Earnings call transcript Q4 2022

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Operator

Good afternoon, and welcome to Alignment Healthcare's Fourth 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 our these detail our of to actual in annual some the ended in materially including December XX-K differ forward-looking filings fiscal report of on factors section for cause that results more Risk Form Descriptions Factors SEC, the of year the statements XXXX. are XX,

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

reconciliation be will fiscal the on evaluating XX, company certain the the website that are be note please believe to and historical in that addition, measures year financial important can XXXX. relationship Form measures the measures they found press for GAAP XX-K ended company's measures performance. discussing that our in December most the non-GAAP In non-GAAP non-GAAP on comparable the between is of financial are these Details release posted on

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

John Kao

and our to I'd our us. call. dedication appreciate year conference We fourth for by outstanding earnings serving our quarter joining a of progress welcome us to employees to you congratulating members. start like and off continued Hello,

in just of revenue billion $X.X to As accomplishments grown moment XX,XXX to to like over from XXXX. together. membership have our we reflect million XXX,XXX and from We've XX-year XXXX approach to an the anniversary in than less our I'd today, founding, take a $XXX grown expected our

do. on in we have focused we together, time quality our During all

more their beginning. fewer providers, stays with to inpatient X.X just members partnership Anywhere the our members between transactions. OTC loved this teams, relative Medicare, than hospital our XX,XXX total million represent XXX,XXX nearly have precious Anywhere grocery outcomes giving time conducting Care meetings -- ones. than combined by and completing And Care family families is our improve more and helped We and our and model with our members' traditional lives a of and our utilization Through face-to-face

today's to results. Turning

to have across performance, are of performance or for strong We the range quarter. key our outlook indicators exceeded straight X concluded the with each year eighth met pleased having our

$XXX our fourth We quarter the of MBR quarter XX,XXX resulting revenue XXXX, an gross health XX% $XX.X growing of Adjusted year-over-year. million, total plan in represent with ended growth a million members, profit the XX% year-over-year. of XX.X%. was For membership

year and an Adjusted of of our grew Meanwhile, EBITDA updated of million. adjusted total initial XX.X%, was and all billion profit adjusted Concluding well full expectations. MBR was of of gross a EBITDA negative our in ahead resulted million XX%. $X.XXX million, $XX.X loss the revenue $XXX.X $XX.X

we Last market XXXX. to in expectations conveyed year, our positive slightly adjusted California be for EBITDA

we This We XX.X%, MBR as driven provider with members. are scale. partners and our to and we operating was exceeded produced an even proud brought those new ongoing through of by Anywhere result clinical on greater our and Care share teams expectations that rapidly engagement members clinical

care ran one over admissions a the averages emissions between model. XXX has testament years, and inpatient Medicare, performance, replicability past which XXX This over than powerful XX% the inpatient each the new our X nearly better thousand, similar thousand. thousand per our per California to per which states than of to of Additionally, admissions our is to less XXX XXX ranged traditional

engagement enroll outcomes program did Care members versus eligible a Care statistics AVA members our Anywhere Insights. by Anywhere few months that across how in consistently Anywhere deploying in powered I'd Care our demonstrate like program. to improving Number in markets show engagement XX by model not who clinical net expense we reduction institutional XX% are one, share claims the a after

in in reduction cohort for thousand per our all X-plus year as at-risk acts X lastly, opportunity across or increasingly XX% funding see including a saw to our cohorts rich members the benefits, of members versus chronic results X lower visits for mechanism cohorts ahead XX% three, from And across base. replicate see XX% our we ER members conditions. at-risk to product improvement as improvement XX%. more chronic utilization going and number from two, ER MBR year membership MBR these traditional we with condition Number even in XX% greater large us an Medicare, The

on page. are in more greater described corporate our and on available examples Relations latest detail our These presentation Investor

are outcomes members, results Medicare showcase we making difference Advantage they Anywhere Care just lives, AVA-powered our these in and XXXX. our results, results. direct in how we the for benchmark a lowest in members. second XXXX contracting top performance PMPM MBR not recently clinical clinical CMS fee-for-service materialize, is Importantly, model despite driving outstanding our year seeing Furthermore, members' while in quartile our in but country, savings average also released the produce weighted net having data

importantly, populations. and Medicare our with grown ability reach increasingly our began panel we cautious strategic a With more the program 'XX attitude These costs senior DCE partners long-term to across as we on margin balanced effectively results working with merits in that and generate book adaptability we a model long-term that in ACO of a the collaboratively of our across program. broader most the with providers the relationships more complement MA engagement business, our leverage we way a their and manage to of continue our comfortable of underscore 'XX our XXXX, When strategic to integrated and toward positive mind, performance efforts provider first the economics business. the clinical could drive portion have

