Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon and welcome to the Alignment Healthcare Second Quarter 2023 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions].

As a reminder this conference is being recorded. John Officer. and are Freeman, and call Financial Chief today's Kao, CEO, Founder Thomas Leading

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

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

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

John Kao

joining and us. thank Hello you for

XXth since IPO. which our performance exceeded of pleased We key quarter we quarter another our the met for to are or in deliver strong indicators each consecutive

producing year-over-year. XX% year-over-year. range health quarter of with members outlook better plan ended profit million, revenue of a XX% For the second the consolidated XXXX, MBR quarter, XX.X%. XX.X%, XXX.X We implied than gross of $XX.X XX.X% growing our million of XXX,XXX of members to represented This total growth our

EBITDA adjusted Meanwhile, million, ahead our XX.X%, was of ACO well REACH range. Importantly, our our an excluding of MBR delivered outlook negative we business. X.X

the reflect we improve progress improvement on year I with organization, one of at made per company. and best an upon in the have of from inpatient pleased and and model history in to the XXX quarter, we As our first QX ran care XXX, thousand each across our our the year-to-date second in the admissions quarter results results the continue

This thousand to industry. our XXX, is admissions brings expectations, with year prior consistent while the well all inpatient per with line in and which above growing year-to-date the our

remarks, like we profit While gross Thomas the lower drive will his I'd achieve and our during full year. that for feel guidance to confident second emphasize ability drill to in adjusted in into our detail more MBR the half our

our utilization second Our outcomes confidence in is successful underpinned care driven AVA quarter. the and anywhere by by

engagement continue as and our to further we execute see also our care upside performance network against We rates anywhere improve management initiatives.

regular improvement we robust seasonality, year D anticipated believe will back position a these Together factors our with XXXX. the of in Part the and for half us deliver MBR

term. to actions objectives cohort clinical our best are us for opportunity We on network experience for create members the product as XXXX. As mix and and we shared in target, our our MBR laser our and networks improve about shared we MBR XXXX the over long-term focused in best the risk member the we've provide think by believe data, long

infrastructure and direct book our networks, external risk manage investing priority designing products to shared of strategic to and to capabilities we engage mind, enhancing growth business, provider these in our making changes this networks. to With AVA's in are

making laid against retention year. our the our our goals highlight Beyond margin progress to we and as the beginning gross trends, the I'd at is out like of sales team

our by CRM rate retention basis second functions. in saw was center we toward year-over-year. call the point improvement total supported AVA our and application deployed quarter, This recently member insourcing within improvements XX During result

We of deployment higher to of quality center transition plan. materialize our opportunity call initiatives supplemental following continued to in benefit distribution our XXXX the with total our and expect partners more vendors, retention

internal up to year improve we seeking generated business, improvement sales year-over-year. our This versus of operations XX% conversion our sales rates versus up sales AEP. are our have partially to for of on sales infrastructure. sales XX% efforts making internal As improvement the X% double we result brokers is our performing high XX% we improvements to mix plans down also scale complement our to gear To-date, to upcoming actively of our our channels. external year-over-year of improved internally while mix These last external as been lead from and

our I'd While bids. on share to early, like comments some still

we will pressure. discussed, risk within we payment competitors our As face on markets challenged lower and be Stars previously believe adjustment

distinct we think anywhere healthy need immediate more With complement types. to who the our shifting or markets. engagement favor maintaining we seniors clinical key approach of our that also value This seniors greatest each product our opportunity programs. the by product level in of savings with in high tend fashion and our two see whom operations. seniors increasing member across XXXX, into products about landscape with the are to cycle, curates risk to the care directly competitive we utilizing a Low of our in strategy our refined we leaning richness similar address This our how

and and growth. we clear creating more that areas benefit high are competitive in products by will believe impact simplifying We concentrating value drive member benefits

AEP. in combined we and Taken our the apart approach will relative us together, RAF tailwinds excited are other product set decisively Stars on upcoming that with from plans

existing our in-state limiting given XXXX. in expansions on we confidence breakeven, adjusted market new and EBITDA focus Lastly, strategies our are in achieving market our expansions to our growth

capabilities strategic in many engagement to other provider systems. strategic with new to around and as of discussions joint These care in ventures XXXX. However, opportunities for and solve partners providers our health existing actively help differentiated ways for the and and are engaged systems plan we we health provider AVA innovative states deploy and anywhere, other center needs

optimistic look about and set we pipeline future. more sharing our about are growth opportunity our forward to in the We

has employee us time. mission once thank who Before improve I'd and a each our care helped I close, at senior health like further every to to

investments objectives. us and our in well activities first achieve growth on and breakeven position to our deliver XXXX year full Our and half the commitments

that, With turn to review the call over Thomas? I'll Thomas performance. to financial our

Thomas Freeman

Thanks John.

