Earnings call transcript Q1 2023

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Operator

Good day and thank you for standing by. Welcome to the Alignment Healthcare First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. conference recorded. today's advised be is being Please

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

John Kao

Hello, our us call. for and earnings quarter conference on thank you first joining

are delivering operating key year, performance We to of beating consistent to strong performance announce start pleased the all indicators. and our a

XXX,XXX year-over-year. the quarter XXXX, with million year-over-year. growth XX% the first our quarter $XXX.X XX.X% For We plan health members, of membership represented total revenue growing ended of

Adjusted $XX.X EBITDA of negative was gross Meanwhile, $X.X XX.X%. MBR profit an producing million, our was adjusted million.

profitability from team Our outperformance MBR Care to our efforts Anywhere and continued AVA. improvements resulted significant by and

has stable. to enhancements identification of Anywhere ongoing been and Our keeping engagement and Care core QX our allow both to us utilization to improve our the members AVA eligible

continue that believe serve the foundation our clinical what and as innovation, to We alignment. differentiates of clinical culture AVA,

executing taken at for changes over several done that value competitive than cost. we create Advantage vision of outcomes seniors right. ever, to standards the believe We Alignment its affordable Medicare will tailwinds reinforce maximizing years the has the are through CMS beginning Medicare XXXX. to in for that its high-quality believe we an next adhere More following Advantage actions

are again First, Star Ratings and high once differentiating low performance. between

over our with rating stars changes in ended the artificially rating or of COVID maintain despite above CMS scores. in year, X-star these We high For inflated the XXXX disaster our provisions Star plans. which cycle members XXXX XX%

toward Ratings, that strength has clinical half reduced shifting announced been measure ours. a weightings of be back outcomes. by scores, which In measures XXXX the CAPS weighting HEDIS This addition, Star will of the for CMS

become are increase marketing pervasive CMS being increasingly standards limiting have over marketing third-party consumer marketing aggressive protections. organizations last the years. to that third-party few Second, practices by is modified

and to our protect will retention CMS' supportive believe to seniors are We goals. of this efforts be additive

being model implemented changes And in are last, risk XXXX.

Since announced recently cost. our for philosophy initiatives. approached know, the risk we've always our well as of model phasing you in risk of and their company's low CMS VXX on quality XXXX, years. quality notice care predicated final many clinical part and We've As the three inception, rate high over achieving adjustment operating changes

As RAF X.XX This as position assess eligible well approach score current moving a new solid reminder, XX% a and the our duly of served us includes the today model. parts has in members. risk within places us we

Most importantly, new X% in review as local of believe share during competitors, more we risk the revenue competitive we'll After will dynamics advantaged particularly be our notice, the in XXXX. change discussion. in net financial will the full assess we conducting to details his believe, neutral to many a PMPM we of of Thomas relative under positive California. final be the model our in each markets,

more the than a XX% of our As our agents of We to have grown rate or come Xx reflection finding conversions in new a switchers how our years. past competitors. opposed at believe traditional we've California products historically is growth this reminder, is members as value five This from versus from greater market Medicare. over the consumers plan

helped beyond. As Star growth our our from competitors, and scores growth our a believe strong tailwinds, switches, plan XXXX and predominantly relative result, in we Rating RAF all coming us to position for

deeper significant states and share a to XXXX within larger the presence local our are develop market existing focused AEP, scale economies. toward Looking we driving on

also delivered employed in this As on captive strategy, markets adding us needed. who agents and part more brokers while down where for double of will we have

taking In addition approach to to also retention. this, we focused a are member

employing of our the industry, better rate retention X-star that we definition, been under has past than we've strive metrics the taken Star. AVA, activities by in service in to call retention which application towards X insourcing actions noted leveraging A a stars. newly our as confidence CMS' center already towards enhancing member benefit always deployed give have we today continue within supplemental us strive CRM seen include customer results program, have and few the these While we a North we've we more management functions. rigorous vendor The early

clinical exciting in support our outside move time of in investing within scale maturity. our at each an initiatives, we achieved markets. into company the impressive and phase operating are Having we now of California, which of the will It's growth as next forward our both operating repeated results,

In showing and conclusion, progress. our goals retention are objectives clinical solid

Medicare about Our next operating position broader us of scale how competitively initiatives are the and over we excited changes many are the years. Advantage taking root, several

call the quarter. the to to Thomas? turn results I'll Thomas the financial cover Now over for

Thomas Freeman

John. Thanks,

we pleased are our the the Turning across start to in exceeded which deliver our results, outlook first of year a to ranges of high-end four strong to quarter the KPIs. each we

