, more XX, Risk of Descriptions SEC, the statements on report December XX-Q Form annual our our on ended for the are

are expectations any our believe we changes undertake occur revise we Although call. to obligations reasonable, statements that no reflect to after this

financial In will Detail most financial are non-GAAP addition, non-GAAP the that please may in comparable important note these the the on be discussing believe to they that company relationship certain performances. evaluating between measures quarter measures of can in XXXX. press September non-GAAP the measures a in posted the reconciliation and company’s that website found for ended GAAP release XX-Q and be is our XX, Form on measures historical

like conference Please go hand now CEO. I the and your over speaker John Founder ahead. would to today, Kao, to

John Kao

to and conference quarter third Hello, call. earnings our welcome

announce full pleased and line each key another of metrics. indicators four quarter guidance we exceeded in to top the guidance high our are We performance raised and across year which XXXX end for of strong bottom

revenue For growth the total guidance million. third quarter, represented of XX% million high-end $XXX $XX our year-over-year, beating by our

million members and us membership guidance. to end members of placing at an year-end XX% $XX.X million, high-end better grew the XXX our XX,XXX beating guidance high members. high-end previous XX.X%, than plan Adjusted by year-over-year, of of XX,XXX of points XX,XXX MBR health our of was in gross our ending in and membership $XX implied guidance the resulting our Our guidance solidly range of XXX basis profit beating

million, $X.X negative was guidance million. end EBITDA of the beating adjusted our by $XX.X high Meanwhile,

than strong raising guidance XX% our reflect growth pleased that full performance, greater Lastly, of to growth of to our annual objective. with on we’re long-term share revenue year the revenue our year-over-year, back consistent we are

continued Closing out model. the the third and replicability quarter, see of operating we scalability encouraged progress in to are our

investments California well. Our activities provider inside new risk community and outstanding and geographies both models, tools, workflow clinical reps in our engagement are results, as our our yielding local prediction

Meanwhile, service track than results anticipated. delivery our optimize investments produce to operating on to are quicker

Our repeatability continued success of high low and in cost gives next our confidence delivering long-term the into quality platform markets we as a our at runway that us momentum year. carry across

repeatability model to of our AVA. is Key this

advantage, upon the and and AVA have to to plants required on competitive data historically is key local value success to insights the level. drivers information leaned at While and science, founded the by create providing effectively our scale our analytics. outperform unit compete cost optimize us allows

market. approach each teams Our and to deliver actionable this on rely agile a to tailored information

believe We it our right the the value-based by people change technology nature the performance what us consistency business, the interconnected vision our and Simply its durable at health partners driving cannot outcomes teams deliver across of is founding is people Rather, the to health should technology-enabled of is culmination and AVA be. care This insights to of and including geographies. leveraged for results. the care. clinical alone is care our right said, providing member data time improve the that across our provider our right allowing financial actionable

the plan and which announced star year of to our by measure quality services drug ratings, CMS stars, seniors. the XXXX Turning recently health received

of achieved contract X that X are which pleased stars the consecutive We HMO our or California out sixth stars, marks achieved report year we X to have greater.

will approximately starts. XX% as be year, of our that XXXX the plans plan X-plus CMS for In in anticipate members total, we rated

too currently be Florida, in weighted the rating, of which to X-star Texas strength average parent plans are also our adopt measured, to due and new rating. will a our Additionally, Arizona,

Given will next us results continued momentum we are our stars for the reimbursement, the determined over two XXXX years. provide excited that XXXX

support result We consistently approach gaps to are are teams hands-on our our Carolina. insights the and also X-star year deliver crucial North in forward of and our identify achieve took is care physician This these model this to community market. actions a and actions a and proud member of to quality teams a at demonstrating are step targeted the core traditionally concerns. strides address in high model have in made by concierge our teams, a cost. To allow low These us with to AVA-enabled to fee-for-service portability member members. teams care aided produce of navigation clinical make capabilities the The and result, this partners

we across to maintain are not strong push future. focused service continuing in quality to shared, we plans the ratings higher all As delivery our make investments but and results previously our company-wide in only also

benefits enter we premiums are distinguishing through members our while innovation. of we lowering annual period, for monthly product enhancing As this our once again plans enrollment

determinants We improve explore continue and new of to create address to living health. that members’ of social standards benefits ways our

we Alignment survey results. Well Social published XXXX the America summer, Health in This Aging Threats to

affordable, revealed social loneliness inaugural high-quality top health report economic the that and instability, food three barriers impacting Our access to care. seniors’ are insecurity comprehensive,

for challenges, of benefits Understanding variety members subsidy address an of to these a inflationary obstacles, seniors gas We utility uncertain day-to-day address been products further benefit AEP elements these including by low-income this pressures. our introduced for a have we instability. eligible recognize and to and economic economic that new environment these exacerbated life and

system family personal of annual aid addition, social plans for to our caregivers, senior of isolation. our In and to many $XXX we now combat support directly feature including strive members as $XXX reimbursement

of our across benefit our over-the-counter allowance spectrum of products, flex zero and have plans Card many a wider benefits moved We our of include expanded to for services. Black also variety expanded a to premium flagship

aggregate, been choice insights at cost. enhancements by this the and powered the continued Our capacity year, concierge direct with innovation our after support and of give benefits improved along services, outperformance benefits In is no AVA’s to seniors our and we’ve a additional drive product care year achieve. our XX/X to of result greater our MBR model, year able

