ALHC - Earnings call transcript Q3 2024 | Alignment Healthcare, Inc.

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Operator

Good afternoon, and welcome to Alignment Healthcare Third Quarter 2024 Earnings Conference Call and Webcast. Please note that this event is being recorded. Leading today's call are John Kao, Founder and CEO; and Thomas Freeman, Chief Financial Officer.

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

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

be will on the website evaluating company certain the the that XX-Q measures note please I measures call our to of non-GAAP Form quarter believe to the fiscal would in in addition, the measures and financial important relationship now can XXXX. And measures Kao. historical they GAAP found financial performance. is discussing John that most company's non-GAAP In like non-GAAP the be on and comparable with for the reconciliation in September press between ended XX, are release these turn that, to posted Details that

John Kao

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

For on we guidance the XX% health to a once final revenue the year-over-year million $X positive achieved profit us and quarter XX% $XXX and of gross of in plan row a of surpassed adjusted REACH. Adjusted gross the of the XXXX. profit again of XX.X%, quarter. growth adjusted guidance quarter end year-end marks both and year EBITDA adjusted high million $XX prepare our placing of million produced membership solid to and enter approximately led XXX,XXX members for represented our where MBR members. the This quarter XX% as year-over-year which third second the XXX,XXX XXXX, XXX,XXX in footing ranges, our Total EBITDA grew approximately of membership of excluding ACO consolidated

and like value and ] has to CMS' health implemented are organizations that to are care struggling year, changes [ population to the reward have platform, paradigm. seniors. succeed aligned an unique creating opportunity adapt was past visibility management new across standards plans Star in control built original deliver accelerated companies to for reimbursement, this tighter share its an to capabilities Over vision Alignment Many at and better that pace. Alignment's enterprise MA which take the to who CMS provides health with higher MA

and data, plan have health Our resulted lower clinical performance, outcomes. integrated capabilities Star fully retention in ecosystem superior and utilization metrics, consistent growth better

seize of third evidenced is the ability of Our ahead our quarter results. us opportunity further to the strength by

Care us today's Anywhere visibility over incumbents. clinical achieve close care and model utilization to years to control are MA a outcomes continue During can our of take and share year-over-year. environment unparalleled what while in into year-to-date we the preview believe enabled coming as membership and real-time We quarter, costs we XX% the our to growing manage from

Stars. to Turning

or We above X-star straight Across that and our retained year. California contract Nevada XX% represents rating health our roughly pleased eighth that the HMO rating. X-star above in announce for a third or This XX% Carolina this are year HMO consecutive other membership MA its of for our marks to in plan plans are X-stars members our which rated contract, XXXX. of our earned has plans, North

with raises obtained PPO X a of cut solid CMS California X.X-star in outcome. plan rating. only Star's plans As bar X our the are we a Meanwhile, points, on rating X-star country the

our quality members This driven Stars stems commitment experience measure success markets. by care Stars the each specific cross-functional ensuring is possible. Our and to best cultural daily get enterprise-wide in reviews an across from our of

results us our declines. Stars deliver consistently enabled Our while visibility of strong and seen many competitors to has control have

to access deeply more see proud further results, network our partnering we're room for by on improvement of with care. we While our

Beyond XXXX tailwinds Stars our ahead scores, Stars us. of impact our payment, year see years we rating meaningful of XXXX which multiple

cycle increasing an on or clinical least in admin contract. CMS CMS reduction reducing year HMO XXXX, would payment confidence in California our emphasis ability X.XX on have greater. weightings resulted year to weightings the contract. the to to admin HEDIS and X We stars in For and quality caps is Star impacting historically past California from HMO caps metrics to approximately XXXX even during us more gives Conversely, score maintain X. X estimate rating This at is X scored in stars our raw increase that by our our rating for X.X that we

rating year equity health and is plans current reward low-income greater-than-average who of disabled portion quality. members XXXX, XXXX factor For high CMS demonstrate impacting a index, which rewards a the clinical and replacing year payment with enroll

in to benefit the us a Importantly, give making current from next our factor, the Star the change X low and believe policy high 'XX a thrive Stars income our in ahead from 'XX tailwinds Health membership, tailwind which our our any for likely index significant that disabled Equity California HMO believe has Equity payment to competitive With already maintain solid summary, California new rating. In we to we competitors 'XX, our benefit the upside in years. stars our scores. ratings well advantage HMO percentage several it to position confidence to our and continue are over years and pure years contract Star create will receive and strong Index next we to bonus. locked the reward over positioned places Furthermore, contract 'XX pressure looking doesn't to environment and Star's a currently changes of the Health

like the I'd XXXX. thoughts over to I share on Thomas, turn to some Before call early

portfolio XXXX approach continue to take our season, a to we and selling the markets. products For

greatest return we towards where advantage Given our investment. on and the the profitability, focus highest competitive are capital markets we on have directing

solidly on the target least the pace are our we channels. first with sales growth from at pleased XX%. X based our we are with results, XXXX We of early believe And weeks activity of on

excited in expansion of margin we ahead us our opportunity growth, are for XXXX. Beyond equally