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

million $XXX.X function The year-over-year. top-line plan a of XX% outperformance both health represented primarily was Our as higher as membership well ACO of first revenue revenue. REACH growth of growth quarter our

was operations season. which to results be in flu across a Utilization ran markets. inclusive $XX.X of the to an month XX.X% generally in continuing inpatient admissions higher per utilization tends gross X,XXX, MBR of at to million, January with with XXX due produce the quarter representing adjusted approximately line Our profit seasonality, expectations our clinical

full As of population. MBR includes a REACH as ACO of in return comparison growth the year-over-year our the reminder, of well impact the faster sequestration as

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

which that lower we part of the our XXXX we next to scale as and the basis of X.X% SG&A for the was $XX expense Note in SG&A timing, relative of our progress was points by full-year business. XXX solid the continue our to to operating decreased improving due XXXX anticipate expense, reverse points year-over-year. revenue expectations a to compensation as excluding equity-based of million, leverage SG&A year-over-year, our that basis approximately percentage of compensation nine equity-based goal increase represents an slightly some in quarter over Excluding year. towards by than XXX months

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

We balance Moving the in in with a to and strong the position quarter capital sheet. investments. $XXX million cash exited

quarter quarter approximately $XXX of QX an as the payment recorded cash early early recognize of second at the the payment revenue and included in QX. in revenue CMS end will Our premium million. We it from deferred as balance

have Importantly, any our million. impact this on does $XXX payment statement and income not metrics. Cash early the excluding were investments,

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

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

are revenue largely full-year outperformance in revenue our raising reiterating full-year summary, our XXXX quarter towards our while guidance the our guidance visibility and PMPM. In we first given the

run our line our quarter first expectations. still achieve we us progress initial of it's we position as to in we our potential the said, results are to in with expectations utilization utilization continued Given That seasonal throughout our look year. mindful with that at how full-year and April variations remain early, pleased

year. a our of the our strategic longer-term we with we to through before, short-term to as progress forward said objectives As we've growth on updating imperative and profitability continue you it's results our ours to objectives, balance look all

Before I'd notice. we close, like final spend moment a on to the

including revenue PMPM and As changes, positive VXX normalization, to change John Stars, population, X% all model be noted pieces ongoing earlier, we our believe fee-for-service their in to risk XXXX. consists will known current This the in operational net moving initiatives. impact, our of benchmark neutral

revenue three our range, negative components approximately next specifically VXX the As risk risk be and we the negative This operating X.X% approximately model and positive the to initiative to over that to X.X% X.X%. model initiatives annually of it X.X% relates PMPM positive expect years. the offsetting positive phased-in X.X% operating to impact reflects impact of within

risk on our we scoring opportunities position. risk risk initiatives, under operational prudent gaps Expanding close given historically the identified model to known current have score our

and model. employed network into smooth and Additionally, transition new clinicians to a provider training engagement our risk we programs with deploying the ensure are

We the next amount over revenue initiatives to years. three to to X.X% these a upside expect of total of X.X%

phasing. Taken together, by changes offset we risk model the operating the XXXX full the and impact expect in or mostly course of the will of entirely both over the initiatives be

the continue to how the by impact in and phased-in over believe highly XXXX and in competitively this manageable, we positions of course impact. model changes us the both fact, the of excited are Altogether, are

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

Operator

Thank you. [Operator Instructions].

Blair. comes from line the first Daniels question Ryan of William with Our

ahead. go Please open. is line Your

Ryan Daniels

one Hey year. the perhaps on guys to strong start thank you for and for you. congrats questions taking the the Thomas,

a of the declining beat You QX looks talked about bit big lot expectations. little the it drove below nicely guidance, EBITDA EBITDA relative like but a That to is SG&A year-over-year. probably

you that two, some income to in expectations. number next So expect to And can how into costs quarters big issues back upside period? come few a color on calibrate statement over should can what our little timing led bit the the kind of provide of we then, more the so we EBITDA those

Thomas Freeman

we the over Ryan, more the anticipate. and the of question. question cadence comments both XXXX then of SG&A maybe course speak to the that Yes, I'll couple thanks for about a broadly earnings

And or of question favorability to to $X based of P&L. favorability SG&A, quarter We sort million in on your that first the that attribute would in that and we few dollars the just to mentioned $X quarter. timing third million terms expenses In hit a over is anticipate of of would we right. we you're the had second, course think fourth I of on temporary the probably reverse when certain neighborhood million that

lot growth, ago. pretty nature. sales support to and had to to up hires expenditures, in of the outlined things that has to of with general, we our SG&A that XX though, that Now, good marketing feel membership about we of target manage about our guidance a and do In ramping new ability just overall our initial ongoing days

of variability COVID in just quarter-to-quarter. comment seasonality, both then, I is year impact sweeps, year earnings we to a expectations, obviously, that, on kind what and I consensus in things of due our the the say had adjustment risk modeled part prior of the think XXXX scores, and terms performance, I'd atypical think broader XXXX like XXXX our on bit to which about cadence earnings And relative note our for XXXX your more and IBNR would is

alluding so, lack think compared of I is kind a to what to year you're comparable year. prior the in true a bit And as the of of current little just the

outperformer an we sweeps primarily due the that the of an note thing the would year quarter in And think think second quarter is standpoint, typically from second see then second was the last we to of year. I that I MLR each

basis, a typically members. very new our we for reminder, accrue don't those for a in As particular aggressive on

moving that our you might on think outlook, to on And it, about it's all approach to conservatively, as bank lead don't for our so, guidance we to I we our you guidance element something a with don't our our We current the rely that's slightly see to as which the in full-year that but guidance. result, seasonality may tend pieces second one historicals see think relative in today. we quarter respect upside and not more of