Accordingly, program year increase the year-over-year. XX% X,XXX aligned the we of for ACO with in invest beneficiaries, began continued reach and an resources XXXX, to have

California this California rate; from year-over-year. disenrollment with positive annual period netting had season, California, of and of growth shared versus members, enrollment a year-over-year. outside market XXXX, we few improvement growth Turning We basis Southern XX% January in AEP of growth a Medicare in results successful selling voluntary XX% XX Fresno, performance highlights the lastly, of our a improved XXXX, approximately states representing to momentum X, more members; as in the XX% Advantage including XXX,XXX launch new membership California than year-over-year; X,XXX our with in point previously

were confidence of us These result Anywhere outcomes, create replicate giving market-leading products. our to the Care AVA a to and ability direct our insights achievements

As in we we success continue to X target top XX% years. growth are we this on that repeatable to in focused driving are line year key XXXX, market areas future believe

outside quality our First, cost doubling playbook the on element been sustained and initiatives, are California. of for we down foundational inside has which of both growth, our and

us successful AEP in outcomes efforts evidenced Carolina, as the heading first Maximizing these a part where remains plan. by XXXX, of priority stars into achieved North our as we strategic for five-star

access provider members. are we with Second, relationships our create greater deepening and network to our expanding for partners

established have going and footprint focused a one of We on in deep geographic remain our significant each markets.

without opportunities how are the into the balanced Third, richness And dollars products fourth, across a more XXXX our broader, looking we increase at laser-focused our are creating MBR, we employing optimize we benefits. to of heading sacrificing including on distribution allocation of rebate strategy.

with better invest presence will while We to we will delivered, in a sales relationships performance. online continue and internal our we areas consistently sales brokers that have need add where third-party greater agents in durable

reconfigure early Texas While we playbook, engagement, our identified our distribution. our and strategies, Florida with have on our a are and establishment X-pillar actions with pleased of growth beachheads numerous we emphasis traction noted provider the to starting of with targeted

identified elevate through that the growth progresses have look of we year. to summary, sharing as our forward move us next we In pillars organizational the key believe and phase to will we

key positioned we that to XXXX, of our we feel are as strides I ahead for make confident Looking continue drivers. value to continued across each success

Now fourth as outlook results to the over quarter I'll for Thomas to cover Thomas? our call XXXX. turn as the financial well

Thomas Freeman

milestones achieved throughout like not our past are only of proud over the XX to years. Thanks, we've journey but in John. how I'd the we echo 'XX,

Now turning results. year-end our to

increased XXXX, For membership health year-over-year. the our XX,XXX ending year XX% plan December of

we added members Over the of January December to our from to X,XXX XX past is the course XXXX, net which experience. similar approximately year,

XX% for a outcomes medical profit states began in an million Our was driven strong and continuation Further, million. $XXX.X for gross in of billion, well. produce full of our our adjusted year, by management new to the our XXXX Care SG&A grew revenue Anywhere outcomes medical as while capabilities total of the XX.X% core year $XXX.X $X.XXX California, reflected to MBR in

equity-based million. expense, $XXX.X SG&A our Excluding was compensation

Lastly, and represents EBITDA X.X%, of year was revenue XX approximately by adjusted reflects a full negative negative improvement points our margin $XX.X year-over-year, over of million. we basis This grew XX%. as even

and revenue going respective strike midpoints As we to relative both a million our of year, the aim a ultimately beat, and that We continued guidance. proud million beat our $XX $XX a adjusted we growth forward. objectives initial both the on XXXX to between to profitability reflect EBITDA delivered balance note we're

third an compared payment with ending quarter $XXX previously down Turning We cash. impact included year quarter prior balance to sequential cash million, in This the a on the inflated early basis. CMS the The balance. full in $XXX step sheet. timing discussed had ended quarter the impact approximately which of temporarily million of net no the from to

our to XXXX guidance. Moving

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

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

revenue XX% midpoint long-term Consistent of the approximately with outlook, growth guidance represents year-over-year. XXXX our our

