Alignment Healthcare, Inc.

Previous wording

We have grown Health Plan Membership, which we define as members enrolled in our health maintenance organization ("HMO") and preferred provider organization ("PPO") contracts (the "Alignment Health Plans"), from approximately 13,000 at inception to 223,700 as of June 30, 2025, representing a 30% compound annual growth rate across 45 markets and 5 states. Our ultimate goal is to bring this differentiated, advocacy-driven healthcare experience to millions of senior consumers in the United States and to become the most trusted senior healthcare brand in the country.

Current wording

We have grown Health Plan Membership, which we define as members enrolled in our health maintenance organization ("HMO") and preferred provider organization ("PPO") contracts (the "Alignment Health Plans"), from approximately 13,000 at inception to 229,600 as of September 30, 2025, representing a 30% compound annual growth rate across 45 markets and 5 states. Our ultimate goal is to bring this differentiated, advocacy-driven healthcare experience to millions of senior consumers in the United States and to become the most trusted senior healthcare brand in the country.

Previous wording

•Capitalize on Our Existing Market Growth Opportunity: Our ability to attract and retain members to grow in our existing markets depends on our ability to offer a superior value proposition. We routinely take market share from large established players in highly competitive markets, a key source of our health plan membership growth in excess of the industry average. We believe that there are still significant opportunities for future growth even in some of our most mature markets where we have approximately 10-30% market share. According to CMS data as of June 30, 2025, our approximately 223,700 Health Plan Members represent only 5% market share of Medicare Advantage enrollees in our markets.

Current wording

•Capitalize on Our Existing Market Growth Opportunity: Our ability to attract and retain members to grow in our existing markets depends on our ability to offer a superior value proposition. We routinely take market share from large established players in highly competitive markets, a key source of our health plan membership growth in excess of the industry average. We believe that there are still significant opportunities for future growth even in some of our most mature markets where we have approximately 10-30% market share. According to CMS data as of September 30, 2025, our approximately 229,600 Health Plan Members represent only 5% market share of Medicare Advantage enrollees in our markets.

Previous wording

•Provide Superior Service, Care and Consumer Satisfaction: We are highly focused on providing superior service and care to our members and on maintaining high levels of consumer satisfaction, which are key to our financial performance and growth. The CMS Five Star Quality Rating System provides economic incentives to Medicare Advantage plans that achieve higher Star ratings by (i) meeting certain care criteria (such as completing particular preventative screening procedures or ensuring proper follow-up care is provided for specific conditions or episodes) and (ii) receiving high member satisfaction ratings. These incentives impact financial performance in the year following the CMS Rating Year (for example, CMS’s announcement of the 2025 Ratings occurred in the second half of 2024 and will impact our financial performance in 2026). One hundred percent of our health plan members are enrolled in plans rated 4 stars and above, meaning our members consistently receive a high-quality care experience, as defined under CMS star measurement criteria. The California HMO plan has achieved a 4 star or greater rating for eight consecutive years.

Current wording

•Provide Superior Service, Care and Consumer Satisfaction: We are highly focused on providing superior service and care to our members and on maintaining high levels of consumer satisfaction, which are key to our financial performance and growth. The CMS Five Star Quality Rating System provides economic incentives to Medicare Advantage plans that achieve higher Star ratings by (i) meeting certain care criteria (such as completing particular preventative screening procedures or ensuring proper follow-up care is provided for specific conditions or episodes) and (ii) receiving high member satisfaction ratings. These incentives impact financial performance in the year following the CMS Rating Year (for example, CMS’s announcement of the 2025 Ratings occurred in the second half of 2024 and will impact our financial performance in 2026). One hundred percent of our health plan members are enrolled in plans rated 4 stars and above, meaning our members consistently receive a high-quality care experience, as defined under CMS star measurement criteria. The California HMO plan has achieved a 4 star or greater rating for nine consecutive years.

