Group 1 - Alignment Healthcare, Inc. will present at the William Blair 45th Annual Growth Stock Conference on June 4, 2025, at 2 p.m. CDT [1] - A webcast and replay of the presentation will be available on Alignment's investor relations website [1] Group 2 - Alignment Healthcare focuses on empowering seniors to age well and live vibrant lives through its Medicare Advantage offerings [2] - The company partners with trusted local providers to deliver coordinated care using a customized care model and a 24/7 concierge care team [2] - Alignment Healthcare is based in California and is committed to high-quality, low-cost care for its members while expanding its national footprint [2]

Company Overview - Alignment Healthcare (ALHC) is currently ranked 5 in the Zacks Sector Rank within the Medical group, which consists of 999 companies [2] - The Zacks Rank system, which focuses on earnings estimates and revisions, has assigned ALHC a Zacks Rank of 2 (Buy) [3] Performance Metrics - The Zacks Consensus Estimate for ALHC's full-year earnings has increased by 34.1% over the past quarter, indicating improved analyst sentiment and a stronger earnings outlook [4] - Year-to-date, ALHC has returned 44.4%, significantly outperforming the average loss of 4.8% in the Medical group [4] Industry Context - Alignment Healthcare operates within the Medical Services industry, which includes 58 stocks and currently ranks 52 in the Zacks Industry Rank; this industry has seen an average loss of 1.9% this year, highlighting ALHC's relative strength [6] - In contrast, BridgeBio Pharma (BBIO), another outperforming stock in the Medical sector, belongs to the Medical - Generic Drugs industry, which has a lower ranking (198) and has declined by 15.1% this year [6] Future Outlook - Investors interested in Medical stocks should monitor Alignment Healthcare and BridgeBio Pharma for potential continued strong performance [7]

Core Insights - Alignment Healthcare, Inc. has been recognized by the Pharmacy Quality Alliance (PQA) for excellence in its Medicare Advantage prescription drug (MAPD) plan, with only 1.3% of 633 eligible contracts achieving this recognition, underscoring the award's significance [1][2] Group 1: Award Recognition - The 2025 PQA Laura Cranston Excellence in Quality Award was given to MAPDs with at least a 4.5-star Part D summary rating and a perfect 5-star rating on all five PQA medication measures [2] - Alignment Health was one of only two MAPDs to earn a perfect rating on five specific medication adherence measures, including diabetes medications and statins [2] Group 2: Commitment to Quality - Alignment has invested in quality through predictive technology and personalized concierge support to enhance medication adherence among seniors, addressing a common hurdle [4] - The company has received the PQA Excellence in Quality Award multiple times, including from 2018 to 2022, and is recognized for its commitment to advancing pharmacy care [4] Group 3: Company Overview - Alignment Health aims to empower seniors to live healthier lives through high-quality, low-cost care, utilizing a customized care model and a 24/7 concierge care team [6] - The company partners with trusted local providers to deliver coordinated care, maintaining a focus on serving seniors [6]

Summary of Alignment Healthcare Conference Call Company Overview - **Company**: Alignment Healthcare - **Industry**: Medicare Advantage Key Points Leadership Transition - Thomas Freeman, the outgoing CFO, has been with the company for ten years, with eight years as CFO, and is stepping down due to personal factors and the company's stability [2][3] - The new CFO, Jim Head, was selected after an exhaustive search, emphasizing the need for someone with experience in Medicare Advantage [6][7] Business Performance - The company reported strong performance metrics, with inpatient admissions per thousand running about 152 better than expectations in Q1 [9] - Anticipated growth for 2025 is expected to be better than 2024, with a focus on proactive care to reduce downstream costs [3][10] Membership Growth - Membership is projected to increase by 50% in 2024 and 30% in 2025, with a focus on managing risk internally rather than transferring it to third parties [14][15] - Year one members typically have a Medical Loss Ratio (MLR) of 89-90%, improving to the low 80s over time [14] Financial Metrics and Projections - The company expects to maintain strong revenue visibility for 2025, with a focus on managing costs effectively [12][13] - The MLR is expected to improve as the company continues to grow its more tenured membership base [14] Part D and Medical Cost Dynamics - The company anticipates higher expenses in the first half of the year due to changes from the Inflation Reduction Act, but expects revenue PMPM growth to outpace expense growth [25][26] - The risk corridor mechanism is expected to shift from a payable to a receivable position as expenses grow [27] Competitive Advantages - Alignment Healthcare has outperformed peers in the Medicare Advantage space due to its efficient cost structure and high-quality care delivery model [32][36] - The company has maintained a focus on care management rather than solely on risk adjustment, which has insulated it from reimbursement exposure [36] Future Outlook - The company is preparing for expansion into new states starting in 2027, with a goal to double its market share in existing areas [56][58] - The company is confident in its ability to maintain high star ratings, which are crucial for competitive positioning in the Medicare Advantage market [58][59] Regulatory Environment - Recent discussions in Washington indicate a positive outlook for Medicare Advantage, with a focus on ensuring that higher risk scores correlate with better clinical outcomes [44][47] - The company is actively engaging with policymakers to demonstrate its effective care delivery model [44][46] Operational Efficiency - The company has successfully onboarded over 100,000 members in the last year and a half with minimal issues, indicating strong operational capabilities [60][61] Additional Insights - The company emphasizes continuous improvement and transparency in its operations, which contributes to its competitive advantage [17][22] - The focus on data-driven decision-making allows the company to identify and address potential risks proactively [21][22]

