Plan membership at Alignment Healthcare is again higher than previously expected, the company announced ahead of its second-quarter earnings call.
It’s the second consecutive quarter the insurtech has outpaced its projected full-year membership. Alignment now has 175,100 members, up 56.1% year over year, with the company anticipating up to 180,000 members by the end of the year.
Alignment recorded $681.3 million in total revenue, a 47.3% increase year over year, but the company posted a net loss of $24 million. Full-year revenue guidance is now projected to increase by at least $85 million.
“Our exceptional health plan membership growth and strong margin results in the second quarter show we’re doing Medicare Advantage right,” said John Kao, founder and CEO, in a statement. “With the scale we have added year-to-date and strong execution on our margin objectives, we're now at an inflection point on both growth and profitability. I’m confident that the progress we’re making in 2024 is firmly positioning us for another robust year in 2025.”
"The thing that should also be noted is onboarding 63,000 new members was seamless," he added during the earnings call. "That's a big deal. It's really quite a statement to be able to onboard all these folks and have no complaints [from brokers]."
Adjusted gross profit came in at $76.8 million with an adjusted EBITDA of $6 million. Alignment maintains it is on pace to meet full-year adjusted EBITDA guidance.
In North Carolina and Nevada, the health plan received a five star rating for its HMO contracts after the Centers for Medicare & Medicaid Services reworked star ratings.
Kao said the company is still aiming for 20% growth next year, but it doesn't anticipate entering new markets. Instead, Alignment will focus on increasing market share. In California, no other health plan has added more members in 2024, yet market share in the state sits at just 4.5%.
"Over the long-term, we believe we can capture at least 20% share across California markets, similar to what we've achieved in some of our most mature counties," he said. Kato told Fierce Healthcare in an interview Friday that 20% growth would see the company hit $3 billion in revenue.
One analyst noted Alignment's selling, general & administrative expenses is similar to Humana, despite Humana generating approximately 50 times more revenue. He asked if the membership growth is sustainable.
"I'd say we've kind of passed a scale threshold that we needed to really benefit from some of the investments we've made over the past couple of years," said Kao. "If you recall, we've spent a lot of effort on our consumer engagement." He also credits Alignment's unified data architecture for providing real-time, actionable data on the backend, as well as other automation improvement, that will allow the company to grow further.
The company’s net loss per share was announced at $0.13, just one cent better than analysts predicted. Its medical benefits ratio decreased from 90.9% last quarter to 88.7%.
"With another strong quarter, one that was highlighted by both strong membership growth and operating leverage, we believe Alignment has found its stride with the right mix of growth and profitability," analysts at William Blair wrote following the call.
CFO Thomas Freeman did not give indicate whether the company would join the CMS premium stabilization program unveiled earlier this week.
Editor's Note: This story has been updated following the company's second quarter earnings call. More updates to come.