First, cohort growth this year. we improvement our expect from significant

VXX Second, competitors, competitive we for and bidding our while offerings believe model advantages allowing improvement. of are benefit phase-in even maintain versus risk the changes on second to widening us margin advantages our relative Stars funding the

Third, factors increases average our lastly, clinical and we operating and unit is as best-in-class, in XXXX. continued $XX forward million. can increase we to XXXX in sharing exceed that as XXXX of look confident anticipated AVA, see of provides to flows. establish achieve management. already profitably, system, each of of IPA scalability Stars performance value. on our combined scale next coordination inflection we adjusted expect weighted In profitability horizon, EBITDA and require built ahead clinical on that X% mind, the believe We geographies cost more a growth and approximately our and grow seeking With at year management operations year, And will proving with in are for simplifies we multiyear expected experience more continued the results while culture. Simply a our increase see industry further put, care better benchmark mousetrap improvements with we to these improvements generated along an technology MA of and success care this When us visibility improves tailwinds we pathway leverage our will our are operating gain model SG&A we Advantage outlook of into results. where population a health we've platform margins member-first the delivery that new a conclusion, Medicare cash is are the the health point using future care AEP seniors capabilities, greater consumer-centric internally and consensus who

would Our to mission one of like with I senior our thank of And this each one begins employees being the of for journey. a improving time. part life at

and to has the of be Your member family each continue our treating your commitment own will you to would success. like cornerstone member been

the results outlook. to discuss call Thomas to turn I'll our further Now over Thomas? and financial

Robert Freeman

Thanks, John.

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

year growth AEP. surpass resonating expectations and to heading member experience into have achievements demonstrate this Alignment's products, reputation are and how the market Our brand in continued

as growth, represented and a $XXX our third quarter growth highest revenue of company. quarter traded publicly ACO XX% REACH, year-over-year Our revenue marking million XX% growth excluding

have have exceptionally combined. put we competitors. Adjusted range, was the growth margin perspective, quarter are months high end quarter line of we added in consistently the profit in an To million with our and strong ability ability expectations seniors pleased growth onboard each is scale, gross met the due MBR XXXX. and of adjusted this programs our year our Meanwhile, growth representing year-to-date, than gross manage our performance guidance years last XX more our our of X clinical $XX with what in into versus Alignment our and throughout the to prior profit to we While in outcomes to differentiates XX.X%.

as Year-to-date, even admissions During track jumping member quarter performing engagement support establishing the new utilization Strong anticipated. for third we than more to strong off third lower point to inpatient X,XXX expectations new previously members continue rate engagement line in with onboarded XXXX. continued XXX a run with modestly year-over-year, expectations. of our results, our per quarter,

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

XXX year-over-year $XX declined operating a ACO basis XX.X% significant of elimination increase associated approximately goals. model The a REACH, in decline revenue, Adjusted to million, last a was the year-to-date our in-sourcing experience year-over-year, has SG&A percentage our of of adjusted SG&A solid incurred member onetime putting excluding a the of as the points. by of with in improved an From perspective, we year-over-year. Our costs of the points, full of as percentage X% scalability basis us improving reflects SG&A XXX from operating achieve our excluding revenue, to our and year by beginning adjusted leverage REACH, functions ACO now that third year. quarter position XX.X%

achieved in of where $X EBITDA adjusted the row Taken million has and positive end together, of our been second enterprise EBITDA the high profitable. outlook marks quarter range QX the in a adjusted

performance XXXX Our confidence manage and to our our in reinforces while quickly our underscores strong further year-to-date growing costs ability outlook.

balance the and with $XXX of million million and positioned ended to parent sheet. $XXX quarter cash in with the company. remain the solidly investments Turning We

