ALHC - Earnings call transcript Q4 2024 | Alignment Healthcare, Inc.

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Operator

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

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

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

be current that In the a today, relationship GAAP addition, the in the for of reconciliation XX, please discussing Please on company financial ahead. measures note to now that are performance. company's that evaluating the Form John between go measures these non-GAAP is can fiscal like website XXXX. and year found they posted important XX-K press comparable believe your speaker our non-GAAP December certain over most historical to ended would the financial in in non-GAAP Kao. release I on be measures measures call Details will the and to hand

John Kao

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

plan fourth quarter grew XXXX, of For we the a our membership year concluded where health milestone XXX,XXX membership XX%. approximately

relative additional growth the of our end XX% high initial initial is above and Our members result range reflects XX,XXX final an than more expectations. guidance to

adjusted our improved as the growth of margin points $XX excluding fourth beyond quarter delivered gross point As of ACO year-over-year expansion In XX% scale produced approximately of XX each expectations. and total in the membership of XXX REACH. of XX% excluding a revenue $XXX million and result a point of basis positive grew of basis and improvement quarter economies, million our key in ACO year-over-year Combined improvement, we the MBR continued profit EBITDA substantial $X our accelerated outperformance, XX.X%, a ratios with membership basis REACH. consolidated Adjusted even XXX margin year-over-year. quarter, year-over-year million

revenue XX.X%. full excluding For profit of million total an ACO in MBR gross grew resulted year, of XX% the and $X.X $XXX of REACH. XX% year-over-year Adjusted billion

Lastly, we reflects which company. year-over-year margin XXX $X marks adjusted points public year EBITDA EBITDA a of our positive delivered million, profitability expansion basis first of adjusted and as of

win not in our care, to ability results and navigate exceptional environment Our MA differentiated can a XXXX by more less. highlight demonstrate that dynamic providing plans

of execute an employ XXX members. our These XX% medical approaching employees costs. from who virtual-based over AVA Advantage a resources to business. of underwriting medical actionable with control quality To model, starts actuarial at-risk roughly not success Medicare our for more and and expenses as leverage insights we just and greater X% home create represent Our management than approximately care full-time business, staff clinical

As to offer confidently changes and first industry standards, a utilization phase-in result, we and back star took of market-leading VXX rising year step in grow the the benefits others while in a were in able patterns. to XXXX,

ability our to on with environment outcomes. will plans the that capitalize favor of demonstrating high-quality results changing together, are a Taken XXXX MA low-cost,

for X,XXX growth now our Turning ex-California X,XXX for of members, than states plan Nevada year-over-year. a and Much entered our health growth of with This to year AEP more XX% of resulted combination consolidated growth in growth XXXX breakout XXXX our has XXX% California. We while January like between growth, representing XXX,XXX XX% from California results. XXXX was year other have outside seniors. XX,XXX each markets. members, over is in a ex-California a breakout and

product richer our guidance members to provides and our markets. XXX,XXX per afford results, total, enabled drive shortly. EBITDA of members, and health XXXX. XXX,XXX further to strong greater contract admissions improvement increased to improving Carolina which for of X,XXX us medical on North management share reimbursement including XXXX our of to our positions by benefits. industry-leading year successful and more line In lower CMS our was cost Our the allow ex-California including both ex-California performance, X-star and Stars growth XXXX from factors scale full AEP membership in of us and our in of These sight Thomas will us guidance of by AEP margin with XXX economies during Nevada adjusted

final margin advantages multiyear relative expansion. the a of model Looking beyond growth risk and Stars for on XXXX, continued VXX the phase-in we believe create our and pathway adjustment robust

of California for competitors our the higher XX% X for is compared advantage when plans. of than California. XXX% This already to of This members competitors have we plans rated stars plans above. For be our our XX% better than the or XXXX X California members payment will or and X-star above the nearly in XXXX XX% widening competitors, in or year rated and above members are will payment state who declining stars is in just XX% are in year, further to XX%

level. will stars well of in payment above or members rated a are all XXXX, year be of industry just XX%. alignment Approximately better similarly is the in X national are at We than which positioned XX% XX% plans that

