ALHC - Earnings call transcript Q2 2024 | Alignment Healthcare, Inc.

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Operator

Good afternoon, and welcome to Alignment Healthcare's Second Quarter 2024 Earnings Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. Leading today's call are John Kao, Founder and CEO; and Thomas Freeman, Chief Financial Officer.

Before we begin, we would like to remind you that certain statements made during this call will be forward-looking statements as defined by the Private Securities Litigation Reform Act. These forward-looking statements are subject to various risks and uncertainties, and reflect our current expectations based on our beliefs, assumptions and information currently available to us. Descriptions of some of the factors that could cause actual results to differ materially from those forward-looking statements are discussed in more detail in our filings with the SEC, including the Risk Factors section of our annual report on Form 10-K for the fiscal year ended December 31, 2023.

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

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

John Kao

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

our in For of the year-end adjusted our of $XX which quarter our guidance, million XX.X%, year-over-year EBITDA XX% $XXX our year ranges. positive on adjusted which to excluding membership of the XX% approximately of places consolidated health achieved plan XXX,XXX second and EBITDA gross million grew $X members REACH. of approximately represented our adjusted our XXX,XXX profit profit EBITDA outperformed XX% Adjusted XXXX, gross year-over-year and end us million adjusted high led guidance revenue second and ACO MBR a adjusted members. Total growth full toward of produced guidance of quarter Both membership quarter. profit to track the gross and XXX,XXX

team what we As year, the round out the has accomplished. the of proud of first I'm half

exceptional our superior distribution to These in the Medicare several and with past data of our investments control and infrastructure, the years, AVA, in Over time, unified and resulting required us clinical outcomes. to in we visibility provide investments right. both real our markets experience, growth platform increased done MBR Advantage vision manage realize member

is the our and Advantage scalability time. the believe to year-to-date results of over model Medicare for about reinforce replicability continue optimism my We our and our future platform

drive the expectations. ahead continued quarter, we of growth During second membership to

broker ability experience. cycle, our reinvests Our sustained resulting savings from reputation enabled our member virtuous offerings unique expanding continue deepen with by relationships Heading was to our costs and further quality we benefit activity into clinical this broker growth AEP, into strong product richer manage by our and which offerings. This was engagement robust momentum to superior for a medical from we improving strong for best at in XX last net resulted voluntary the months name approximately demonstrating seniors XX,XXX retention the become rate in our year-over-year. We year the a as last service platform. cost. disenrollment seamlessly of our and partners From household the the member levels onboarding XX% this quality improving seeking while lowest scalability in standpoint, achieved roughly investments experience members our supported

And of MA XX% manage an ability plans year-over-year MBR. believe Our plan in to MA membership only one the rapidly growth makes that has nation. we fastest-growing grow us and demonstrated the both the

prior is are we by to our and the said product of with before, risk including our profitable development in in is per capabilities growth. continued As MBR: we This drivers X,XXX required quarter, outperformance engagement. over visibility control have the enabled second adjustment, which manage approximately quarter. on management, in resulted and inpatient utilization focused medical XXX, the stars, These provider emissions line value

while Our momentum the the we of in is first second MBR the X.X%. achieved XX% grew quarter a result in we quarter year-over-year, where increased continuation MBR just

challenges. by MBR national stars still just X% average health increased and year-over-year, plan the a while year-over-year. To MBR mix MBR, new first Advantage at risk the Medicare quarter see with meaning greater reminder, in increase put as the faster-growing perspective, utilization, higher a higher in typically grew typically of new join performance into our industry members, X.X% members publicly-traded faced a As plans adjustment members a

Our investor the presentation Investor website. on available Relations latest in highlighted our further shared differentiated results here are

innovation to IPA clinical continue performance which driving MBR our are believe improve navigation, outcomes discharge with management pre-service to pleased care through are of we improve MBR we future. to all post our and the While our improvement, already in we will performance case date, results

are believe EBITDA preparation profitability well to positioned year our XXXX. next and we improvement adjusted XX% continued deliver to growth Turning least through at and leverage. for We MBR SG&A

confidence ability underpinned to objectives XXXX. Our in bid margin-focused achieve by is process into competitive advantages both and our our our heading

plan competitive any more We have XXXX, advantages. members increasing our presence added our and in than is health other in market growing California

growth, market our strong share share a collaboration and Even at addition brokers, by enterprise seniors. to local room expand market leverage position California stands In reputation our our only our to enhance with competitive objectives, increasing among with supporting operating with share leaving significant mind our size gains and further. providers X.X%,

