Health insurance startup Alignment Healthcare on Wednesday filed registration paperwork with the Securities and Exchange Commission as it prepares to go public, following a trend of recent IPOs in the insure and healthtech space.
Alignment Healthcare, an Orange, Calif.-based startup that offers Medicare Advantage plans, was founded in 2013 and is known for its ties to former CMS administrators Dr. Mark McClellan, who served in George W. Bush's administration, and Andy Slavitt, who worked in Barack Obama's administration.
In a letter in its S-1, CEO John Kao said he was inspired to launch Alignment after experiencing how fragmented the healthcare system could be while caring for his sick mother and disabled brother. Alignment aims to differentiate itself from competitors through its connected care model, wherein it engages in value-based relationships with providers and implements its AI-powered platform to help physicians engage in preventative, proactive care for its members. The startup's technology platform operates more than 150 AI models and 200 dashboards that physicians can use to crunch actionable advice for individual enrollees.
In addition to offering individual Advantage plans, Alignment acts as an administrator for some Medicare Advantage providers, like FirstCarolinaCare to receive a cut of the insurer's payments from CMS to run its Medicare Advantage program.
The company's public offering follows Clover Health's SPAC debut in January and Oscar Health's offering this week. Alignment estimates the Medicare Advantage market will be worth $500 billion by 2025.
Here are five things to know about the startup's plans:
1. Alignment plans to trade on the Nasdaq Global Select Market under the symbol "ALHC." In February, the company counted 80,500 members across three states, up 63.2% from 49,300 members at the end of 2019. Alignment on Wednesday said the number of shares and price range for the proposed offering have not yet been determined.
2. The company brought in $959.2 million in revenue in 2020, up 26.7% from $756.9 million in 2019. Alignment's operating loss narrowed in 2020 to $22.9 million, down from $44.7 million in 2019. Alignment in its S-1 acknowledged that it has a history of losses and may be unable to achieve profitability. In the near-term Alignment expects its costs to increase as it invests in growing its member base, hiring and expanding its operations.
3. The company's growth plans include expanding into new markets and attracting new members through innovative product offerings and benefits designs. As examples of supplemental benefits, the company pointed to its ACCESS "Black Card," a pre-paid debit card that HMO enrollees can use to buy health and grocery products at certain stores. The company's Care Anywhere program now serves more than 4,000 high-risk members at their homes in-person or virtually.
4. Alignment's plans to go public come on the heels of a $1 billion valuation and funding announcement made in March 2020, where the company said it closed a $135 million Series C round led by Fidelity Management & Research Company. The company has raised $375 million in total funding, according to Crunchbase.
5. In 2021, the company plans to unveil a virtual Medicare Advantage plan that "incentivizes members to access care digitally through our virtual platform by offering rich and convenient benefits, while also providing in-person care options when needed." In early February, Alignment also announced that it expanded its partnership with Health, a telehealth and doctor on-call startup.