QX impact the which or timing due parent We to parent be to on cash. no total transfers, year-end than of intercompany the approximately cash expect same cash higher have

guidance. Moving to our

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

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

expect the year-end our guidance of year-end strong midpoint we at at membership are activity, of Higher growth XX% raised year-over-year. now by outlook, continued Following the REACH. we to our year-over-year implies membership in drive membership another range. and of year ending raising expectations midpoint improvement quarter of expectation our ACO now our sales XX,XXX X,XXX Year-to-date, revenue XX% growth members full and guidance also by revenue membership members which have excluding XX%

profitability. to on Moving

are narrowing We adjusted EBITDA guidance our adjusted profit ranges. and gross

and management raising year-to-date the strong end of reflect low medical are We operating SG&A to leverage. utilization continued

reducing and such with associated incremental mix variable to total to to as timing support From certain also initiatives expectations. MBR of the increasing increase to members we of are see an reflect MBR impact our outperformance. membership relative continue end growth, membership, a SG&A investments expenses our of commissions the modestly our profit We and as prior which percentage standpoint, new high clinical gross

our to continued percentage a the now has worth in adjusted as that as we be of revenue adjusted noting However, guidance. be midpoint percentage to expect revenue offset It's of SG&A SG&A XX.X% by outperformance at our outlook. our this a of

comparisons, and affecting would seasonality a the use comparisons. to investors the in quarterly Finally, fourth comparable year-over-year quarters due I of the to as more third second individually remind than half terms baseline dynamics

prior XXXX the favorable of releases. costs. of period by Meanwhile, and benefited third higher of the start quarter impacted fourth quarter XXXX The REACH from was results unfavorable ACO unit atypically inpatient

us places more towards dynamics, successfully the half is indicative our our guidance regular solid comparison quarter our of year the a second MBR of we As seasonality. In year-over-year growth. as these result closing, on third of profitability footing full of year outstanding manage strength results quarter-to-quarter

early still in AEP, are Although optimistic the we about year ahead.

to for adjusted million anticipate growth continue mentioned confident are John EBITDA $XX we we earlier, can achieve of XX% and that least XXXX. of consensus at As

health our few the our results With to open care growth year next ability to scale, improve seniors. the profitability for and that, outlook and together, our Taken years and balance Operator? call demonstrate this questions. let's for

Operator

Now with moment, we'll first open from One please. of comes the the question. It Blair. Ryan William line Daniels

Ryan Daniels

year to tie about John, you're and a back we relations Thomas local go clinical in something one you some performance. it initiatives talked and investing the investing you, But maybe on roughly strong for Congrats market just might in. ago, providers said that brokers. as with on

in you go-forward organization? internalizing doing spirit to that experience. innovation of the just us You things deeper the mentioned at the with Can member of investments the and basis maybe on some continue you're share a with improvement

John Kao

Sure, it and kind would is deepening game. then we sure. our what on want better as provider call partners a those us. surplus with workflows Ryan, them yes, faster. and way provider IPAs end-to-end automating make really of we're help I'd ground We operations. more in can And doing what our I bench with better the categorize Really are we investing workflows in and to that provider work do the

and clinical refer as two is, Number operations. general operations scaling clinical one. that's So I number to

a the that you've times And in and business. improve distinguished heard us pay there's to us. -- pre-service IPAs of of post-discharge -- continuous really, there's control all including other served I is program and I efficacy of and to and we our can off. of that categorize networks to it, think And I'd kind referred starting talk so few access our lot getting opportunities improve and Anywhere saying has a improve care management, is of as But a this in, and work we They're more. visibility Care areas preferred these where the that and I with we stars would UM, all And think, our about has well by think, lot us us, summarize this in improvement. script, even philosophy, case

the got have with very if we control. affect internal hotspots have our effectively. those data, to as actively we hotspots, use so we the And and the we've of work company well the from parts We data providers AVA. certain as managed And

is And so this business so local.

to have results. I market to to that And And system all have that's You apply to a market we've done. can those problems. what that use solve we're think from market you I to hope benefiting helps.

Ryan Daniels

That's you know, to take Yes. just either the of this really or X it year, helpful it's kind you've you the to this, growth highest growth as mentioned really tremendous Maybe Very throughout I John. insightful. is can follow-up, membership color, and Thomas, helping now? rate super an my experienced continues you versus would in the expectations, that's sales dynamics any outperformance or as things organization. the market your there external Is whether attribute company internal just X of accelerate.

John Kao

process really is say John the bid This undertaken but beginning the public, very we've Yes. again. inception, disciplined. been would since been we've since we've from the specifically I of that company's

We haven't growth. chased

what doing to knew between margin. strategies to that it going balance We the were based were hunkered we just advantage VXX product was in constructed and tried find and were on when on unit we the economic for advantage growth and really down margin. worked. a going and And the be stars advantage. thought have We haven't us, we XXXX, to we to the And we going bids bid relative really we have that

invested in all and And the and because is them kind we so best thing if keep keep the recall, the to member happy. in all member want services experience you get the 'XX, infrastructure we of we growth, can we members do of

did. we what And that's so

paid the as over in off. I you investments, so of have And know, go all In last mean, I all X.X business, they these think, years, cycles. really this

data to have the pure years really on mentioned see care we're utilization think to transparency as think margin have. the we'll basis and just well And demonstrating that could And for also we do revenue. we expansion. think manage on this we that. a more continue that for just And into XXXX, really economic XXXX. head I we bit we that that next ability a model we're positioned through of few I unit erred the I changing on little And I

value it's this term. X, since it's all our long for shareholders. working. same because creation approach day for in the is been and it's And long-term And has the This really so we're that