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

driven XXX.X favorability timing CMS annual Advantage to million of XX% quarter combined year-over-year. Medicare the and The result PMPM by Our that represented strong exceeded due membership was our second the with outlook revenue revenue of our sweep cycle. growth

the reflecting or XX.X% actions million our XX.X% drive facility [indiscernible] care business. nursing the members. an MBR towards engagement book in The with result of and was profit our to in skilled ACO gross quarter our was a XX.X adjusted of of population, direct efforts our second anywhere excluding including eligible Our REACH higher quarter targeted outperformance

the In half, MBR XX.X% REACH compared year first a was excluding to XX.X% ACO ago.

As two distorted difference by we period year-over-year higher due is year dynamics, noted, favorable thirds last the previously in dynamic including related to atypically year-over-year of sweep comparison COVID items comprises roughly the MBR. This prior payments.

to the gross profit contract positive quarter While the sweep was due this year, revenue lower impact mix. meaningfully some benefited payments from in

were relates past, we sequestration discussed The this took in utilization, We remaining and the all into to claims which $X member and XXXX XXXX outpatient including paid as replacements in approximately consideration our opportunity PMPM PMPM factors the elective an mix within bids. third see knee in our remain and quarter transition. other we the for relates the including one as MBR additional product hip network, year. On by to look-alike roughly outpatient which it procedures prior of for year-over-year, first specifically line

comfortable utilization quarter year track to we OpEx, trends of are are authorization provider and with competitive June our the evaluate on half our paid total solid expectations. data, claims engagement a outlook. similar we million. our quarter back at-risk and and members our a vast quarter advantage This us to was with majority SG&A we According is In in towards believe claims running we to the AVA, While Care are consistent Anywhere, strongly feel we have able indicate achieve partial that authorizations outpatient at last through received second to that volume overall are second trends. managing data levels position $XX.X outpatient efforts correlated our data continuing give in aggregate, outpatient to we to

our a A by the reverse expense, as favorability compensation that by XXX SG&A year-over-year. an driven equity-based was percentage of we $XX.X expense of SG&A points to increase basis X.X% second was Excluding decreased half. of year-over-year. the of expect in portion equity-based expenses timing the compensation million, approximately revenue excluding

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

$XXX.X with and sheet, ended cash Moving to quarter balance investments. we the million in the

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

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

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

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

year-to-date results full the membership efforts, our guidance. retention XXXX Given are we and strong sales our year raising of

to for focus about we We positions how and activities this feel on AEP. optimistic our pay these see pleased to us start are off continue to year-to-date

the our of also full growth on XX% now outperformance, raising revenue second are implies guidance revenue outlook back range. year-over-year quarter at of We our the midpoint the which year

gross Next, guidance we profit reiterating adjusted our for year. the are full

high-cost favorable the the is year-to-date, alignment trends XX.X%, cases of a entails more Part duals Second additionally implies to seasonality doctors medical increased which mix and to extending half MBR our We profitable second see achieved in This the provider contracted first and and efficiency. in half. half, utilization half a initiatives from reduce management. MBR, continuation of XX.X first to operational EVA of Anywhere normal compared Care improve of relationship and an of to which D resulting seasonality, more as reflects opportunity drive to our experienced

and processes are XXXX Further, in and managing our risk-mile are growth higher and payment in items clinical sales materialize These expected investment new for and our the partially our actively those preparation by quarter. anticipate in outperformance, fourth and vendors we offset associated activities visit changes. given annual year-to-date with than tailwinds integrity membership, increasing to third and efforts wellness AEP

on views to as SG&A of unchanged and revenue EBITDA overall Our in percentage XXXX in our delivering relative now spite are XXX XXXX. higher basis membership growth, point a of we in SG&A and adjusted anticipate improvement a

management as clear and of operations. showing Lastly, the of improvement good keeping utilization optimistic medical utilization these progresses. XXXX. for as mentioned to clinical earlier, through our we our our We into of announced about are we the on forward we Each with you impact outlook and continuous initiatives have look assumptions XXXX overall believe updated to objectives, signs cost operational fully leave offset us about remain our and VXX year track experience incorporated previously [indiscernible] on our factors feel completely our medical

