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- **Revenue Growth**: 44% YoY to $994M, with 26% membership expansion to 229,600. Full-year EBITDA raised to $94M.
- **Star Excellence**: 100% of members in 4+ star plans; California HMO at 4 stars for 9th year, North Carolina/Nevada at 5 stars.
- **2026 Outlook**: AEP growth target of 20%+ supported by early strong retention and gross adds. Star rating improvements and CMS Equity Index changes provide margin upside.
- **Operational Strength**: MBR 87.2% (120bps YoY), SG&A 9.6% (120bps YoY decline). Part D stability despite IRA changes.
- **Investment Focus**: AI/automation, Stars durability, and direct provider engagement driving replicable success in new markets.
- **Risk Management**: RADV compliance strong; no material risk from CMS reviews. Part D margin assumptions cautious but stable.


**【CEO Summary Section】**
- Health plan membership reached 229,600, up 26% year-over-year, driving total revenue of $994 million (44% YoY growth). Adjusted EBITDA of $32 million exceeded high-end guidance, with full-year outlook raised to $94 million.
- Star ratings improved, with 100% of members in 4+ star plans for 2027. California HMO earned 4 stars for the 9th consecutive year, while North Carolina and Nevada contracts achieved 5 stars.
- 2026 AEP growth target of at least 20% is supported by disciplined member acquisition and high-touch care delivery. Early AEP results show strong retention and gross adds.
- Investments in AI (AVA clinical stratification), back-office automation, and Stars durability are key to replicating success in new markets.

**【CFO Financial Commentary】**
- Q3 2025: Adjusted gross profit $127 million (58% YoY), MBR 87.2% (120bps YoY improvement). Adjusted SG&A ratio 9.6% (120bps YoY decline). Full-year 2025 guidance raised to $3.93B-$3.95B revenue, $474M-$483M adjusted gross profit.
- Part D performance stable despite IRA changes; Q3 utilization trends moderate. Q4 2025 guidance: revenue $995M-$1.01B, adjusted EBITDA -$9M to -$1M.
- Cash position $644M, supported by medical expense timing benefits. Full-year 2025 cash flow expected to remain strong despite seasonal Q4 utilization.

**【Q&A Key Highlights】**
- **Growth Strategy**: 80-85% of new members are switches, with no material risk from aggressive growth. 2026 AEP early results show strong retention and gross adds, with 2 weeks of activity already encouraging.
- **Star Ratings**: Raw score improvement in California HMO to 4.05/5.0, driven by AVA's data integration. CMS Health Equity Index changes may provide 0.25-star cushion in 2028.
- **Part D Management**: 2025 execution stable despite IRA changes; 2026 bids prudent but cautious. Part D margin assumptions remain conservative.
- **Market Expansion**: Replicating California model in North Carolina/Nevada with 5-star contracts. New market entries for 2027 will focus on high-provider alignment geographies.
- **Cost Control**: SG&A timing benefits in Q3 ($3M) expected to reverse in Q4, leaving full-year SG&A unchanged. AI/automation investments to drive long-term efficiency.
- **RADV Preparedness**: Documentation processes robust; no material risk from CMS compliance reviews.
- **MLR Performance**: New market MLRs consistent with California model, supported by shared-risk IPA arrangements.
- **Brand Investment**: Initial marketing efforts (e.g., LinkedIn ads) to enhance member acquisition channels, reducing reliance on broker commissions.


Alignment Healthcare, Inc. (ALHC) Q3 2025 Earnings Call Transcript

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ALHC

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