We are proud members AEP sharing our more forward to in supporting January. our of results and in about role look

wrap and I significant our up, outstanding I’d contributions conviction members in growth to balancing to our with well-being. thank The first momentum long-term our strategy added of company employees continued solidifies to things of their quarter our further sincerely of our profitability. like half and for As results our impressive the year this

our over Now year. the Thomas third the the for the to well I’ll turn of quarter call as results cover as outlook remainder to financial Thomas?

Thomas Freeman

John. Thanks,

results. Turning to the third quarter

to another of in quarter exceeded we across four deliver strong guidance each ranges mentioned, our the end which high John proud KPIs. As are our we of

compared ending For to membership year September health XX,XXX increased a of plan the quarter XX% ago. XXXX, our

Our represented third growth $XXX year-over-year. million revenue of XX% quarter

third sets mentioned than outperformance brings of the growth XXXX year year-to-date Our long-term revenue quarter XX%, up with greater to revenue earlier, to full its revenue our as consistent growth target. And company John XX%. growth annual our

Our was adjusted and as newer $XX.X representing of in expectations. profit outperformance million, contributed our XX.X% MBR an our MBR states, to versus quarter the gross both California franchise

of In that baseline. abated emissions run the quarter. an quarter, the COVID cases had noted third begin as previously increases admissions seen COVID total, remainder we early X,XXX below in inpatient per the uptick the in progressed continue While we we to throughout to

accrual, gross from also final million XXXX final adjustment adjusted few outperformance a of which in suite to our profit the contributed a benefited We quarter.

quarter, do third While profit fourth we expectations we that the event have excluding MBR in meaningfully to this ahead quarter, recur gross not still the pickup. we anticipate and note in run would of this

in the was million. SG&A quarter $XX.X

anticipate the of increase couple quarter. compensation of the spend, year to expense, quarter million, zero as timing and experienced year-over-year. to reverse equity-based around in that million Excluding fourth our as was our market an AEP we some our XX% marketing well of the in $XX.X the timing of of favorability SG&A spent SG&A a of sales ramp-up Due we

adjusted EBITDA our was $X.X expectations. million, Lastly, solidly ahead of negative

trend produce out long-term as we the our As of quarter, outperformance is our EBITDA objectives. rounded to are the ability indicator proud balancing our to strong We operating growth first view this loss adjusted $X for and we months profitability third negative nine note while another to only leverage model of million. year the our that

with the Turning million to We ended the in cash. $XXX net quarter balance sheet.

fourth payment does as income early position the of included end Our revenue the the CMS and quarter any metrics. statement in that on premium from QX. this our early payment impact of recorded revenue at quarter an deferred QX, in cash million. not have it We Note $XXX as recognize approximately we’ll

approximately we secured In facility, the excluding in our with line third cash, was balance otherwise loan under delayed principally the during were of proceeds facility, initial The expectations. our XX a transaction. remaining prudent the term announced management $XXX was which $XXX million to was of early of which a $XX subject the closing in million close existing term conditions. Net months. which senior million, available is loan sheet, upon $XXX funded of certain The to quarter, million was used payment, refinance draw due

our expect external and working fund We continue to without balance organic financing. sheet needs growth strength requiring to capital our

guidance. our to Turning

For loss a range $XXX plan membership million the XX,XXX fourth adjusted in be million of be $XX of to a members, quarter, we million $XXX loss be $XX range expect to between in between health and to $XX million, to and million. $XX to gross to of the profit the EBITDA adjusted be million revenue XX,XXX and of

a revenue expect we be million loss the and in $X.XX million $X.XXX of to between gross $XXX to EBITDA and range XXXX, billion range to $XXX be of profit year in full $XX the adjusted $XX a be billion, million. to million For of adjusted the of loss and

our XXXX and third performance strong year raising end year guidance. membership the continued lower revenue Following full our of we raising guidance quarter, in the are full

recur step additional anticipated fourth do quarter normal is PMPM our of takes as portion not quarter pickup year. that as down both into a course as note members suite trend seasonality our throughout our fourth the revenue anticipate account revenue comprised in of the higher that new membership We from to well of third the that quarter our the to we

our year-over-year. represents months expectations the XXXX colder potential which remain enter as We Additionally, full in cautiously due increases over now the are raising guidance our of we postured utilization the of year. we year and XX% growth COVID flu gross range, against and adjusted profit to narrowing

annual COVID flu our and round such, and encourage partners provider As shot latest get to of to their are boosters. our teams working members actively clinical

mentioned our strong given quarter, to outperformance As quality care towards we member year-to-date. invest and engagement last also efforts our continue

meaningful a to While efforts believe MBR, to these on be in years we performance our short-term will headwind come.