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

Operator

come with you. Instructions] first the Ha line Thank will question Stanley. [Operator of Our Morgan from Michael

is line open. Your

Michael Ha

Hi. outperforming Thomas, you we view or but guide in I think it far I possibly expectations, so it, of year, accelerated investments. think EBITDA cost or Yes. but better keeping explained conservatism year-to-date. About you wondering as half prudent solid than $XX more expectations Very might million year the full should earnings unchanged. the Thank back you. you're mentioned unanticipated have

any helpful, there you MLR? and be us benefits, also suite would help color Just quantify payment mid-year could

John Kao

over and start we with six Yes. of the question first months. things see outlook half back evolve Happy how the next the to in terms

we things achieved lot year-to-date. a favor, our mix membership the we've some think moving favorable I include eligible and of the outline the duly in is of

see a with who grow care our book as and often As from members to highest reminder, we business. we most of are tend to returns your that a those work financial be continue programs, engaged therefore the and standpoint

tailwinds major as and into KPIs as monitoring protections think we industry, quarters feel the Second, be terms terms the incur of we confident claim second we our where our in the costs. some the seasonality, of catastrophic really overall second D, the had relates of in evolving, one across company of trends utilization concerns spend. some then fourth our half the particular it the in with utilization which drug And in I quarterly first of one play part most of we are how in course the track we've metric, into still spite tends have year, is half quarter history in of of more terms inpatient best our to of the delivered heading that from over come profitable lastly, to members do the as just in

think coming in I a XXXX, year is as put VXX ensure on changes. as growth resources, with of provider possible investment as as clinical in seen of as mentioned overall of efforts, our our AEP additionally, well really items, members partners, risk talking impact the both external to of both we're there our to as plans what we're care up, a our couple you lot this place relates as and employee about it terms model that well many to

new thing, seen last overall our over continuing updated so million the trend few and the in we're also the cohorts invest XX% time. XXs of half given around MBR an our outlook. reflected members then MBR that's you've And dollars to XXs typically come in I even before, year-to-date And the outperformance, and high our low extra our the year, think down and in as into back

line a show to on higher so new not ensure to we're are revenue year-to-date that from as But overall we SG&A the that given of an 'XX. sales standpoint MBR that if to outperformance, holding percentage And related margin offset a SG&A absorbing bit in membership. just we of improving, that flat, EBITDA

Michael Ha

Appreciate that. Thank Great. you.

is has biggest mean, So shopping the of while the I think being, I plan riches next plans it since product are strength star think how most year basically arguably mentioned, year, ratings, quite breakeven your is given with relative target unique been just next the rate focus you're XXXX actually the I which and increasing or John year, possibly quite maintaining for benefits. environment, reducing powerful

So, golden is extremely lifetime is market share. to member high. average grab quite attractive. The value The retention opportunity

said, that questions. with So two

bits there For much do excess how growth does your you begin long-term let's incremental of a provide to level 'XX membership example, alignment in could what earnings long-term target pressure your of target? in earnings member or how One, XX% believe membership two, to articulate excess your multi-year value growth growth story? on outside quantify you. some your way year, Thank Is place above breakeven XXX beneficial next say to XX%. every of for just it trajectory? is And

John Kao

answer certain, terms and we've described, a we're the tried balance comfortable in new question and EBITDA find basis? do tenured about, on a really year next would overall as to John target level for as is members a members so reason way And us MBR outlook, the growth few been yes, And really, higher breakeven growth your with Yes, between there on us cause bit excited AEP is to a that that an think we're we profitability. I And with come with than of say the concern our kind is, more we achieving that no. I that's think about years. tend was, think of the of

also we see would offset we pressure outside SG&A. an on might expect MBR see significantly growth, any from However, to

incurred we we variable the membership. to those of as a overall anticipate grow establishing few continue years, continue scale is, of public particularly lot to on we support our company Part fixed membership. of over grow have costs, to last our that economies to as seeing of ourselves a course, have SG&A that But we we've

