Four takeaways from Alignment’s IPO filing
Another tech-based insurance startup is lining up to go public. Alignment Healthcare, a startup offering Medicare Advantage plans, filed the preliminary documents for the IPO with the Securities and Exchange Commission.
The Orange-based startup has yet to price its shares, but its S-1 dossier has shared some information on the company’s current situation.
Like many of its peers, Alignment touts its technology to differentiate itself from a growing number of Medicare Advantage plans. He says he uses predictive analytics to determine whether older people are “healthy,” “pre-chronic” or “chronic,” in order to tailor their care. It also has a 24/7 line that members can call for their health, transportation, care navigation, and other service needs.
The company currently offers Medicare Advantage plans in 22 markets, primarily 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 has announced its intention to grow by developing additional product lines, such as vision, dental and specialty pharmacy, and adding providers of palliative care, home care and behavioral health.
Here are some other 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 its startup colleague Medicare Advantage, Clover Health, which had over 66,000 members in February. But Alignment will still face the same challenge as some of its competitors in beating the larger incumbents. UnitedHealthcare, for example, had 5.7 million Medicare Advantage members at the end of 2020.
- Alignment has operated with a net loss for the history of the company. But that net loss has declined, at least in the past year, from $ 44.7 million in 2019 to $ 22.9 million in 2020. The startup has an outstanding loan of $ 150 million that will come to expires in 2023.
- The company said it plans to test CMS’s direct contract model with a small number of members. However, the model, which would have linked Medicare payments to spending and quality for an entire region, is under review 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 yet to reveal what percentage stake they will hold in the company. General Atlantic and Warburg Pincus have both led private equity investment rounds in the company. Fidelity Investments, which is also a 5% shareholder of the company, conducted a $ 135 million round of fundraising last year.
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