health prior assuming from XXXX, our December January throughout of to our continued years. experience As plan growth we part forecast, in our of membership comparable to are

parts. plan member contemplates revenue health forecast month few moving Our per a per

is partially average in member our returning PMPM. lower growth, which increasing PMPM member revenue offset comes new on by at First, year-over-year,

impact roughly results XXXX full year, PMPMs adverse XXXX. Second, XX basis phasing we year the in full which and last revenue a point the quarter represents second will began the in headwind of return of during realize sequestration, in versus to

is ACO $XXX of and growth which increasing DCE million, year-over-year, XXX% revenue. expect revenue our total to reach represents compared approximately we Additionally, membership XXXX program over

our income guidance. reach in guidance, revenue count plan associated membership ACO is and beneficiaries include is health don't our we in our the While recognized included on statement benchmark

factors utilization. note few Moving like a year-over-year to MBR comparison. impact the We'd that to

a growth on ACO consolidated is on we run time, basis close previously At MBR expected consolidated of XXXX, to a as First, spend. leverage Care our the to presenting to program XXXX. deploy forecasting extension and also MBR drag our but we across meaningful our the this as are provider time in our ACO over in reach XX reach confident year-over-year, We membership operating points program continue weigh participating AVA improvement partners. our SG&A resources roughly our XXX% medical strategic remain creating mentioned in to and in Anywhere of with relationships view

noting the ACO at worth both also our the medical guidance, excluding XX.X% expense MBR is implied in approximately It's and that revenue, midpoint. reach

this Second, points MBR future down we new expect by approximately engage increase year with to as basis growth Anywhere and XX we these trend member teams. members our consolidated new Care years in

in past Consistent cohort our experience, seeing improvement less than non-California thousand per including with MBR results members, with returning are XXXX. in our we XXX to inpatient expect admissions strong continuing of year-over-year

the MBR our impact realize basis core expect we consolidated approximately points. weigh continuation the Third, by million of in as of MBR these and members XX.X% sequestration of trends, to XX of which over in reflects additional Normalizing time to year full year, an they for $X margins our embedded we also factors, at a $X ACO future. expect incremental our will guidance on target strong power the million our now midpoint X our toward this reach we earnings mature of underlying

seasonal profit similar objectives. past are over Overall, implies quarter higher feel on the to year the of year Lastly, increase full thousand, our MBR a full well in admissions first we confident contemplates guidance deliver that first year experience. MBR average. we adjusted This on per lower will remainder quarter our positioned be and than gross the the in MBR resulted in an to our

reach of We expect grow, deriving along a XXX leverage additional business. in benefit SG&A growth of in operating to scale the add ACO to This disciplined continue XXXX, ratio year-over-year. as an with significant focus an points of improvement $XXX basis from our of with is we of economies result of on expense implying operating million our XX.X%, book

than of believe we the required MA. While business profile attractive MBR reach, the grow the our significantly than less MA is business long-term is incremental ACO ACO more reach to SG&A

factors our these in into takes our objective Lastly, and outlook each basis account point with EBITDA year-over-year reflects a on of XXXX. improvement pace adjusted EBITDA range margin X.X%, and adjusted negative breakeven of a XX

was we earlier, our in As continue XXXX. John adjusted mentioned this California and in XXXX, to EBITDA expect franchise positive

therefore, EBITDA Our making markets the loss reflect expansion initiatives. of adjusted outside consolidated to guidance support we're investments growth continues future in California XXXX, in to and

scale, public to we continue visibility company of into we we and foresee high As resources, a over our will the degree costs achieve model clinical corporate expenses. leverage

and confidence proud are Importantly, all on we our give future. throughout position to positioned our we to us look not fund we sheet objectives how of require projections and operating progress our today, the growth updating organic the balance strong forward will in additional you that I'm year. financing

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

Operator

Our comes Massari [Operator line first Stanley. Morgan Connor question the from Instructions] of of

Mayo SVB. of line the from comes question Our ? Massari Whit Connor of

Whit Mayo

you me? Can hear

Operator

Yes.