starts in then don't it look think be to to as objective. pay EBITDA it's of and actually benefit tradeoff years And you three, a breakeven if 'XX really our a four. get to additive dividends of growth point, we two, problem certain amount where that your is at So to life-typing value compounding it form growth, if in not neutral, a the we the into that would target,

terms if would the earlier, from membership, we year as in think engage the through efforts. I cohort we've year manage is all about mentioned it about so least see a care our not XX percentage five way previous shared, you deploy And I XX, improvement MBR point analysis and can in our at of them clinically, one anywhere to as of continue

the about so make sort really growth, it of we investments the is but MLR today And way membership of pay the we dividends drive think long-term improvements. that's in short-term form the

Michael Ha

guys. you, Thank Perfect.

Operator

John from you. Jain. One come And the will our with question. next of line moment That Ransom Raymond thank for

is line Your open.

John Ransom

Hey, good morning.

We September, three-five. big I and kind is basis, on know in points, cut the to stars of close some up that the coming the plan raw have your of a

you're we how wondering the head fall. dynamic about Just thinking as into that Thanks.

John Kao

Hey, John. John. It's

John Ransom

John. Hey,

John Kao

a lot feel I now I days did than better, actually, right ago. XX

the for comfort, in around say, maintaining still on, measures on five comfort. the the we pretty a think I in than obviously. I better for the It's originally We're or certainly too overall points. right positive, I of feel all really the is early, for it thought. don't coming and California four the better, now lot I was side still had very cut specific measures of earlier the close had waiting four. shared year but It's close in execution

in I so even of see. think some and the to other there's get better, we'll states opportunity

the we'll next on that HEDIS the I months. in I Part be cut final we're to challenging I but caps my okay. that measures think so couple and think think for is to Again, That's D of industry-wide, latest exception, know good going the some it's and we're admin we're not everybody, an subject points thinking. of

John Ransom

so four things? measures, what you different five or but When do focus five on or which four There's or things, four today? mentioned five many you

John Kao

kind it There comfortable. on were was to CTMs measures, etc. was whether starting In on as or in different good a more the a edge of toward those bubble example. of were some data kind us example. of right and four side good lot example. we we've get and a Disaroma the getting one four more on of three measures, we're more we're of was analysis, We're rolling another between and data, the five, of TTY another a We're that. sitting and middle different is to the side kind gotten guy's of our more these

John Ransom

fewer asking the know plans you're raising just That's new shrink did the trying that going lastly, it you that and MA you with keep the four have thesis do the about Stars, under that they're I'm think across country, you the Do Just overall I but to they're if bar? number do what so agree general? than the people just like, year. raise of, on agree looks you had XXX with and bar, star general measures this to you but and

John Kao

think high cost, I at of value so. whole that quality to the think lower I MA thereby a encourage mean, I thesis beneficiary. to increasing was

disciplined made being be growth think for of at couple going thesis, margin and better I think comments all back and getting around to the to the I is think have I different around a last years, quality we've of I the versus we and get two think of CMS of the the foundational form loopholes for that concepts those why used I that to the very variety reasons thesis, lot years, beneficiary, two have I original be of around and been provide the the at about line, so the this at I a the a think day, expense three bit. it's think whatnot and we chasing jets turn year think and end to XXXX there because optimistic AEP, players margin, held little good low higher the cost, going last a I over different going companies not that that it's original we're growth on think are loopholes we've and and to to

thing good a for industry it's the think John. overall, I

think of for shift said is I next a I'll have weighting the think really industry. the which having thing oh, of is the good Now, caps that, a year, slight I

healthy net-net quality super four-weighted I term. where going we're a these you short to some that's having so membership D, think with for think on the all be good to the of long super a advantageous that us to on the that's for and think in be not in admin, on players, we quality of fraction be good the indicative part measure when surveys of thing, and context and of a on so on and I overall put then is that measures, HEDIS, sit think super very going good I I

John Ransom

jump sir. back Thank I'll Right. in you, queue.

John Kao

it. got You

Operator

moment One question. the will Bank for Kevin you. from our That come America. Fischbeck Thank of next with line of

Your line is open.