Ryan Daniels

kind some and John, of the you forward? Very market new drive I commentary you. hired of to Okay. about Northern investing And senior helpful and membership to objectives two one market the pretty then, to speak Nevada the noticed ties for and of core California. and goals in going you talent in one executives, NCAZ of some in another Texas maybe bringing sales in marketing maybe that that your growth and Can how color.

John Kao

Ryan, Yes, hey, absolutely.

are know I'm about Morehead they're excited excited They've They integrated have, very Ferrari, that. we're respective which in about culture the we to and they wonderfully. think vision Lisa I and markets speaking and that been same them. have Tim leading. They and share We're specifically people. senior the

I'm the And eye I fit the it. year XXXX I'm be starts serious people very when adding, culture about we're investing deepening When that that. I And say we the resources, about throughout how adding investing AEP, I'm you And the onboarded, the I network can into scaling. it. kind see have, they whole head that doing in them of be get it with and do. to think an we distribution, we're talent. excited and about acquisition think into going and we're going in as team to excited the very we're just what and of that trying We're people say bench. how we member We're with we're I the towards to resources

Ryan Daniels

housekeeping I And your but the guidance, nuances. changed know a helpful impact last assuming few I hasn't to for this quick color. talked Very about and confirm, from in then a Okay. you quarter MBR Thomas. I'm want

sequestration the I think we bps. MBR? still XX year-over-year basis bridge points ACO the XX, maybe algorithm XX REACH and kind XX, new hit, think about was like of as Is members the in that

Thomas Freeman

exactly. Yes,

you incremental we When were well. and some consolidated sequestration growth said lower think the of we compared three think January overall elements outlook our the think to just described, saw it in XXXX, those the MPR, REACH ACO payment RAF year-over-year about XXXX new on impact you I I scores impact, the which member file. as

that bridge. much still are things the I way year-over-year think we think about three those very

we April. being really our utilization of year strong. again only pleased overall really first in unit which the the business, XXX our admissions for core running around economic of is we're not also fact, the inpatient think driver to that once all through it risk the shared started per X,XXX but quite quarter right with remains I the MLR, that said, that key is And

And confidence drive to of on gives of growth. that together SG&A that of us continue of economies the lot all with scale growth continue in so, invest to kind along a side and to

Operator

Morgan And Thank next our And Ha come one next to for Stanley. from you. line going is of question Michael moment, with the question. our

Your open. ahead. go is Please line

Michael Ha

you. thank Hey,

to year you anything did accrue quick second correctly. bps remember I MLRs drove think one sweeps. quarter, mid-year it for it? XXX Last if a better on I almost Just

trying much magnitude quarter? Just to and sweeps benefit sense get a of how next could potentially

Thomas Freeman

would seen and the of encounters are to the when are that pickup in XXXX that than to periods, you of year, second outperformance kind a accruing we directionally submitted course just have up until we of XXX-basis historical think the over point. and slightly guiding downstream higher previously we due relative of COVID of about been had the full-year, again, what saw the being other impact to some by last point correct, say providers. the timing I quarter I was Yes, probably in of

next tends come But that see days. positive being said, keen through over certainly a it's be I it that think generally something see item speaking, those we're to we to and the XX how

where new They to is encounters just in relate book paid reminder, that what for that members for we're this were specifically a As these payment year. last to given being ultimately the that's the not with particular, and we obviously Alignment. the year dependent population upon

so where the reevaluate and And of start course typically conservative year. that's over we then of more the kind

Michael Ha

switching Got sense. you. or it. looking XXXX. to And makes maybe just That Thank to

to members this not more protect around dual that think are only you D-SNP California modulating I X,XXX given and I'm mistaken, plans mix of recent understanding do going in any toggle there probably benefits, hasn't just heading your about my I environment new TBC allow if to benefits D-SNP that in doesn't apply reduce them benefits to years. it's are to margins probably I But of don't theXX'XX ability to understand while terms licenses actual most D-SNP benefits, MA rules modulate year for in because are given of year? And view where how by plans. In plans XX% rate plans, XX% of And XX%. are accepted your context, your D-SNP. next But offerings than plan with eligible, into down think

