Alignment Healthcare's Q4 2024: Unraveling the Contradictions in Stars Ratings, MLR Assumptions, and Membership Growth

These are the key contradictions discussed in Alignment Healthcare's latest 2024Q4 earnings call, specifically including: Stars Ratings expectations and member engagement trajectory, Part D MLR improvement assumptions, Stars Ratings expectations and SBT, MLR assumptions, and membership growth trajectory:



Revenue and Membership Growth:
- Alignment Healthcare reported revenue of $701 million for Q4 2024, up 51% year-over-year, with a total membership of 189,100, surpassing the high end of their initial guidance by 25,000 members.
- This growth was driven by a 59% increase in health plan membership and strong execution of their Medicare Advantage model.

Financial Performance and Margins:
- Adjusted gross profit was $88 million, with a year-over-year improvement in the consolidated medical loss ratio (MBR) to 87.5%.
- The improvement in margins was attributed to scale economies and effective medical management strategies.

AEP Success and geographical expansion:
- For AEP 2025, Alignment Healthcare saw a 35% membership growth, with more than 100% growth in non-California markets.
- This success was driven by strong Stars performance, improved medical management, and increased benefits affordability due to higher reimbursement from CMS.

Outlook and Stars Advantage:
- The company expects membership to reach 227,000 to 233,000 by the end of 2025, with MBR improvement driven by the retention of 2024 new members and product design adjustments.
- They anticipate continued Stars advantages and margin expansion, supported by positive changes in Stars ratings and risk adjustment models.