Core Insights - Alignment Healthcare (ALHC) reported revenue of $926.93 million for the quarter ended March 2025, reflecting a year-over-year increase of 47.5% [1] - The earnings per share (EPS) was -$0.05, an improvement from -$0.25 in the same quarter last year, with an EPS surprise of +58.33% compared to the consensus estimate of -$0.12 [1] Financial Performance Metrics - Medical Benefit Ratio was reported at 88.4%, slightly better than the five-analyst average estimate of 89.6% [4] - Health Plan Membership at the end of the quarter was 217,500, exceeding the average estimate of 213,332 from four analysts [4] - Revenues from other sources were $8.89 million, surpassing the average estimate of $8.05 million based on five analysts, representing a year-over-year change of +26.2% [4] - Earned premiums revenue was $918.04 million, compared to the average estimate of $881.46 million from five analysts, marking a year-over-year increase of 47.7% [4] Stock Performance - Shares of Alignment Healthcare have returned -0.7% over the past month, matching the Zacks S&P 500 composite's -0.7% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Core Insights - Alignment Healthcare reported a quarterly loss of $0.05 per share, better than the Zacks Consensus Estimate of a loss of $0.12, and an improvement from a loss of $0.25 per share a year ago, resulting in an earnings surprise of 58.33% [1] - The company achieved revenues of $926.93 million for the quarter ended March 2025, exceeding the Zacks Consensus Estimate by 4.21%, and showing significant growth from $628.6 million in the same quarter last year [2] - Alignment Healthcare's stock has increased approximately 57.5% year-to-date, contrasting with a -5.3% decline in the S&P 500 [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.05 on revenues of $940.64 million, and for the current fiscal year, it is -$0.37 on revenues of $3.75 billion [7] - The estimate revisions trend for Alignment Healthcare is favorable, leading to a Zacks Rank 2 (Buy), indicating expected outperformance in the near future [6] Industry Context - The Medical Services industry, to which Alignment Healthcare belongs, is currently ranked in the top 28% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8]