Thomas Freeman

of I competitive at what several going of is benefits, think I going our headwinds the that from too faced, think past of remarks, region modulation of the benefit described broader that are of And not into the terms of won't the space terms about about given we a risk that kind prepared probably fact So of they're to I up some of rate are benchmarks the up faced standpoint. reflection the in competitors But the just the have think specifically some they much statement, your into while talking his quite Rating a our folks both relative we of XXXX, some XXXX, years. in that to some over disproportionately same how VXX just think in impact go John competitors us. adjustment, Star in

mindful you the you've factors clearly, also take seen very why IPO. that since growth to be growth. opportunity so, those and same profitability we're phase-in, in modulation. all we're think the more that the a in from to because way continue and when And a But growth we potential little see think think presents continue years invest navigate account, we're versus into accordingly. benefit in two that's think headwind, And I hearing us to to And be VXX folks we I the an Star going sure over well-positioned disciplined about to industry you're I talk don't are bit to going continuing we last very make Rating to invest about

John Kao

Hey, and Michael, it's John.

feel share we're right now, proud XXXX I lost to I the remind that. don't a kind that design but I that we've deep to process. benefits, we job think into respect really good Just other everybody, with I And of process, bid that mean with talked products. whole before, just cross-walking the we're Thomas' so lookalike to this and very and actually D-SNP we about I and call. -- of QX very on the comfortable the anybody product last through think did year point, more mean, to and we'll process on But

Operator

one Thank question. our for you. next moment And

SVB. Our next Whit question line of the comes Mayo with from

ahead. go Please open. is line Your

Whit Mayo

X,XXX the you you last comment did what And that the Good visibility outpatient? since provided per quarter, Thomas, utilization to just XXX can in year? compare quarter, maybe in just inpatient afternoon. the days on of thanks. Hey, to back

Thomas Freeman

Yes, to that question, take happy Whit.

last in to was I XXXs. performance it So compared of want quarter to of first very the terms the the year, say in as last similar. high quarter this year was

so, given with difference, as population normal changes the is, year. And three would I of year-over-year, well prior very that as whatever of seasonal performance kind in our as much two or variability sort the our expectations course of line very, view in

we experience And in back utilization more in outpatient that in outpatient of I first think of question I return then saw a had a your kind of more return started about on of I to XXXX. go in first And impact utilization trends, significant or to COVID think that when if some terms an holistically more fully increase XXXX, XXXX. we

so, the we similar with that on stand go-forward expectation think looks as our claims run-out, pre-COVID. kind of And And and of here a to back benefit significant I think be kind of would outpatient XXXX today we of utilization fairly that now today experience look basis. on I overall our

Whit Mayo

Okay.

little a Looking ahead the guidance. there in you you tracked OEP, few at And resonate bit not about picked saw plans maybe more any up more products better your either of just if just sure of that details quarter membership, you maybe then I talk a relative first and lives presume to newer share. some expectations. the to the are specifically, more or worse

companies to very have plans a lot specific we cover. You the guys some tailored relative other of of

John Kao

year. eliminated into think the lot of just for lookalike this John. to D-SNP Whit, of products talked tailwinds -- over terms members kind so D-SNP we're we everybody's getting mix some in the with respect and and to kind product, a of Yes, benefit, about of what I other they and last these we crosswalk had Hey, Yes. just it's

bit design. because growth product. members on created MBR as actually getting from of And of a headwind tailwind from resulting we into seeing, getting little product we're OEP, we're D-SNP that an so, that pure are a a bit that But

something And so optimistic that we're about. that's pretty

Operator

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

open. is line ahead. go Please Your

Adam Ron

on question. for Thanks Kevin. Hey, guys. Adam is the Ron for This

my risk levers to the it. what you think have your around and want think changes think, to offset at focus questions you I model I you what revision disposal

more to to rate X.X% Is wide go X.X% next could get such specific first, to why into what X%, it all couple is you're the taking if And you recoding? that mitigation range? about detail years. just over a lift So, of steps it

Thomas Freeman

Yes.

speaking. So, -- is Adam. Thanks, I think this Thomas

itself, but realize I that these opportunity, timing the think terms of we think reflects pretty to range range I the feel the in or of And full also when the upper partially results. of is we the anticipate bound the good impacts that X.X%. opportunity reflects

the XXXX opportunity. you're maybe bookings. think a the terms we're us in us of for range with conservative being of seeing I Hence, that achieving the little pace

by high possible terms and of I'd lot a actual recapture engage on ensuring our In things as as clinical have resources as many visits, making and tackling success say rate initiatives, ensuring of as or is blocking it are kind we possible. our like that the wellness operational possible, PCPs, chronic that rate our basic as is and again, sure a annual in members the as of as of both seen of of is well high network being as

just I years, the overall over done on those of have of visit the growth, activities. good last pace wellness aspects of each overall the several think different we given

ensure the great pipeline. impact However, that we we that offset coming And we a down recognizing relative to to there some and of been is haven't see is I are opportunity the that VXX think the perfect.