for the still recent at term, are California California on our there Over position can where capture our stars below million plan counties. In rating in Even to Star long some share our changes. stars we advantages rated. model have HMO approximately we markets, not relative least CMS most accounting were capitalize what and to on we believe California total we've seniors mature across after in changes, we plans of XX% fully XXXX, achieved risk X.X similar X the in

gives commitment By foundation to Carolina a XXXX quality. in competitive and us Star North a clinical rating for with unique growth our more doubled continue of focused us outcomes, our to year-over-year year focusing awarded still on on markets. remaining Given than have to our long-term that our plans XX% CMS roughly to membership have margin Nevada California X-star anticipate update position and stars The will California, we have and strong opportunity X-star first and level, strong expansion. Outside advantages. a recent our payment demonstrate of payment we while members that ratings we capture built

time. toward over to markets see As and sustain deepen ability these opportunity When investments to infrastructure we markets. scale, services profitability, our and will able with shared significant consolidated we be in newer in our in we these investments to move a our combined growth our newer accelerate

our we will new strength growth, XX% any at our enter in and to XXXX. in not competitive our profitability achieve existing solid states on least focus positioning markets, Given our

we to our market thank in like Advantage while profitability. In years the However, of model conclusion, employees the expansion further part members one I'd their prioritize of are to Tens for in pioneering their each Medicare thousands growing committing expect sustained this future nation. us as partner fastest of new choosing year, alignment making health senior future. plans the of to of care in the

turn further as get our barely closer for our further our And who However, scratching XXXX. I just to we Medicare towards to will help. Thomas vision more to I'll are outlook. call done over to And AEP. inroads seniors look discuss and right surface millions we believe of the the results for I make sharing we in need the financial Thomas? forward now

Robert Freeman

John. Thanks,

our ending expectation XX% For plan midpoint health the XXXX, membership year-over-year, our XX% quarter June of increased at second XXX,XXX the guidance of for our quarter range. membership growth outperforming

excluding year-over-year Our XX% XX% second quarter growth, million ACO revenue REACH. growth and represented of $XXX

proposition from and described, service local John of in the positive delivery up gross and momentum partnership heading into MBR an expand point broker with improvement $XX provider Adjusted in XXX and was for AEP. first XX.X% setting our this our reputation a basis million, value and As markets, quarter. us quality, continue representing the quarter to profit

balanced strong row, a be have with we second quarter model if you can performance the and MBR membership in are differentiated a that with For control. growth industry-leading demonstrating visibility

performance. of trend our admissions per MBR our XXX continuing inpatient to expectations continued experience utilization within drive to overall quarter X,XXX Second with

inpatient While continues shortly. significant X,XXX the on we the room half year, performance expand believe our we for industry, will in admissions of still lead per I the to improvement see back which

being overall increasing by the Our clinical was growth utilization board on strong programs. our from mix are offset still partially who performance new our members onto of outperformance

As of unit increases which are also expense will we XXXX, previously both to we of navigate benefit heightened improve in mentioned, supplemental atypically and in continuing high cost levels XXXX.

out our service sufficient it's claims we second our closed noting worth the to we assess of fully now that QX first As performance. more on quarter paid visibility experience quarter, have dates

Given reserves. our accruals, not as overall confident our paid quarter as IBNP pleased new we are our assessments we initial accuracy first in in incurred in stability of or both report implying overall but to remain well volume that our membership,

SG&A Turning to in quarter was million. the OpEx. $XX

a XX.X% from adjusted $XX an was points operating XX% approximately basis XXX QX SG&A ACO increase Our of REACH, SG&A to by our as percentage Adjusted expectations. leverage improving year-over-year. excluding exceeding declined XX.X% year-over-year, and million, of revenue,

EBITDA range and adjusted outlook $X of million us track our placing was together, positive the Taken in our our end high full quarter, towards the EBITDA on guidance. achieving adjusted year

the ended we quarter investments. Lastly, $XXX with in cash and million

Moving to our guidance.

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

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

increase outperformance revenue momentum January, by continued our half, members membership the our growth has expectation the We outlook. in guidance year our range our which an year-end members. in X,XXX of guidance by full membership drives increased our on raised additional our expectations and have based XX,XXX initial Since further year-to-date second in for midpoint the

REACH, guidance of XX% of at XX% revenue XX% implies XX%. the of versus initial our Our excluding at outlook and our versus membership guidance growth, growth ACO now of midpoint initial midpoint the

Turning to profitability.