Previous wording

•Navigate Seasonality to our Business: Our operational and financial results will experience some variability depending upon the time of year in which they are measured. We experience the largest portion of member growth during the first quarter, when plan enrollment selections made during the annual enrollment period ("AEP") from October 15th through December 7th of the prior year take effect. As a result, we expect to see a significant percentage of our member growth occur on January 1 of a given calendar year. As the year progresses, our per-member revenue often declines as new members join us, typically with less complete or accurate documentation (and therefore lower risk-adjustment scores), and senior mortality disproportionately impacts our higher-acuity (and therefore greater revenue) members. Medical costs will vary seasonally depending on a number of factors, but most significantly the weather. Certain illnesses, such as the influenza virus, are far more prevalent during colder months of the year, which will result in an increase in medical expenses during these time periods. We therefore expect to see higher levels of per-member medical costs in the first and fourth quarters. The design of our prescription drug coverage (Medicare Part D) results in coverage that varies as a member’s cumulative out-of-pocket costs pass through successive stages of a member’s plan period, which begins annually on January 1 for renewals. We anticipate that, starting in 2025, the benefit redesign under the Inflation Reduction Act will result in much more moderate seasonality than we have experienced in past years. Members will still pass through the benefit phases, but our share of the total liability will be more consistent through each phase than it has been in the past. In addition, we expect our corporate, general and administrative expenses to increase in absolute dollars for the foreseeable future to support our growth. Due to the timing of many of these investments, including our primary sales and marketing season, we typically incur a greater level of investment in the second half of the year relative to the first half of the year.

Current wording

•Navigate Seasonality to our Business: Our operational and financial results will experience some variability depending upon the time of year in which they are measured. We experience the largest portion of member growth during the first quarter, when plan enrollment selections made during the annual enrollment period ("AEP") from October 15th through December 7th of the prior year take effect. As a result, we expect to see a significant percentage of our member growth occur on January 1 of a given calendar year. As the year progresses, our per-member revenue often declines as new members join us, typically with less complete or accurate documentation (and therefore lower risk-adjustment scores), and senior mortality disproportionately impacts our higher-acuity (and therefore greater revenue) members. Medical costs will vary seasonally depending on a number of factors, but most significantly the seasons. Certain illnesses, such as the influenza virus, are far more prevalent during colder months of the year, which will result in an increase in medical expenses during these time periods. We therefore expect to see higher levels of per-member medical costs in the first and fourth quarters. The design of our prescription drug coverage (Medicare Part D) results in coverage that varies as a member’s cumulative out-of-pocket costs pass through successive stages of a member’s plan period, which begins annually on January 1 for renewals. We anticipate that, starting in 2025, the benefit redesign under the Inflation Reduction Act will result in much more moderate seasonality than we have experienced in past years. Members will still pass through the benefit phases, but our share of the total liability will be more consistent through each phase than it has been in the past. In addition, we expect our corporate, general and administrative expenses to increase in absolute dollars for the foreseeable future to support our growth. Due to the timing of many of these investments, including our primary sales and marketing season, we typically incur a greater level of investment in the second half of the year relative to the first half of the year.

Previous wording

We define Health Plan Membership as the number of members enrolled in our HMO and PPO contracts as of the end of a reporting period. We believe this is an important metric to assess growth of our underlying business, which is indicative of our ability to consistently offer a superior value proposition to seniors. This metric excludes third party payor members with respect to which we are at-risk for managing their healthcare expenditures, which represented 300 and 400 members as of June 30, 2025 and 2024, respectively. It also excludes the approximately 6,400 and 8,600 ACO REACH members as of June 30, 2025 and 2024, respectively. On July 30, 2025, we notified CMS that we will discontinue our participation in the ACO REACH model as of December 31, 2025.

Current wording

We define Health Plan Membership as the number of members enrolled in our HMO and PPO contracts as of the end of a reporting period. We believe this is an important metric to assess growth of our underlying business, which is indicative of our ability to consistently offer a superior value proposition to seniors. This metric excludes third party payor members with respect to which we are at-risk for managing their healthcare expenditures, which represented 300 and 400 members as of September 30, 2025 and 2024, respectively. It also excludes the approximately 6,400 and 8,500 ACO REACH members as of September 30, 2025 and 2024, respectively. On July 30, 2025, we notified CMS that we will discontinue our participation in the ACO REACH model as of December 31, 2025.

Previous wording

(2)Amortization expense for the six months ended June 30, 2025 includes $0.6 million in impairment expense related to the remeasurement of goodwill associated with one of our subsidiaries. There was no impairment expense for the three months ended June 30, 2025.

