[PART I. Financial Information](index=6&type=section&id=PART%20I.%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for the quarter ended September 30, 2023, showing a 26.7% revenue increase and growth in total assets to **$770.8 million**, alongside an increased net loss Condensed Consolidated Statements of Operations Highlights | Metric | Three Months Ended Sep 30, 2023 ($) | Three Months Ended Sep 30, 2022 ($) | Nine Months Ended Sep 30, 2023 ($) | Nine Months Ended Sep 30, 2022 ($) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $456.7M | $360.3M | $1,358.2M | $1,072.3M | | **Loss from Operations** | $(29.8M) | $(33.4M) | $(85.9M) | $(76.5M) | | **Net Loss** | $(35.1M) | $(40.2M) | $(100.9M) | $(92.6M) | | **Net Loss Per Share** | $(0.19) | $(0.22) | $(0.54) | $(0.51) | Condensed Consolidated Balance Sheet Highlights | Metric | September 30, 2023 ($) | December 31, 2022 ($) | | :--- | :--- | :--- | | **Total Current Assets** | $667.0M | $544.5M | | **Total Assets** | $770.8M | $633.9M | | **Total Current Liabilities** | $410.3M | $230.0M | | **Total Liabilities** | $581.2M | $394.6M | | **Total Stockholders' Equity** | $189.6M | $239.3M | Condensed Consolidated Statements of Cash Flows Highlights (Nine Months Ended) | Metric | September 30, 2023 ($) | September 30, 2022 ($) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $128.3M | $103.8M | | **Net cash used in investing activities** | $(146.2M) | $(20.1M) | | **Net cash provided by financing activities** | $0.06M | $17.1M | | **Net decrease in cash** | $(17.9M) | $100.8M | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting an **18%** membership growth and **26.7%** revenue increase for the nine months ended September 30, 2023, alongside an increased Medical Benefits Ratio [Overview](index=27&type=section&id=Overview) Alignment Healthcare operates a consumer-centric platform focused on improving healthcare for seniors through Medicare Advantage plans, serving **115,600** members across **52** markets in **6** states - The company's business model is a "virtuous cycle" where managing healthcare expenditures allows reinvestment into richer benefits, which in turn drives membership growth[138](index=138&type=chunk) - Health Plan Membership grew to **115,600** as of September 30, 2023, representing a **28%** compound annual growth rate since inception[137](index=137&type=chunk) - The company operates in **52** markets across California, North Carolina, Nevada, Arizona, Texas, and Florida, with approximately **8.5 million** Medicare-eligible seniors in these markets[139](index=139&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Total revenues increased by **26.7%** to **$1.36 billion** for the nine months ended September 30, 2023, driven by membership growth, while medical expenses rose **30.4%** to **$1.20 billion** Revenue Comparison (Nine Months Ended Sep 30) | Revenue Type | 2023 ($) | 2022 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Earned Premiums** | $1,341.9M | $1,071.5M | +$270.4M | +25.2% | | **Other** | $16.3M | $0.9M | +$15.4M | +1717.3% | | **Total Revenues** | $1,358.2M | $1,072.3M | +$285.9M | +26.7% | Expense Comparison (Nine Months Ended Sep 30) | Expense Type | 2023 ($) | 2022 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Medical Expenses** | $1,204.8M | $923.9M | +$281.0M | +30.4% | | **SG&A Expenses** | $223.7M | $212.4M | +$11.3M | +5.3% | | **Depreciation & Amortization** | $15.6M | $12.6M | +$3.0M | +24.1% | - The increase in medical expenses was driven by growth in Health Plan and ACO REACH membership, richer member benefits, and a smaller amount of favorable prior year development[168](index=168&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2023, the company held **$515.6 million** in liquid assets, which management deems sufficient to fund operations for at least the next 12 months, supported by a **$250 million** term loan agreement - The company held **$515.6 million** in cash, cash equivalents, and short-term investments as of September 30, 2023[173](index=173&type=chunk) - The company has a term loan agreement with Oxford Finance LLC for up to **$250 million**, with an initial loan of **$165 million** received in September 2022, bearing a variable interest rate based on SOFR plus a **6.50%** margin[178](index=178&type=chunk) - Net cash provided by operating activities was **$128.3 million** for the nine months ended September 30, 2023, an increase from **$103.8 million** in the prior year