growth our in remains spite of guidance higher Our outlook. unchanged

clinical the improved We EBITDA managed full and in the us our of confidence our adjusted initiatives, have in are giving results year model. continuous scale economies in automation with guidance. improvement These efforts and operational closely pleased resulted investments MBR, SG&A of our

membership Care which XX.X%, we dollars adjusted a Specifically of new the uptick benefit in positioned by have XX%. XX in gross on target added we current profit, rate We second in year-end range offset rate X guidance. midpoint members we SG&A to expect our our level scale the with increase our on be through half of very represents our an of supplemental the of implied from MBR standpoint, remains expense, approximately to our from year. work of guidance the our eligibles incremental basis continued remaining captured expected our significant XX% engagement opportunity prior see still in we offset a which half an among well The XXXX point profit utilization gross factors engagement first bids. our now MBR economies. From are of These Anywhere toward to resulted achieving as

John see claims our up the commented opportunity our in and the compared improvement see navigation, our group to the On of engaged. yet typically half fourth care a engagement SG&A setting to the quarter. Further, control performance institutional new ramping we continue we half up REACH, XX% an to ramp improve of both Accordingly, we results demonstrate excluding IPA utilization on and not our membership reminder, engagement its year model following by a management on improvement our have on efforts MBR. our XX improve previously, towards As cost members of pre-service see performance that case scalability months to our of particular to in we a points PMPM with the revenue opportunity ACO with adjusted member a overall as year-over-year. back post-discharge new declining and XXX to as first SG&A, continue continue management eye basis onboard in percentage beyond inpatient the are as

incurred incremental our the implies percentage REACH. guidance our greater of in-sourcing includes conjunction commissions our of and experience improvement in to variable staffing year impact now have basis second outlook, XX.X%, We full and of year improvement a even function improvement an the adjusted increase related and last as half in the to related expect with costs points the AEP excluding expenses to growth of ACO not the we since of representing other of member In acceleration SG&A roughly revenue year-over-year, XXX onetime continue This expenses. membership growth. will

we towards that a margin supported tailwinds. excited will about of us in by As look XXXX, opportunity be front and of increasingly number we the growth are

our share to with adds our and brokers advantages momentum in growth First, AEP. XXXX the upcoming mind scale in

appropriately we benefit XXXX XXXX our believe bids. have captured supplemental we experience in Second, expense our higher

X.X% our unit of average hold benchmark absorbing in to for XXXX. the make outsized Third, will X% of are us currently weighted increase national increases average we cost relative the

to strongly and stars on phase further model of the summary, adjusted positioning. In advantages EBITDA combination risk our greater factors target XX% towards changes will open achieving while relative second these competitive call our Operator? growth the us our positions driving the the next Finally, of questions. least year. With at let's VXX that, of or profitability

Operator

the from comes And of James. first our Instructions] [Operator Raymond line John question Ransom with

John Ransom

sweep? this, quarter from to midyear I out may was the anything in the but have missed there call

Robert Freeman

this one. Thomas. John, I can take that is

relative sweeps. of driver similar from did about and where lot to of sweeps to though revenue a outperformance did not quarter pick bit to majority a really the sweep And was second much the revenue sweeps, up wasn't talked to expectations contracts, actually the standpoint, globally quarter we in pick we on gross up MBR performance the last how related this of sweep our the some year, So year overall of mid-year capitated significant the the in of a final quarter last outperformance. From in expectations. with year, of through came the to a it we membership the relative profit both related the the

John Ransom

get the a this -- I'll back just then question in and for John, queue. And is

policy but Asked not When Medicare elevator for there's convinced with your least your tie, great this we what's better, it's competitors, not pitch? taxpayers. it's what's seems D.C. the a of a says the who of people, doctors good like but Advantage are that members conversations that a it, those for pitch deal at plurality know taxpayers. the you're and like mean, in having it if one for is people I

John Kao

the the your that say and pretty think point, think, I'd benefits doctors, beneficiaries to John, for the I is compelling. I

those trend what back the is I fee-for-service. And changes changes all at I built, we've that for we things, less is of with more stars even to kind foundation that's taxpayer the the with the to think at the that getting which that the the side with good companies care if quality VXX respect some the of of intended overall cost. saying lowest which the respect I CMS this really I and some and potential thing, to a price, to distribution be And is lowering increase a think are recent for And going to of since think think quality happening. respect going standard that that it's respect we've to fundamentally originally certainly are you access of better which win really the been to cost, and with infrastructure the policy see is providing higher affordable think will, to everybody. beginning, I than be that's and highest will and

Operator

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

Benjamin Mayo

member year? metric of members? that is the total first for quarter engagement for you that is half? back first that total or number that the XX% of And Thomas, on Or a referenced, for the XXX% new Sorry. new is this subset members the that