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

from XXXX, have score the Raw year during admin XXXX contract, Stars cycle will by approximately to caps further an X HMO reinforcing for to weightings change in payment resulted be reduced our past rating For This X.XX impacting California rating our X. our increase year would position. and

reward index. is equity replacing year health payment year factor rating For impacting the current CMS XXXX a with XXXX,

reward contract currently existing benefit from receive any the California factor. HMO doesn't Our

under while our creates the margin increases HealthEquity Each analysis, score. tailwind we star change in strengthens our additional we above our balancing years greater achieve new growing tailwinds objectives. or least at stars on this or coming X.XX and in index. bonus our maintaining confidence the XX% X these of early expansion conviction membership raw over a Based an Star So to potential believe of could score

Lastly, rapid and XXXX moment I'd expected a a cohort. talk XXXX, embedded Due of be our gross year over to X XX% margin to are in within about the X growth to opportunity spend our to year in members existing membership. like or our

As durable improvement, $XX we growth members at-risk and membership and rate million Stars was creating membership resiliency $XXX that XXXX X have XXXX year we members in environment. senior incremental In beyond. $XXX dynamic a PMPM and with for profit clinical our win closing, at-risk demonstrated gross the This double pathway cost our while to a of the to within and embedded grows By again in prioritizing million at-risk of our our existing X resources, base, profit the us PMPM putting our gross our from any members positions profitability growth. moat year health created gross profit we just engage the irrespective delivered approximately $XXX for results. and of without of we quality to year milestone on policy first, a creates outcomes

our outlook. that, further over For like part discuss in employees I'd of our results their With to and Medicare Thomas? the to to mission done turn our each thank fulfilling right. Thomas call for Advantage for I'll to seniors, dedication our financial playing their

Robert Freeman

Thanks, John.

year XX% This of For growth, XXX,XXX and the XXXX, total of XX% excluding year plan increased ACO revenue December XX% drove year-over-year health membership XXXX, representing year-over-year. ending for REACH. north $X.X just our growth full billion

guidance we the end the over to the $XXX $X million. accelerate of year initial our As high during membership million profit by adjusted million of midpoint continued revenue XXXX represented exceeded MBR year, $XXX of guidance our Full latest and an ultimately of XX.X%. gross exceeded by

our of fourth medical of the demonstrate quarter of We our XX.X%, management year. strength MBR continue quarter marking capabilities our to MBR with the during lowest the

at-risk to XXX our X,XXX in in XXX, showing for full admissions and XXXX. our finish strong XXXX members from continued inpatient Our drove XXX per year improvement

prior gross Our adjusted in from period results benefited the also fourth IBNP quarter the of reserves. profit release

of we Given during onboarded during large third prudent approach quarters. new the XXXX, members took a initial reserves to we first through cohort setting the atypically

upside favorable to runout to out our the allowed year, prior claims closed we our us As expectations. deliver relative

our into Our XXXX visibility outlook. latest combined confidence XXXX in claims our our experience strong performance in give together admission with us XXXX,

Turning to OpEx.

our of Full Our in-sourcing and operating incurred of with functions we half that given associated of year-over-year costs million. SG&A was improvement onetime second year experience showed continued XXXX year. last member the cost the growth elimination our in ratios the $XXX

increase XX.X% approximately representing an XX% relative Our just XX% $XXX year-over-year a an million, as to points. of in XXX REACH of membership growth declined XX.X% of adjusted year-over-year. revenue, excluding of percentage SG&A XXXX, in XXXX improvement was to Adjusted SG&A basis ACO from

of prior to full achieved and more together, net million adjusted X XXXX. breakeven combined. XXXX while places Taken than profitability the adjusted differentiated in demonstrates our did continued on expansion power in EBITDA model members in track new of year scale drive our This goal the us onboarding so $X to we with and years outcomes positive EBITDA margin

$XXX balance year transaction quarter. the notes investments. We The sheet. used from to convertible the $XX our interest loan principal significantly down cash in added pay approximately costs. and moving to million to outstanding This annual and the of million in aggregate senior net This $XXX fourth term net funds transaction expense cost sheet, reduces capital lowers in $XXX sale and from of of proceeds Turning balance million the forward. the includes this million cash million were with ended principal of $XXX by

Moving to our guidance.