Unidentified Analyst

you and for Adam just you you outlook, the is could, would utilization bikes Is you or of utilization. Kevin. appreciate the what you won't that saying the what I'll around gross profit plans data like, just the materialize? utilization, cover on kind Yes, anything United higher reserves, talk [indiscernible] there higher are absorb you I and and you that Hey, and gives seeing, trends, and pressure being materialize, larger but kind of Obviously if we guess the wondering, I question be that, CVS, just, in your in you have confidence expected. to like, this my how, were support, see doesn't maintained Kingdom, health boosting utilization, are have potential, the that about

Thomas Freeman

Thomas. This Hey, Yes. is Adam.

of the upon setting a the back of centered to saw expand out months, quarter the coming the two, of the say lot part commentary some about XXXX, in and in think the I'd I some kind fourth across COVID started prepared year. in around upon continue general, of ago, summer that and so early of outpatient comments into guess made see been industry, I this two to three, we has year of depending the, increases remarks, in So we we our probably plan, the just outpatient a

we of say is that that saw spend depressed seen from levels back some we during would outpatient it's come I the what not the COVID. haven't so And

continue year I into much in the And would think with we today, we the we see But the when categories it's ebb expectations say what flow not In well different based as trends side I so of about second we I very that different this take continue words, with our stably than line feel seen big job just nice to far off other and expectations, that here sit experienced we've our and is we in through we a our pretty some on trending XXXX. picture, together are obviously moving our to quarter, account spend. as across think the like did in our to individual guidance. outlook. as data of on bids and think XXXX outpatient half utilization pieces we all as line second the put trying XX what

Unidentified Analyst

outlook confident they're in seeing in DCE what year or some we and from positive And adjustment of, ACO they they with feel for and a then, got just made the if soundably, things like trend increased on any got this sound you've more changes contribution. positive I'm off Agilent data you wondering just program. expecting meaningfully that it that you're phone CMS his the makes similar like they retro if REACH And terms their call in noticed during

John Kao

'XX you're a out number, say the benchmark. that comment trend can't in specific I data first growth lower And seen it on point back in what move at their would say perspective, the I would that to if on terms right, to X% retro the quarterly number was, the know we've and has I a 'XX. 'XX quarter what of in and X% than X% put to so suggest messaging. in I to is does want on CMS That we far, we I quarter-to-quarter. were ultimately saw being look from range, go that X% 'XX and basis, said, around

how and the anticipating to quarter continue quarter CMS fourth next will update from on evolves. third And the the days XX see I so and over think we're next the getting it second

our pretty the I And with are call so we year early too in for would line big terms us relative picture, that But begin outright expectations, set of probably guidance. would to we say running agree that win. to an I how with in to

I best extension rather with a sort view view way senior around In other we and think plan what a in to to provider that more long much anywhere in from our to the portion our partners term. But as ACO trying a trying as see of at we're of ACO to health panels. growth accomplish of it's the don't to markets a across as for us, align on our I some expand something continue to the do practices going of words, on we REACH to it's comparative big program the lower deeply picture, in us also past apply said plan pursue not it to crazy strategic but we're We probably we has plan. MBRs think just REACH think into what care to that both ACO growth. of us standpoint. AVA a terms go has and accretive what broader their benefit run REACH is we new you're of will to the us networks. something profitability much continue that see And it higher than MA new is to states Book Business. you'll otherwise SG&A, while that or health think growth, And

Unidentified Analyst

much. Awesome. Thank you so

Operator

Blair. Jared line Thank with our you. will William come moment That of question. the from next One [indiscernible] for

Unidentified Analyst

there's broadly, are a you driving ask that the to CRM questions. Daniels. there color improvements to some about And more any technology with if And innovations any on in sort for updates that talked little or Jared, on Thanks bit guess, a guess think think seeing more guess little our you're I really curious be out goals. I investments retention you application. I for are Yes. think specific some taking bit around, engagement Good other afternoon, you I Ryan progress then John, regards of retention. I'd enhance of seniors? called you internal the could

John Kao

been, It's I focal to point would improving absolutely. in Yes, there. hey for an on be retention. lasered operationally us Yes, absolute say,

the things of vendors that we're that across points improved frankly. quality lot that touch for vendors we've the I on we've management so emphasis was and really A I'd we've level technology benefits supplemental board. of the, of and that sure us so abrasion apply kind And being the And of stressed, we done of caused that vendor the I some make think into just the plan. the and And service expectations also much four 'XX the the supplemental the consumer. is that there like it incorporated across benefits. used, the as particularly actually the to, call think were focus on some vendors all And subcontract

so we've focused a of good done some them. that and job replacing frankly on really really on And

second call thing vendors. is to decided lot a from member the we've we've done of insource The functions also

over more just experience taking we're And member that to end control end.