Lastly, also year-to-date our and approach which adjusted our the raising as strong months year. we of final we increased outperformance reflects the EBITDA are guidance, visibility

account quarter. takes fourth into third into adjusted SG&A outlook Our EBITDA favorability quarter our from also timing

improved range by we XXXX today, initial million improved and are the to our MBR provided of March are and XX or into EBITDA positioned In XXXX. guidance XX%, From $XX.X of implied approximately year-to-date in results we with as well by outlook heading basis midpoint delighted guidance believe our points. updated conclusion, our our our

With that, the to let’s Operator? open questions. call

Operator

from with [Operator comes Instructions] next of And the Ryan our William Blair. question Daniels line

is open. line Your

Jared Haase

morning. North Thanks just of hear Ryan. would dynamics much to of the early of led the about of for rating successes networks How Carolina. it to to the hear guys. any early This for learnings for to the your strong that is you market? year-to-date. related congrats a days Jared over if teams love other you’re to stars I external How in that Haase in share the X-star sort specifically the and would I kind wanted able bit internal much there? that markets? the question on color ask around in that to extend love provider is there more taking that are to how to franchise any just here. in I of results at Good of own related might a is just questions thinking about and looking to applicable the be your execution you And

John Kao

get clinical notion of on members. a into something quality something AVA cost. our what focus forms we’re you being And hands-on shows John. Jared, right new that template work. high think this using of. with ingredients the the just like-minded model, the of us basis proud low it’s some really very of to overlaying I all really think And as provider of of equally are Yes, markets, the that these and it’s have having will that it’s really But to partners, we important, I

to which be marketing, get markets. us that new to get, member. year-round a It that’s what markets highly of us And kind allows you make relevant us the way X-star And is formula we’ll you unit think what of that’s some as business the get I of into our kind know force we these aggressive really And and it the and is that, tough helps model. And because MA. important to market, significance gives successful. use on market But the if gives respect this kind in single portability on it the satisfied is of and economics. we this kind with every our of of of new And very it these product.

Jared Haase

Got coming color at guidance, helpful it’s where there, you at sort in the of little just SG&A maybe I little updated you. bit us. factored the talked guidance. But into Street. bit quick think mean, is guide more related look that’s prepared relative Thomas. if the lighter I And a Yes, a EBITDA your of follow-on about as end some favorability there. then remarks that from is, I one to a the to EBITDA and reversing for This that’s was

I one, to were So that be that showing favorability? we XQ about? size there or actually number are that you guess SG&A other did should in of kind XQ unique that And were up thinking dynamics any

Thomas Freeman

that’s and me terms Maybe speak gross in looking on to just because maybe EBITDA. your factor at then Yes. SG&A comment also a question of critical Yes. profit let obviously

perspective, there. So maybe annual start an I’ll from

heading from ahead quarter. consensus think I previous into EBITDA perspective, year increased I believe EBITDA the guidance. EBITDA annual of is our today the EBITDA our annual meaningfully as was full where meaningfully updated guidance our guidance of from an And

also our it from I respect we excluding of it’s million remarks shows versus couple and timing it favorability kind think mentioned, the think QX to think of revenue, of actually about I a implied updated shared I comp, that XX.X%. to a SG&A in dynamics midpoint QX our as highlight around But range that QX with of prepared you was SG&A our QX. into XX.X%. of important the percentage stock-based guidance previous timing

is words, other leverage revenue, outperform in for operating full to see as of adjusted year. on that part we’re which continuing SG&A, continuing So to raise we’re EBITDA the in

QX us and think thing anything year of more I than for timing a of QX the results very really and proud sets how it’s XXXX. feeling we’re So full up and else, that

Operator

Lisa Gill next comes One with you. And our for Thank moment JPMorgan. question. our question next from

with Gill Your line line is your is Lisa open. open. JPMorgan,

Unidentified Analyst

quick Lisa. is wanted This Hi. I for profitability. Kal on on a to ask question

XXXX So you meaningfully. you’ve as expectations getting already guys breakeven, I think own to outperformed but about talked have initial your pretty this year

versus EBITDA think midpoint adjusted about your guidance. I at $XX original higher million the

think how year just $XX reasonable consensus, if and think, you million ability think the wondering can in you for you XXXX. breakeven on next to So a I’m about EBITDA I estimate. current curious guys about that’s maybe comment whether hit loss

Thomas Freeman

here. Thomas Kal,

to terms in So today. I think probably do not XXXX guidance, commenting of on going we’re that

period, the et guidance XXXX our earnings provider share full a I market, new look of have AEP cetera. benefit where our quarter in by final to member think by we comes after we and group, mix our call we’ll in fourth see

question, directed line towards I think translates terms more to to future. of in though, outperformance our our the your and year-to-date how in profitability that’s time that

into probably think expectations, we we we caution would that and first are outperform pleased breakeven initial with how say I would I XXXX. translates relative while on year us nine our full what is to then up to for sets think in months that to extraordinarily our clear folks ability