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

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

membership are the strong our months January. of sales raising of guidance year, Given our early provided the our commentary year-end the to momentum plan midpoint X,XXX we in guidance first health relative through by X

our markets our Our confidence resonate the and across results products year strength of trajectory. to early us give continue our in full

of The initial growth midpoint revenue guidance range revenue. nearly $X.XX approximately billion to year-over-year. XX% of Turning represents our

by membership to the Inflation outlook model risk strong cohort, the changes. revenue phase and partially Reduction new revenue is the PMPM member changes to our our increases offset second growth, Part related Act retention VXX our in the of of due impact XXXX by our Beyond supported D of to

adjusted Moving to guidance. gross profit our

$XXX XX.X% growth we and our compounds of implies of This Our an profit year-over-year. million where adjusted XX%. result off gross strong XXXX midpoint by MBR XX% of represents grew

to Reduction Inflation MBR second model, by the of the in the risk with D the Part driving P&L, higher due modestly retention impact design. Act membership. ex-California we Progressing product scale assumptions phase VXX to and from new are see the our outlook services. factors Our our ratio changes SG&A expect we These to on utilization associated functions of to the improvement shared further and automation members down and embeds modifications balanced volume XXXX markets, our expectations of initial while the mix our back-office continue across as improvements our in productivity and of improvement

adjusted underlying leverage cost trends million Taken midpoint the of year-over-year together, margin of XXX our XXXX. points expansion our and EBITDA implies operating $XX.X in guidance in and basis opportunities reflects range of confidence

all to the than slope Act. terms quarter seasonality equal. the our throughout we relative Inflation year years, noting however, conversely XXXX half it's in to Reduction MBR modestly years in will the prior due year, is related and a that half that seasonality Part our the of to of at first increase improve the to changes shift In the less MBR D worth MBR past. else first our in prior second sequentially will year anticipate the to guidance, in Similar of of in lower change experience, being Accordingly, year's MBR anticipated

reflects to Medicare to Beyond of in consistent us breakout in incorporates with growth year. Advantage our quarter seasonality, first strategy Part performance which enabled our seasonality, In D higher of first the our conclusion, and differentiated platform our balancing quarter XXXX. utilization broadly the guidance changes deliver combined regular profitability,

we let's continue confidence from and that, in to call looking distancing into positioned believe we XXXX questions. ahead XXXX momentum to as well well as Operator? ourselves outlook, With this XXXX step to our year with growth we the open As competitors and are on beyond.

Operator

[Operator Instructions].

with Our is the line to Scott from of first Fidel Stephens. going question come

Scott Fidel

end unpack maybe to for solid EBITDA, top for both range. profitability, wanted There's the adjusted of the and embedded top of which shows sort reasonable just guidance end in question, range on bottom improvement the the the bottom First there the end. between the XXXX and a

midpoint you around thinking of end you the the could possibly high of end assumptions your So have the just may the low range. give that was key reach allow hoping us maybe versus could ultimately some between some of and that you the to --

Robert Freeman

Thomas question. here. Happy to take the

guess, the great worth XXXX. what year as I probably into the and we actual which just first where it's fourth looking looking for of feel march think So about outcome really important quarter full only that is off, not noting we I we means XXXX, us in it landed for forward backwards, but terms

And of of towards a are key to the year. so sort think send this what would the of low of end us us to your question I end kind the of on range the that there's versus high range, few variables sort

about, the of So the new the others many first we the D Reduction stepping under Act. is, aspects space Part in program talk are some as into you've heard Inflation

MLR look terms thinking approach I our prior say would range, on to prudent a a the like through bit low And the should in has XXXX. conservatism that in what taken more on we've end would how think years. in particular, relative of look I program that of

our D think XXXX I about $X within what experience we PMPM expected. on ultimately landed of Part