Whit Mayo

back some focused, comments improvement. to you just around where particularly not initiatives you're where prepared to the think have some John, you you can your of I go of kind wanted happy where you're unpack advance and stars, just

rebate close sit points cut how reviewing pretty sort some And contract? provide of the of dollars? you're You on on thinking largest around the some maybe just your age

John Kao

question. great Whit,

function, the ensuring entire and on way got one of the in a got commitment X.X but stars. think the me, history, was that I be there may just from departmental to are to to still our that And all that Board a of our early the and else initiative somebody company. was corporate focus stars days X We first, from a not company's stars really corporate

kind I in points kind of increase And industry-wide we've have really something all that it's to of to different thinking across the the address that -- training all I reinstituted star think along enterprise-wide so measures. think cut just measures. do with the And we

stars. And better you X today to in stars to get got be -- to stay is X

rebate we good -- stars. And I now. I right think good the company a with to concept a we're respect XX think in did And job

harder XX think going is be stars to I also.

And And along so to better one engine. moving markets. in lines stars have get get to -- we mean, towards MLR every X.X we those have to on, I our X better our of

the there's operations management what really us really proud medical and good. of really, team like I'm But there good, well. doing for Our is to clinical opportunities as is really improve there.

we really at growth think, that have All the I question, that something of which kind of drive which, MA I get kind address to is membership in the rebate want. better think to we of

measures, was across the much Whit, really the pretty were do, board I it's that points notified, think, everything industry even we to so higher. because And on the just in we notified, be were cut the and XX going

we with for on it employees And and just of arms, so the team feedback so do the really encouraged proud I'm an have to enterprise speak, from to call to the stepping And up. level. and the

Whit Mayo

and on Last gain-sharing maybe of you're Arizona, strategies? learned. for the physician Anything that markets, question looking of is update around partnerships some some you've inroads Nevada, me making North engagement just Carolina, at just just the new efforts, an

John Kao

in you and with from these And a learned, that in got Texas. lot growth need North was to really And Florida new Yes, it new and stars. lots because with pillars starts tailwinds credibility call stars. you brings stars, your learned concluded, quality we what we when all it X, and them really get entrant we as and market lessons Carolina It brand of legitimacy to you a have of work, X market. starts a obviously,

lot really that now in Florida all is emphasis other getting to and And of star so a Texas, rating. the the markets

performance enough. about of admissions being XXX-ish I'm and new not in really really we're proud which, of with expected. per what one outside to the XXXX executed. combined of these we is deployment, reasons how Career California, which running management That that's the with excelled beat core markets just that's We're thousand AVA And again, medical the Anywhere able why in is

controllable, good to we strategy these we products And products, thing distribution adjustments that, really, was had key be and so and that has the we're of new to pretty markets. reliable, the learned more you distribution. with then got making to good more have the But in all even

enter market. win need You in to to the in is California. we X is we're and get going standard of investments, just with need if entered market a market, -- just kind to every we or we're we market And enter, of a not which we've a really these much I ourselves holding think win, that components market grow all that's make into that a can't pretty consistent to pretty but

now those right And do of speak. same need we some operationalizing to we're are outside so we as California. that lessons But the

Operator

our for moment next question, line Daniels. the from Ryan One comes of which

Ryan Daniels

positive the growth rapid ACO newer see contrasted try it in push more with of MBR. due all appreciate to the you're coming in on want into XXX% patients higher the lower? pair are MBR mostly I to your going given experiencing experience I existing to one Nice to But the that reach. a experience color First kind commentary there. there. that much patients with Is of to just to

can on between us if the delta X any groups? give so, color you And those

Thomas Freeman

Ryan, this take Happy question. is Thomas here. that to

region, X,XXX includes just considerable shift a seeing we for think to where you're about think exercise overall that So X,XXX us et participating pretty cetera. right, we're by of But a expectation maybe the is kind kind terms of I of by growth the sort in the mix prudent to seeing, what we're as outlook you're significant year. of setting just 'XX, going from start also from provider

us much many population for pretty new it's respects. a So in

in arms our were cost was to on bend being the outlook able measures I said, lowest to as curve, new we're -- of country, respect rate recently, I the XXXX for new results around tend until second savings that our terms our calendar be opportunity XXXX the the in think we right we yet to not outcomes know which really proud produce very released so means X% I there's quartile of by CMS year like And And that us, much our John how and That we results. CMS were think are you our really get still top members program. comments benchmark as to around obviously think groups. something we with cautious mentioned, in

also. we XXXX I good feel think And results our about

in that have we our material and confidence work words, future. across could senior business that their you're continue way our is we relationships. for think line in to something think And see this as something continue an stands I grow us for lieu really In to or I is really, going the significant in of of be that accretive with can combination of to be accretive where a of we revenue lot think these portion I something of panel. and kind So think, a an don't for us I incremental MA goal MA. can other XX% with MA this a it broader opportunity again, us providers in grow this