We think top we same year. But obviously to for aggregate. fact we’re EBITDA make get the at the of positive the also in time, organization to a are I that to continue mindful still priority that which And Arizona, one and Carolina, markets. two we North Texas and year XXXX year will be require markets, and Nevada next as Florida have launching investment and three will those year

outperformance we the the obviously, California the last call be we I as expected I’d much very – year. significant we year-to-date, of important view. given think on positive first XXXX And thing thing maintain is, emphasize that to that EBITDA our shared this

a investments to in future. these of of drive California looking to some in can we’re we making that create some we’re where performance to use newer so markets dynamic our in continue the offset And that and

Unidentified Analyst

ask Great. you you returns you know there. relationships those talked we’re some what strategy could of those? before far, us I your early Can in follow-up. AEP so you’re some Thanks. made on just were? have distribution a maybe changes seeing the I the of you’ve with brokers If altering of the remind and And know I about early some but

John Kao

Yes. the several think that with. John. to terms worked something with continues we’re I the some of of the for we’re formula years Kal, be for that that’s No, FMOs working in comfortable us past

that where a areas kind establish to trying really to is think going we’re in of I foothold which look we newer at. the markets the be

to You’re really really work very driving those et which brokers using just products, good stars, markets engaged, are performing. requires with the product, you really we’ll are and MLRs, are competitive in turn having loyal, that good have in And cetera that.

those, markets don’t employed distribution it our we’re And that in channels, have to whether have going certain we telesales sales. and/or be own

And people. just have big If right loyal product with that the to think a the so good the can’t then – right if okay, you our FMOs, going sales just right we because get guys, – way we’ll be you the I employed partnerships to ones that’s they’re with right the force it’s formula. it’s and We’ll in too. have

I’ll I to e-brokers. about kind also think them be, continuing call thoughtful of, of the, we’re some

for us. Some of them good have been partners

And not retention initiatives therefore, pretty been kind have been – our some good. dependent of that. have on We our of

So exposed other I have folks like really there, some think, we’re not communicated.

we as get more So can positions of of and outside I more California. particularly you more that, think see

Unidentified Analyst

on Thanks the congrats quarter. again right. and All

John Kao

Thanks, Kal.

Operator

Ransom James. our next by with John for Raymond And you. comes question next question. stand Thank from our Please

is open. line Your

John Ransom

strategic little question one One boring Hey, and It’s hopefully model question. more there. interesting. a

our came little the So quarter by this X%. in PMPM bit – came a model higher versus about

then or first been a your of do how kind could plans, talk into for where incumbents established a of you and have one just more for crowded or So And nobody knows what establish you, interested maybe bunch time a have? the that. just where market brand Thanks. who market and you you And John, a things kind of three you you they’re the long have that are there go is in than some say, like, you do? much about when foothold Jacksonville, of two

Thomas Freeman

I’ll here. then one. Maybe for one John take over the Thomas and John, it the first second turn to

terms in So of from benefit final a true-up revenue CMS. final XXXX the quarter did the third PMPM, suite on from our

our quarter. so quarter And actual they the relates continue And which the final changed support slightly third CMS providers this and quarter schedule created in second fourth an last emergency health of earnings and place final two interim the that to public bit actually years, to quarter. an see was related really COVID. in a we the upside the a takes having we the on call, where their mentioned of to payment then And second result to in during wanting that

that, I the to outperformance that is you’re up success great continue to So anticipate is QX. lot otherwise. said we portion what in set QX of QX just from we a QX think of that’s think for QX Having seeing don’t

I’ll to turn it second think to maybe, you the over. I question, if speak John, want

John Kao

work to us Care like-minded want something with are to that PCPs our home-based pretty our obviously, with inside we you the to that the all starts start much want tools, and every on with on XX with us XX market yes, time, providers. work stars, work outside John, Thanks, it model, on about us Anywhere single really with model, care. kind Thomas. finding to of willing And it’s California, California think understand Yes. and AVA

then with drives Promoter the, the that which MA. Net And successful drivers a it stars then need lot it drives you It drives utilization all be value that, in drives to Scores. call we need. it, It the that drives of engagement, turn management; you in

the and As with turn, to then in and put have this our very ability infrastructure connection products. these clinical that providers, in gives aggressive place you us create then then,

I then how and think we’ve profile. question PCPs other into and of, what attract PCPs, slowly a, members then the And durable we then done you kind before, join engaged they’ll everywhere. that pretty product add as and happens contract that much mentioned much the come get And I leave to network with. is, it’s will everywhere, with is and members, profitability that And and that of those worked And Kal’s that’s you pretty market have will providers.

strong with of then obviously, you’ll that, employed distribution relay relationships, good strong augment good broker and with kind strategies branding. and and You that

very the faced only lot California, then where just work. the not of the can competitive, And grow name the Jacksonville and think That’s other grow brands. of strong, time very you – made providers have or Alignment a know. like And is as a that, in Southern other this But and first way set same established particularly of dynamics, again, we lot of we that’s in each we Healthcare. we’ve the helped we’ve

those really model. on in the not does. very and growth time, markets it that’s always the will and that with the take lot done I’m some from a work But we’re in So Texas. it of happy relying XXXX. And has Florida team actually And

in very with happy that. But of terms about realistic strategies, pretty We’re that. the I’m engagement