Robert Freeman

No, questions. Yes. good

of we're there So engagement is Care what talking about the really eligible population. Anywhere

level stratification call authorization needed of began that proactive reminder, the event we data a to model our program that we of lab those this when greatest were as through we Care the and capturing identify are comorbidities we that Anywhere. inpatient running greatest onboarded so new quickly Care pharmacy our thought had an from risk we values, data, and And membership utilization at therefore year, data and

that consistent with of our And really, the have members us as quarter, of for so so the probably have is to year. clearly you engagement to set is the the of stands to XX% that second consistent back I'd big more and opportunity that expectations far, overall pretty continued to performed from Care XX% half get those about XX% typically of which programs, where we of program. over course, at of we say, there's about Care engaged But population, year the XX% a for at Anywhere which identify over if We've runs intensive our to them it's past. about relative about think this population it in years XX% course eligible on

And X,XXX. second we're that We as our for a growth where opportunity significant on to the there's so better year-to-date, emissions of run that's we're still engagement to the a mentioned per we what we've taken up pleased below significant opportunity performance. underscoring as onboard row we've really in inpatient ramp feel quite area thousand like year. per we But quarter this with admissions an and XXX continue do

Benjamin Mayo

just follow-up staring in the picked quarter, up on my that XX,XXX page. certainly just it at you new still And this the maybe jumps members and off

that I a is maybe bit. little just unpack Just of the presume D-SNP, that preponderance but maybe agents. California,

up Just any other help that color of to much commentary how you kind picked of sort growth. us visualize

Robert Freeman

absolutely. Yes,

I positioning think of from a a market think few sort I standpoint, things there's happening. So

which the were Care our we So based overall of be talk the about. cycle afford model to first function is we often continue a our on virtuous to benefits leading, market able products and is

of our overall, for members. those spot continuing programs, to to the product our From the at be a And actual we That eligible book total greater so that stars second you're position really, tends good business. for and population. an portion was stand among standpoint, us, X brokers that maintained continue years for market HMO leading in just well. And grow kind combined reputation And from or X California And share, think, last, underscored we product of that or fact word-of-mouth that's duly Care I duals still do has X by we've XX% tend think I this contract. through I I grow quarter of at as and a the well growing both star gain to is of think quality the with our I we seniors to at on that as for continue membership rating think, sweet for financially movement in about now the right, to traction. grassroots think our

acuities, for are products and ethnicities that we offer income Beyond a designed levels. of though, variety that

amongst good as different continuing well. types we're to think I see product So traction pretty

Operator

Michael the of question comes Our line with Baird. from Ha next

Hua Ha

So are SG&A. what's are I talk size I yes, wanted really -- think guys me remarkable in as SG&A Yet, Humana. that basically you XXx at to And they to about your like same the revenue. is they're

So just in a year it's think economy, a ability pretty where growing especially your generate and that like eye-opening scaled to cost leverage, about you're to XX%.

other questions sauce So benefitted then forward? out this think may a sustainable structure? fruit step cost productivity, back, my on creating think And unique there in that's do at like X sort first going evolution? a it's new think to a your and any all Number the And items or you you point you any secret about opportunities you're be would the I are that taking low-hanging is, have how XQ? X, then what call is guess is question that do automation, where of stage question cost general of structure X technology,

John Kao

And say is question. great needed some that we quality of past threshold the we of years. spent I'd you clinical really investments to over from effort our on of recall, engagement. couple scale passed outcomes. around around the and we've Michael, if delivery a kind service made consumer lot a we that benefit of Everything

whole really we So architected in data. way thinking of as in as just to starting way reflected reflected question your though which look which in quality at is in foundation our we've retention and our starts rates the systems, with that line the stars of around pay off. The

with captured kind or just us don't a way of that's streamline actionable information what to in up to time. reconciling efficient unified XX functional data not provider And data make a we allows to that G&A of this a that's And in in databases. actionable data It's data so have There's That our manually. And we with allows XX-day real and delay it staff have architecture. in all decisions. very eligibility us a we call have claims data unified architecture. architecture we kind

to that, point, And And way, and I that main say, announced your came so incremental the that would by is opportunity. mean we -- growth just expenses. it's commission with I the additional

a onboard onboarding brokers, in to our quite scale to profound. noted all I the are they automation right XX,XXX function these thing think efficiencies was big to And I'm that deal. asked think off. Low-hanging complaints. there's systems and members said, point It's is to the new able And do That's from and seamless. happy. heard even more should automation now, fruit, folks just also the opportunities. be I we're from garnering I able made, is further. The have we're a really the That, so of be these these members. They're be that no to that going investments and that any statement even and complaints broker paying a haven't I at event very no, actually they think, you a

with opportunities provider is there partners. which in way think we in the our work I

want think We we path path a set I to money. We want be to more on IPAs to, successful. more. we it more make have out surplusing call our to a them

there's think I opportunities there.