Adam Ron

have why would see they RAF you would members Would haven't wellness that others visits been than than many less because lower you an engaging should? and they of you explain impact as think in

Thomas Freeman

is members pretty I or benchmark. quite PCPs, would industry say of a a our standard-type had our I good. differently. annual wellness solid between us engagement maybe an it been And which I over say have think I bit would our think little visit has XX%

can those visits. we're of job of a with we better what is, think efficacy saying the do I each

increasing slightly trends. do can beyond historical completion our I think above overall rate and better a the at job we

have in I for Where Medicare adjustment value-based the other have. bit in And suspect generally on or focused the markets center our so probably our that around clinical I Care and of competitors more think for that much mature several member it's Advantage on outcomes. experience, putting a a that market many the care, a in Anywhere i.e., high quality, markets of a Florida improved similar of improved more but are we've low we like focused notion very little past risk probably Texas, and been like California, health and than been outcomes to the that model, cost has the years at cost, ensuring emphasis been our this past team of translate

We I of haven't them necessarily used we the in risk front not revenue why the have, we is us. that as some factors adjustment have model cycle as which think much that management, maybe others see might some as think of mitigating quite

John Kao

to some we've that enough what because done our Yes, to much very the But of very it's RAF We there zone remember noted the with beginning been that's you're X.XX. of safe still to long And an the have I'd And known want to be safe reimbursement. that we've like in we beginning we've around is consolidated ACA and and business we've say normalization. in happened this business that going and the from the that any And Adam, John. run by revenue X.XX. kind that from off of continue overall XXXX we RAF and standards, zone. adjustment

I come clarity, now so we mean, or years of actually. changes or kinds five around years so every have X to these that XX And

of little Stars a about kind where that. a very and And that we predictability about on bit of going. pivot good just very is feel the we feel so, good And

opportunity what Thomas' to And I are. the kind those grow so, some know we And think of to areas. got point, we've rules that, in

Adam Ron

how you this Great. are members seeing. of California, doctors. terms in that And capitation headwind those and seen bigger a high than capitated are your what you're like seeing many, you're a And theory, around rate then my in percentage last relatively by is, question of have in doctors

you some And your getting theory headwind. of if adjust rate a rate or to cost these cut so, they're offset benefits headwinds, bigger in structure

you it? Or to to net capitation likely and Is in around for rate? ask support see to them have way? they So of are higher to to going are and going it going they'll they a sort margin have you're turn absorb any just headwinds

John Kao

saying And two-thirds are we've from have aligned that business those And those it's capitated. we would our Meaning that's hospital what No, Anywhere, a is of where third globally that with make shared institutional a beginning, something we been about with capitated the we're we and Yes. providers that the we risk about and that's Care from call not et globally managing risk and contracting environment the risk. cetera. sure pools, AVA with IPO. pools

vertical are just I going think and/or folks it the more more, relatively again, to your having This and integration. the we've And so, of think help going us, virtually capping, that why squeeze you arrangements built speaking. are is to to I fact in think point, going -- we be And plans mentioned. this. haven't on I feel depending Because and company preponderance toward global on the you that globally are is the to of That's plus vertical see that seen going kinds just XX% also global cap. call fact it in why industry cap the that

for the in And se. delivery most do per think intermediary Care it's I individual mean, the groups frankly, can that Not years literally why that the we occur so company be we've why XX and doctors. we supporting AVA, we seen we I model we think Anywhere, reason we California. did, the built the in why is built built way efficient

control is cetera. intermediary lot Anywhere Care job a beauty HEDIS, think do actually Now team better doing IPAs on going cap. global a closures are our more the that are those your outcomes. of on on make to more And there exact But sure with work we that there's relying ensure just we that it fully delivering that we be to that get is, think also point, gap the those of to we I et have to Stars, is and pressure delivering

Operator

next one you. And moment question. for Thank our

with Our Maliki line Nathan of the comes question Raymond next [ph] James. from

Please open. is line ahead. go Your

Unidentified Analyst

Ransom. John is in this Nathan for Hey, Maliki [ph] stepping

expansion what of the your you membership expand you maybe incremental Texas. continue wondering learnings as in seeing growth new you provide in can on And especially if efforts, on anything can in markets, to there, Just you're terms Florida comment on then and those states? I'm

John Kao

and hey, we've Stars, feeling great which Yes, John. we're very, I going able to without comfortable heavily on we're you're hit very Yes, how relying distribution, in or rates we're -- past. network, on be something doing? making do on is I think to exceed think Florida our It's on progress growth the I'm Texas. mentioned

the have, the -- model, which with move stars, have again, good North stars, operational delivery partners support. of that products, just toward good of to on Carolina provider taking playbook out is get X focus bit a a working really X the are the little We have we

had But solutions problem we material that The entirely and into for the two the really those recall, we're we distribution And the we've I'm heading find I dependent as both be year, going on got about good on to feeling right XXXX. that. partners so growth for had is you hand, just to last markets. optimistic about that, I'm not other expect

Unidentified Analyst

Star to that membership other Stars, Yes, up you to or satisfaction following provide And translate how anything might some maybe access helpful. and XXXX internal that's that of then on have will you the on data just kind can Ratings?