John Ransom

that. Just as a follow-up on

doctors So and time see are I to for X them. million people these mean, go try pushed

trying to do block dozens you and tell vendors attention room, some bit who bang what’s with of What... their pay makes that this probably a up just get – kind out attention. you your set person, dozens minutes in the you them little from there, of way and kind of what So the coffee in and if get of guy the noise with the are other X have time them

John Kao

of their talked times with front. lean go time, of kind office which pretty you chair, in you is they single them done Anywhere the physician, Then about talk story. And you his the practice, much this talk same, model, manager, I’ve walk back. you them Care the talk the programs. of actually back you it’s kind every of Yes. about alignment about and to an extension whether you care hundreds – the then talk the are we They how our sit data, their through

clinicians patient, their it’s of while not kind in And are our directory. provider any

So Then the we understand say, how to through getting we then we they then is kind chair. paid. this of way kind you of a want member. the sit outcome paid in at of the the And of And day, where that and compensate the the working they’re clinical they less folks. math for economics up and story get they walk more unit it’s with that end us these providing jointly better resonates with for

how And of small ask do people portion question wallet so and doctor care if speak. to do just always their you that is a next then really should size, ask you’re this get to the

how do and starting, practices actually get just successful to them you’re you MA? in If care to change the be all

coding. downside. upside we practice. And We’ll doctor I extension it. all at that actually "Well, the relationship." of We’ll and by have just as the It’s through lifting. the the that. of an the said is do population do of no act UN. health how the XX% then do lot I think a work That’s with that’s really lot they the this do end, XX% like, We’ll do We’ll that We’ll that’s we a We’ll assessments. of do don’t expect We’ll work. identifying the the of do polychronic, their Stock sick. dock. And to provide

John Ransom

Thank you, sir.

Operator

comes moment Michael for Stanley. our question question. next One next from Ha And with our you. Thank Morgan

open. Your line is

Michael Ha

for and on guys the X stars Carolina. in you, congrats Thank the question North

buydowns started, competitive I landscape? seeing now dynamic with And similar to target? year? evidence Thank your So that Or your on has the any I’m long-term about surprising, almost Are benefit Part you. you of curious XX% any marketplace? growth just to competitive growth early any thoughts a happened guess last B OEP it relative highly expectations just on offering rational is more what thoughts

John Kao

just little of and here. we’re three about think you But we Michael, John give of bit I I things. what a kind to Yes, see weeks mean, we can AEP. how in

than happier in First terms we’re relative see, thing is in rationale, I would in we terms of terms products. a of year, last of lot just say the year just this what to

Having a year. churn, at some said focused two our the that, I includes encouraged apps week that minimizing for I of the terms on kind think, received. last of the we And in I’m least see. some given lot that broker the think first weeks, of experiences we behaviors, people for what are, of last

be XXs our in process. would the growth say think data, got would just XXXX, weeks properly, of we’re for kind rate back the growth AEP looking of again, end guidance not of the low again, I kind in that, I sure we’re of that and comes giving high I extrapolate, given this three would – three say you teens, of membership based expectations is of not. of the on something kind make kind XX% I’m any – be for Thomas’ this you we But to on remember, weeks

very it’s early. So

great of really And proud job. so kind what And couple happy last so you of They of a week insights. the today. that’s as if some organization. I’m are expectations, the sales indication, give any – working but just to hard. we’re about are doing I’m seeing that. They A really of is other

I earlier, and XXXX. a be Florida think, not Texas going coming for as of growth expecting to we’re I mentioned from lot

ensuring infrastructure be kind place. quality to and chassis going in the setup on get we just of infrastructure get the investment those more that stars focused We’re and sure to make that get we

see – let’s And so here.

I every single fighting say day. for I I much it’s that We’re right. can pretty what mean now. do Thomas, did

Thomas Freeman

well that’s said. Yes, I think

Michael Ha

that just stars. on Maybe color. I quick guys. follow-up, quick you, a appreciate one Thank a

your per you of upper CAP, weighting I and trouble gives your you having care how methodology. the peers you to model, have performing model feel about adapting hand? you small here? Do related your basically know an advantage closely But cap. some aligned size a is of the that to sample mentioned Just like have just feel competitive AVA do because

John Kao

we how there’s of capitation the is work very the difference And mean I between Carolina the delegation. way. point our make really Michael. Yes, pudding. that with in proof I’d a providers in it’s kind mean collaborative a North I versus

core doesn’t And we disease and market information can are with think certain IPA the understand Carolina. we get there payment, I real-time often, in community that data our North control our the that and we doctors, but we management capabilities partner utilizing the actionable that crack get programs, if those those outcome doctors that that’s really UM too do process, claims capabilities the fully, we

that And California so emphasize, the on we’re been good that have we’re the working with, partnered hard I some IPAs ensuring of would partners. that

work We faster of the and is really a kind so the bottom coordinated caps. our in And access in That’s members. more do access have way. on – line to for with getting bottom them to line

And is on to the do risk got whether if And adjustment. of the that the lot legacy a very marketplace, there’s influences access things good a that all I subcontract – of utilization, a they somebody, they compliant just a job – a to delegation. vigilant in you from really on. make very, these that good in caps, job, that’s they do ensuring sure mean a to have we perspective, the just California to lot subcontract, it’s like got be something

job, and some that better we there. the a do can going to of get help And have partners them we’re

Michael Ha

Thank Perfect. you guys.