which way improving the there's our using think I again, in clinical technology. AVA opportunities with we're model,

EHR G&A side, that back in while implementations doing our functions. able G&A scale of we're be noted back areas our and and should think economies getting is On the administrative variety automation office something a also I we're office these more of our automation that achieve in to

So all opportunity expansion, that even lend for I we going to, bigger us more margin get. the for think, is of

Hua Ha

Maybe just more question. relatively long-ish one

year-to-year. you increasing by in So, bps benefits, think, a only reducing not XX where maintaining yes, edge benefits, but have shown that I guys and year everyone's

another that to across reductions be with said, probably expected so XXXX benefit be would even year the And worse board. with

on margins star but thoughts. love your positioning, to hear advantage massive balance Alignment Or position and more competitive ahead a in ratings, next say rating star that that investing is bigger your a also and your you're year focus in next benefit to year be just in of be might stability? it so I California, had it year between fair would far I'd priority? And year, delicate into similar understanding could know be funding, where where your benefits a So it's advantage of terms another taking

John Kao

mean last just you I'll Well, out the year. to XX% Michael. growth Yes. I that only you, called shout were one

much dynamic. we at would margin say bids, that bids. I focused sticking said least I So still XX% will growth more in the having were XX the say to that, XX% in our -- we're

of the so function of And degree think, a competitors will of bit a our achieve, is achieve we or growth do. won't I what

than of kind we aggressive exhibited some of All pricing ratings, exposure VXX the see your will to And more your us increase to respect -- got year rational to We to conservative of we not you're It be lead also, metrics with the conclude point, relatively people that in that the was not. star they that remember did growth. and that very perhaps XXXX, right benefits flat. much. last this

And so we just -- we still and found that margin. balance between growth

have focused nonsustainable call I'll going 'XX really said a caution certainly pretty stuff we may 'XX they how But We 'XX. we lose what very, I'd and both the come felt is I 'XX. Remember, about some that. growth just a of the are to doing growth feel year very, months. said year, have kind money. heading people they out. would you very stars find in that positioned That's on And say out price have tailwinds potentially only conclude still logic for is terms But by possibility. margin don't XXXX, of way, of to in My the we're we of we like stars well good the next with last do, upon into good couple the depending stars strategies. 'XX, and more that kind or they their are, VXX have If in don't still it, in we'll

Operator

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

Jessica Tassan

efforts you restrictions kind regulating help align impact on in benefits insulate the frame forthcoming partner any California's the there's results. a D-SNPs hoping growth. of just to if to Medi-Cal can the or Medicare the and from to for I'm regulation by state. yourself with of and Congratulations plan know interested on I'm way Medicaid alignment

John Kao

Jess, partnering it's plans. be John. we'd very interested in question. Good Yes, with Medicaid

-- taken an able be to think on will couple spend and expect that the good tactic -- of the lot feel years the just of kind products last be still clearly that area I growth has get really about sold the a programs still it's to us of we some SCP over that allowed through during that. that we've and of we we time

people forced network like a a I benefit service our They of into levels. kind want a and be consumer designs think of Medicaid set fundamentally They networks. to they like perspective, at Medicaid products. like our don't necessarily our or

-- model they the like and So clinical care. of

of think really I we're far network the so in in. thus any counties those aligned And things that some kind of have superseded

see. far, we've able And it pretty so been to we'll But thus effectively. manage

Jessica Tassan

then that on And And I end the that over in any quarter Is accurate? you you the was all any XXXX. see that of hoping of surge utilization of comment benefits were course just kind you wanted particular quarter. then increasing said you volumes in just setting? Did second could I to in supplemental verify,

Robert Freeman

I take X. Thomas, Jess, can those

quarter steady. So would was terms on your throughout the first question in of utilization, I say our performance utilization pretty

utilization in on here as under driven were Rule, that in been the couple who new issue us a uptick California. for other which principally we we as by of Rule have things really way adjudicating as de saw last facto calls, maybe such hasn't already operating situations the an may the in given those an claims think about been really Two-Midnight I of Two-Midnight talked

it been initial XXXX. issue has second to on an forward. On for not see relative Rather supplemental benefits, our emphasizing we for issue we changes modest we the increases have benefit moving half your So to nor us that being kind speak us do not did question anticipate for supplemental of benefit first were expenses increase to extent. throughout expectations continued to our or a supplemental what that is of XXXX, we an

the the levels the actual guidance just contemplating over we're that changes really and today, the And elevated levels we benefits those XXXX for release our back outlook, overall our so your is at in point, part investments of will to slightly on captured which, next that's in year, but have updated bid the a half commenting continue not year. of of

