Four takeaways from Alignment’s IPO filing

Another tech-enabled insurance startup is lining up to go public. Alignment Healthcare, a startup offering Medicare Advantage plans, filed preliminary IPO paperwork with the Securities and Exchange Commission.

The Orange-based startup hasn’t yet priced its shares, but its S-1 filing shared some insights on where the company currently stands.

Like many of its peers, Alignment touts its technology to differentiate itself from a growing number of Medicare Advantage plans. It says it uses predictive analytics to determine whether seniors are “healthy,” “pre-chronic” or “chronic,” to tailor their care. It also has a 24/7 line that members can call for health needs, transportation, care navigation and other services.

The company currently offers Medicare Advantage plans in 22 markets, largely in California, North Carolina and Nevada. The Centers for Medicare and Medicaid Services (CMS) gave its plans a 4-star rating in 2021.

In the long-term, Alignment said it plans to grow by building out additional product lines, such as vision, dental and specialty pharmacy, and add hospice, home health and behavioral health providers.

Here are some more takeaways from Alignment’s IPO filing:

  • Between 2019 and 2020, Alignment saw its revenue increase by 27%, for a total of $959 million. Its membership also increased by 38.5%. In total, the company has 81,500 members—more than fellow Medicare Advantage startup Clover Health, which had over 66,000 members as of February. But Alignment will still face the same challenge as some of its competitors in beating out the larger insurance incumbents. UnitedHealthcare, for example, had 5.7 million Medicare Advantage members at the end of 2020.
  • Alignment has operated at a net loss for the history of the business. But that net loss narrowed, at least in the last year, from $44.7 million in 2019 to $22.9 million in 2020. The startup has an outstanding $150 million loan that will come due in 2023.
  • The company indicated that it planned to test out CMS’ direct contracting model with a small number of members. However, the model, which would have tied Medicare payments to spending and quality for an entire region, is currently being reviewed by the Biden Administration
  • Investors General Atlantic and Warburg Pincus will own a controlling stake in the company, giving them significant influence over board appointments and shareholder votes. Alignment has not yet disclosed what percentage stake they will have in the company. General Atlantic and Warburg Pincus both led past private equity investment rounds in the company. Fidelity Investments, which is also a 5% shareholder in the company, led a $135 million funding round last year.

Photo credit: designer491, Getty Images

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