Operator

line Thank question. our And question Piper you. from Tassan comes Jessica Sandler. next our of moment next the with One for

Your line is open.

Jessica Tassan

additional your Or to I’m all? stars curious came if to just in approach the for help much marketing like to take kind average, know local lower of passive the of a Nevada bit approach? so little a you market? in – in help taking how Do deploy is do than kind more supplement supplement maybe markets you where change, Thank question. resources you at Hi.

John Kao

No, Great Jess, – to with last kind just John. People if contract response folks globally with if and perform. they no have going consistent say provider problem do what capping – it’s to question. with you’re it’s they we they of you have my group, the do.

partner got a I think we’ve that there. good

we’re them helping not frankly, – the that stars-related of well We’re we’re executed a with I on on gaps think just items. caps lot

working with They’re aggressive very with being we’re so that. us. And

But North more that in really all end-to-end cap of successful, like kind kind versus can going have that. of makes where Carolina, with our where you of aspects of just drive it you about kind [Audio MA starting happy So Gap] consistency with of kind shows a I’m and durability what global model we’re say and market with contrast

you our lesson learned and – there’s so is And in go can’t no shortcut. just there’s

is going You save of what can’t into you you’re just investments market in a Carolina, to new we a Texas, we we’re got a and there, bucks doing have did provider somebody upfront, going kind in help were and say, to new in just just globally which Florida. which North make the you cap few doing

what same further, we and And to just are level, California. kind just the experiencing folks make think doctors they you. delegate have at we’re work macro for other with did of systemically is taking a I stuff lot and them thing. it this you it’s And in the And Because deliver successful. I of community Jess, one-step to like a think folks,

earlier none action, with successful workflows when – these We had of the to we started best them the with help were of become And practices. real-time with tools the successful. be IPAs they earlier company, receptive. None

And receptive. the They’re so thing. same being Nevada – in

it and we’ll get fixed. we’re together So working

Jess, I your did question? answer

Jessica Tassan

I one how How flu you the normal evolve MCR season? mute. was fourth of I in kind far think And so in flu terms Yes. you. a helpful. Thank That on on Sorry, just we of just was an in impact flu about are follow-up. quarter? do had – seeing

Thomas Freeman

here. Jess, Thomas

in of of not of we’ve having atypical season. that, seen and far, much we a we have years I flu. say, terms in so not But that always flu would two seeing, also been much recognize an said seen the last So what have uptick we’re

thought given experience, And what would kind fourth driven of about so with saw of line setting Omicron sort run we quarter, for utilization the fourth for inclusive flu a as our our we utilization of that quarter would portion with and approached last which COVID-driven, particularly the our in inpatient baseline historical and guidance year. expectations assumption be of potentially of we our kind

of quarter. of that, left and in utilization we third through line in said say the things in kind say, pleased with we’re I’d that has Having remained, month where to one our October, we’re kind

far, we’re pretty things so And about good stand. feeling where

related our of this I a that don’t too some And this that. But early for of at positioned well say that think flu spike materialize I of extent we kind our some to we a the could extent have So be to to bit does see some the COVID, the do of guidance that think point. to think season or is year there materialize, I upside guidance. to

Jessica Tassan

Thank Great. you. Okay.

Operator

moment Thank America. our question. our you. next question Bank Kevin with comes Fischbeck of One And from next for

Your line is open.

Nabil Gutierrez

the is Gutierrez beyond? for for been and for direct XXXX Nabil you Thanks about you? can Can for you how trending on remind the This us Thanks. has plan contracting about And talk question. taking Kevin.

Thomas Freeman

Thomas Happy here. is to. This

to quarter when didn’t I contracting the of out have first booked gate a of So and the that gate began experience, direct IBNR lot out of our we of our quarter the shared that MBR it visibility if the that back kind around think second consolidated we around our to XXX% of had program, would but flash be first that right XXXX, headwind the MBR. we we was of a is I what program

that we forward flashing of XX for part the we’ve in and better say traction to some months. been now, continue pleased operational now And program momentum see we’re with. the I’d

have some seen. we we’ve on when standpoint. probably still I think from EBITDA improve think that to so to continue even And of given about basis, kind cumulative the of I And since a began, program we’re the an traction opportunity

of REACH. think terms with XXXX in program are XXXX, I interested ACO in we continuing in the

files month continue participating be And around Medicare the in evolves. look we some getting of and potentially But CMS, – that such remain upon ways we’ve our can or how export I REACH. next a I the views lot direct or in the to think think sort capabilities those terms ACO we’ve dependent monetize how how from we’re we’ve built out sustainability two. in cautious long-term we’ll so in for think to future, we’ll enrollment on the I and contracting ways or the as in think looking will from to that of program of that leverage forward of upcoming focus program, with other learned Advantage and to plays here the I around continue