work the is levels the speak, team it's and results, which taken to care here then think got really I so anywhere, look And experience encouraging. we've serving control combine senior. really the a a you the to so feedback the with service it's hard us And us to with testament back to really, transparency mean, on is of just implementation of board. member really our of. across with, what I the CRM. that begin a model, just are all getting focusing story that of providers, differentiated, so if Anyway, Google at cetera. the lot you care et the with that And

whole that So a really, it's out of shout people. group to

and just I you senior think the I the what question the commit you sure 'XX kind give to is, as approached to. your think the we've it's of related market bids, making we way

patients, So to do aggressive healthy, so care comfortable you just simple with if and higher with say being that. opportunistic do then benefits. are But is both And consistent generally as reliably, going the acuity for We're sure it's, anywhere. as you're them of that, benefit members about sure obviously And reliable. very make that make delivery something, that it. we take to that care the also

retention, it's improve retain. only it's that those, improve adjustment And both And think stars, going going we they're MPS. improve the the it's to to so not risk going of improve I people the think to of I going to

So roads consumer. the to it's delivery just service all, lead all to

Unidentified Analyst

of we you parts about think as the of all curious, color moving Thomas, guys some of that's these that that think one even you some in up follow we year. the the going sustainable with especially that in sort outlined appreciate XXXX. guess think do have there. level the just is SG&A forward, mentioned target Yes, year-over-year in I investment Absolutely. of you Obviously, leverage there's I areas implied guidance. this how quick sort break I'm leverage had of that operating like

forward. So kind how about I guess just of of should think we going operating leverage that level sustainable

Thomas Freeman

about in would absolutely what you when looks 'XX. into say percentage we're 'XX specific in sure expect Yes, kind the one is heading SG&A today Though drove a probably I guidance not Business, relative as two I'm the 'XX, able teens year, improvement relative what One so revenue of growth pretty going that that considerable we're think membership. would high with scale the of kind though to we're to improvement 'XX that I SG&A of, in of like. terms range deliver sort growing from of improvement provide thing was of still our a where of revenue to the economies this MA membership Book associated associated that pieces. there with sort was of

a XXXX, And prior on to a been the improvement the MBR from year-over-year. year, our then which contributed saw also has consolidated has growth headwind we a but this mentioned also SG&A basis ACO on we as benefit REACH to in call,

consideration that basis also with But 'XX. 'XX same how a of as outlook, that what of ACO about significant continue REACH next head the think year-over-year 'XX, it absolutely versus again, growth we XXXX MBR. XXX SG&A both think year, that XXX, SG&A revenue a as improvement to you growth to decline expect was less I points not about to as 'XX on say I would in while it I in into that would of and And is, in be our would quite given see you 'XX should MBR, might we think as other words, in ACO percentage In I when be saw anticipate I so don't 'XX. as take impacts REACH

Unidentified Analyst

makes That sense. perfect. I'll that's the in Okay, back hop queue. Thanks.

Operator

the Whit question. Thank Learing That of come with moment will you. line for Mayo our from Partners. One next

is open. Your line

Whit Mayo

Hey, thanks.

Just of just then versus would difference your love broker in of remind those risk and you And you could I'd that's can year members secondly, today strategy. ones just risk hear and know and to your and of the color go sort us networks MLR remind I the arrangements focus some perhaps shared big think aren't. kind us Thanks. hear percentage thinking, to the that love just there. quick two on shared on maybe ones. in that where John the update an next been a of so evolving terms

John Kao

Whit. That's Learing awesome. congrats Hey, And Partners. on

Whit Mayo

you. Thank

John Kao

have a had Yes, with FML good on of no, that we down couple going growth double that to are with. One retention do is partners we've great things. we the and

going and think I in to both are new the existing be the overall, markets. markets So across standards just board increased

intentional being where with the in of I strength We the have more markets we relationships agents kind say, are FMOs. of about, some don't with XXXX direct, certain we want of kind that would

It's I about to of already in it going is going select think strategy starting to think kind I where to alluded the off employed we're used be and to XX% direct pay captive and captive. we controlled markets.