period, primarily due to the timing of CMS premium payments[185](index=185&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure is inflation, which has not materially affected operating results to date, and the company does not hold financial instruments for trading purposes - The main market risk identified is inflation, which has not had a material effect on operating results to date[191](index=191&type=chunk)[192](index=192&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal controls over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2023[193](index=193&type=chunk) - No material changes were identified in the company's internal control over financial reporting during the third quarter of 2023[194](index=194&type=chunk) [PART II. Other Information](index=39&type=section&id=PART%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company discloses a tentative **$912,500** settlement in a class action lawsuit regarding employee meal and rest breaks, which has been accrued as a potential liability pending court approval - The company entered into a tentative settlement for **$912,500** in the Dabney v. Alignment Healthcare USA, LLC class action lawsuit concerning employee meal and rest breaks[130](index=130&type=chunk) - The settlement amount has been accrued as a potential liability as of September 30, 2023, pending court approval expected in Q1 2024[130](index=130&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the Annual Report[196](index=196&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section confirms no unregistered sales of equity securities occurred during the period and no material change in the planned use of **$361.6 million** net proceeds from the March 2021 IPO - The company's IPO in March 2021 generated approximately **$361.6 million** in net proceeds[196](index=196&type=chunk) - There has been no material change in the use of proceeds from the IPO as described in the original prospectus[197](index=197&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section provides a list of all exhibits filed with the Form 10-Q, including corporate governance documents, employment agreements, and Sarbanes-Oxley Act certifications - The report includes exhibits such as the CEO and CFO certifications pursuant to the Sarbanes-Oxley Act, and various employment and separation agreements[199](index=199&type=chunk)

Alignment Healthcare, Inc. (NASDAQ:ALHC) Q2 2023 Earnings Conference Call August 3, 2023 5:30 PM ET Company Participants John Kao - CEO Thomas Freeman - CFO Conference Call Participants Ryan Daniels - William Blair Michael Ha - Morgan Stanley Whit Mayo - SVB Adam Ron - Bank of America Gary Taylor - Cowen Jessica Tassan - Piper Sandler Calvin Sternick - JPMorgan Nathan Rich - Goldman Sachs Operator Good afternoon and welcome to the Alignment Healthcare Second Quarter 2023 Earnings Conference Call and Webcast ...

[PART I. Financial Information](index=4&type=section&id=PART%20I.%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Presents unaudited condensed consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, cash flows, and detailed accounting policy notes for June 30, 2023 [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$783.5 million** by June 30, 2023, driven by deferred premium revenue and short-term investments, while total liabilities rose and stockholders' equity declined Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $395,258 | $409,549 | | Short-term investments | $122,249 | $0 | | **Total assets** | **$783,546** | **$633,863** | | Medical expenses payable | $207,198 | $170,135 | | Deferred premium revenue | $147,477 | $308 | | **Total liabilities** | **$572,434** | **$394,561** | | **Total stockholders' equity** | **$211,112** | **$239,302** | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2023 net loss increased to **$28.5 million** due to medical expenses growing faster than total revenues, widening net loss per share to **$(0.15)** Q2 Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | Total revenues | $462,379 | $366,474 | | Medical expenses | $410,644 | $307,269 | | Loss from operations | $(23,659) | $(6,648) | | Net loss | $(28,494) | $(11,580) | | Net loss per share | $(0.15) | $(0.06) | Six-Month Statement of Operations Highlights (in thousands, except per share data) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Total revenues | $901,534 | $712,000 | | Medical expenses | $806,959 | $611,027 | | Loss from operations | $(56,148) | $(43,123) | | Net