So little looks that on conservative being given the But what the like. good are way. end we our more of a ability just feel there low think about some I coming to changes forecast our really we

our the cohorts and or to of I of year X,XXX overall year think very we to run progresses range X admissions overall year for utilization forth. in feel the our the it's X usual year, think from how year in that per where for have But members given sort XX% the terms intra-quarter of X I year, of X and throughout how so in sort beyond that, just our year particularly suspects our cohort. mature growth year picture, still X, big year the do confident X and we our

place ahead great to I think a XXXX. we're looking in

Scott Fidel

have just playing breakdown year have would could new the split for at given and you the do this, Okay. follow-up you if what be you've Great. And sort nice then full for as question, the non-California. I looking of that growth then between when interested expect XXXX, guidance just engaging you my have Certainly around if markets in would of be of membership California the growth out any those see then in in with of of versus California that, us the that you to or Aeva to both home terms that non-California indicators And related are engagement, there just with you share sort are areas. the how initial members market? of

Robert Freeman

Yes.

would AEP the occur So what expect to just our results point, over X/X the indicator as XXXX. good I kind duration we for of on be membership would a expect through to of

of ex-California, we're of replicability think total the say think one question how really focused the of remains percentage markets. net the points So would think XX% to sort grow year. I of from and example, hyper growth, during growth of a our California, AEP to I to That saw California on would continuing overall growth, for be that than I'd membership to proof member say from speaking, around. in And we ex-California from other we expect would continue to the net where on standpoint, area think Nevada, would Aeva anticipate success ex-California demonstrate generally our more still [indiscernible] things growth said, over your expect we and I similar engagement, continue drive we a expect to an just and -- faster just sort materially comments maybe being during one of be year through given to to would the obviously, the and we care to on continued addition rest I I model that the

remarks inpatient that And mentioned XXX enterprise so than consolidated X,XXX, admissions that and in the we per which California. actually therefore, our prepared ex-California ran better about of is

consumer's in market sure standpoint, or convenient care being around of the and So a the delivery. teams the hiring, our of care better an I at acting tools extension upon I of we from we're consistent kind market depending it market think virtually training, prefer, really relationship. what how matter doing job engagement of perspective, think making adoption approach From by for nice they're and care driving sort And is. ultimately or in as really really their they home free what the from doesn't care a getting the i.e., perspective seniors' an primary manner, we're

the ability And to engage state. or think so don't I our the of of in county differences see terms irrespective we

Operator

question And with going the America. from of Adam is Bank to the come next of line Ron

Adam Ron

X got I questions.

like it, being into the XXX I about they're very was for about then presume and which points release, cutting that Meanwhile, was same MLR in MLR first, talking United XXXX, XXXX are seems I the both markets XXXX XX you're them how is on decrease up growth in saying that and it but includes big based talking XXXX, just press is at Humana quick XX in are. MLR you're flat, guidance talking saying the was United year. At mostly if So look a while more exiting basis basis benefits it you simplistically being Medicare point than basis unprofitable. time, where on increase after about down points another math Humana

coming bridge have And and they you a lot new more -- than if could that MLR just dilutive members so you are of do.

to just I would could are, you how more be they about follow-up. if a be talking you have MLR than helpful. severe so that And seem a bridge And increase

Robert Freeman

cover to that. happy Yes,

the but se, model Stars XXXX, the are universe changes including the utilization the lot course, the VXX seeing. of organizations, last factors, back terms broad organizations challenges really these to risk I they're mentioned X think of necessarily over struggling of per payment a XX that those of and, think of across second I for can't the comment many just changes what not of impacting in on general, But in myriad you've I sort seen you peer of a year industry going year with months. XX the

really to versus differentiated results question our me, January that year-to-date yes, a growth in quarter XXXX in our excuse third when starting basis REACH -- others. ACO or in point at the about, I back to to showing up through that answer as membership say, XX think is want point MBR shared high your points year-to-date XXX I was you we're for percentage why the at normalize We about relative to conference XXXX time. year-over-year

today, to our for full membership you were If points to relative about year XX%. refresh that analysis basis XXX had actually and we while only MBR growing XXXX again, year-over-year up XXXX,

increasing with alone you industry, If growing of to while that basis those XXXX in contrast see more the shrinking you points membership. the cases, or up many And peers XXX% that saw tune to were some MBR were in XXX XXX to that year-over-year. would to than did to XXX% of the XX% XX% grow barely