Ryan Daniels

then my Okay. follow-up, helpful. one That's as this very And John. is for

context As rebate and across already, MA the increases that XXXX, And benefits. you Q&A discussed even think discussed becomes the of is of I rate dollars optimizing mentioned, this you in your you playbook, important. more one X-pillar lower for potential in things the

is because Kind that there. of Or pedal what dollars et love really seen Is given rebate the outlook engagement might to you've color certain to consumers, specific really focused organization you on by be for more you what cetera? maybe that with going there the 'XX. market especially about market? curious benefits want I'm on push it some the just Would lower differ are given So there, opportunities there? how think rate

John Kao

of Ryan, question great usual. as course,

it creation general just board strategic across increase a CMS on of be ensuring theme you, think of that we've a low of -- that long the -- at I ultimately for the actually many for the kind in will points, formula highest value had the ratings advantage on in star company And think we reiterated from in of consumers. that for will in reimbursement to quality was cut be And terms terms the built us standards increased and term. I cost. high the

it, of think the past metrics I sustainable. given we're think I past of call in some the years -- and the artificial the reimbursement some kind -- stars several of COVID-related for several -- don't the that years,

sustainable crazy going going I is coverages, going think. the impacting to so think people think of start is benefits favor. that short-term relying to that supplemental sustainable. not to some what kind it's I be some we've going And the rationalizing That's -- And have tightening is this to I the sustainable have of stuff market those to on subsidies, speak. our of been design, seen again, and sustainable to benefit be

waiting all -- cycle we're for interesting So And I a notice. this really it's think that think to I year. waiting the we're bid be going final

a of and strategy with the back. structure, I you people think it's the pull how dollars But sustaining of at cost respect still be the the be most going are end in are to going lot day, much those rebate add position in to people to to best be ought the you to got value. to aggressive how the best if benefits, going

got better better -- -- saying question, in not say, stars. -- continue medical we I'm We we're that in And And get thought get you to we management. combine with just We're to to MLR, you not to good. we're good. continue get can Whit's got good.

to to rebate incremental drive that I have lot just by think going artificial better. going of what's the That's strategies to are these wayside. get engineering And to go of a consumers. kind We value

Ryan Daniels

a is color that. on how think powerful AVA existing do I And in you but and only not can new using markets results of pretty testament you're the your markets, achieving,

Operator

comes line Ha of of Morgan question Michael the from next Our Stanley.

Michael Ha

toggle 'XX you on last piggybacking expected. said, one. your notice, come to benefit mitigate just thrive when than to competitive the I that other And positioning for plan pressure, need their thoughts MA because higher-quality slightly this off MA on the advance opportunity on this down -- lower the feel or plan back in. And -- rate potential of is question, like MA a may slow to like to I presents down wanted golden expand into maybe And rate thinking my just to

model, gain see care think star to a growth? So 'XX share, perhaps rating superior in presents market you your do outsized possibility alignment delivery stronger for that to

And just that around general thoughts thoughts that? expanded or on

Thomas Freeman

Yes, Michael, is this Thomas.

I think I with think what an cycle. we could you're interesting sharing going competitive as we're describing how dynamic this we our definitely specifically margin that or to out And that think XXXX. whole being is to versus growth about us on today. too upcoming thoughtful bid strategies much strategic look from to conversation comment standpoint that don't impact next contemplating impacts we're the strategies just respect very our product bid too not in a adversely and

right. higher-than-average manage that benefited adjustment. of you're in couple ratings. I some protections last all they've And certain a from who COVID They benefit competitors star said, being of part job done know from have offerings But some there think years. We benchmark certainly risk in because to exactly I with are been cases, think around the markets their benefited increases have able nice in our

win of and impact the dial adjustment, impact And the be in around change in, long every the 'XX, in things of the in ability we're and, overall worse compete important competitors terms us. continues our I some as for those dynamic that term. try not just to said, is CMS market really think could John to but on think to And than as of it's over I future, tighten in relative the our some risk most as that

coming and our be means interesting as cycle industry what positioning to years this relative optimistic we think but So as come. feel the an will bid John said, I it the up, for in to