loss | $(65,865) | $(52,397) | | Net loss per share | $(0.36) | $(0.29) | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity decreased to **$211.1 million** by June 30, 2023, primarily due to a **$65.9 million** net loss, partially offset by equity-based compensation - The accumulated deficit grew from **$(732.2) million** at the end of 2022 to **$(798.0) million** as of June 30, 2023, reflecting the ongoing net losses[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly improved to **$122.3 million** for the first six months of 2023, driven by deferred premium revenue, while investing activities used **$136.6 million** Six-Month Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $122,287 | $(1,284) | | Net cash used in investing activities | $(136,638) | $(11,982) | | Net cash provided by (used in) financing activities | $60 | $(100) | | **Net decrease in cash** | **$(14,291)** | **$(13,366)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes explain significant accounting policies, including revenue recognition, medical expenses payable, and fair value measurements, alongside disclosures on debt, equity compensation, and regulatory capital, notably **$147.5 million** in deferred premium revenue - Premium revenue is derived monthly from CMS and is recognized in the month members are entitled to services, subject to risk adjustments based on member health severity, which are estimated and recorded throughout the year[40](index=40&type=chunk)[45](index=45&type=chunk) - Medical expenses payable includes estimates for claims incurred but not yet paid (IBNP), developed using an actuarial process considering factors like cost trends, historical payment patterns, and seasonality[55](index=55&type=chunk)[56](index=56&type=chunk) - The company entered into a senior secured term loan agreement with Oxford Finance for up to **$250 million**, with an initial draw of **$165 million**, at a variable interest rate based on SOFR plus **6.50%**[102](index=102&type=chunk) - Due to the early receipt of the July premium payment from CMS, the company recorded deferred premium revenue of **$147.5 million** as of June 30, 2023, to be recognized as revenue in July 2023[50](index=50&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2023 performance, noting **17%** membership growth and **26.2%** revenue increase, offset by **33.6%** higher medical expenses, resulting in an **88.4%** MBR and increased operating loss, while maintaining strong liquidity of **$517.5 million** Key Financial Metrics Q2 2023 vs Q2 2022 | Metric | Q2 2023 | Q2 2022 | % Change | | :--- | :--- | :--- | :--- | | Health plan membership | 112,200 | 95,900 | 17.0% | | Revenues | $462.4M | $366.5M | 26.2% | | Medical benefits ratio | 88.4% | 83.4% | 5.0% | | Loss from Operations | $(23.7M) | $(6.6M) | NM | | Adjusted EBITDA | $(2.1M) | $10.3M | NM | [Overview](index=26&type=section&id=Overview) Alignment Healthcare, a Medicare Advantage provider, leverages its AVA platform and clinical model to serve **112,200** Health Plan Members across **52** markets in **6** states, aiming to improve outcomes and control costs - The company's business model is a "virtuous cycle" that uses data and engagement to lower healthcare costs, allowing reinvestment into richer benefits, which in turn drives membership growth[135](index=135&type=chunk) - As of June 30, 2023, Health Plan Membership reached **112,200**, operating in **52** markets across California, North Carolina, Nevada, Arizona, Texas, and Florida[134](index=134&type=chunk)[136](index=136&type=chunk) [Factors Affecting Our Performance](index=26&type=section&id=Factors%20Affecting%20Our%20Performance) Performance is driven by membership growth, CMS Star ratings, MBR management, and AVA platform investments, with seasonality impacting member growth, medical costs, and sales and marketing expenses - Key growth drivers include capitalizing on existing market opportunities (currently only **2%** market share in its **52** counties) and expanding into new markets like Florida and Texas[138](index=138&type=chunk)[139](index=139&type=chunk) - The company's clinical model has demonstrated the ability to lower the Medical Benefits Ratios (MBRs) of returning members over time, which is key to its unit economics[142](index=142&type=chunk) - Business results are seasonal, with most member growth occurring on January 1st, higher medical costs in Q1 and Q4 (e.g., due to influenza), and greater sales and marketing investment