John Kao

XXs. MPS still the good. very is Yes. in still It's

whole I think and it's around membership. historically for bounced between XX. XX XX It kind of the

think and last the and membership between I saw XX. Anywhere it around was I been XX, has Care kind of Our XX

I fact good. very So are triggers in those think

year think the you it with that HEDIS. reemphasize weighting think going think is. put the back they're XXXX on to for know to I and they're down CMS guys changing weightings that caps respect And I rating I caps,

to with respect to of alluded would note on, spending member caps levels and we're I service any vendor we lot that to thing of management. are delivering the this and satisfaction, but would we're The I on is a I say time sure just members. with, work lot us spending their other time that won't in vendors a on we remarks, supplemental and to of promise the but the and Making our them, contracted name

that But dealt heading very of perspective. us And going year a pure so, with that's abrasion was Stars source this be for I'm that XXXX. from confident a into to

Operator

And one our question. for moment Thank you. next

Taylor comes of question from with Our the go Cowen. ahead. Please line next Gary

Gary Taylor

guys. quick theoretical a Hey, then and good Two question. evening questions numbers

revenue numbers, just Thomas, the sweeps, a the I mid-point seasonality ago on the or the sequentially. that that the the anything XQ around typical a else retro conservatism, imply anything the MLR and XQ? Or is of piece? just your from bit guide On in but there's EBITDA I little does was down in that's understand year wondering,

Thomas Freeman

grow is revenue a PMPM revenue both from older, as sequentially involuntary the new see which members, revenue come we goes members. standpoint revenue down on we typically drive see we in the our are obviously hand, on yes, of think PMPM two the what sicker higher lower Gary, that we than the and PMPM the continued terms in first factors the second I quarter. the quarter the Hey, as to second revenue, other membership that anticipated guidance sort disenrollment PMPMs, so with guided typically of compared offsetting And and growth the of quarter to

Just over the the course two year. mix things those the of of

then CMS what expect see historical to earlier your that based could And experience. quarter, to on the opportunity from this area we our mentioned be sweeps I obviously and do is an point, that of

Gary Taylor

-- days higher claims sequentially looking Is the really of then and down bucket. us is incurred the year-to-year that those at you out floating help your year-to-year And there of from reserve -- and paid sequentially expense? medical -- Q, but color on some why with that that not the bulk can the with it is payable and Thanks. dollar coming

Thomas Freeman

for has earlier of nine increase our the and months overall productivity how This of to in we that The initiatives to in now benefit of obviously department. last claims Yes. claims continue terms can really six of is emerging visibility our been ongoing the invest one trends. to

so, of just more And something been automation tools kind is accordingly. terms actively this investing examiners and of in, different we've in

to you're of quarter, see. the starting some very pleased see So first I to those little a of benefit bit of think which efforts the we're in

more scale we're continuing business. And speaking; about to broadly I think overall how the we think

a be revenue of for think to percentage so, I a down over go-forward SG&A to time. the as of system basis claims things areas And investing in drive on like that opportunity continue will us

question driver of the in of really payable you the terms days the that's actuals. had primary quarter first So

Gary Taylor

you're Or the is XQ? incurred Was is there claims that in that moving? it P&L adjudicated impact a saying not from paid the but

Thomas Freeman

No.

quarter slight million actually a XXXX. significant couple in we wasn't fact, few number, some first had favorability dollars. on IBNR In the a It but from

Gary Taylor

for one XXXX. into Last me; benchmark how in just you're heading a give quick nothing put the on update drugs us the form. thinking about CMS Alzheimer's

you latest requiring cetera. the on CMS that Lilly calculation protect protect in if will could I trial but June registry, pass-through that? a feel your you to assuming do bid rely now process? to NCD through with you the CMS it You've head the got into the significant just Or and of bid like get there's you guess And or maybe drug reexamined, will yourself uptake a et that slip cost on do you to going chatter theory, NCD existing do it's patients. But material just have in be

John Kao

That's to specific here. I resulting D think impact Hey, from initiative. Gary, are the one going many Part John of variable whole that that's IRA

in the is of a past think Generally we've heading that speaking, important do your specific said to relates going pretty rely, into that this that important for rely going think to bid and of very I strategy drug design going also, question, to the into component think I the we're hope product kind XXXX. our D I heading on it into to we're specific of be strategies whole part D, the But Part say calculus. factoring as be benchmarks and are a that the XXXX. I to will the going CMS bids, Part

Gary Taylor

you. Okay, thank

John Kao

Hey, Gary.