Current wording

(2)Amortization expense for the nine months ended September 30, 2025 includes $0.6 million in impairment expense related to the remeasurement of goodwill associated with one of our subsidiaries.

Previous wording

(1)Amortization expense for the six months ended June 30, 2025 includes $0.6 million in impairment expense related to the remeasurement of goodwill associated with one of our subsidiaries. There was no impairment expense for the three months ended June 30, 2025.

Current wording

(1)Amortization expense for the nine months ended September 30, 2025 includes $0.6 million in impairment expense related to the remeasurement of goodwill associated with one of our subsidiaries.

Previous wording

June 30, 2024 and June 30, 2025 and higher revenue per member per month. The increase in revenue per member per month is primarily attributable to an increase in the CMS benchmark rates and Part D revenue rates from changes arising from the Inflation Reduction Act.

Current wording

$2,907.9 million and $1,980.1 million for the nine months ended September 30, 2025 and 2024, respectively, an increase of $927.8 million or 46.9%. The increase was primarily driven by growth in our Health Plan membership, which increased 25.9% between September 30, 2024 and September 30, 2025 and higher revenue per member per month. The increase in revenue per member per month is primarily attributable to an increase in the CMS benchmark rates and Part D revenue rates from changes arising from the Inflation Reduction Act.

Previous wording

Other Revenue. Other revenue increased $1.9 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, an increase of 26.3%. Other revenue increased $3.7 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, an increase of 26.2%. The increase is mainly attributable to an increase in revenue from services provided to third-party providers and an increase in our average interest earning cash balances and current investments. Cash and cash equivalents, and other current investments were $503.7 million as of June 30, 2025 compared to $363.7 million as of June 30, 2024.

Current wording

Other Revenue. Other revenue increased $2.1 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, an increase of 26.2%. Other revenue increased $5.8 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, an increase of 26.2%. The increase is mainly attributable to an increase in our average interest earning cash balances and current investments and an increase in revenue from services provided to third-party providers. Cash and cash equivalents, and other current investments were $618.0 million as of September 30, 2025 compared to $340.3 million as of September 30, 2024.

Previous wording

Medical Expenses. Medical expenses were $881.7 million and $605.3 million for the three months ended June 30, 2025 and 2024, respectively, an increase of $276.4 million, or 45.7%. Medical expenses were $1,702.6 million and $1,178.5 million for the six months ended June 30, 2025 and 2024, respectively, an increase of $524.1 million, or 44.5%. The increase was driven primarily by the growth in Alignment’s Health Plan membership, which increased 27.8% between June 30, 2024 and June 30, 2025, and an increase to our Part D cost sharing due to changes arising from the Inflation Reduction Act. Overall, medical expenses for the three and six months ended June 30, 2025 grew at a lower rate than earned premium revenues compared to the three and six months ended June 30, 2024, primarily due to a higher percentage of new members relative to returning members in 2024 compared to 2025. The decrease was offset by increases in unit costs.

Current wording

Medical Expenses. Medical expenses were $868.0 million and $613.4 million for the three months ended September 30, 2025 and 2024, respectively, an increase of $254.6 million, or 41.5%. Medical expenses were $2,570.7 million and $1,792.0 million for the nine months ended September 30, 2025 and 2024, respectively, an increase of $778.7 million, or 43.5%. The increase was driven primarily by the growth in Alignment’s Health Plan membership, which increased 25.9% between September 30, 2024 and September 30, 2025, and an increase to our Part D cost sharing due to changes arising from the Inflation Reduction Act. Overall, medical expenses for the three and nine months ended September 30, 2025 grew at a lower rate than earned premium revenues compared to the three and nine months ended September 30, 2024, primarily due to a higher percentage of new members relative to returning members in 2024 compared to 2025. The decrease was offset by increases in unit costs.