in the second half of the year for the Annual Enrollment Period[145](index=145&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Q2 2023 total revenues grew **26.2%** to **$462.4 million**, but medical expenses increased **33.6%** to **$410.6 million**, leading to an operating loss of **$23.7 million** - The **25.3%** increase in earned premiums for the first six months of 2023 was driven by growth in Health Plan membership and higher CMS benchmark rates[162](index=162&type=chunk) - The **32.1%** increase in medical expenses for the first six months outpaced revenue growth due to a mix shift towards ACO REACH patients, richer member benefits, seasonality of utilization, and a smaller amount of favorable prior year development[164](index=164&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2023, the company held **$517.5 million** in liquid assets, deemed sufficient for the next 12 months, and was in compliance with covenants on its **$165 million** term loan - The company had **$517.5 million** in cash, cash equivalents, and short-term investments as of June 30, 2023, including **$147.5 million** in deferred premium revenue from an early CMS payment[169](index=169&type=chunk)[171](index=171&type=chunk) - Net cash from operations for the first six months of 2023 was **$122.3 million**, a significant increase from a **$1.3 million** use of cash in the prior year, primarily due to the timing of the deferred premium revenue payment from CMS[181](index=181&type=chunk)[182](index=182&type=chunk) - The company has an outstanding term loan of **$165 million** from Oxford Finance and was in compliance with all financial covenants, including minimum liquidity of **$23.0 million**, as of June 30, 2023[175](index=175&type=chunk)[179](index=179&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is inflation, which has not materially affected past operating results but could adversely impact future performance - The company's main market risk is inflation, which management believes has not had a material effect on results to date[189](index=189&type=chunk)[190](index=190&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal controls over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2023[191](index=191&type=chunk) - No material changes were made to internal control over financial reporting during the quarter ended June 30, 2023[192](index=192&type=chunk) [PART II. Other Information](index=37&type=section&id=PART%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending a class action lawsuit regarding employee meal and rest breaks, with no liability accrued due to an inability to estimate potential loss - A former employee filed a class action lawsuit (Dabney v. Alignment Healthcare USA, LLC) alleging failure to provide required meal and rest breaks; the company is defending the action and has not accrued a liability as of June 30, 2023[128](index=128&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors from the Annual Report on Form 10-K were reported - No material changes to risk factors from the Annual Report were reported for this quarter[194](index=194&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the period, and the use of IPO proceeds remains consistent with the prospectus - There were no unregistered sales of equity securities in the period[194](index=194&type=chunk) - There has been no material change in the use of proceeds from the company's March 2021 IPO, which generated approximately **$361.6 million** in net proceeds for the company[195](index=195&type=chunk) [Other Information (Items 3-6)](index=37&type=section&id=Other%20Information%20%28Items%203-6%29) The company reported no defaults on senior securities, no mine safety disclosures, and no other material information for the period, with a list of exhibits provided - The company reported no defaults on senior securities (Item 3), no mine safety issues (Item 4), and no other material information (Item 5)[195](index=195&type=chunk)

Call Start: 17:30 January 1, 0000 6:28 PM ET Alignment Healthcare, Inc. (NASDAQ:ALHC) Q1 2023 Earnings Conference Call May 4, 2023, 5:30 pm ET Company Participants John Kao - CEO Thomas Freeman - CFO Conference Call Participants Ryan Daniels - William Blair Michael Ha - Morgan Stanley Whit Mayo - SVB Adam Ron - Bank of America Gary Taylor - Cowen Jessica Tassan - Piper Sandler Calvin Sternick - JPMorgan Nathan Rich - Goldman Sachs Operator Good day and thank you for standing by. Welcome to the Alignment Hea ...

