Alignment Healthcare(ALHC) - 2025 Q2 - Quarterly Results

Executive Summary & Business Overview This section provides an overview of Alignment Healthcare's strong Q2 2025 financial performance, future outlook, and CEO's strategic vision for high-quality senior care Company Introduction & CEO Statement Alignment Healthcare reported strong second-quarter 2025 results, with CEO John Kao emphasizing that their model successfully combines financial performance with high-quality, affordable senior care through clinical excellence and member experience - CEO John Kao highlights that Q2 performance demonstrates strong financial results and high-quality care are achievable with their model, emphasizing clinical excellence, affordability, and member experience by prioritizing seniors and real-time health visibility[3] Second Quarter 2025 Financial Highlights Alignment Healthcare exceeded its second-quarter guidance across all key metrics, reporting significant year-over-year growth in membership and total revenue, alongside positive adjusted gross profit, income from operations, adjusted EBITDA, and net income Q2 2025 Key Financial Highlights | Metric | Q2 2025 Value | YoY Change | | :----------------------- | :-------------- | :--------- | | Health Plan Membership (members) | 223,700 | +27.8% | | Total Revenue ($ millions) | 1,015.3 | +49.0% | | Adjusted Gross Profit ($ millions) | 135.2 | N/A | | Income from Operations ($ millions) | 22.7 | N/A | | Medical Benefits Ratio (%) | 86.7 | N/A | | Adjusted EBITDA ($ millions) | 45.9 | N/A | | Net Income ($ millions) | 15.7 | N/A | - Alignment Healthcare surpassed the high-end of its Q2 guidance for membership, revenue, adjusted gross profit, and adjusted EBITDA[7] Outlook for Third Quarter and Fiscal Year 2025 The company has raised its full-year outlook for 2025 across all key metrics, including health plan membership, revenue, adjusted gross profit, and adjusted EBITDA, reflecting strong anticipated performance Q3 and FY 2025 Outlook | Metric | Q3 2025 (Low) | Q3 2025 (High) | FY 2025 (Low) | FY 2025 (High) | | :----------------- | :-------------- | :--------------- | :-------------- | :--------------- | | Health Plan Membership | 225,000 | 227,000 | 229,000 | 234,000 | | Revenue ($ Millions) | $970 | $985 | $3,885 | $3,910 | | Adjusted Gross Profit ($ Millions) | $106 | $114 | $452 | $469 | | Adjusted EBITDA ($ Millions) | $5 | $13 | $69 | $83 | - The company has raised its full-year outlook across membership, revenue, adjusted gross profit, and adjusted EBITDA[7] Condensed Consolidated Financial Statements This section presents Alignment Healthcare's balance sheets, statements of operations, and cash flows, detailing the company's financial position and performance for Q2 and the first half of 2025 Condensed Consolidated Balance Sheets As of June 30, 2025, Alignment Healthcare reported a significant increase in total assets, liabilities, and stockholders' equity compared to December 31, 2024, driven by growth in cash, accounts receivable, and medical expenses payable Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :-------------- | :---------------- | :----- | | Total Assets | $1,000,150 | $782,063 | +27.9% | | Total Liabilities | $859,183 | $681,108 | +26.1% | | Total Stockholders' Equity | $140,967 | $100,955 | +39.6% | | Cash and cash equivalents | $470,266 | $432,859 | +8.6% | | Medical expenses payable | $455,154 | $289,788 | +57.1% | Condensed Consolidated Statements of Operations For Q2 2025 and the six months ended June 30, 2025, Alignment Healthcare demonstrated a strong turnaround, moving from net losses in the prior year to positive income from operations and net income, with substantial revenue growth Condensed Consolidated Statements of Operations Highlights (in thousands) | Income Statement Item (in thousands) | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------- | :-------- | :-------- | :-------- | :-------- | | Total Revenues | $1,015,288 | $681,286 | $1,942,220 | $1,309,887 | | Medical Expenses | $881,740 | $605,312 | $1,702,640 | $1,178,530 | | Income (loss) from operations | $22,748 | $(18,382) | $17,355 | $(59,488) | | Net income (loss) | $15,653 | $(24,003) | $6,299 | $(70,578) | | Diluted EPS | $0.07 | $(0.13) | $0.03 | $(0.37) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, operating activities generated significantly more cash compared to the prior year, while investing activities shifted to a net cash outflow, and financing activities saw a decrease in cash provided Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Item (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $45,746 | $17,291 | | Net cash (used in) provided by investing activities | $(10,126) | $69,671 | | Net cash provided by financing activities | $1,797 | $49,153 | | Net increase in cash | $37,417 | $136,115 | | Cash, cash equivalents and restricted cash at end of period | $472,359 | $341,069 | Non-GAAP Financial Information This section provides reconciliations and definitions for key non-GAAP financial measures, including Adjusted Gross Profit and Adjusted EBITDA, used to assess operational performance Non-GAAP Reconciliations The report provides detailed reconciliations for Adjusted Gross Profit and Adjusted EBITDA, bridging these non-GAAP measures from their most directly comparable GAAP figures, Income (loss) from operations and Net income (loss), respectively