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $103.8 million and $87.9 million for the three months ended June 30, 2025 and 2024, respectively, an increase of $15.9 million, or 18.1%. Selling, general and administrative expenses were $207.6 million and $178.4 million for the six months ended June 30, 2025 and 2024, respectively, an increase of $29.3 million, or 16.4%. The increase was primarily due to an increase in ongoing investments and expenditures in network development, operations and sales and marketing to drive the growth of Alignment's Health Plan membership. Selling, general, and administrative expenses as a percentage of revenue decreased for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024 due to economies of scale gained from Alignment's membership growth.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $110.0 million and $90.9 million for the three months ended September 30, 2025 and 2024, respectively, an increase of $19.1 million, or 21.1%. Selling, general and administrative expenses were $317.6 million and $269.2 million for the nine months ended September 30, 2025 and 2024, respectively, an increase of $48.4 million, or 18.0%. The increase was primarily due to an increase in ongoing investments and expenditures in network development, operations and sales and marketing to drive the growth of Alignment's Health Plan membership. Selling, general, and administrative expenses as a percentage of revenue decreased for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 due to economies of scale gained from Alignment's membership growth.

Previous wording

$2.1 million, or 17.1%. The increase was primarily due to the amount and timing of our capital expenditures and the associated depreciation relative to 2024. Additionally, for the six months ended June 30, 2025, we recorded impairment expense of $0.6 million related to the remeasurement of goodwill associated with one of our subsidiaries. The goodwill impairment was recorded to amortization expense.

Current wording

Depreciation and Amortization. Depreciation and amortization expense was $8.0 million and $7.6 million for the three months ended September 30, 2025 and 2024, respectively, an increase of $0.3 million, or 4.4%. Depreciation and amortization expense was $22.6 million and $20.1 million for the nine months ended September 30, 2025 and 2024, respectively, an increase of $2.5 million, or 12.3%. The increase was primarily due to the amount and timing of our capital expenditures and the associated depreciation relative to 2024. Additionally, for the nine months ended September 30, 2025, we recorded impairment expense of $0.6 million related to the remeasurement of goodwill associated with one of our subsidiaries. The goodwill impairment was recorded to amortization expense.

Previous wording

Interest expense. Interest expense was $4.0 million and $5.7 million for the three months ended June 30, 2025 and 2024, respectively, a decrease of $1.7 million or 29.8%. Interest expense was $7.9 million and $11.1 million for the six months ended June 30, 2025 and 2024, respectively, a decrease of $3.2 million or 28.8%. The decrease in interest expense was mainly attributable to a decrease in the interest rate on our debt following refinancing in November 2024. The convertible notes have an interest rate of 4.25%, compared to our prior term loans which had an average interest rate of 11.84% for the six months ended June 30, 2024. This decrease in interest rate was offset by an increase in our long-term debt balance which was $330.0 million as of June 30, 2025 compared to $215.0 million as of June 30, 2024.

Current wording

Interest expense. Interest expense was $4.0 million and $6.9 million for the three months ended September 30, 2025 and 2024, respectively, a decrease of $2.9 million or 42.0%. Interest expense was $11.9 million and $18.1 million for the nine months ended September 30, 2025 and 2024, respectively, a decrease of $6.2 million or 34.3%. The decrease in interest expense was mainly attributable to a decrease in the interest rate on our debt following refinancing in November 2024. The convertible notes have an interest rate of 4.25%, compared to our prior term loans which had an average interest rate of 11.77% for the nine months ended September 30, 2024. This decrease in interest rate was offset by an increase in our long-term debt balance which was $330.0 million as of September 30, 2025 compared to $215.0 million as of September 30, 2024.

Previous wording

Other income, net. Other income was $(0.1) million and $(0.1) million for the three months ended June 30, 2025 and 2024, respectively. Other income was $(0.1) million and $(0.1) million for the six months ended June 30, 2025 and 2024.

Current wording

Other income, net. Other income was $0.0 million and $0.0 million for the three months ended September 30, 2025 and 2024, respectively. Other income was $0.1 million and $0.1 million for the nine months ended September 30, 2025 and 2024.

Previous wording

To date, we have financed our operations principally through our IPO, private placements of our equity securities, revenues, and convertible notes (described below). As of June 30, 2025, we had $503.8 million in cash, cash equivalents and short-term investments.

Current wording

To date, we have financed our operations principally through our IPO, private placements of our equity securities, revenues, and convertible notes (described below). As of September 30, 2025, we had $644.1 million in cash, cash equivalents and short-term investments.

Previous wording

We operate as a holding company in a highly regulated industry. Alignment Healthcare, Inc., our parent company, is dependent upon dividends and administrative expense reimbursements from our subsidiaries, most of which are subject to regulatory restrictions. We maintain significant levels of aggregate excess statutory capital and surplus in our state-regulated operating subsidiaries. As of June 30, 2025, our operating parent company (an indirect wholly owned subsidiary of our parent company) had $163.4 million in cash, cash equivalents and short-term investments.

