Alignment Healthcare Details Care-Management Growth Plan, Targets 300K Members at JPMorgan Event

Executives from Alignment Healthcare (NASDAQ:ALHC) outlined the company’s strategy for growth and profitability during a JPMorgan healthcare services event, emphasizing a care-management approach to Medicare Advantage that management said is producing differentiated medical cost performance while expanding membership.

“Alignment” thesis: Medicare Advantage as a clinical business

CEO John Kao said the company’s name reflects its goal of aligning health plans, providers, brokers, hospitals, and the Centers for Medicare & Medicaid Services (CMS) around “data fluidity,” aligned incentives, and operational execution, with a focus on improving the experience for seniors.

Kao argued that Medicare Advantage should be treated as a “care management business” rather than primarily an underwriting business. He said the industry has relied on three levers over the past decade that he believes will be less viable going forward: coding arbitrage (which he said is being curtailed by Version 28 risk model changes), shifting risk through global capitation arrangements, and higher denial rates. Kao said Alignment’s denial rate is “less than 2%,” citing 1.9%.

Membership growth and premium scale

Kao said Alignment has grown to more than 275,000 members and has guided to close to 300,000 by year-end, approaching $4 billion in premium revenue. He characterized the company’s growth as roughly 30% per year over the past decade, “effectively doubling every two, two and a half years.”

In discussing recent results, Kao highlighted 58% growth in 2024 and said the company’s medical benefit ratio (MBR) only increased “a little bit,” while 2025 data through the third quarter showed MBR declining despite growth. For the first quarter of 2025, he cited 31% year-over-year membership growth.

Stratifying members and deploying “Care Anywhere” teams

Kao said the company focuses on the notion that a relatively small portion of members drives most medical costs, describing an “80/20” dynamic where 10% to 20% of the population can account for 70% to 80% of the medical loss ratio (MLR). He said Alignment uses data—including lab, pharmacy, encounter, authorization, and hospital admission/discharge/transfer data—along with claims data, to identify members needing higher-touch interventions, and then stratifies members into cohorts.

He described four cohorts and their relative impact on institutional costs:

• Generally healthy members: 74% of membership and 5% of institutional costs (as presented).
• “Healthy utilizers”: 7% and 19% of institutional claims, described as generally healthy but with an acute episode.
• “Pre-chronic”: 7% and 1% of institutional claims, described as members with markers suggesting higher risk but without ED use yet.
• Chronic population: 12% and 74% of institutional spend.

To manage higher-acuity members, Kao said Alignment built an interdisciplinary in-house clinical team called “Care Anywhere,” made up of clinicians and support roles including doctors, nurses, medical assistants, social workers, behavioral health coaches, case managers, and care coordinators. He said the service is provided to seniors at home “for free,” costs about 3% of premium, and employs roughly 450 people. Kao said the company does not outsource the function to maintain quality control.

He said that by bending the cost curve through this model, Alignment can reinvest savings into richer benefits, which he described as supporting growth while preserving margin. Kao also said the company partners with providers rather than “grinding providers down,” and asserted the model is “loved by the providers” because it does not cost them anything and can improve member experience and outcomes.

Star Ratings and systems investments

Kao said Star Ratings are treated as an organization-wide priority rather than a department-level function, and reported that 100% of Alignment members are now in four-star and above plans, including three five-star plans.

He also described ongoing investments in people, process, and technology to scale operations, citing implementations of Athena (EHR upgrade), Workday, and Facets (TriZetto). Kao said the company is documenting and automating workflows to retain “visibility and control” as it scales.

Geographic mix: California versus ex-California

During Q&A, Kao said California growth in the latest annual election period was above the company’s 20% target, but he emphasized that Alignment could have grown faster and chose to be selective in contracting to prioritize “durable growth.” He said the company declined some contracts that competitors accepted, framing the decision as balancing growth and margin expansion.

Kao highlighted faster growth outside California, citing 84% growth ex-California and stating that the company is now “about 20%” outside California, roughly double the level from a couple of years earlier. He also said 80% of the company’s growth comes from “switchers,” and noted improved retention despite broader market churn.

Kao said the company’s gross profit per member per month, Star Ratings, and admissions-per-thousand utilization metrics are better outside California. He attributed part of the difference to California’s higher presence of intermediaries such as IPAs and medical groups that take risk, while ex-California markets more often allow Alignment to work directly with physicians. He added that, where subcontractors are not performing well, Alignment may take back certain administrative functions.

Looking ahead, Kao reiterated an intention to begin investing in new markets in 2027 using cash flow from operations, describing recent performance as a “proof of concept” for portability outside California.

Financial outlook and Version 28 crosscurrents

CFO Jim Head said the company reaffirmed 2025 guidance and described financial performance through what he called three major factors: the phases of Version 28 risk adjustment changes, elevated growth since 2024, and Part D impacts from the Inflation Reduction Act. Head said Alignment was break-even in 2024 and guided to “the mid-to-high 90s” for adjusted EBITDA in 2025, which he said implies a “mid-twos margin.” He characterized trend as stable and said the company felt good about performance through the first three quarters.

For 2026, Head pointed to the third phase of Version 28 and the growth mix of new members as key inputs, while also indicating the company expects additional SG&A opportunity but will continue investing in technology, people, and process rather than directing all efficiencies into near-term margin.

Kao also said he expects benchmark rate increases beginning in 2027 without the “takeaway” from Version 28 phasing, which he believes could provide more “breathing room” for the sector, while adding that future program integrity actions could still occur. He said CMS views Medicare Advantage favorably but wants it “done right,” and he described Alignment as an “insurgent” that can demonstrate a viable model aligned with CMS objectives.

About Alignment Healthcare (NASDAQ:ALHC)

Alignment Healthcare, Inc (NASDAQ: ALHC) is a health care company specializing in value-based care for Medicare Advantage beneficiaries. The company leverages an integrated care model that combines in-home clinical services, telehealth capabilities and digital health tools to manage chronic conditions, improve outcomes and enhance patient experience.

At the core of Alignment Healthcare’s approach is a proprietary technology platform that aggregates real-time clinical and claims data to support preventive care, risk stratification and personalized care plans.