Alignment Healthcare raises membership guidance but posts $47M net loss

Alignment Healthcare boosted its health plan membership and is now projecting a higher full-year growth range, the insurtech announced ahead of its first-quarter earnings call.

The company said it's grown its membership to 165,100, already outpacing the membership goal range of 162,000 to 164,000 it shared previously. Its full-year membership range now sits at 170,000 to 172,000.

Alignment reported total quarterly revenue of $628.6 million, a 43.1% year-over-year improvement. Adjusted gross profit came in at $57.3 million and a loss from operations was $41.1 million.

“Through the integration of our advanced technology with effective clinical oversight, we've met or exceeded expectations across membership, revenue, adjusted gross profit and adjusted EBITDA, setting a solid foundation for achieving our full-year outlook,” said CEO John Kao in a statement.

While Alignment intended on posting an adjusted EBITDA between -$15 million and $15 million for fiscal year 2024, the company is restricting that range by $3 million on both ends.

In the first quarter, its adjusted EBITDA was a loss of $12 million, more than doubling its adjusted EBITDA loss from first quarter 2023. The company recorded a net loss of $46.6 million this quarter.

The insurtech also reported a net loss per share of $0.25, slightly worse than analysts’ predictions at Zacks Investment Research, who said it would post a loss of $0.24. Its medical benefits ratio increased from the last quarter's 89.4% to 90.9%.

Kao said on the earnings call the medical benefits ratio gain is just a modest increase despite growing membership by 50%, compared to a 17% membership increase from last year.

Analysts at William Blair said Alignment's first quarter earnings were strong and stand out in a difficult Medicare Advantage landscape. They noted that the company is achieving results toward the higher end of its guidance for all key financial indicators, though Alignment opting against changing its profitability outlook signals "some conservatism."

"Based on recent reporting from large managed care peers, the MA utilization environment remains mixed, in our view, but we believe Alignment’s robust clinical programs; focus on HMO lives ... and proprietary technology stack are helping the organization execute against its outlook," the analysts said.

Kao noted the company has several tailwinds working its its favor.

First, 95% of its California members are in plans with four or more stars, but there are 1.2 million HMO members in California markets that are in a plan rated lower than that. Over time, Alignment will receive more revenue per member that can be used to offer more comprehensive benefits than its competitors.

Additionally, he views Alignment as having an advantage in risk adjustment, a disparity that will grow greater because of the V28 phase-in. He also expects a weighted average change in its growth rate of 5%, compared to the national average of 2.4%, after the MA rate notice was finalized earlier this year.

CFO Thomas Freeman said the company was not materially impacted by the Change Healthcare cyberattack. Alignment did experience a temporary dip in claims receipt in February because some providers used the clearinghouse, that effect has stabilized. The company does not use the affected clearinghouse for pharmacy claims or prior authorization.

Editor's note: This story has been updated with earnings call commentary from executives and analysts.