Operator

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

Michael Ha

slightly with the at about in bps. guide full updated at year up So implied previous think XX, XX than the 'XX lower your narrowing I MLR is guide midpoint, now

to you're at confidence fair say 'XX elevated much in versus So your or initiatives it you these overall, is clinical MLR adjusted your XXXX? uptick how new new whatever related in shake guess, since in consensus fourth not investments all member basically to is support And of versus this you're supplemental reaffirming growth? quarter at does on I seeing Are any benefits continued growth change to then all? seeing EBITDA,

Robert Freeman

Michael, Thomas here. absolutely. is this Yes,

big So of into and maybe year. start just QX MBR the of dive picture to and full update. kind then Implied kind

XX,XXX where the really months profit So great I guidance, year-to-date, scale throughout of I clinical membership and to year. think of utilization ability think indicates we we're into very at have we're in quarterly something And where about think feel manage proud our I X the raised hitting terms positioned gross by our ability our and year we're throughout while our the to model XXXX.

-- greater previously. well. up where update, we're with looking outperformance few to we as growth next weeks the X few lower really million expectations is then as In in results of pleased as support to XXXX, of think continuing investments kind ahead ramp or function starting making midpoint to AEP be well profit and the of back both is our a to first a expect comment, this prior we're our half the incremental XXXX growth of about relative XX% But year continue ongoing our terms than of your to full to the a how year of gross guidance think I investments exact to

kind the for in coming down. end that's driver think terms high of primary of I us kind So the of

in think the in we to range on year some also pulled some to depend I initiatives And we based second that we of would that down high said in the shared where expectations. of timing quarter for end the think initiatives, I last the thing timing fell year. prior part of those the relative the is we this of point your the upon earlier slightly

basis been this from leverage changed So outperformance. full the points, XXXX update, to growth that in implied through and think, SG&A think MBR we've given membership that about of year continued quarter has I MBR, offset last terms XX overall I quarter able to by

I think excellent put the some new thing quarter, the and given members is see just that do pressure last say just MBRs, I been new strong through third the MBR, through continuing membership utilization as well. our would has results utilization has we're on while with come higher-than-average in October incremental to

think the as point, the outlook our of I question I in to a jumping of utilization to think in XXXX underlying So our us next gives achievability off for well. bid the and your our performance date assumptions lot confidence on year

Michael Ha

Got supplemental seeing trend it. elevated benefits, further And there? you're any not

Robert Freeman

kind to benefit second change probably saw I beginning from last to say supplemental no. tune the and the it quarter, that the we was quarter We quarter that second previously $X the But No, anticipated. shared quarter, third in experience. of hotter PMPM real running we in no of about than would

Michael Ha

Got it.

Okay.

second my ratings. question, So star

seeing X-star to X%. So plans percent like again X% of next California are state -- -- overall year like in looks looks a star it dropping plus by I'm average like about at members level, ratings, on

revenue could I I if So is I single-digit with 'XX. And the year advantage about of 'XX, talk provides that you plans talk million one 'XX. moving guys you and at sort like through street was rebates of for up in to think, for think, compare bids. improves, estimating when ] $XX I that then on being, that once how X.X benefit, a million, $XX move [indiscernible] about tailwind. benefit the 'XX X% of across, 'XX. outperformance MA revenue was competitive you the million I are the benefit improvement, [ star actually wondering X% year strong it potential could $XX wondering look 'XX for that stars, to your and up stars stars earnings again it I was feels growth could and you again think pretty bonus, alignment when into only in ratings X in of high members. your if to also, that And about just a today earnings incremental significant us gross I percent where bump your