Operator

Our question with next Blair. Jared comes from line Haase of William the

Jared Haase

I for kind trends quick D last know bit a the Yes. unpacking Jared Part utilization kind Maybe This further. of Daniels Ryan this focus. big of a a just is was one MBR the evening. on quarter, little

update just the then hoping that's expectations? half to I of how second get in So terms And an the there relative assumed for was what's of year? to tracked

John Kao

Yes. Jared. Absolutely,

second I So forward relative every don't the that call quarter overall was the to first wanted necessarily. D But sure just C and make with quarter basis year. expectations underscore from the and kind on Part our to overall relative performance. specifically consolidated D more to of our we to out not rest think we're a really C question, seasonality the to the in a quarter break mechanics of folks QX of Part going versus major driver the really performance did on to your And in understood line MBR moving run

at the the still Part half back will what a tailwind D that on the look we to the we talked be to meaningful MBR about anticipate quarters, next over of we As year, last call. X similar

Jared Haase

for in no thoughts that market as when of opportunity you then, you footprint. markets some states talking And and the and especially geographies? of that to margins again open national about longer about opportunities current have up updated for larger plans get you to Obviously your do But I in around mentioned balance look you of guess the certain newer grow might get John, what you think share term sort exiting new that about continue how I they preserve to thinking sort of wanted I know touch XXXX. sort XXXX. expansion to base just beyond runway the

John Kao

I these to things sheet, in that good as get we is automation leveraging about. think feel the that goal, economies the we profitability. growth I expanding is I administrative work years. for of these over as in we we're both clinical workflows way, a couple way side priority model And and just EBITDA position yet these of practices go get systems as get the we we the the really have cash the do we just with quite at terms whole that. And a when we the packaged on positioned the a time, this same accretive the the have balance side things from getting said One of most we're of investments take the and funding the desire behind we really degree not to I've get what that best to That's focusing talking the I couple now is kind national to in grow the to scenes That's cash governor and cash. well on ready the feel operations. next start But the now. And side, were footprint once the kind when on and want you along of in network that Yes, is all and really these cash said the in to as just us the and expansion well scale to as coming get want we get for together. showing past, That's producing really still and think start kind And I of on matured in all everybody well then to management to simply IPO. expect. achieve from of

an what trend The are so. think innovative said is you'll they're that emerging systems kind the Advantage. networks, to is currently experiencing think from integrated delivery next come I other or partner there of these toward hospital year ways I fruition that for in to Medicare And I've over thing large looking see do

Operator

from comes question line with Kevin Fischbeck of the of next Bank America. Our

Adam Ron

This Ron. is actually Adam

growth, so quick And a When the are say about first, yield does enrollment? of be include yields? So XX%? one. specifically on you would Or talking that you XX% top

Robert Freeman

we're Yes, we take XXXX. feel can can I in achieve that next contemplating Adam. Yes, revenue, and growth we XX% think I both like membership that year one,

et to cetera. don't doing what we rather, early while think because an from our mix, also currently account I what standpoint -- for terms of expect into overall population, PMPM designs we it's new too member positive say, we the in uptake take we benchmark as think to rate as XXXX, benefit have have I do we're very product well

our early into that XX% to talk membership I was from for to alluding good ability that us John PMPM growth think to on about and see previously. probably So we revenue But change feel XXXX. revenue year-over-year about too

Adam Ron

very you out and percentage then a a of a high and there's because who year, had to Alignment. parts are MLR, have year, that just on lot moving you reach this then members last And came then new of

those returning wide MLR and a delta there's on members members. saying of You're

you wondering last things delta MLR I how from like are bid. that like us us was give members on what trending if sense different So color maybe a give versus new how what to was of can and returning any year this you what on that's is year and members and

John Kao

absolutely. Yes, yes,

overall, So generally I members would new expectations. in with running line are relatively our say

various at-risk would seeing have the been past, XX%, seen variability on year. From of members we loyal described of consideration expectations, that some few second that. I'd into say amplify point, unit of on that original cohort points supplemental I obviously right that So of is historically, XX% that expectations. in MBRs within suggest certainly similarly the Part some comments XX% unit you we're to or which And which in standpoint, we're say a with around supplemental that just a maybe navigating consistent our the loyal. benefits, currently benefit a overall cost that describing dynamics range for both and is in of kind our was run we're the inclusive member would higher to years, a the run to of cost dynamics take better few this want across I call. On overall than our performance and all historical this kind taking continuing points population. XX% or than to new I that now, a very population, worse couple maybe the but band within what points of there's

costs outpatient are about maybe And is And would on closer value X% X% in a X%, So we and have unit average. our a year in past, us point going in years overall overall something that in up to say, totality, of normal MLR. XXXX. worth total about and seen I inpatient typically would to

would our MLR. cost overall other in unit say, X% been and environment normalized experience little so on is less had year outlook rate year-to-date full our words, of And update we a would than a had, have better more almost kind I what

dynamics experience I the also cost around ability the to just a based growth, to not manage think team CMS other really year. some our to your point, this testament the manage so updates on rate that's our unit And overall but of and these

and So about. feel half I our think we're in the we a both adjusted very year EBITDA performance, good profit on position and very I on full adjusted good achievability think gross our first based