[PART I. Financial Information](index=4&type=section&id=PART%20I.%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2023 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $761.8 million, driven by current assets, while total liabilities rose to $537.8 million **Condensed Consolidated Balance Sheets** | Financial Metric | March 31, 2023 ($ in thousands) | December 31, 2022 ($ in thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 384,261 | 409,549 | | Short-term investments | 103,483 | — | | Total current assets | 670,914 | 544,546 | | Total assets | 761,751 | 633,863 | | **Liabilities & Equity** | | | | Medical expenses payable | 185,670 | 170,135 | | Deferred premium revenue | 141,081 | 308 | | Total current liabilities | 374,187 | 229,961 | | Total liabilities | 537,811 | 394,561 | | Total stockholders' equity | 223,940 | 239,302 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total revenues increased 27.1% to $439.2 million, while the net loss slightly improved to $37.4 million **Condensed Consolidated Statements of Operations** | Metric | Three Months Ended March 31, 2023 ($ in thousands) | Three Months Ended March 31, 2022 ($ in thousands) | | :--- | :--- | :--- | | Total revenues | 439,155 | 345,526 | | Medical expenses | 396,315 | 303,758 | | Selling, general, and administrative expenses | 70,408 | 74,293 | | Loss from operations | (32,489) | (36,475) | | Net loss | (37,371) | (40,817) | | Net loss per share - basic and diluted | $(0.20) | $(0.23) | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased to $223.9 million, primarily due to the quarterly net loss of $37.4 million - The company's total stockholders' equity decreased by **$15.4 million** during the quarter, from $239.3 million to $223.9 million, mainly due to a **net loss of $37.4 million**, counteracted by **$22.0 million in equity-based compensation**[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations was $85.1 million, while investing activities used $110.4 million, resulting in a net cash decrease **Condensed Consolidated Statements of Cash Flows** | Cash Flow Activity | Three Months Ended March 31, 2023 ($ in thousands) | Three Months Ended March 31, 2022 ($ in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | 85,110 | (11,638) | | Net cash used in investing activities | (110,428) | (6,127) | | Net cash provided by financing activities | 30 | — | | Net decrease in cash | (25,288) | (17,765) | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Details significant accounting policies, revenue recognition, and disclosures on debt, equity, and legal proceedings - The company's operations primarily consist of **Medicare Advantage Plans** in California, North Carolina, Nevada, Arizona, Florida, and Texas, operating as a single reportable segment[30](index=30&type=chunk)[33](index=33&type=chunk) - Premium revenue is derived monthly from CMS and adjusted for member risk factors, supplemented by capitation revenue and participation in the **CMS ACO REACH model**[37](index=37&type=chunk)[38](index=38&type=chunk)[40](index=40&type=chunk) - Due to the timing of CMS payments, the company recorded **$141.1 million in deferred premium revenue** at the end of Q1 2023, to be recognized in April 2023[47](index=47&type=chunk) - The company is subject to a **class action lawsuit** regarding meal and rest breaks, but has not accrued for any potential liability as the loss cannot be reasonably estimated[124](index=124&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Discusses Q1 2023 performance, including a 27.1% revenue increase and a higher Medical Benefits Ratio of 89.7% **Key Performance Metrics** | Metric | Q1 2023 | Q1 2022 | % Change | | :--- | :--- | :--- | :--- | | Health plan membership | 109,700 | 94,200 | 16.5% | | Revenues ($M) | 439.2 | 345.5 | 27.1% | | Medical benefits ratio | 89.7% | 87.0% | 2.7% | | Net loss ($M) | (37.4) | (40.8) | N/A | | Adjusted EBITDA ($M) | (5.2) | (3.9) | N/A | [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Revenue grew 27.1% driven by membership, while medical expenses rose 30.4% and SG&A expenses decreased 5.2% - **Revenue growth of 27.1%** was driven by a **16.2% increase in health plan membership**, higher CMS benchmark rates, and an additional **$19.8 million from ACO REACH**[157](index=157&type=chunk) - **Medical expenses increased 30.4%**, outpacing revenue due to richer member benefits, seasonal patterns, and a revenue mix shift towards ACO REACH patients[159](index=159&type=chunk) - **SG&A expenses decreased 5.2%** year-over-year, primarily due to a reduction in equity-based compensation; excluding this, SG&A increased 3.2%[160](index=160&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) The company holds $487.7 million in liquid assets, sufficient for the next 12 months, and is in compliance with its debt covenants - The company had **$487.7 million in cash, cash equivalents, and short-term investments** as of March 31, 2023, sufficient to fund operations for at least the next 12 months[163](index=163&type=chunk)[165](index=165&type=chunk) - The company has an outstanding **$165.0 million term loan** with a variable interest rate and was in compliance with all financial covenants as of March 31, 2023[168](index=168&type=chunk)[171](index=171&type=chunk) - **Net cash from operating activities was $85.1 million**, a significant increase from a use of $11.6 million in Q1 2022, mainly due to the timing of a large deferred premium revenue payment from CMS[173](index=173&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Identifies inflation as the primary market risk, though it has not had a material effect on recent operating results - The company's primary market risk is exposure to potential changes in **inflation**, which management believes has not had a material effect on operating results for the periods presented[182](index=182&type=chunk)[183](index=183&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes in internal controls - The Chief Executive Officer and Chief Financial Officer concluded that the company's **disclosure controls and procedures were effective** as of March 31, 2023[184](index=184&type=chunk) - **No material changes** to internal control over financial reporting occurred during the three months ended March 31, 2023[185](index=185&type=chunk) [PART II. Other Information](index=33&type=section&id=PART%20II.