Adjusted Gross Profit and Adjusted EBITDA Reconciliations (in thousands) Adjusted Gross Profit Reconciliation (in thousands): | Item | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :------------------------------------ | :-------- | :-------- | :-------- | :-------- | | Income (loss) from operations | $22,748 | $(18,382) | $17,355 | $(59,488) | | Add back: | | | | | | Equity-based compensation (medical expenses) | 1,594 | 762 | 2,746 | 1,895 | | Depreciation (medical expenses) | 33 | 46 | 66 | 98 | | Restructuring costs (medical expenses) | — | 21 | — | 796 | | Depreciation and amortization | 7,003 | 6,493 | 14,597 | 12,470 | | Selling, general, and administrative expenses | 103,797 | 87,863 | 207,628 | 178,375 | | Adjusted gross profit | $135,175 | $76,803 | $242,392 | $134,146 | Adjusted EBITDA Reconciliation (in thousands): | Item | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :------------------------------------ | :-------- | :-------- | :-------- | :-------- | | Net income (loss) | $15,653 | $(24,003) | $6,299 | $(70,578) | | Less: Net income (loss) attributable to noncontrolling interest | (14) | 7 | (254) | (47) | | Adjustments: | | | | | | Interest expense | 3,950 | 5,691 | 7,900 | 11,118 | | Depreciation and amortization | 7,036 | 6,539 | 14,663 | 12,568 | | Income taxes | 3,224 | 22 | 3,245 | 22 | | Equity-based compensation | 15,553 | 16,784 | 32,740 | 37,638 | | Acquisition expenses | — | 12 | — | 12 | | Litigation costs | 555 | 401 | 1,062 | 721 | | Loss on ROU assets | — | — | — | 143 | | Gain on sale of property and equipment | (72) | — | (72) | — | | Restructuring costs | — | 595 | — | 2,363 | | Adjusted EBITDA | $45,913 | $6,034 | $66,091 | $(5,946) | Non-GAAP Financial Measures Definitions Alignment Healthcare defines and utilizes Adjusted EBITDA, Medical Benefits Ratio (MBR), and Adjusted Gross Profit as non-GAAP measures to provide a more comprehensive understanding of its operational performance and to aid in internal comparisons and future planning - Adjusted EBITDA: Defined as net income (loss) before interest expense, income taxes, depreciation and amortization expense, certain litigation costs, gains or losses on ROU assets, gains or losses on sale of property and equipment, restructuring costs, and equity-based compensation expense - Medical Benefits Ratio (MBR): Calculated by dividing total medical expenses (excluding depreciation, equity-based compensation, and clinical restructuring costs) by total revenues - Adjusted Gross Profit: Defined as income (loss) from operations before depreciation and amortization, clinical equity-based compensation expense, clinical restructuring costs, and selling, general, and administrative expenses - These non-GAAP measures are used to supplement GAAP results, provide a more complete understanding of operations, and aid management in evaluating financial results and future planning[23][24][26][27][28] Corporate Information & Disclosures This section includes details for the Q2 earnings conference call, an overview of Alignment Health's mission, forward-looking statements, and investor/media contact information Conference Call Details Alignment Healthcare hosted a conference call on July 30, 2025, to discuss its Q2 results and future outlook, with a live webcast and an on-demand replay available online - Date & Time: July 30, 2025, at 5 p.m. EDT - Live Webcast: Available at https://ir.alignmenthealth.com/ and https://edge.media-server.com/mmc/p/45vdkr4b - Replay: An on-demand webcast replay will be available for approximately 12 months[10] About Alignment Health Alignment Health, a consumer brand of Alignment Healthcare, is dedicated to empowering seniors through high-quality, low-cost Medicare Advantage care, leveraging a customized care model, 24/7 concierge team, and AVA technology, while expanding its national presence - Mission: To empower seniors to age well and live vibrant lives by providing high-quality, low-cost Medicare Advantage care - Care Model: Delivers coordinated care through a customized model, a 24/7 concierge care team, and proprietary AVA technology - Core Values: Emphasizes leading with a serving heart and prioritizing seniors - Operations: Based in California, partnering with local providers, and expanding its national footprint[11][12] Forward-Looking Statements This section serves as a cautionary disclosure regarding forward-looking statements, highlighting inherent risks and uncertainties that could cause actual results to differ materially from projections, and clarifies that the company has no obligation to update this information unless legally required - This release contains forward-looking statements concerning future growth and financial outlook for Q3 and FY 2025 - Key Risks: Include attracting new members, governmental approvals, maintaining high Star Quality Ratings, provider relationships, risks as a government contractor (e.g., MA funding), regulatory changes, indebtedness, market conditions, litigation, security incidents, and personnel shortages - Disclaimer: Actual results may vary materially, and the company undertakes no duty to update this information unless legally required[13] Investor & Media Contacts Contact information is provided for investor relations and media inquiries - Investor Contact: Harrison Zhuo (hzhuo@ahcusa.com) - Media Contact: Priya Shah of mPR, Inc. (alignment@mpublicrelations.com)[29]