Nabil Gutierrez

Thanks. then next how utilization thinking year? are And about you

Thomas Freeman

need what a seniors teams, think proactive who our picture, big risk. folks, greatest very that really be I from with we’re of to to seeing we’re So for are clinical and lot most and Care be I credit at continuing the continuing engaging pleased an give those in inpatient in standpoint, Anywhere

in I And things so some in of well seen our lot place COVID continue probably think XXXX. in we’re to a good that and that think I view of trend is a of to we’ve today in with ebb XXXX. And continue the spite see flow trend

higher and outside over we’ve might others last but areas. similar been ER And the utilization, probably urgent seems lower back a in think setting, inpatient industry seen suggest. care to that really fully to the of bit utilization. there’s quarters. couple the also We’ve minuses some seen normal. to I pluses you have other in heard Outpatient seen We’ve trends what seeing be

Having probably I that what years things next if feel we is of to we’ll see two said anything general, quickly. COVID seeing the we’re pretty last today like what change largely we that, year. learned in is these in think continue think I do during representative

months. update XXXX in our a think guidance here release I you So when we guys give we’ll a few more comprehensive

Nabil Gutierrez

Thanks.

Operator

And moment comes you. One Sachs. next Thank from of next for question. Goldman our Nathan Rich question our

line is open. Your

Nathan Rich

could If that ask Great. previous follow-up question. Thank I a to you. just

think trend factors. wanted thinking on next ask are As how cost we I year, to about about different a few you –

and that’s might of the of do kind potentially the maybe COVID then that you’re how paying just lastly vaccine if you And like you you demand about treatments are the contracting talk for there? then First, and the on kind the just And pent-up notion footed normalization in still any seeing with government? inpatient system? what feel kind trend, by of of of providers cost there’s volumes. left thinking And of Could more inflation. be about out

Thomas Freeman

Great. here. Nathan. This Happy is to Thomas

year, admissions we’ve per years. over last the I we’ve continued think So for in around really around seen of COVID we’ve really, now. run years seen emphasize inclusive inpatient five inpatient five-plus our some I XXX while straight and performance XXX terms And the continued the ebbs X,XXX, of flows results, this would of performance to

those good think our about of And kind results maintain feel trend into year. kind of we heading and continued so next I really that ability to

the the we’ve care focused of which able reason function to And high-risk of again, is so active maintaining few with I a years delivery those chronic and growth frail launched having markets last very mechanism, really that, consistent be the would a hands-on also launching the and on over some seniors. say been we that while is and

pent-up concerns the And so see or today pretty don’t us. good inpatient that I think we and of trends something a about feel lot demand

in I think today material COVID that think around I the as second vaccines, terms of a we one. don’t the view I your question headwind. think

always pluses updated there’s go our and think process. forecasting I that minuses into

of year’s next about one will the several that outlook. just be so account that And we think we take as into

aware our contracting, it that hospitals how of a standpoint. a to contracts. institutions labor of of standpoint, contracting many pressures some fee-for-service kind of impacts our as of face contracts And the And relates think we’re other the and all lastly, majority from vast are I that the from

And so obviously rates Medicare releases those advance. in

able good have to those into contracts we’re year. what as an the visibility of multiyear And are on And rate heading type evergreen pretty on mechanism we’ll back typically so those contracts next see end. to with increases

trends while being respectful I to. stand that about we you’re pure looking alluding pretty cost we So unit feel XXXX broader into standpoint think also a where out of the just good environmental from

Nathan Rich

growing Texas is shorter Florida those I’ll all on your might on of both aspects for your I’d just planned I you where markets follow-up. to Thomas kind awareness, relative curious specifically terms guess but traction value the going differentiated follow Thanks, of new in AEP. be of expectations, up you Great. be like in wanted and to versus like I feel ask competitors? a kind comments. how comments of

John Kao

Nathan, Yes. is John. this

the view multiyear of with product I a kind growth. our design of products think kind we set good. of is pretty But

perspective, they side, particularly staffing, our community material from the again, we what with in And like of the to wanted and years. relationship budgets. below get just with. going we we’re place, with in the It’s I fundamental begin slightly And take from But don’t provider a to on of trending was an to I think engagement to place. kind start basically brokers, get think stuff deepening the and traction it’s we Arizona needed I a really I our were Nevada. couple going the get to think underwriting think all clinical basic in had the

Nathan Rich

Thank you.

