Alignment Healthcare (ALHC) Stock Forecast & Price Target

Alignment Healthcare Inc reported a 21.1% year-over-year increase in health plan members, reaching 119.2K as of December 31, 2023, which exceeded the high end of its guidance. The company is projected to experience significant adjusted EBITDA growth as it approaches profitability under the new Medicare Advantage regime, with expectations of continued margin expansion of 50-100 basis points per year through 2025 and 2026. Additionally, the company's strategy to improve the tenured member medical benefit ratio (MBR), which rose by 107 basis points year-over-year to 86.2% in 2023, supports the overall positive outlook on its financial trajectory.

The analysis indicates a negative outlook for Alignment Healthcare Inc. due to a projected increase in the consolidated SG&A ratio to approximately 19.6%, reflecting heightened discretionary investments in Q4 2023, which have resulted in a downward adjustment of the 2023E adjusted EBITDA estimate to ($33.489 million), a decline of 25.4% year-over-year. Additionally, the company faces potential revenue headwinds in the Medicare Advantage (MA) market, projected at (1.3%) annually during the implementation of v28, along with a tougher reimbursement outlook for 2024 that raises Medical Loss Ratio (MLR) risks. Furthermore, limited guidance on long-term profitability targets and the variability introduced by participation in the ACO REACH program create uncertainty in financial forecasting, which could challenge the company's ability to sustain membership growth above industry rates without access to sufficient capital.