Alignment Healthcare Is 'Differentiated With Durable Long-Term Growth Trajectory' In Challenging Medicare Advantage Environment: Analyst Says

On Thursday, Alignment Healthcare Inc ALHC reported a first-quarter EPS loss of $(0.25), up from $(0.20) a year ago, missing the consensus of $(0.22).

The company reported sales of $628.6 million, up 43.1% Y/Y, beating the consensus of $595.13 million and the management guidance of $590 million-$600 million.

The medical benefits ratio based on adjusted gross profit was 90.9%.

Health plan membership at the end of the quarter was approximately 165,100, up 50.5% Y/Y.

Guidance: Alignment Healthcare expects Q2 revenues of $625 million—$635 million versus the consensus of $608.65 million.

The company raised its fiscal year 2024 sales outlook from $2.38 billion—$2.41 billion to $2.495 billion—$2.525 billion, compared to the consensus of $2.41 billion.

Health Plan Membership is expected to be 167,000- 169,000 at the end of the second quarter and between 170,000-172,000 at the end of the fiscal year 2024 compared to the prior guidance of 162,000-164,000.

William Blair says the first quarter print is favorable, starkly contrasting to what other larger Medicare Advantage (MA) plans are reporting, especially regarding overall medical benefit cost trends versus guidance.

The analyst notes that Alignment reported largely stable cost trends, including inpatient admissions per thousand, tracking slightly below historical performance at 151 versus a historical range of 155 to 165.

Looking forward, William Blair writes that investor sentiment remains challenging for MA-focused operators due to the mixed utilization environment and a disappointing final rate update for calendar 2025. 

“We continue to believe Alignment is differentiated in the market with a durable long-term growth trajectory. Importantly, we also continue to view the management team as highly thoughtful, strategic, and focused on winning in all the company’s key markets,” William Blair writes.

William Blair reiterates the Outperform rating with shares trading near the low end of managed care peers.

Price Action: ALHC shares are up 23.40% at $6.49 at last check Friday.

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