Michael Ha

sense. more makes That Maybe question. just X

seems off SCAN, rebound B terms in at foot few regained California, Central positioning. offering aggressive your benefit where dynamics top flipped really competitive really and the you've Looking a California, seeing have North Southern the gas I'm players also of Kaiser, in some taking But competitive Centene a investment. Part pedal now, in to great plans seen Cal, rebates. their

sustainable? are SoCal in on member attrition forward, to the also headwind by marketplace X of you lower-than-expected being was looking fully that this. competitive driven SoCal do marketplace? back membership new So Do NorCal you question rational much more think NorCal? Northern versus offerings The And the Central is California, and in how in how you And view do aggressive both members? existing think

Thomas Freeman

the kind kind in Southern standpoint geographies, what say from Northern macro really, from of portfolio across terms a -- there California So think our of I I versus or California a management is, are and more different aggressive be less growth more are competitors of dynamics, would always who and more will who years. certain standpoint are in and competitors kind margin focused of focused growth other certain focused years, on in on on are

out the of really, that over seen California. again, time XX-plus sort business, we've operating been this time and I just X, the and play dynamic in of X, reality the think last we've years that's here

view to always aggressively broker strategies, run. top have the bidding We some someone product our expect right I sustainable from going be we the a relationships, the year right in management market have still ourselves given any sure we who But target that anomalies and it. and think, strategies, to of on basis. our those on insulated growth right consistent get line to certain we such in distribution provider to a that XX% is we long that is the might than should should there's it's us So belief extent, more to expect be make

So simple in think that's competitor going dictate it's as X future I performance. as don't market X to our kind of

the control from to us see to in our of destiny, own have continue I think and what take we you'll that's future.

of for. a of hoped your in I combination, incremental quite think bit your of retention in as say, just on the some I had was see was growth It where the sales well a counties we the of both Northern side. specifically California second we would didn't as question new in terms the part side

our was by our more AEP that markets is better California this reiterating as it past and state other XXXX. from a think noting offset terms points worth was that, XX basis again retention standpoint retention in than of actually that I such a versus

Operator

the Our from question of James. next of Raymond comes John line Ransom

John Ransom

question the my advanced which lots for away. of complicated, changes are course, going notice part is codes you John, is of that, the of ICD-XX

how think what kind what also sort level? at of would level, you plan downstream calibrations at that So provider then be you your a And do make? of downstream about

John Kao

Yes. good question. John,

well from think -- very perspective, hand. systems I we're in a a just think I from very,

data of engage all we I downstream think which for, of been that a we've way the that processes, in our is workflow working just ingestion, with couple years. the on something providers, frankly, the

not I'm really about that. So worried

the advanced think findings. a think kind with directional we've of frankly, to notice of way itself, industry our the through quarters. respect lot now that over professing last of right we're kind that several working been with the consistent kind I themes I And is, of

there to kind those hit think at, of of lower specific is populations. is of certain I terms this Based that and/or so disproportional on there risk looked of impacting kind speak. X% populations a a of we've diseases color kind that to in adjustments, of chronic that hit to preliminary some are analysis the income

'XX, heading -- John. of think way question, that. so in that answered to working all planning And be so we're your we're our right for think, speak. rebate strategy, that know I now that embedded gets we're our mix, working mean, bids, to going don't if into I on I And product that the through already I something our how that, is

John Ransom

in treating you to or what is are a for, level, group a profile, than heard follow-up certain is while be just that's guess fine, little this If down I will I fine. and gets then and your going about be it others And a very I the point? coding? -- of groups you're just thought, you bigger be provider trouble, coding of is, simplistic it's may be this it what too if you're kind at that, thought guess -- hit weeds or in a Well, X% we've with partners much hit to too that that, the bit certain that mean, at well, group might physician

John Kao

like we is it lower to non-demographic and the seeing But the people on are disease, in this and that sure the But not demographic different the conditions particular, changes, again, about speak. are color, to looking we HCCs. I'm mean, diabetes all changes I all impact at think changes, to, way. Yes. I stuff, so some disproportionate relate that income to public impact of vascular -- said, certain we

that And that's But to something it's into range, built in people, something point, heard be will the we've heard product talk X% your number of at. looking significantly strategies it overall, competitive embed that And and to respect So the designs. a we've people higher. strategies, say bid X%, product we're to want on. want to about we obviously, strategic are such sure and how it's we clear any you And kind don't something we very your with dynamics. make