Robert Freeman

going X% market typically at not competitors much The I comments detail for sets the on terms to investors to and up outperformance plan past revenue foremost. X-star a focusing revenue difference So X-star per growth X.X-star and in for given plan But 'XX member plan on month. month. continued to between framed the of something too I gains of per per think and that closer XXXX difference we're the extra think XX% and is point, And first in to how is into us we're tune of the on is stars a this probably of it versus extra our kind between a way per 'XX. in a X-star just your plan we get share about that member

we is say, of account guys, we that shared have into market had of an depending issue VXX by X% VXX each something taking to between advantage we contemplate the market competitors the continue revenue upon competitors, to to as PMPM so I -- prior evaluating of a those in here. navigate impacts would as on own bids, we're of in we've our XX% And past, somewhere our sorry, for many And XXXX how will which sort we'll terms Internet of us. average,

me? hear still You guys

Operator

can. we Yes,

Robert Freeman

you. Thank

VXX RAF points the navigate We is to starting many in to terms our frame, their kind the shared under will Stars. we continue time XXXX that of to disproportionately being given what's are really similar competitors that of in over we know as higher-than-average So But VXX of XXXX important on I setup, VXX. think our past. impacted

but we out of another and think will I 'XX layer looking as well. so And incremental just not advantage XXXX have, 'XX, to relative in that's

Operator

for It ] line the of One with KeyBanc. moment next [ please. question, comes from our Matthew Gilmore

Unknown Analyst

to sure I in is sort you're the first there the it fourth quarter. I the Was And I like I of some revenue sequentially third or a upside implying make in reason retroactive down revenue pickup guess wanted understood little looks quarter. revenue the like members something like I guess bit the quarter in ask that? maybe

Robert Freeman

think I the that No, don't was that case.

revenue sort to I think look same decline you time, revenue as QX, from working course of year, X And revenue expect we increase things with membership more tandem. to over typically associated PMPM in new you the tends the out QX and have have the sequentially. One be new involuntary PMPM members. just is given on At continued the we lower our acuity higher that members ongoing we QX members to typically with to disenrollment, come of the higher also, older, have PMPM. which

Unknown Analyst

had goal there is any to to share sense. getting Anywhere engagement? year-end. think members of to a then targeted respect with by you Care Makes And of update I it. Got XX%

Just you that curious are where goal. on

Robert Freeman

in nice during third the a in originally is, from, barrier expectations. contemplated. noteworthy to to than QX, particularly the we we of again, group quarter much to break call Really the more by which wanted in think And grew were with We're I we XX% able given up so it, line were terms year-end. the had We it. Yes. XX% with that we was get XX% up last by commenting, doing new quarter job particular, membership,

of kind QX I way our So in engagement and Anywhere Care sets our terms think well of that into really heading for on how XXXX. we're

Operator

Ron from of Bank America. Adam comes question line the next of Our with

Adam Ron

a got I've couple.

think for into by mentioned benefit bidding last And you're basis you that margin XXXX, mentioned you heading in XX I actuarial you So that value the year, increased XXXX. roughly points.

comment there's you markets, XXXX if could were a were Or aggressive carriers they and your benefits? stable? number cutting also similar give other like in for mostly wondering So in

Robert Freeman

looking relative So XXXX. value we're we the have call But past change to basis with benefits comment going kind folks couple to over share compared of benefit we we where on many that to reduce your them I'm today's 'XX. modestly not shared had modestly point to on opposed as 'XX of to months benefits did 'XX in a out sure in increased 'XX

to shared this back So I for is many on both benefits and improvement profitability. we we as approach more prioritizing try balanced we on often said, John to and did growth think ensure XXXX, like growth take in XXXX. That others like what margin. margin that John were we to probably pull I relative have And being are XX-XX commented

ahead. I in to were where the our prioritizing ability achieve flipped in margin probably XX% confidence general, did have XX% XXXX, to just towards growth, at kind what than but our greater next expansion looking the least we slightly ahead given of was year, given competitive more advantages still we we balanced direction, think looking we opposite XX% probably growth, like margin focused,

Adam Ron

I few questions from different then helpful. angle. And hit if a a could utilization That's on

X last year-to-date. was it I think XXX wrote the quarter X expect in and to inpatient you I in was it said half, half, down you admits that per XXX but X,XXX that decline

really in skew if their or recent described United negative members X D you new could if just was call. hot seeing on your So rule midnight development or into And in came way not the also somehow if then hit that and XQ Part on anything there the if sure you're it?

Robert Freeman

Sure.

there. me So take let each of those

expectations. where QX So mid-XXXs, with to line to relative continued at in the much of in inpatient low- to run pretty in successful terms us we're for utilization,

start our down. and up as actually sort or of between think we QX course And XXXX. think, we I was I year. that expect kind the a is QX step-up the performance admits of shared the per same just kind normal the XXXX QX necessarily in of time, the earlier few performance, year, our would variability within best ADK throughout continue level to that, didn't At

So I think feeling expectations. QX. about mentioned in line, to than slightly continue as we're inpatient very better not And I October good if earlier, per run X,XXX admissions

any experiencing impact of to have terms that not type experienced on In an we in date on future. the anticipate that don't Two-Midnight, and impact

reminder, a that de not terms for in were adjudicated in on Part your us question officially we think As therefore, approach D. rule went And claims. significant a rule final change how Two-Midnight a when lastly, operating I of facto under it was was we already California, into effect. then And