Adam Ron

clarify unit When could thing that talking Two-Midnight is more costs I the Rule or because I'm just just that. are outpatient just if about admissions say were this like the previously And Basically, X% is with up X%, there, and you is what about Humana one what because all about anytime board hospitals this would latter. on it's the visibility more have or reclassifying are goes someone doctors asking across higher? you

Robert Freeman

Yes.

related that we've was change of So to That to it's a was really caused actually I rates would down. of reclassified put due not and and CMS is go What up kind and us, not unfavorable I earlier. an country came a any not other in normal places variable. to kind exposure certain to and for across place performance Rule, onetime what into is as markets, beyond that saying Two-Midnight referring area and I'm they increase say XXXX in urban it markets the of heading when seen rural

for say, national increase a normal, that year. high able navigate saw an far to successfully thus we've year-over-year basis, of So specific on somewhat But our markets, I'd we was been atypically it this a change.

Operator

the comes of Scott next from Our with Stephens. Fidel question line

Scott Fidel

way, and terms just question, or MLR gave the the the increased laying First in help about Thomas, maybe us given hoping impact possible, basis of you is and sort both out help year? could on supplemental to the it you us was that way you outpatient those impact of sort sort quantify existing of of unit this and year-over-year in the points, the XXX the there that I supplemental did talked of what fence in inpatient about to if impacting the the benefits trying MLR Maybe new benefits year. ring members if could impact exercise of and you similarly sort of impact costs quantify the at a any this similar

Robert Freeman

Yes, happy to.

somewhere points new if and I by today, about kind think to say, I of XX up impact then prior greater XX our say probably at relative it neighborhood supplemental in to our were overall would kind for piece, the members the points XX and points current look I basis a member And supplemental about expense. look were benefit you if benefit you to our basis of and XX previously guidance MBR the the to full mix on probably discussing went implied of the new XX members it's on you guidance basis that the we think the would of at maybe new year.

is So with we pretty slightly higher very expectations. overall consistent initially it anticipated. really It's just than

Scott Fidel

want that they one would follow-up getting on and Part potentially like, on us just still that my about thinking may with premium your in definitely you it's proposed early D CMS what observations give participating interested to year the that. program guys' then stabilization the be No, program week for may demo assessment you're came but if in on And you initial what for you pretty demo. here, on with be has initial concerned that this question, out

Robert Freeman

Yes.

I too another. think too of or it's one a us something probably for early view provide much on to we're evaluating, but definitive way

the changes terms teams a think overall both as our in feel think D I standpoint, lot ability to from there's of employed under through for partnership obviously, the of XXXX pipeline our big And we Inflation positioned, overall, internally down also in the I well PBM. picture, of Reduction through well navigate coming clinical Part an very as continue to but our a kind those benefit Act.

XXXX, than continue into like there's risk evaluate just opportunity you we'll changes on the to as part Part describing D heading we that. actually and more of were probably feel So the program

Operator

comes from Ryan Our Cowen. question with the of TD Langston next line

Ryan Langston

trends just or you can utilization has California wanted utilization California majority. if progressed the know, talk outside. to versus of way about below been maybe of above, Obviously, Just portfolio? enrollment any the But rest trends, the curious kind California has

looking there. give for context any can Just us you

Robert Freeman

Yes, Ryan. to, happy

Care depends inpatient we're what And the -- running we in launched say we've I'd So continue on couple California overall, per an to them. actually running our on admissions place better really run market. to well. new how California. And the ensure in years the that that's train markets we AVA these standpoint, But individuals, relative a years, than of then our past than of ex-California put recruit line as I'd we're those similar we monitor California. we've quite we're over that with ex-California we're for tools the how replicability to is as over individuals we such use bringing from do typically in new those and or It pretty say teams, last consistent and function few systematizing what efforts X,XXX how being markets or to

business back and our have of evaluate the et ability people length centralized terms those control right metrics the terms rates, K, and metrics end to skilled doing how time, admissions our stay, of of managing per X,XXX, on in in seeing nursing teams and to inpatient cetera. we're the per So things readmission command making right a like ER at sure

been So an we've population how to operational this ex-California. and from results try think seeing I standpoint, we of that the to build the continue as disciplined we're about pretty we grow