Current wording

We operate as a holding company in a highly regulated industry. Alignment Healthcare, Inc., the parent company, is dependent upon dividends and administrative expense reimbursements from our subsidiaries, most of which are subject to regulatory restrictions. We maintain significant levels of aggregate excess statutory capital and surplus in our state-regulated operating subsidiaries. As of September 30, 2025, the operating parent company (an indirect wholly owned subsidiary of the parent company) had $145.5 million in cash, cash equivalents and short-term investments.

Previous wording

Certain states in which we operate as a CMS-licensed Medicare Advantage company may require us to meet certain capital adequacy performance standards and tests. The National Association of Insurance Commissioners has adopted rules which, if implemented by the states, set minimum capitalization requirements for insurance companies, HMOs, and other entities bearing risk for healthcare coverage. The requirements take the form of risk-based capital (“RBC”) rules, which may vary from state to state. Certain states in which our health plans or risk bearing entities operate have adopted the RBC rules.

Current wording

Certain states in which we operate as a CMS-licensed Medicare Advantage company may require us to meet certain capital adequacy performance standards and tests. The National Association of Insurance Commissioners has adopted rules which, if implemented by the states, set minimum capitalization requirements for insurance companies, HMOs, and other entities bearing risk for healthcare coverage. The requirements take the form of risk-based capital (“RBC”) rules, which may vary from state to state. Certain states in which our health plans or risk bearing entities operate have adopted the RBC rules. Other states in which our health plans or risk bearing entities operate have chosen not to adopt the RBC rules, but instead have designed and implemented their own rules regarding capital adequacy, such as the tangible net equity ("TNE") requirements for our health plans in California. As of September 30, 2025, our health plans or risk-bearing entities were in compliance with the minimum capital requirements.

Previous wording

For the six months ended June 30, 2025, net cash provided by operating activities was $45.7 million, an increase of $28.5 million compared to net cash provided by operating activities of $17.3 million for the six months ended June 30, 2024. The increase is mainly attributable to an increase in net income. This increase was offset by an increase in prepaid expenses and other current assets due to a change in our Part D balances arising from the Inflation Reduction Act.

Current wording

For the nine months ended September 30, 2025, net cash provided by operating activities was $190.3 million, an increase of $146.8 million compared to net cash provided by operating activities of $43.5 million for the nine months ended September 30, 2024. The increase is mainly attributable to an increase in membership and net income, an increase in medical expense payables related to the timing of our payments in the third quarter of 2025, and changes to the Part D program related to the Inflation Reduction Act. This increase was partially offset by an increase in prepaid expenses and other current assets due to a change in our Part D balances arising from the Inflation Reduction Act.

Previous wording

For the six months ended June 30, 2025, net cash used in investing activities was $10.1 million, a decrease of $79.8 million compared to net cash provided by investing activities of $69.7 million for the six months ended June 30, 2024. The decrease primarily relates to increased investment maturities during the six months ended June 30, 2024 compared to the six months ended June 30, 2025. The decrease was offset by a decrease in capital expenditures, which decreased $6.6 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Current wording

For the nine months ended September 30, 2025, net cash used in investing activities was $7.8 million, a decrease of $52.9 million compared to net cash provided by investing activities of $45.1 million for the nine months ended September 30, 2024. The decrease primarily relates to increased investment maturities during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2025. The decrease was offset by a decrease in capital expenditures, which decreased $10.4 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

Previous wording

For the six months ended June 30, 2025, net cash provided by financing activities was $1.8 million, a decrease of $47.4 million, compared to net cash used in financing activities of $49.2 million for the six months ended June 30, 2024. The decrease is primarily attributable to the $50.0 million draw down of the Oxford Delayed Draw term loan that occurred during the three months ended June 30, 2024.

Current wording

For the nine months ended September 30, 2025, net cash provided by financing activities was $2.7 million, a decrease of $46.4 million, compared to net cash provided by financing activities of $49.2 million for the nine months ended September 30, 2024. The decrease is primarily attributable to the $50.0 million draw down of the Oxford Delayed Draw term loan that occurred during the nine months ended September 30, 2024.