Alignment Healthcare, Inc. (NASDAQ:ALHC) Q4 2022 Earnings Call Transcript

And so then even with that, you got to have good products, and we had pretty good products in all of these new markets. But really, the key thing that we learned was the distribution strategy has to be more reliable, more controllable, and we’re making adjustments to the distribution. You need all 4 of these components to — not just enter a market or grow a market, but really win in a market. And I think that’s kind of the standard that we’re holding ourselves to is if we get into a market and we’re going to make investments, we can’t just enter, we need to win, which is pretty consistent with pretty much every market that we’ve entered in California. And so we need to do the same outside of California. But those are some lessons that we’re operationalizing right now as we speak.

Operator: One moment for our next question, which comes from the line of Ryan Daniels.

Ryan Daniels: First one on ACO reach. I appreciate all the color there. Nice to see you’re going to push more into it given your experience there. But I want to try to pair the commentary of the positive experience with experiencing 100% MBR. Is that mostly due to just the rapid growth in kind of newer patients coming in with a much higher MBR contrasted to existing patients that are lower? And if so, can you give us any color on the delta between those 2 groups?

Thomas Freeman: Ryan, this is Thomas here. Happy to take that question. So in terms of the overall outlook for ’23, I think what you’re seeing from us is just maybe a prudent sort of expectation setting exercise as we think about the considerable growth we’re seeing, where you’re right, we’re kind of going from 5,000 to 7,900 to start the year. But that also includes a pretty significant mix shift just kind of by participating provider by region, et cetera. So it’s pretty much a new population for us in many respects. And so I think — you know us, we tend to be cautious with respect to our comments on our outlook until we get our arms around new members and new groups. That being said, I think we’re really very proud of our results in the 2021 outcomes that are released by CMS recently, as John mentioned, we were the second lowest benchmark in the country, which obviously means there’s not as much opportunity to really bend the cost curve, yet we were still able to produce top quartile results.

And I think our savings rate for 2021 calendar year was right around something like 6% in terms of how CMS measures that program. And I think we feel good about our 2022 results also. So I think we have a lot of confidence that this can be an accretive line of business for us and something that we can continue to grow in combination with our MA relationships. I don’t think this is something where you’re going to see us grow it in a really significant or material way in lieu of MA. In other words, I think our 20% revenue goal for MA kind of stands in the future. And this is really, I think, something that could be an incremental and again, accretive opportunity for us as we continue to work with these providers across a broader portion of their senior panel.