So demonstrates kind I XXXX control to while continuing MBR and think grow to manage our membership. really own of our destiny ability

as mentioned the pluses like rate a we benefits of some I Inflation between And of think XXXX, Part update I members in number our industry. We and We do in X and headwinds and trim some the of help previously. for around year us. course, forward, X year the But to modestly XXXX cohort, which changes minuses similar does certain conversely, Act is a areas which maturing we we move did have have benchmark a from have XXXX. tailwind significant VXX XXXX a year-over-year. Reduction D of is we where the do couple have

out feel minuses, achieve So I good to we today. ability pluses guidance of about some the those XXXX That's helpful. and our think given we laid very

Adam Ron

you following and squeeze just one. on up could what questions. very I If then One, second the X said quickly

is if in actual guys else? from the you have the risk you think the one notice? XXXX So first on it the one, if CMS is is question thoughts And something bonus had your to the the -- biggest on is you like thoughts mentioned give delta any answer Or give about it it? and but versus Is could adjustment? could then just as it if what your you Or peers? rate release, you rate

Robert Freeman

interrelated. members that our sure can high-risk these I by variables fundamentally, and mean i.e., you think are engaging population. engage quality, ability starts care to control with with one managing and acute drive not I'm because say our differentiated costs all stars so up chronic I it's model and thing

impacts we to but Inflation I changes benefits stars think Reduction manage about changes D the through think, offer how utilization to think such our It Act. we how then, in navigate foundation, it think that's I perform the ability and about flows impacts around on It market. and can Part we VXX. as the

financial can you sure our variable across say one variables. different pinpoint why not specific different and than are I'm So others trends those more

really with our starts the from fundamental the think the And than it just other not delivery, being model actuarial us. care perspective business down things think from this there. care flow others. underwriting an for management. approach It's starts I I then just different kind of It to of

Operator

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

Michael Ha

rare Congrats out still here I there's so visibility the earnings. XXXX, sitting way It's really in into think on much the February all 'XX. to tailwinds that

rates 'XX 'XX, weightings to tailwind. driving, start star rough rating mentioned for another and think, X.XX your then I benefit You

your for you think change. factor reward said X.XX I

factor, just is raw be my then even moving about of thinking X.X or further. even rating I'm X. current you up that widen would line HMO California your the star if be means the contract rating And alone, which to also competitive is, to X program likely from it assume have advantage fair right, your contract? from might changes magnitude your even sight to competitors Some what getting star benefit? So And a it same won't for reward might see question score already that plans

So thesis the magnitude. to just understand wanted confirm I this massive better tailwind. and

Robert Freeman

Yes, absolutely.

hit of there. nail head the on sort you think the I So

HMO terms a I of think that California us buffer lot for for provides minimum, in contract. it maintaining the of rating at X-star

X strive remains our tailwind it towards stars, Beyond a X.X which or objective. that, we as certainly continue to is

our were membership or XXXX, X standpoint, grew we I competitors still think of for X.X and competitive XX%. stars, X a toughest from

For to XXXX, XXXX, really stars of those a ours is above stars. couple looking below that stars. And above there's continue to ahead X competitor one of or fall X at or only X

to And a is to alone. But grow see from while do through based these visibility, to our describing I variables just these any continue the industry I to certainly grow significant others it's previously what benefit that think continue in relative help I perspective, I the the the emphasize not that just with some to Stars and future, would to extent in that Stars. terms of so changes from opportunity our XXXX our us we was in back tailwinds on ability And to own think markets. think it all differentiate of disproportionately goes our I

that at be are day, our low high ourselves like directly the and the so not than think is risk secret to the relying to to wanting model the ability key and seniors sauces end to the in, I faster And our to success. us with the year of manage out. really Things and quality really global allow cost grow market the year engage capitation on continue

other for into I results think to positive we variables those certainly still to above as a Stars well. XXXX, to XXXX I based the as on us you grow very think and and XX% or see get continue continue out opportunity

Michael Ha

bps. see largest cohort function MLR the one how typically, think, know step question. And XXX I X, maybe improvement, maturation, On X powerful I to you more your year year

risk itself, of I this the like XX% estimate also driven improvement. magnitude from it almost of 'XX bridge the And quite adjustment by 'XX. lot is entire to power think be significant. We could the it a

adjustment that in sort -- this I said, in dynamic? of far on and with everything story, really tracking Care 'XX cohort, expected that impeding nothing line this moving maturation expectations, guess, Anywhere as along risk so terms of maturation fueling maturation, engagement, So cohort but capture that everything

Robert Freeman

Yes.