Gary Taylor

Yes.

John Kao

one other thing. Hey, just

timing so since So that. we've But disciplined I with being sweeps, it, know we're know, we relatively for point the are, as don't on I don't conservative. Just QX we Thomas' mean I the to think you last I this, know you know, business, we started very of we're numbers. in will were some for that? pickup Remember XXXX, about always COVID. say unusually good associated QX the they issues just positive had whole because the sweep

Gary Taylor

that Got you. with playbook, that. wrong so Seen XX-X. nothing

Operator

And next for our you. question. moment Thank one

question Tassan comes next of Our Jessica Piper line Sandler. with the from

line Your open. go Please is ahead.

Jessica Tassan

the you you remind those criteria quarter. on move just Care the the program taking Can for are? what so Thank the model? new Anywhere changing us congrats you guys for VXX question adjustment to criteria risk and current And Hi. are in as the XXXX adopt much

Thomas Freeman

Yes.

would Anywhere -- things how think separate impact sort the of So Anywhere. about we new Those RAF whatsoever words, the model entirely model risk are someone's on no I other and under in score criteria. VXX Care from or has current two Care

senior. that basically try to greater who likely population we've would transfer data event way tools encounter chronic people higher a to have we of over and who the a who than be time members, the average the days as to or more using pinpoint including most data, on demographic other that is us well XX as and sources data, much all allow average next factors in learning of evolved have recently us machine So basically this admission/discharge an lab variety of a those the AI the algorithms data, pharmacy data, data, set allow are some variety to take have the or acute

our program. think how those get so that our the kind nature. things try I that chronic And gets in to go is have more, five conditions, criteria, terms of not outbound we would XXs. of then and members age the call provider kind On to that resources of can we typically all high Care eligibility things these say engagement into our in in automatically average, routed our into and enrolled about or if Anywhere team six of They so population

approach engagement other any extent than or just the our continuing anticipate don't get I So in to criteria how to Anywhere everyone engaged we Care change we ensure we can.

John Kao

level going care that members. yes, need identified Care we And reimbursement, care continue get going of closer to XX% do to to think no, that Anywhere doing Thomas Yes. engagement that, like right. we're we're yes, exactly irrespective the But of take people eligible We've the these I that. to have on to got the and is

Jessica Tassan

adjusted you in membership the it. it breakeven just you. the think me. then gains potentially accelerating kind Got of target to And of wanted between ask level about I your Thank comfort XXXX and balance Thanks. for the of versus And EBITDA that just XXXX that's persistence how target? with

John Kao

You I we're a innovation investments testing of into it Yes, very this several got feel company for some us MBR it. good side to of that going of The John. shared kind loyal because Care kind And the on in going in lot the Anywhere continue that that production being be putting predominantly are still make. bunch to about the and an of MLRs got We've I think to that our of is good. we going very, we've AVA ideas a markets. to got create are clinical basis. we're tailwinds out of on be risk

I it's core scale do for we've perspective got good kind I very on of think blocking the a that and initiatives us. just of retention operational from just kind opportunity think tackling a to

what said that operations. of have vendor to they in high be to to things that For, out confidence just going more I are our will say a before, management, sure degree roll like we These that they vendors doing efficiency we are our back-office do. making were going

growth, itself, base getting share product that's kind from growing if a uptick said think profitability. your do. the But lot It's and from little you're differently, up because backing combined trade. that, backing all that's disproportionate see find that new any the make of think that being said perspective presents think just think I new core I because resulting something off I I to confidence economies a lot growing, in that if, MBR I of opportunity pick of would, MLR. of that Having our we're off bit an going to do with ourselves not -- we've got raw members, would I fact in membership market I got a if you've And if not a if members, the of we scale think of to design a we

little with that on get about still how posted we'll initiatives and everybody it So proviso, feel actually I operationalized. keep good these

Operator

next for moment one And you. Thank question. our

line with Calvin Sternick from of next JPMorgan. Our comes question the

ahead. Please open. go is line Your

Calvin Sternick

follow-up a the have last I to question. one. the for thanks Yes,

like be a would guys about opportunities some volatility. in going you be others, Just to curious bit little bit just more how advantaged next some a relative it thinking year the that of markets there given you sounds your be could where to are

curious those markets? you of revisiting within M&A potential just So changes if looking to any your you're at leading

John Kao

Okay.