%20Other%20Information) [Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) Discloses a class action lawsuit from a former employee for which no liability has been accrued - The company is defending a **class action lawsuit** from a former employee regarding alleged meal and rest break violations; no liability has been accrued[124](index=124&type=chunk)[187](index=187&type=chunk) [Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) Reports no material changes to the risk factors previously disclosed in the company's Annual Report - There have been **no material changes** to the risk factors disclosed in the company's Annual Report[187](index=187&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Confirms no unregistered sales of equity securities and no material change in the use of IPO proceeds - **No unregistered sales of equity securities** occurred during the three months ended March 31, 2023[187](index=187&type=chunk) - The company's March 2021 IPO generated approximately **$361.6 million in net proceeds**, with no material change in the intended use of these funds[187](index=187&type=chunk)[188](index=188&type=chunk) [Exhibits](index=34&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including required officer certifications

Financial Data and Key Metrics Changes - For Q4 2022, total revenue was $362 million, representing a 21% year-over-year growth [7] - Full year 2022 total revenue reached $1.434 billion, a 23% increase compared to the previous year [16] - Adjusted gross profit for Q4 2022 was $38.3 million, with a Medical Benefit Ratio (MBR) of 89.4% [7] - Full year adjusted gross profit was $193.6 million, resulting in an MBR of 86.5% [16] - Adjusted EBITDA for Q4 2022 was a loss of $23.7 million, while the full year adjusted EBITDA loss was $26.7 million [7][16] Business Line Data and Key Metrics Changes - Health plan membership grew to 98,400 members by the end of Q4 2022, a 14% increase year-over-year [7] - The California market achieved an MBR of 86.3% in 2022, exceeding expectations [8] - New states reported less than 155 inpatient admissions per thousand, demonstrating the effectiveness of the care model [8] Market Data and Key Metrics Changes - As of January 1, 2023, Medicare Advantage membership reached 108,300, reflecting a 17% growth year-over-year [12] - Membership growth outside California exceeded 60% year-over-year, indicating strong performance in new markets [13] Company Strategy and Development Direction - The company aims for 20% top-line growth in 2024, focusing on quality and cost initiatives, deepening provider relationships, enhancing product richness, and broadening distribution strategies [14] - Continued investment in the ACO reach program is planned for 2023, with a 52% year-over-year increase in aligned beneficiaries [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving continued success in 2023, driven by strong performance across key value drivers [15] - The company anticipates challenges in maintaining star ratings due to industry-wide increases in cut points, necessitating a corporate-wide commitment to improvement [29][30] Other Important Information - The company ended Q4 2022 with $245 million in net cash, indicating a strong balance sheet position [17] - The guidance for Q1 2023 includes expected health plan membership between 109,300 and 109,500 members, with revenue projected between $429 million and $434 million [18] Q&A Session Summary Question: Can you elaborate on the initiatives around star ratings and rebate dollars? - Management emphasized the need for enterprise-wide training to improve star ratings and acknowledged the challenges in achieving higher ratings due to increased cut points [29][30] Question: What lessons have been learned from new markets regarding physician partnerships? - The company highlighted the importance of achieving high star ratings to gain credibility in new markets and the need for a reliable distribution strategy [33][35] Question: How does the ACO reach program impact MBR and membership growth? - Management noted that the rapid growth in new patients could affect MBR, but they remain confident in the long-term benefits of the ACO reach program [37][41] Question: What are the expectations for competitive positioning in 2024? - Management believes that competitors may struggle with tightening regulations, providing an opportunity for the company to gain market share due to its superior care delivery model [48][51] Question: How does the company plan to address the impact of ICD-10 changes? - Management expressed confidence in their systems and processes to handle the changes, focusing on the potential disproportionate impact on certain populations [57][59] Question: What is the long-term margin profile for the ACO reach business? - The company estimates the ACO reach business could achieve low to mid-single-digit EBITDA margins as it expands [73]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number: 001-40295 ALIGNMENT HEALTHCARE, INC. (Exact name of Registrant as specified in its Charter) Delaware 46-5596242 (State or other jurisdic ...