I remain drive ability those think results continue confident to cohort we to our over time. in

that's good to say, in think last year in mind, feel and in by of we between of cohort we how of about year maturing of XXXX, the XX,XXX end evolve. very continuing alone that I and would grew X December. the end XXXX I half second June similarly, about into membership year, keep terms

I had with a what we're of only that so is for couple continuing board of some those. And months, on those would we've still to for members say engage

our XXXX, did described, had admissions XX% that at driver close our for of to X,XXX year year year. exceptionally got engagement but XXXX, And well. still an that ability We we us to to for think say engage for towards think last that just previously continuing full a board inpatient those goal the where we land the on really including I for margin of XXXX, big not as opportunity have MBR and that also QX our some was months. we per moving are a so just I major would been about But being XXX best quarter picture, of just provides tailwind incremental members few

Operator

going line Our with the next come Gilmore of to from Matthew question is KeyBanc.

Matthew Gillmor

reflection underlying hoping to I of one utilization or had mix assumption the you of that favorable a guidance. a on was membership. bit. that had first something that? else mentioned Thomas duals mix higher a due little the just modestly unpack could Is I

Robert Freeman

correct. exactly that's Yes,

So both to during continued growth XXXX see solid we duals come with AEP have higher and then XXXX, membership, utilization. in through slightly which to our tends

are in the in we It and full up of wouldn't percent we just for a given expect of change But be a of mindful too terms then mix in much PDP it year total 'XX is So 'XX think something year-over-year. changes per couple to admissions that from I of might to XXXX, 'XX. total X,XXX. 'XX

Matthew Gillmor

commentary of of going? flow about where cash and CapEx you do And of for then, sort great. is terms sort for us that have That's money it. you're Got any in expectations thinking Thomas, how and

Robert Freeman

Yes.

guidance worth So cash points for without of on XXXX, guess, noting. getting data into a kind couple flow of full I

share So obviously, guidance from an million. our we EBITDA today of midpoint did $XX.X with the standpoint,

Beyond that, to $XX $XX and million of we million tune to XXXX million. expense would expect probably CapEx in probably the $XX about of interest

capital Working on evolve kind to medical sort the to I to a year some tends think of year kind kind be of It the receivables. of payables just overall are of in, expense major depends relative So some of of of out. driver the those consider. major variables cash not how

over And without to we're we're achieve with overall of so next ended spot I think financing. about cash we growth organic standpoint. feel at an over XXXX to need our think hand. We external great I cash continue targets in think several spot those great like million from years, And pathway as $XXX a in we for a the the

Operator

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

Jessica Tassan

Congrats and the guidance on strong raise the results.

I just the lower members in than obviously, new of even at new are outside X kind of California of does MBR than first to members? or -- California And -- would are that years, on starting MBRs sorry, the eventually at what the MBR point that And markets year So your members that if X, wanted understanding in ask, at converge? California drag, kind trajectory MBRs higher happen? so, what

Robert Freeman

one. take can I that

So It the the product It It the depends type. I'd on it provider depends group. on depends. depends on say market.

a drive year cetera. we is typically combinations X, the simple MBR certain So what to et that from year answer. higher do through are those with markets, start year there's it's just see variable, through year X I There think, MBR, improvement greater is opportunity but X, products, X provider

those So earlier. sort some But opportunity. curve of does just depend on mentioned improvement slope I of it a variables of steeper

Jessica Tassan

Got it.

same of level do profitability? converge roughly So at they the eventually

Robert Freeman

Yes.

actually actually than drive greater would to fact, even In performance inside ex-California California. instances there's MBR I opportunity of a in where see say we

Jessica Tassan

guys said cohorts, given in churn in And helpful. give That's maybe during it is on any just can had commentary some about know retention just year-over-year AEP? emphasized then Okay. you year XXXX XX% more in I X comments AEP some just than but play -- X, out? during benefit? you Or So that retention reality 'XX? is alternate higher the did AEP margin you