Ryan Langston

maybe. one quick one just then And

for years, Just about those cetera. markets. non-California in North couple of mean you've a et now been some talking Carolina, your markets I of

of you those would bit to into do more, you year maybe have markets one a little into maybe XXXX? 'XX grown grow in more intend that Now experience, you than have faster

John Kao

we need John. it's quality that the get Yes, made the decision model Care and Yes, replicability of and we established foundationally, want to established.

of Carolina. working outcomes do to very, are still stars, that so we've Nevada. the terms on in in the We're We've in been that clinical been to able North And but do good. able very Arizona

just been and accretive most the specific think And I so we cost. emphasize from because California it's lowest the acquisition made growth the to decision

continue We I and think on provider that. have it good sense And double broker to good such partners, do just to such we'll down for that. us partners just really made

conviction so toward going that because have still emphasis think we'll profitability, and heading that see. I much to we're XXXX to is there's so into And we on focus

I think you'll much us aggressive see more in be 'XX.

But in we're think, to the profitability. ex-California you're be these lot growth to I be, growth making, fact 'XX again, of going to in well going 'XX we're in from going I that investments just we're I because think to that markets. get very a on of think very, the get going positioned

call we're and our going that, to kind I thinking to markets. take it 'XX expansions. so we're of investments in then starts then it, we're make And That's new going with and those, ex-California both existing of think how think And about market prioritization. factors about

Operator

Our Barclays. next question comes with from the line of Andrew Mok

Andrew Mok

you the maybe year. next Now will and potential bids us, be behind what you the are margin MLR SG&A? could that bigger a more you expansion? expansion between What if do is of drivers level reasonable share XXXX And on bit for do think think a

Robert Freeman

of much the the detailed withhold broad think has just around on But think your too I from So through probably we'll that come commentary XXXX as information direct question kind subsidy CMS. of MBR currently I kind are more reallocations underway to MBR from opportunity given drive improvement John versus think, performance standpoint, an is SG&A opportunity. And was I an think what continuing in describing, we be XXXX, bid margin-oriented I both mean for into I MBR by that XXXX. were, as are to process and the to benefits disciplined

an of to in the of we on we will it irrespective came in process. growth, how the MBR the extent But think see get. growth next you bid to I see think opportunity of improve together which the part level almost year I we based relate

things side get And SG&A revenue SG&A of single as to past, to as on or XX% the below SG&A percentage possibly great while describing, of going XXX close be to driving that a even job to total year. remains north of XX% that, as a improvement high about in percentage a goal revenue XXXX, this to was this we've points our in digits. talked John the we've year of of done in still we're On basis

do to in of and improvement we So SG&A next continue well. to leverage I we as year, XXXX think scale grow continue as anticipate economies further

Ryan Langston

the elaborate that It seasonality XQ up in just follow could And to could this MLR like if XQ some MLR you're expecting sequentially improve. wasn't why XQ. of to on expecting you're I both Hoping year. improve MLR me It would looks clear and you here.

that's historical I a trends. than different think bit

us quantify So through progression and can meaningful? you of maybe the impact the walk that calendar if

Robert Freeman

to. happy Yes,

of couple say I bit of items last So a third typically fourth about of third prior and would I the was year-over-year, that the kind had is period quarter favorable seasonality onetime that that thinking year, a of quarter was in or went think in MLR that bit part down the little items of we the into that of terms last the in the fourth kind drive a in and distorted dynamics atypically inpatient the quarter a costs what helped In on in fourth actually other side, that quarter effect occurred unit particular, had year. in couple third unfavorable year. And a describing October quarter last the I XXXX. opposite was X,

quarter, is I that say aside second feel our outlook, more would of to about I probably in So about where our appropriate think terms we good stand. we or think really full kind guidance of third quarter dynamics even And fourth guidance. half year

supplemental implications of latest the reflects that both benefit and kind our growth increase. the talked as the guidance MBR we that of about, impact as now think of well I As kind incremental incremental of we have modest membership added

that, feel of initiatives non-inpatient we're that including today. things good improvement Integrity On the we last some the the quarter, of talking Anywhere. some other for about side, Payment Care And the then opportunities think we and about I about talked further beyond on

we in on those dependent year to ability I think that economy to outlook will profit picture, full with further upon terms the feel SG&A. the So in offset range where adjusted somewhat But our MBR EBITDA of and think in overall of be we both of gross kind modest confident land big I our of pressure the and timing initiatives. continue scale

Operator

you you today's gentlemen, and program, for thank disconnect. This and now Ladies participating. does conclude may

Alignment Healthcare (ALHC) 1 Aug 242024 Q2 Earnings call transcript