Alignment Healthcare, Inc. (NASDAQ:ALHC) Q3 2022 Earnings Conference Call November 3, 2022 5:30 PM ET Company Participants John Kao – Founder and Chief Executive Officer Thomas Freeman – Chief Financial Officer Conference Call Participants Jared Haase – William Blair John Ransom – Raymond James Michael Ha – Morgan Stanley Jessica Tassan – Piper Sandler Nabil Gutierrez – Bank of America Nathan Rich – Goldman Sachs Whit Mayo – SVB Securities Sarah James – Barclays Operator Good afternoon, and welcome to Align ...

Financial Data and Key Metrics Changes - Total revenue for Q2 2022 was $366 million, representing a 19% year-over-year growth, with year-to-date revenue growth at 24% [6][14] - Health plan membership increased to 95,900 members, a 13% growth year-over-year [6][14] - Adjusted gross profit was $61 million, resulting in a minimum medical benefit ratio (MBR) of 83.4%, the lowest quarterly MBR since going public [6][16] - Adjusted EBITDA was positive $10 million for the quarter, contributing to a year-to-date adjusted EBITDA of positive $6 million [7][17] Business Line Data and Key Metrics Changes - The company reported 155 inpatient admissions per 1,000 members, which is 38% lower than Medicare fee-for-service [9][36] - The care management model powered by AVA technology has shown effectiveness in reducing hospital admissions and improving member care [9][39] Market Data and Key Metrics Changes - The company plans to expand into Florida and Texas, alongside eight new counties in existing states in 2023, targeting a total of approximately 20 million Medicare eligibles [11][12] - The anticipated expansion represents over 30% of the entire Medicare market [12] Company Strategy and Development Direction - The company aims to replicate its successful business model across various markets, focusing on local market management and provider engagement [8][10] - Investments will be made in service delivery, quality initiatives, and new market investments to support growth and profitability [7][19] - The company is committed to enhancing member experience and providing value-based care [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year financial metrics for 2022, despite potential COVID-related utilization increases [7][20] - The company is monitoring the impact of COVID variants on hospital utilization and is prepared to adjust strategies accordingly [20][21] - Management emphasized the importance of maintaining a balance between short-term profitability and long-term growth objectives [21][81] Other Important Information - The company released its inaugural ESG report, highlighting its commitment to health equity and improved health outcomes for members [22][23] - The company is focused on building strong provider relationships and enhancing its community presence through targeted hires [12][22] Q&A Session Summary Question: Market expansion and cash flow implications - Management discussed entering Texas and Florida, emphasizing the importance of having the right provider partners and competitive dynamics in these markets [26][28] Question: Sweep payments and provider sharing - Management explained that sweep payments are shared with providers through various contract arrangements, ensuring that when the company wins, providers and members also benefit [30][32] Question: Inpatient admissions per 1,000 - Management confirmed that inpatient admissions per 1,000 were 155, which is significantly lower than Medicare fee-for-service, reflecting the effectiveness of their care delivery model [35][36] Question: Reinvestment of outperformance - Management indicated that reinvestment would focus on quality initiatives and improving member experience, alongside ramping up new market clinical hires [42][43] Question: Guidance and conservatism - Management clarified that the conservative guidance for the back half of the year is due to potential COVID impacts and normalization of prior period items [48][82] Question: Competitive landscape for 2023 - Management expressed confidence in their positioning for 2023, noting that while competitors may be aggressive, the company's unique model supports consistent growth [87][88] Question: Provider partnerships in new markets - Management affirmed their ability to establish competitive provider networks in Florida and Texas, which is crucial for their market entry strategy [90]