Financial Data and Key Metrics Changes - Health plan membership reached 217,500, representing approximately 32% year-over-year growth [5][15] - Total revenue for the first quarter was $927 million, reflecting a 47% year-over-year increase [5][15] - Adjusted gross profit was $107 million, an 87% increase year-over-year, with a consolidated Medical Benefit Ratio (MBR) of 88.4%, improving by 250 basis points [6][15] - Adjusted EBITDA was $20 million, resulting in 410 basis points of margin expansion year-over-year [6][17] Business Line Data and Key Metrics Changes - Inpatient admissions per thousand were 153 in California and 145 in non-California markets, both exceeding expectations [7][15] - The company continued to scale its clinical model, particularly in non-California markets, where membership more than doubled year-over-year [6][8] Market Data and Key Metrics Changes - The Medicare Advantage landscape has evolved, with the company maintaining a focus on serving seniors effectively [8][9] - The company has less than 5% market share in existing markets, indicating significant growth potential [9] Company Strategy and Development Direction - The company is raising the midpoint of its guidance ranges across all key metrics due to strong first-quarter results and growth momentum [8][19] - Plans to invest in back-office operations and enhance member experiences while strengthening provider relationships [9][10] - The company aims to expand its competitive advantages through continued innovation in its AIVA technology [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage through rapid membership growth and achieve financial objectives for 2026 [11][19] - The final rate notice for 2026 indicates a healthy increase in benchmark rates, positioning the company well for future growth [11][19] - Management emphasized the importance of maintaining quality care at lower costs to thrive in both increasing and decreasing rate environments [70][71] Other Important Information - Thomas Freeman announced his transition from CFO to strategic advisor, with Jim Head appointed as the new CFO [12][13] - The company is focused on continuous improvement in its AIVA technology to enhance member engagement and care management [45][46] Q&A Session Summary Question: Inquiry about integrated strategic partnerships and care coordination - Management highlighted their success in managing complex populations and the importance of sophisticated care management [26][27] Question: Plans for growth in new markets and potential M&A activity - Management confirmed plans to add new markets in 2026 while remaining disciplined and thoughtful in their approach [28][29] Question: Clarification on MLR outperformance and Part D revenue - Management noted that early favorability in Part D was modest and not a significant driver of outperformance [33][34] Question: Competitive landscape changes in California for 2026 - Management expressed confidence in their position despite increased competition, emphasizing their strong STARS ratings and operational capabilities [60][61] Question: Visibility on RAF for new members and contracting with providers - Management confirmed they have good visibility on new member revenue PMPM and maintain aligned relationships with providers [52][66] Question: Expectations for Part D trends and potential changes in risk adjustment models - Management indicated a conservative approach to revenue recognition and expressed confidence in their ability to thrive regardless of rate changes [69][70]

Financial Data and Key Metrics Changes - Health plan membership reached 217,500, representing approximately 32% year-over-year growth [4][13] - Total revenue for Q1 2025 was $927 million, reflecting a 47% year-over-year increase [4][13] - Adjusted gross profit was $107 million, an 87% increase year-over-year, with a consolidated Medical Benefit Ratio (MBR) of 88.4%, improving by 250 basis points [5][15] - Adjusted EBITDA was $20 million, showing a 410 basis point margin expansion year-over-year [5][16] - Cash and investments at the end of the quarter totaled $480 million [17] Business Line Data and Key Metrics Changes - Inpatient admissions per thousand were 153 in California and 145 in non-California markets, both exceeding expectations [5][6] - The company continues to scale its clinical model, particularly in non-California markets, where membership more than doubled year-over-year [5][6] Market Data and Key Metrics Changes - The Medicare Advantage landscape is evolving, with the company capturing less than 5% market share in existing markets [7] - Medicare Advantage penetration is over 50%, indicating growth opportunities, especially among high-risk populations [7][8] Company Strategy and Development Direction - The company is focused on enhancing back-office operations, improving member journeys, and strengthening provider relationships through long-term partnerships [7][8] - Plans to expand competitive advantages through continued innovation in AIVA technology, aimed at improving clinical quality and member experience [8][9] - The company is preparing for new market launches in 2026 and 2027, emphasizing a disciplined approach to growth [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage costs and maintain quality, even in a changing rate environment [10][70] - The final rate notice for 2026 is favorable, with expectations for continued margin expansion [9][70] - Management highlighted the importance of maintaining a strong operational foundation to support future growth [12][70] Other Important Information - Thomas Freeman, the CFO, announced his transition to a strategic advisor role, with Jim Head appointed as the new CFO [10][11] - The company is committed to continuous improvement in member experience and operational efficiency [8][45] Q&A Session Summary Question: Inquiry about integrated strategic partnerships and care coordination for duals and chronic conditions - Management emphasized their capability in managing complex populations and the importance of sophisticated care management [25][26] Question: Plans for growth in new markets and potential M&A activity - The company plans to add new markets in 2026 and is starting initiatives for 2027 market launches, focusing on disciplined growth [27][28] Question: Clarification on MLR outperformance and Part D revenue - Management noted that Part D outperformance was modest and not a significant driver of overall performance [32][33] Question: Thoughts on favorable rate dynamics for 2026 - Management expressed confidence in their position relative to competitors and the potential for margin expansion [36][40] Question: Changes in Part D behavior and visibility on RAF for new members - Management confirmed visibility on new member revenue PMPM and a conservative approach to revenue recognition [51][52] Question: Expectations for competitive landscape changes in California - Management remains confident in their competitive position and the sustainability of their strategies [60][62] Question: Feedback from capitated providers regarding MLR concessions - Management indicated alignment with providers and no significant requests for changes in contracts [64][66] Question: Expectations for reimbursement rates and potential risk adjustment model changes - Management is prepared to thrive in either increasing or decreasing rate environments, focusing on quality and cost management [70][71]