I'm happy that. so And about

I is think, really retention. felt, say the, impact to in going I'd think be I the economic

G&A. More so than, like,

lead to we leaders we've the strength I leaders I augment the got some just think existing of newer here markets. have the alluded new think And and automation think gen lead and the initiatives. the, more bench the gen and Salesforce board, also, conversion that that across reliability kind in giving we that the this of and that currently of I are particularly in the us some control

about And And said I'll been this this so we to Florida. I and Texas think that. link we've and intentional

of relationships. those think building us, some and newer establishing a these that been in for markets, challenge has I particularly

good I pretty about it, of markets people they can going some year a think would worked and that something these feel we're they haven't We've been lot which This looked they there's in the rely to relationships And I on. of that call it. markets. And with durable I that want, on I've giving these and out brokers. out is, had, plant them of side. Because been

I Five about think just There's good belt So about work there. with brokers, have no the performance. that. that the there I strong. feel At We're we some with going to the we're feel of we're always the and newer star disenrollments. markets good tightening I you. California, relationships

second, So take on want the the to Thomas, you second one?

Thomas Freeman

happy to. be I'd

our of XX% in a a we So of is is that shared the cap. think with business that past third, of the And we sort today couple a just things. way over about about global

is that created California. the of global cap some those organizations, really First in grew model, up

So markets, in in work are the of in delivery. some with best of those terms quality. provider of certain service sort And terms of to overall partners

of but both overall shared California. continue of California, Our faster inside our strategic business of cap risk outside to to global business, objective particularly is grow than book of book our

but our lifetime risk of best when as way the And provide experience tend someone to for seen on the terms value best is we it manage financial we cohort not passing returns reason provide to it to you've only think also clinical because the about ourselves the with data, in members, that opposed we we as else.

view we would MBR would as or of MLRs. What to we or drive by cap that tend because type just as higher claims over that doing the global to anything country goals term nature, to are MLRs by one California slightly five of of MLRs get that the cap years U.M. shared of towards county bit percentage kind like certain rest say risk extra of you a and MLRs for cap long about membership long break the to risk I higher probably paying the across global services But while paid don't key of the book our than out I march it we term they at business generally our next total the a or continue contract think speaking, global ask is target.

Whit Mayo

Okay, thanks.

Operator

line the come from Thank will Tassan Sandler. you. That One for question. from Jessica next moment of our Piper

Your line is open.

Jessica Tassan

to benefit know for slightly MBR that to to going lower relative you despite new or enhancements? I'm year's may online given expect would historical next be experience in design members confined Thanks taking new that geographies or existing more to the planned states, curious is the question. to come growth even be the favorable

John Kao

and Jess. product for that's membership. that on provider on the that take It I'll Maybe depends the market one the contracted

come but very new of of those point so come high year to the kind of say at the put of But XXs XXs variability I'd MBR And you've perspective, of kind other cases some there low to kind is seen your on where closer XXs, in is XX%. average in members to rare. one on kind risk XXs, not the it in mid more to our occasionally and low mid if that's

so depends of And that on of just coming nature where kind from. growth is it the

in in new consideration our not, into we taken market we've bid it's benefit goal in in get the with towards MBR brand think product do tailwinds the we be we that beyond. to value 'XX how that but in the and are the growth going things the to greatest of One a about to geographies or 'XX is partners invest less that continue provider and whether

a of we bid think And will that hope this fashion in so continue year. pay year process planning part really our strategic dividends I next to that really see was a and

Jessica Tassan

Got half guess seasonality shared risk from you. in the hoping catastrophic it. quick phase coverage. in MBR and quantify then you I second benefit the And would as the the follow think my growing what was your the that's shared just percent D of into up as me. Thank you members it move Part I could for is And then of preferred structure networks the contract be risk membership about of

John Kao

income be gross a service things profit I have for PCP that layered think whether really is or fee the that I one to or on arrangement cap non-global is MLR quality share. of of on of and so the we today net upside our type some what that, incentives ourselves contracting we And it contracts mean with of pride an flexibility. by Yes, include share only terms top in

capitation same thing have share. incentive where we're have form some then institutional And share and we quality PCP also incentives contracts on costs that or and share. essentially professional in profit capitation. PCP again or share to We MLR paying aligned terms of an have the capitation we specialist both the have of risk And profit

contracting And meets using depends approach toolkit that to do of really the wants the the it to provider or what our their in preferences. same preferences so on a suits and try it tailor consistent market we and but suits

In the to in half as a with Part is bit fourth a tailwind of second half first more two the that terms the D, third concentrated little quarter compared point the that in three probably to of versus quarter.