Operator

with moment question. question comes our Mayo for Whit next next And One Securities. our you. SVB from Thank

is Your open. line

Whit Mayo

have or know modules one question. IT I’ve And budgeting particularly of process you’re you for that I share that got we any to excited Can Thanks. you the discuss going development? in about with XXXX? now, any there that’s anything new Care Anything around are new? only AVA priorities the Thanks. through care Anywhere you’re right that’s it. but

John Kao

Yes. Whit, John. its

maintain The California. the And X in get investments yes. the give the kind second – stars the of that is me to we care answer the yes, is X stars kind – reasons able here. coordination of think of chassis were I the one in one and

to of it’s next call kind we’re kind integrated it or going health you gets you year. an so system, be And a of will. That that refined make if sure to this approach And in got – continued CRM it’s that a put year.

in. processes – brokers consumer made I paid more the the incorporating think some make time, automating stratification data. terms real of I get to reconciled you’re to is the how of And more faster, online the us broker, going going be of some submission kind broker investments see in paid investments app the and we’ve that we think of model apps

think of broadly kind speaking. it’s I

that of really understanding kind how the that start kind consumer. of experience for we determinants into and So entire plays social

clinical going say kind more see I to And broker I focused what Thomas, think kind believe investments Did I while would in I that’s say, clinical workflows, we’re and anything there, XXXX And you’re some about. consumer-facing anything? talked XXXX. I modules would more including of was, doing. the I that of miss of on

Whit Mayo

Okay. Thanks, guys.

John Kao

You it. got

Operator

question, Barclays. next from Sarah One you. moment with comes And by. stand our for please question Thank James our next

Your line is open.

Sarah James

ownership? the what entering like adoption you. does an more looks seeing versus And you partnership and you Thank engagement markets, a long-term consistent how adoption what this more you’re see for physician curve AVA Can impact of curve timing iterate clinic you become your on engagement idea us pacing new that strategy market? as in and give of on

John Kao

months. management And between a it and Care our kinds trained Well, say questions. operational a physician a that’s of two And kind – practice resources, kind lot time. big get have, like with that and our six I about are the combination really takes it’s on a of those We think all clinical engaged, six of the on-the-ground along educated, tools would some of kind To of them is resources. using Anywhere of we of it education.

model we’ve of of of really it basis globally providers It strategy all a and years the doctors. whether owned our be born consolidators. still of cap not it be of XX% engagement mean owned brick-and-mortar, in got out community it forms primary kind of doctors of hospital the model, staff that. the of of the out kind if be I whether still whether by was or delegated, think a I kind experience, there, really kind lot independent, from experience you There’s PEDs, long-term all partner came where by is with is care with really And we really if take of out system some the

successful a and to and collective to of know that really in that the team have that physicians do to market of bricks with and physicians out them in to to XX% bricks mortar that who and in support to a care practice. more then in there. have population way and resources our And extend not are place efficient reinvest the there’s the to successful. the be And to existing So mortar to have XX% polychronic already be to that and is them to the enable with markets, but lot work

to lot on the We’ll et as a charts, so population. lifting. before, mentioned change We expect and their of the it’s do change do of cetera. not their a entire I And them workflows, the heavy don’t lifting we lot all

for we sure make And make And share possible consistently, way the separates happens They we in curve are bend a want is that we And best what do think see that money. of more think us. gets to it can the not – then the It’s that that it’s we some patient care. capital-efficient what I to cost the just And dynamic is they this. physicians money. just more just most regional how that everybody the about shares thinking a want markets of There with But and gain some that acquisition I key that’s would be an successful tactical, wins. we of practice it. very where of Nevada them. in to we’ve being level. And it’s more or folks a say more markets, kind at here there. That’s been we’re one these – may philosophically with of it’s augment in

Sarah James

them actions Or taken of have you and by you level And reward trends, kind as new see see, these very are have navigation cost what you’re and just on able start the consistent Okay. actually then what are partner digging can care inpatient a getting physician to curve into details that… you you and diversion for that? inpatient of them clarity to do that bend

John Kao

latency latency. There’s we being no data. the chain of because like global we top XX to It’s access no a plan the There’s Yes. actionable group. have or XX-day why to cap level at food

and real time. where internal daily, clinical real hourly, – We in get teams And if And attention a doctor time. kind lot that hospitals members are our a information know and them that there – not to are talk our know so we we that data about our use of detail. the referring who maniacal within we why that. It’s to they’re of all company,

doctor with And going or sure the I the to this, cost physicians, XX%, work that it’s driven it’s make it XX%, the about pretty them lot but are. think of those works actual this, I’m and we is XX% for support by we them, that the think a mean data. the at practices. it XX%, work you costs is where like with and and really the mean if just work the understand not well. particular of do XX% we teams I – all sees automatic. that that – And really population engagement not That’s we guys member XX% up their for It’s a would is to our deploy where we really clinical where

care Anywhere people home office for office the our And we the There’s Care they’re visits. XX-minute X-minute not through at visits. like that program,

PXXX So or it. they patient question we to that’s we it. really not but free practice. it. about I I have your their Sarah, how access XXX sure full if up their capacity think with to have just answered there’s I’m record. longitudinal That’s how And patient They full access do there, mean transparency. our we

Sarah James

Okay. Thank you.

John Kao

it. got You

Operator

This I’m concludes call. you. questions Thank participating. time. today’s further no you this Thank showing at for

You may now disconnect.

Alignment Healthcare (ALHC) 3 Nov 222022 Q3 Earnings call transcript