D that third utilization in we experienced their claim Part our terms standpoint. our PBM. there's get really any daily, of that think from the of have not a of on on is spikes in no in some quarter our weekly And lag utilization We interesting visibility commented pharmacy I peers experience. from have

Adam Ron

all could squeeze If in. helpful. one I That's more

based year, do tailwinds, points this XXX track bunch of out your to but headwinds. year. points a any And XXX So margin And basis listed didn't roughly basis I hear next another comments, you expect on improvement. of you're you on

just a if since the next should keep anything we So that margin you there's improvement year down keeping you bigger year terms in commented of in like mind curious here? is margin think next for improvement

Robert Freeman

Yes.

to growth on percentage outperformance, our able pressure we've our improving some given of offset we by a MBR revenue. and we're we SG&A very year-over-year, actually both as SG&A. think And with MBR improvement And drive well of but that you've XXXX think I on contrast were like to the of than if been revenue. look a seen MBR I at year-over-year I it's and to feel where then as in terms it positioned then significant put experience, both more it percentage SG&A

next XXXX a looking also say ahead just expect XXXX saw would both XXXX, we given less opportunity in would growing we relative XX% probably to don't that while what we 'XX year. anticipate versus percentage anticipate 'XX, I think I as for variables on improvement to that of revenue SG&A in we

Operator

That the John James. Raymond of with comes from Ransom line

John Ransom

to year, about Two terms questions. lot If growth the we existing of with you question next certainly look does the that is, are in how markets markets? about versus think now new difficulties of a downstream providers. the having contracting reading press plans MA now And second we're

comment would any So on just that great. be

John Kao

we've But in said California feel with cash we market then expansion for be growth. We new and about good the profile. really 'XX and anticipate in the existing pushing question, turning John, I push from ex-California fund about expansion growth that good mix. flow XXXX is what back What feel more really of to going actually. to to and 'XX, feel margin that one? it's the about markets. positive the And what a market the kind was markets to on mean, about get good we the share we are toward second feel second is really was overall, John. EBITDA All We the good growth John? We

John Ransom

all old. That you're with providers, Downstream they're gosh, they're back MA, [indiscernible]. memory, pushing contracting on seconds was Oh, I'm back the my ago. testing pushing XX on John.

John Kao

management. Yes. But have shift health population see, in to we successful all me it's a you said what along going at good forward. And fundamental be be that in Medicare Advantage have paradigm will to

take are, care You you be kinds you to got sick little different of differently. have different the frail to them chronic if that who or And to able populations. manage said cohorts of kinds patients know we've polychronic of and a always and or

And at our of home employed so own care them we clinicians. the take with

also in And to of an we've to cap do it's a okay that of multiple kind said where single supply arrangements, that and so cap share, premium also global there's in do also financial we've lots chain having But global it's really environment engineering expensive. deals. said

when with to not there's now, or cap going on Stars right of around go financial engineering kinds what's so deals. and global revenue margin with enough pure VXX And in there's money compression

internally, have And is competency done. which to we've population so what you that actually the managing have of

surplus so think we it done that again, of as that question, of, introducing And and think done previous than think heard I what's me with having not on to is some model we're and what think control about. well the trying the working. allowed expand And the else. different make downstream that actually the is And the isn't have we're sector way then partners, we've side. we're of the thinking And both having very side And I And a now visibility differentiate provider has collaborating, much was the everybody that the IPAs, us the information this the IPAs. pools Everybody risk you to the of that's the downstream of as ourselves more from And MA that money physician partners. to public hospital for with playing we them going in are say with us. less. all It's about a delivery concert is thought way in I function future. being that's it's with

Operator

One of comes it Mayo Whit the Partners. moment for line our please. And with next question, from Leerink

Benjamin Mayo

scores go of I caps and lots Xs of minute? again mean just to this back John, the Xs year. for can to kind remain continue just challenged, a we

I stuff center there's some call challenging. the and what's like for a but but to as numbers mean what better you IPAs performance ITA fix you But do really know disadvantage. with of do And heard I need are management Your to good, the caps do California here? with the still I look this?

John Kao

fix opinion. humble No, is it's foundational -- in no, the my

management way I with think do we kind has whether do the on of going approved we And get what It parts do approved. need of of we to to has think is delegating to or deciding you're it contract. not utilization certain UM ratchet with to as to not the nurse IPAs.