Jessica Tassan

thank again. Great, you

Operator

from Thank line you. Sachs. will One moment the of with come for our And that Nathan Rich Goldman question. next

line open. Your is

Nathan Rich

for I back, the to Great, by excuse me, questions. Thanks afternoon. start going good maybe to wanted utilization.

outpatient I'd maybe just kind surgeries, said behavioral, seeing cardio, standpoint. I you're of of of from that were what curious ortho called think, outpatient second quarter, relatively hips PMPMs during called heard dental, utilization the Thomas, outside out you out and you you and other some year-over-year mentioned categories a the knees. we've consistent the be

John Kao

outpatient Yes, well are knees surgeries settings things consumer we but take plan standpoint. that's the really that standpoint I as in as from a of from like to list. ASC so shift a were couple continuing we and things think appropriate shift, the and see mean a win-win I on to hips

So see year that's to something we're continuing to date.

seen, of others not that's the to that's as past, bigger maybe think the lower the utilization care in continuing we're about same and to supplemental We really bit necessarily comments benefit think, more more of than but see from a we others seen we I degree some some not you've the dental have something have I ER. as their to benefits have. heard a opposed urgent used I may to ER picture, And think

there's of given I day few recent , And we out always there year in end and if some good pluses larger feel the and minuses of players that about given big sort of the at I even back, like on a overall picture so there's the the the any before in of a utilization big so, commentary picture, trends. went think but year things some of guess I

So and consideration. those minuses pluses into taken

Nathan Rich

appreciate I to get that. thoughts, in maybe curious be your And John, Great,

competitive next markets you looking in to are those been kind be do to and tend markets look and the year like that have switch past, how positioning on to where Southern be may differentiate see the you yourself competitive California as that, of you to in opportunity plans? specifically biggest capitalize seniors

John Kao

models. high I cost individuals our XX% really What Nate. is would Yes, is product identifying a that way say hey care designing that looking the to And what I XX% XX% to and the and are in products look is that we the was XX% the really at that really in the and delivery consistent the them for at with mean that our strategy be of by XX% XX% that that the in this design and spend of what kind income. low products specific very But the they're confident receiving. to population. They're healthy year also to the going and around generally reliable did acuity of

the in it's a done so we've past. bit little different than And what

call of, at at more trend looking values is, looking analysis factoring degree rigorous I in distribution the our realities, competitive the only market, just it think benefit I network, analysis. would much each looking but not within actuarial at

is would looking this process will And to stack bid to from what very All say, impact from a that's expect beneficiaries. to competitors I of year that some as analysis got star at that public think factored be year that's our level. ratings well the just change And again, up something going rigorous where think I on and I we VXX. And part year. more very into attractive the of is competitive that of as at,

all at maintaining of about of that. a And know are so and our benefits. we're lot competitors thinking lowering best also we And

terms lot think thing increasing in of a I bit in taking a been think I the we've of And a we're of heard. view common markets. again contrarian yet that's a

strategy, seniors in where their will to I very And We the that that are you do Except benefit combine market, materially is very, that. our California, what shop. going but a for all year the think to strategy, they're seen So situations tough is we've this in They it. going Southern it's with loyal better. with design and network doctors. the be that think past is to product know I

focus, that pretty we'll of add I new of operation, deeper So you kind capabilities provider leadership, see. add and you sales, distribution with that when But feel add with kind when you with engagement, when optimistic. retention that

Nathan Rich

Great. details. the Appreciate

John Kao

it. got You

Operator

you. Thank

no for concludes in queue showing Thank this program. questions today's I'm this participating. at this further time, As you

disconnect. may You now

John Kao	CEO
Thomas Freeman	CFO
Ryan Daniels	William Blair
Michael Ha	Morgan Stanley
Whit Mayo	SVB
Adam Ron	Bank of America
Gary Taylor	Cowen
Jessica Tassan	Piper Sandler
Calvin Sternick	JPMorgan
Nathan Rich	Goldman Sachs

Alignment Healthcare (ALHC) 3 Aug 232023 Q2 Earnings call transcript