Operator

line This of question comes from the BofA. Kevin of Fischbeck

Kevin Fischbeck

absolute an I like, look be flat but EBITDA wanted because into fair I to just beating dollar guess, from show to basis, relatively XXX% it going EBITDA comparison to the but difficult you're improvement. does have basis thinking the to you and actual the improvement ultimately, year-over-year, appreciate XXXX. made EBITDA not about year-over-year, particularly points XX dig QX, guidance, going But the more by I it's is and loss maybe

on So they makes impact flow I going comp? anything kind would is year-over-year a unusual, in or comparison year less of that you the say, dollar this improvement of -- there what either what in this EBITDA through the guess

Thomas Freeman

Kevin, Thomas here.

of the just through today And shown I as we it's as some performance think but California, of target year-over-year. I be in think about of improvement I that results, comparison, pleased think are now kind think combination our to going that MBR over year-over-year in both think SG&A continue consistency we're in to enough we've to years to in the cohort a line that we're not to I we leverage stand I we outside terms with see materialize. that continued our So to California, terms of of improving MBR see of as item. time, starting beauty think And we replicate where that of to breakeven confident come, the margin traction can where we well continue point, those your are is the operating

our XXXX, really recognize XXXX we to compare starting XXXX. to a on to out of our to that continuing to SG&A improvement that size we just but and now the SG&A of to lot if think, improvement of to improvement you side, And look lot membership, our And show really I new as expenses terms we relative quite of public have didn't absorb get on in the a to as a are to I we show have continue breakeven. revenue think we company,

around to while ability that think proof improve and we how positioned think a is to I had market side to things MBR, time, over we're can SG&A continue is our the demonstrate operating 'XX. needed points we the where of which So we I leverage lot of MBR show manage feel great that we've for

X a still at mind, in good we like things I in have with breakeven shot towards So think feel the working those we future.

got we grow. continue to think I to

of breakeven recipe part think things all solid about sets objective. objective 'XX. that pretty guidance that for in considered, up 'XX a our I as XXXX and But Obviously, -- us as think we we our

thing And how is, year course, We're we'll the out. the and last see I'll it's, early, plays say of

months X in. only

Kevin Fischbeck

an XX making? year-over-year, of that similar be to guess the kind I is basis XX Okay. headwind that get of just well? saying bridge, EBITDA, I on were followed XXXX what core MLR guess pressure to was point basis to Because I members number as takes one the following in the on And But adjustment MLR points number? So the the have that the doesn't core new puts from that guess I I wasn't number. in XXX% then and part the like you number a

Thomas Freeman

actually the that's incremental. Yes, so XX -- is the

current in in new sort And to MBR year-over-year MBR consolidated our member headwind. of So terms 'XX measuring new embedded in -- incremental new member XXXX point, the expected really MBR there's the 'XX. member we're results, XX of an versus in your the really, and it's 'XX the overall

And based group, so distribution as say, our product, we would reflect expectations on variables this and member products, for we groups, year those expected corresponding the again, markets market, PMPMs MLR kind by different members are to of each provider on where of our across the of different and growth member by than is MBR expecting our new the revenue be by that higher we've new the and seen year, I slightly 'XX. for so far those

on think where manage ability most improve again, And margin much produce typically kind necessarily we don't strongly that anyway. those where and new come really is time. X, to us those being What the we're focused at about is feel more and our in members contribution that But I important today. year I think what over really MBRs confident is not they new to still members said, of

Kevin Fischbeck

Okay.

numbers, So are the where that year-over-year it's not numbers of causing delta? number the it's that's

Thomas Freeman

It's a and when right. of bit a mix consider That's product provider. you geography,

Operator

of This line question Gill the from of comes Lisa JPMorgan.