Financial Performance - Total revenues for Q1 2025 were $926,932,000, a 47.6% increase from $628,601,000 in Q1 2024[19] - Earned premiums increased to $918,043,000 in Q1 2025, up 47.8% from $621,556,000 in Q1 2024[19] - The net loss for Q1 2025 was $9,354,000, significantly improved from a net loss of $46,575,000 in Q1 2024[19] - Adjusted EBITDA for the first quarter of 2025 was $20,178, a significant recovery from a loss of $11,980 in the same period of 2024, marking a 268.4% improvement[146] - The net loss decreased by 79.9%, from $46,575 in Q1 2024 to $9,354 in Q1 2025, indicating improved financial performance[146] Medical Expenses - Medical expenses rose to $820,900,000 in Q1 2025, compared to $573,218,000 in Q1 2024, reflecting a 43.3% increase[19] - Medical expenses for the same period were $819,715, up from $572,033 in 2024, indicating a 43.3% rise[36] - Medical expenses rose to $820.9 million, an increase of 43.2% from $573.2 million in the prior year, primarily due to the growth in Health Plan membership[162] - The medical benefits ratio (MBR) improved to 88.4% in 2025 from 90.9% in 2024, reflecting better management of healthcare expenditures[146] Cash and Liquidity - Cash and cash equivalents at the end of Q1 2025 were $446,184,000, up from $432,859,000 at the end of Q4 2024[17] - Cash, cash equivalents, and restricted cash at the end of the period were $448.3 million, up from $241.1 million at the end of the same period in 2024[183] - The company had $479.5 million in cash, cash equivalents, and short-term investments as of March 31, 2025, indicating strong liquidity[168] Assets and Liabilities - Total assets increased to $895,617,000 as of March 31, 2025, compared to $782,063,000 at the end of 2024, marking a 14.5% growth[17] - Total liabilities rose to $786,622,000 in Q1 2025, up from $681,108,000 at the end of 2024, indicating a 15.5% increase[17] - The company reported a total stockholders' equity of $108,995,000 as of March 31, 2025, compared to $100,955,000 at the end of 2024[17] Membership Growth - Health Plan Membership increased to 217,500 as of March 31, 2025, representing a 29% compound annual growth rate[135] - Health plan membership increased by 31.7% year-over-year, reaching 217,500 members as of March 31, 2025, compared to 165,100 in 2024[146] - The company operates in 45 markets across 5 states, targeting approximately 8.2 million Medicare-eligible seniors[137] Operational Developments - The company is focused on expanding its Medicare Advantage Plans across California, North Carolina, Nevada, Arizona, and Texas[29] - The proprietary technology platform, AVA, is expected to enhance member relationships and care quality, impacting future performance[139] - The company plans to invest in the AVA platform and pursue strategic acquisitions focused on healthcare delivery groups and Medicare Advantage plans[144] Regulatory and Compliance - The company is subject to a minimum annual medical loss ratio (MLR) of 85% for its Medicare Advantage Plans, with immaterial amounts payable under this provision as of March 31, 2025[46] - The company was in compliance with Risk-Based Capital (RBC) and Tangible Net Equity (TNE) requirements as of March 31, 2025[120] - As of March 31, 2025, the company was in compliance with minimum capital requirements set by states where it operates[174] Expenses and Costs - Selling, general and administrative expenses increased by 14.7% to $103.8 million, attributed to investments in network development and marketing[163] - Interest expense decreased by 25.9% to $4.0 million due to a reduction in the interest rate on debt following refinancing[165] - The company experienced modest increases in unit costs and labor expenses but believes inflation has not had a material effect on operating results[201] Legal and Settlement Matters - The company has accrued a potential liability of $913 related to a tentative settlement of a class action lawsuit as of March 31, 2025[125] Management Changes - The company appointed James Head as the new Chief Financial Officer effective May 2, 2025, succeeding Thomas Freeman[215]

* Please see "First Quarter 2025 Non-GAAP Reconciliation Tables" below for more information on the non-GAAP financial measures reported here as supplemental information. "Alignment Healthcare's first-quarter performance reflects the strength of our model and the discipline of our execution, showing what's possible when technology, clinical management and member-first service operate as one," said John Kao, founder and CEO. "By staying focused on quality, clinical outcomes and member experience, we exceeded ...