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On Monday, Raymond (NSE:RYMD) James analyst John Ransom increased the price target for Alignment Healthcare Inc (NASDAQ:ALHC) to $19.00, up from the previous $14.00, while reiterating a Strong Buy rating on the stock. The $3.1 billion market cap company has shown impressive momentum, with its stock surging 15% in the past week and 178% over the last year. According to InvestingPro analysis, the stock is currently trading slightly above its Fair Value, suggesting investors should monitor valuation levels carefully. The adjustment follows Alignment Healthcare’s robust performance in the fourth quarter, where the company exceeded expectations in several key areas.
Alignment Healthcare posted a membership growth of approximately 59%, surpassing the Raymond James estimate of about 55%. The company’s top-line growth also outperformed projections, with an approximately 51% increase compared to the estimated 44%. A lower-than-expected medical loss ratio (MLR) of 87.5%, which was 130 basis points below the Raymond James estimate of 88.8%, contributed to an adjusted EBITDA beat of $1.4 million, significantly outperforming the anticipated -$2.5 million.
Additionally, the company saw a year-over-year decline in SG&A expenses as a percentage of revenue, excluding ACO REACH, from 14.4% to 11.1%. Looking ahead, Alignment Healthcare provided guidance for 2025, forecasting Health Plan Membership to reach between 227,000 and 233,000 members by year’s end, which would represent a growth of approximately 35% from January 2025’s 209,900 members. Notably, the midpoint of this guidance was increased by 2,000 members from the preliminary outlook provided in January.
The company also issued revenue guidance for 2025, projecting figures between $3.72 billion and $3.78 billion, marking a 40% year-over-year growth at the midpoint. Adjusted gross profit is expected to range from $415 million to $445 million. Furthermore, the adjusted EBITDA guidance was raised by $7.5 million from the preliminary January outlook, now standing at $35 million to $60 million. The midpoint of this guidance exceeds pre-print Street estimates by $5.9 million.
In his comments, Ransom highlighted the promising future for Alignment Healthcare, citing the company’s ability to grow at a rate of 20% or more annually while enhancing EBITDA profitability by leveraging its clinical model, STARs advantage, and operational scale. InvestingPro analysis reveals the company’s impressive revenue growth of 48.25% in the last twelve months, with 8 additional exclusive ProTips and comprehensive financial metrics available to subscribers through the platform’s detailed Pro Research Report.
In other recent news, Alignment Healthcare LLC reported its fourth-quarter 2024 earnings, surpassing analysts’ expectations with an EPS of -0.16 compared to the forecast of -0.18. The company’s revenue also exceeded projections, reaching $701.2 million against the expected $674.97 million. This marks a significant performance, with total revenue for 2024 reaching $2.7 billion, a 48% increase year-over-year. The company achieved its first year of adjusted EBITDA profitability, a notable milestone in its financial journey. Looking ahead, Alignment Healthcare has set its 2025 revenue guidance between $3.72 billion and $3.78 billion. Membership grew by 59% in 2024, with expansion notably outside California, particularly in Nevada. Analysts from firms like Stephens and Bank of America have shown interest in the company’s ability to manage medical loss ratios and membership growth effectively. These developments reflect Alignment Healthcare’s strategic focus on care management and market expansion.
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