Cal Sternick

said Sternick MA you Lisa. membership I of This you it's is is terms couple margin the over of from for business the to I if target. of not missed know Apologies long your the -- your guess growth, XX%-plus Cal And in clarifications then on going you preclude term? hitting have I that. is reach. on A -- what the given profile the

I grow different think much there but investments to trajectory need membership? we But a SG&A business material of growth make any load that with reach, the going you that forward? how should are there's ACO incremental know about associated to

Thomas Freeman

this Cal, Thomas is here. so

belief in to reach opportunity. comment, is of think is I business And EBITDA I of that we'll program, today mid-single experience the as concentrated that grow our in the continue pretty digits to continue to new margin of far small low recognizing the has learn EBITDA been our a book terms in a limited is terms pretty In in population and we probably ACO to so think the it a geography. that

continue think California, are on the thinking But to I broader we will I'd Florida, we say today. Arizona adding of a like providers we'll expand draw of longer-term and our get Nevada, new set we can of start that, that's that think 'XX, inform to I as our view that in kind opportunity. current margin in of So more experience

SG&A already to providers from books of significant too business, is an because not in And are we're providers of business. MA on our we with are the the it's that with terms grow standpoint required incremental investments working that investment this the reason partnering

and kind our significant day-to-day, So are massive to part infrastructure had week-to-week a that providers already we of create to partners business new we're haven't operations. because as these development or talking a of MA

more and cost deploy services resources to the fixed in deploying et shared our the case of are lot managers, a bring a as nurses, of real sort we're -- line expense cetera, from a from only have on kind list commissions, standpoint, if incremental medical we then have aspects And do Anywhere member versus the of of ACO compare But goes MA, programs to to this operational population. services, We on. marketing, do for you reach the claims we don't core payment. UM sales credentialing, don't and Care

that's why capital-efficient obviously MA intensive really reach, So we're SG&A, ACO for in do and of all manner. terms capital have things a to in we that for able do to that such grow don't these have we it are to

Operator

Goldman from comes line Sachs. question Nathan Rich of the This of

Nathan Rich

to going kind factors maybe MBR for there it's on for this that MBR roughly guess what is see I you'd that thought returning wanted is, on Kevin's that to if membership if in the roughly get in be members base. to you at of made all wanted driving make items year-over-year. flat we that the response comments the guess, I guess improvement would you implying follow question. I the it are seems right? that? And of up to year-over-year have you to Thomas, highlight is so, try some I MBR I for I mentioned, that adjustments like think any I

your be just to I'd curious get there. So thoughts

Thomas Freeman

here. Thomas Nathan,

described think I we that at way you the bit might So little look it. to differently a

loyal improvement seeing And deviate consistent pretty do expect historical cohort think cause our in us or terms we we've So members. our what of I today our our returning anything that's to not on that from We're prior experience. with data. would members shared

XX the and 'XX when 'XX with So with what that. the that on saying kind an we of top 'XX, think basis the earlier, is -- we're in new is of I members think shared on impact about impact bridge the points those consistent members plus again, new members of the you on additional what

it to the the between new see expectation or and the members, down 'XX. number of 'XX members loyal 'XX all would were loyal were in break of take to you improving returning If actually that versus kind and we you an

good I standpoint. cost about how well as feel up, standpoint shaping a revenue medical pretty both a think we from trends those as from are

Nathan Rich

an Great. bit I EBITDA Okay. anything a it 'XX, the follow-up. relative quick seemed would little expected that maybe to standpoint full guess, have for just cadence guidance then And lower is EBITDA And the year. we from than XQ there aware a like be guess, was I should of? we

wanted standpoint? a ask just to I if So cadence there's from anything

Thomas Freeman

Yes.

has to is So share saw past I what think this to higher typically January MBR, was utilization, experience, QX in terms we're in January. case relative guidance come prior reflects that similar January, it and back that a of we the utilization down month, February very our where pleased utilization to much though for the

look guidance implied I we the out today MBR. so that the similar terms in last for to it And guidance in of would the of the pretty first of looking think put you're quarter actually terms year MBR, at if our

But I operating That consistent in we, the of and hit plays well up of with the about as of fairly spend see being out. I a years, SG&A, we're environment. of SG&A around about normal might the our market the the year, And contemplating last year year third how last guidance ramping we XX% think terms the quarter. of expense first had opposed half then as is kind we around to marketing back the X year our quarter MBR the beat of seasonality sales and as the fourth course, the the half in which typically in couple said, MBR, how of recognize is think we'll and the this of

would around sort as So similar this a expect well. I year cadence of SG&A

Operator

your participation and today's now program, disconnect. Thank conference. you the may conclude for you in This does

Alignment Healthcare (ALHC) 28 Feb 232022 Q4 Earnings call transcript