Alignment Healthcare (ALHC) Q3 2024 earnings summary

Executive summary

• Health plan membership reached 182,300 as of September 30, 2024, up 58% year-over-year, surpassing guidance and expectations, driven by expansion across 53 markets in six states.

• Revenues increased 52% year-over-year to $692.4 million for Q3 2024, with revenue excluding ACO REACH up 62.4%.

• Adjusted gross profit was $81 million and adjusted EBITDA was $6 million, both at the high end of guidance, with net loss improving to $26.4 million.

• 98% of members are in plans rated four stars or above for 2025, with one contract earning a 5-star CMS rating.

• The company is positioned to benefit from CMS policy changes and expects continued Stars tailwinds through 2028.

Financial highlights

• Q3 2024 revenue was $692.4 million, up 52% year-over-year, marking the highest growth quarter as a public company.

• Adjusted gross profit was $80.5 million and adjusted EBITDA was $5.9 million, both improved from prior year.

• Adjusted SG&A as a percentage of revenue (excluding ACO REACH) improved by 540 basis points year-over-year to 10.8%.

• Ended the quarter with $381 million in cash and investments, including $105 million at the parent company.

• Medical expenses increased 54.2% to $613.4 million in Q3 2024, primarily due to membership growth.

Outlook and guidance

• Q4 2024 guidance: Health plan membership of 184,000–186,000, revenue of $663–$678 million, adjusted gross profit of $67–$82 million, and adjusted EBITDA between a loss of $10 million and a gain of $5 million.

• Full-year 2024 guidance: Revenue of $2.67–$2.68 billion, adjusted gross profit of $282–$297 million, and adjusted EBITDA between a loss of $10 million and a gain of $5 million.

• Year-end membership guidance raised by 6,000 at midpoint, now expecting 55% year-over-year growth.

• 2025 outlook includes at least 20% membership growth and consensus adjusted EBITDA of $40 million, with margin expansion prioritized.

• Management expects continued investment in technology, market expansion, and product innovation to drive long-term growth.