You care care and routing have navigation. think of it as to

to And our so you is do a to concierge a if somebody access, approved, or to what team you help you actually going we're okay, only get facility. use to say, are have to you not specialist have access to but get wants

delegate the what to when to have really it's incentives so that or IPA need hard frankly, to don't that do they do. do you tools because to the for us away an we them And

UM. them our into need so answer. we the on That's workflows And real integrate to

somebody the linked to will when person to be do it able that faster. the right be calls, care into and so navigate And will

specialist, one care of operation And kind provider your have had. And If specialist, option the made. same if points can you we're exposure X choice. the you that see want that it's see a access months to that's that we've next linked specialist, the comment have it's coordination, workflow. your care cardiologist week. B see And really that of out, to your to kind provider It's are think preferred we also is I you redesigning I that Option A. to entire whole

that issue entire other, it having not much extend of And that, the or said that it's care think, which And obviously to for now. Now this company to solving which as preferred fundamentally scores. the us to the the time routing, it's a kind into because be I'm or cap just The specialists That is have may. beyond just access ancillary But think that happy on not but fundamental improved upside thing I extends whole with going survey. care based And give survey that makes reimbursement on -- fix still the is a we're so more cap scores, is sense? crazy, and and MLRs. fix going I and going to right better the to also is, it's to control providers. preferred of

Benjamin Mayo

it multiyear you -- Would would -- as describe journey? yes, a it Or feel you like do as you describe like a

John Kao

member the XXXX, the treating of really in it's year, in we're well. refer said same No, we the worked our think of to central and of managing has the And our last where I the no. to 'XX as as in experience. and consumers. success way We partners started the to operations year This in year that the customers, did been we ergo the sales the -- been year. provider in that's all terms investments the provider, was which We've our really, it utilization. year And consumer, this on it

you'll which think of don't delivery I of that an have outside changes it able you'll services. we've kind as has isn't of piece relatively And some I so to the because us delegation work, moment of the think see And system of of again, -- been lot occur delegation a certain not. see been make delegation to you relates for advantage to these it claims or with unique California, others California. to UM

So distribution. I good to efficacy going management the We're care the kind stars we're We'll having outside of model, get really the of advantages. X to California, as focus the cost actually it's still stars have still We to the of easier -- be advantages. for the have on and need to us MRA going by evidenced think advantages.

got and got bigger. we've more And good seeing I you'll get just think to there products, I growth little so. a think start even we bit

Benjamin Mayo

when relative seemingly that change? about feeling My deductible did all. in IRA D you like How it stuff, changed you just don't what takeaway there How everyone doesn't massively this at the on look else know Part sort I increased follow-up, my you just meaningfully are deductible? land of D your stability Part it. is

Robert Freeman

here. Thomas Whit,

$X very our competitive in comparison very, of part comparison, just benefit differentiator of of more you overall the of competitiveness competitors our a PCP focus on the think terms sort is So not D co-pay national And Part our large. counties, to versus counties. just our a offering. at D Part like I geographies are the of deductible really within the got important degree Things to local of because broader

our you much think very of position than level. if of on relative about national gets an richness many line better and our So kind benefit our in think when look them, of still to I sort of does you competitors. of a way to kind to kind overall we're local look outlier the of probably the think competitors, would don't relative it many it like But it I at which

Operator

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

Jessica Tassan

flat, I wondering Congrats for of or contracts. on where just the any the enrollment. kind MLR expectation there capitated on in was or the D nature of contracts excluding not the the previously? in they or follow up Is benefits the year-over-year had just book up Part that structure including is capitated then I And XXXX, if XXXX? change could capitated or the down supplemental either is in

Robert Freeman

agreements change they global say largely that the cap different year-over-year IPAs all California. no expect relative kind MBR to I Part on any of supplement changes risk would benefits. MBR. do not our of Jess, cap terms in change capitated group, of global here. We on really either. take specific take would Thomas for But the construct typically The And do nor wouldn't risk the I that XXXX. our speaking, to on not expect take D XXXX of in on nature of typically comment an don't components of

Jessica Tassan

D the up on to And helpful. really I then That's just question. Part Awesome. wanted follow

with in the or to has you that be actions just year-over-year, catastrophic those shift offset alignment understand or bid-related or again, taken MLR Part unfavorable liability take is 'XX impending, can any to So And to in redesign spend? D then going favorable, the the in kind neutral of will help just UM us of of phase maybe actions? consideration