Okay, Calvin. that Yes, was good.

it the answer we me at Let one. is way look The first this way.

think last I secret headwinds have the industry not had it's three macro on years perspective. a a

aggressive have on technical on benefits been resulting people loopholes kind I think Stars. from of

adjustment. risk I think aggressive on been have people

been of fact the that that way the just what and have unyielding kind all down think And I refocused people of on was Advantage Medicare designed. we of kind is CMS has closed on distribution. love

by to have And think Stars. going competitors impacted be some you're so our of I

impacted to going have You're some risk of our by competitors adjustment.

the I with think going even a side be everybody think distribution there is on more can more field brokers, I the to done there. have playing of although

So that. about feel I pretty do good

particularly the Because switchers, is. to growth maintain years, California think factor. I from share have is and fact that with is adjustment of I what think We'll that though, from their in stars. we've competitors a we in can happens the do take fact see respect those that and risk proven able our the folks bigger to been over the also coming XX%

So I pretty that. about good feel really

overall -- business just we've We've mind be in to scale. to about would incur. of respect very of of M&A, very a of to With getting is careful, incremental right in well-run things. mix got think trade-off solid, I I important going to now. careful, mean, got got be that what thoughtful very the kind you kind the getting risks Because are the I think that notion keep just I being scale with we've of very think being

Care economies one. Just and scale office AVA more just in taking And number memberships. it to over particular, number the two, and on back applying Anywhere accelerate the

causing look got look -- stuff don't at I and to of got synergies we've we we've think those But two think -- is that up. that's said to good sure stuff make having -- seriously. we've kind a at just going, that, got I goof thing thematic

Operator

And you. Thank for next moment question. our one

comes Rich line question the next Nathan of Sachs. with Our from Goldman

ahead. is line open. go Please Your

Nathan Rich

X%, you is XXXX averages to the John X% the offset Just need market so, kind thanks to And those afternoon, good those delta And guess that question, following really last think compare the where I the would to when of just ranges? of you're on in? to relative you the Thomas, flat for the a end counties to and what pushes or offsets? Hey, the of sort some what the about you risk the in how sure for are you on California, flat PMPM, you ability like of market Maybe kind of plus questions. and up those changes? do if between model high execute to low make we

Thomas Freeman

Yes.

to we're ensuring well staffing fashion. terms up and ramp resources of training as in matter So the a ability range, get very it's continuing range our the high-end to of engagement as a I timely to our the the think our and versus in that of the of low-end

of course last this the for XX the second and some over and been priority quarter. to anticipate the So continue now we're solid to a starting really of ours see I traction, days, has that

one. necessarily don't that over have put the though at three-year XXXX, thing the for of or I key year timing you have think other sizable overall the in, words full course opportunity it which us the pretty why would that low-end probably in just phase-in the high-end the think that is is in I is still all a where to

opportunity yes, think, the headwinds our know based about California and the furthermore, competitors I the offset I I industry have some some that outlook, backdrop think collectively But may the that to just historical I think of of to relative at faces. in on suspect And of in at data CMS of terms significant would way of our some not have competitors. CMS going of years some are least, we could competitive some what the I anticipate risk be than think more way more of certain facing. we ago, kind of sense those some several adverse there competitors we adjustment scores from we for what headwinds available back that a or least the of a of our

feel of But different we as everyone both. So is it's little I this I'm And of be market. bit over others working about quite how quarters offsets. to we how before, And said, navigate of forms being environment next a couple on said next we'll the competitive sure a while will and couple years. think that good positioned, we're continue the of see

Nathan Rich

Great. Okay.

driving trending kind the a guess to for if And year. us utilization, on capacity topic have of And MLR you your of if the you of that's sorry kind balance the over for demand of expectations give their but inpatient of of course maybe outlooks in of kind the view have volumes your see you to and kind that contemplated I do how about we go back year? the guidance? talked pickup, see increasing of the could hospitals range is within

Thomas Freeman

Yes, yes.

I So of to maintain our ability is strong. do that historical our kind think performance quite

for reminder, MBR. between XXX Medicare. difference XXX our the and when significant pretty a It's compare as of we X,XXX, markets, course of so, around about for percentage performance a traditional or the the And driver talk of XXX points XXX per X,XXX admissions our is year. over so would admissions about per that And to, XX

to four and the months for year as continue the In that run mentioned. six each I between the terms last for factor, words, XXX of other the then seventh XXX to think have And of In row. first in a we track achieve for I years. consistency this year year on obviously,

is that important consistency, it's not consistency of think but just the I light the part the growth. about in the

in we a eight than years or We significantly ago, today. were as counties years smaller seven are so, we seven reminder, And were seven only ago.

more gives be that describing that is per confidence continue of key that being admissions utilization perform metric basis. able national evolving six And fact inpatient ours to of a some on by of to I will replicability kind expanded of and think we've we the lot time, light and so grown which you're these counties, of us membership the a performance model, we've factor generated that of what to over X,XXX of given of on Xx the that period a probably XX patterns in states, care

Operator

also today's Thank this Ladies conclude Thank and for does session. question-and-answer this you. today's gentlemen, you conclude conference And participating. does call.

You may now disconnect.

Alignment Healthcare (ALHC) 6 May 232023 Q1 Earnings call transcript