Robert Freeman

X, so a the I to was X/X/XX in X/X/XX of company, going to AEP similar years back that. retention before the the history best was Actually, retention think, the X/X/XX, or very No. last rate. in, percentage certainly X/X/XX X year our X

overall decisions of the a and contracts those well. make very and to contracts So that did have durability or trajectory have certain that really to we year. -- how make certain on designed markets We products contracts them sure or our during multiyear had provider feel about couple period that MBR good as over longevity that were a evolved

we lives those couple some of how decisions. So of about out picture, associated feel lose But thousand good AEP. think with during I we a big few retention played did the very

Jessica Tassan

share then to based want sneak I or notice one any ask have you like to with expectations guys and for you us. rate thoughts that if just And final quick the helpful. one on in just would That's

John Kao

John. it's Jess,

think with couple we're basis, they have not last whether irrespective only but on about go the the that really the be that really taught around of years from I of of us been up risk positioned talked aggressive a stars, relative the of reimbursement, well too just beginning or what in Thomas adjustment company has terms approached the it. way we've to down, not

And so relative I to a second think advantage us. like that's

what is a more be to my little just my -- than it expect would higher gut would suggest. bit I Now nothing

think increases increase if that, bit. benchmark I on that rate on XXXX we feel as X.XX%. runout fee-for-service I of go sure part remember, first of only predicated there's And really inclusion basis, of just first of increase you But potential we'll lot kind some think the of would But have is half in the to think reason utilization either a way. just I'm up into it well X.XX% the the see. in little wait the XXXX. increase could made not the other ACO a And than I and as and actual good the a say the I that national

Operator

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

Unknown Analyst

for on Andrew. Tiffany is This

whether slope some improvement that you But your a to to anything like benefit be peers some think it dramatic do us throughout peers? the pointing significantly like might has versus are still D more like you year at MLR slope. D upward a with to MLR differences Part of due are experience and guys XQ just to IRA assuming why Can there your changes. help Part flatter on the Part D I from seems in structure understand XQ

Robert Freeman

Part I want the part happy on stand-alone of I'm don't that. offerings, overly but or has broader do D also which fact to to address others, have have. I they suspect speculate don't it that with to Yes, PDP we

to sequentially shared terms quarter QX earlier, that visibility I for the ultimately, then Part going of land it and we of the expected MBR mentioned $X PMPM. D earlier, that our forecast fact our to ability kind about we And as I back XXXX, improves D. real-time and is previously of think tends track claims where higher experience, of be have in I for Part course the over mentioned we year. our sort we on that XXXX, as strong, that quite within including And to

I think a XXXX, just will of past, slope. moving less so to be And similar into it years do

so than said be else conversely half it expect equal in of as headwind the slight prior our cause remarks, years, prepared second and would all to slightly the being And that half lower I we a first would to would the year-over-year. be year

Unknown Analyst

follow-up helpful. a Okay. just That's G&A. quick And on

XQ higher came G&A XXXX? your slightly we of guide little what point step higher little about bit basis result a progression in give should and the a XQ quarterly was and XQ in down. think bit implies XXX you than drove I what guide on Like think how in color can the G&A about a Q-over-Q implied

Robert Freeman

back you the in and of a Ma'am, kind Yes. the you the in obviously in sales typically particular, of quarters year, the sort revenue have where would as I a a have progress, spend. say, of percentage step-up general, of of marketing as concentration half

meaningfully dollars to the that ultimately that some and timing marketing I of us including think normal well fact a the of as dynamic, we the combination fourth relative sales expectations. membership the outperform our did was as of quarter for

landed improvement year variable to leverage worth comes full I costs continue points we've in membership that I operating have year, prepared where think commission that our think our with basis membership year-over-year, certain we noting So of growth. XXX XX% and was incremental I to significant in said we remarks, that guess, higher given the about expenses of full for I again, terms other sort from the 'XX support but 'XX to know growth. And incur to

kind So high SG&A it confidence control to 'XX relative and in our the given of forward think XXXX. quite of manage growth continue to our in ability our I is success membership to moving

Operator

this disconnect. participating, to you This our now Ladies is going gentlemen, going have session. also is conclude great for Everyone, conference you call. a day. and question-and-answer and to Thank conclude today's may

Alignment Healthcare (ALHC) 27 Feb 252024 Q4 Earnings call transcript