Analyst Cautiously Optimistic On Alignment Healthcare, Assesses Journey to Profitability Of Medicare Advantage Firm

Stephens initiated coverage on Alignment Healthcare Inc ALHC, saying it offers growth-oriented small-cap investors pure-play exposure to Medicare Advantage (MA), a catalyst for sustained growth in Managed Care. 

The analysts Scott Fidel and Raj Kumar have initiated with an Equal Weight rating and a price target of $9.

The analysts aim to identify more concrete signs of Alignment Healthcare's business model's capacity to achieve sustainable Adjusted EBITDA profitability in 2024 and beyond. 

Alignment Healthcare has developed several significant capabilities, showcasing robust MA STARS performance and establishing its AVA technology platform, the analyst writes.

Consequently, Alignment Healthcare is presently achieving a notable enrollment growth rate approximately double that of the overall MA market despite commencing from a relatively modest foundation.

Stephens writes that Alignment Healthcare has not yet attained its goal of achieving adjusted EBITDA profitability, a milestone it aims to reach in 2024. 

Furthermore, the Medicare Advantage market is expected to encounter one of the most challenging reimbursement landscapes in recent memory in 2024. 

What's more, healthcare utilization has been increasing at a swifter rate in the Medicare Advantage space during 2023, introducing heightened Medical Loss Ratio risk.

Price Action: ALHC shares are down 13.9% at $6.36 on the last check Thursday.