Robert Freeman

to those some cover of points. Yes. happy Yes,

to in to overall think important So part your that Part for margin And of plans I MA couple things is think more our a all and going a about are that, XXXX. noting. become MLR to of gross I D when worth think definitely question, approach I there's

we anticipate The think it C first about be I and bids, than in think next tailwind would MLR slightly would of financial we Part overall to standpoint, to continue an our historically overall be that actual D MLR. year, a from how Part lower be terms given our will XXXX

into tailwind us year. I be it heading next a will for So think

that is population high then both drugs, of operational But right we kind our ones I situations, clinical more, with in Care who members have in care that really variety we're from PDM they're And XX members the many on-the-ground ensure our and engaging of on comorbidities we more program, drugs of the Anywhere Anywhere that cases. getting clinical to not one and of beyond are if of certain multiple that approaches in of with the Care intensive or standpoint, drugs. program for from a a standpoint, benefits are that, the think many at need time. are the many I XX typically, an think acuity, on also right the is complex, kind are actual more right conditions

us think and overall the a are part who clinicians more to the continue Care year. some medication play advantage will into for frontline pharmaceutical continue our I program sure and be to ability leverage so populations management adherence complex Anywhere working is of with our make of as a that next to competitive these already comes And to IRA

Operator

line Mok One Andrew moment for please. last of it the Barclays. our And with comes question, from

Unknown Analyst

on for [ Andrew. is ] This Tiffany

uptick meaningful XH on an some looks again You've costs. normal to progression XH the made G&A like color some AEP this driving G&A where on due seasonality somewhat is shift? give in like be there's from implied Can might It quarter. you what progress that different

Robert Freeman

Yes, happy one. that cover to

of marketing as timing terms expenses, driver seasonality, of the is SG&A normal of So the and the for in the back along year, of the the spend to X the new following the concentrated half primary in our more are a throughout sales compared year with year the half increasing market of first as percentage year obviously revenue ramping which much or of up year. any

benefits so any we're benefits of And states for getting percentage launching not seasonality revenue, when you expansions major XXXX. new I a any of of X about the are as guess, XXXX or, new market SG&A we're one the of or think

other SG&A the onetime back of gotten an of we on of of that experience quarter a the had half expenses. the relative more number and to thing in in in out also our last And able economies half more has sales the are that have I'd XXXX. back half overall XXXX is XXXX lapsed member we of back into So the result, year of related marketing saving spend on in-sourcing is of say to X half onetime we back as year. since the of XXXX. third to And half back began scale nature in the functions our we're we've beginning XXXX, as a increase in

year-over-year the onetime last continue expense compared of not is part XXXX so in year. that having And to this improvement year

Unknown Analyst

Got it.

XXXX similar you've proper like savings the sort And XXXX? of in Okay. as just rate durability about kind then you of run talk the can think a in G&A vein, of to achieved into we

Robert Freeman

absolutely. Yes,

couple far. we a on think things I that thus So of said

a XXXX. we relative anticipate percentage SG&A revenue in to improvement XXXX as So continued do of

XXXX, going in to be that it's think same we'll to As extent year-over-year seen I to of improvement see continue I we've next quite don't improvement said the year. earlier, think do but I

kind we've our including and medium-term get of XX%. is, what I terms revenue think goals, like said And of excluding and to percentage depreciation, as just And as public sure an originally amortization that the going because over to towards first it. we're then. of expense a I some medium the continue from we'd basis, of our we a to to of equity longer-term term, issuances if I'm about to today, of SG&A those then when percentage make atypical said kind SG&A and compensation stock-based think want foremost, year, have we to usually down inflated implications also not adjusted we really and on we'll there nature strides more longer accounting next get but went get the SG&A And in to we're and of due to since talking XX% comp. revenue, stock-based items,

continue well kind all So I XX% then our of in towards years. think towards improvement on in way making to we're progress in, and towards probably that XXXX, see we'll future

Operator

question. for comes the our moment of And it from Craig line next with Stifel. One Jones

Craig Jones

X this is improvement got see shift wondering how to members year typically we to in X you big from shifting large 'XX, that year was X I as MBR cohort X? historically year as year

Robert Freeman

Craig, take that. happy to

not historical said point kind what's to we've of beyond X, historically consistent between cohort our And think good points So XX% basis to year of I name just of about improvement as our but transitions the really not members XXXX in high embedded of future your to the profit feel business. multiyear claims the year our year institutional to I and in think XX% the about is performance the membership terms year those the years. of we important XXXX, that X we very our opportunity kind into And year PMPM, down we're last the opportunity at-risk few bolus X. population performance. over really really large low [ with X in where cohort that as improvement those the ] And XXX try continue looking earlier, keep retention ability this where to the as MBRs range, have next into of years and there about in range, we if seen drive the game John the relative this retention and on is competitors, that's given year managing

Operator

no I may And participating, now see I conference Thank in call. with today's further that, as all queue, the will conclude you disconnect. for questions and you

Alignment Healthcare (ALHC) 29 Oct 242024 Q3 Earnings call transcript