Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Alignment Healthcare Reports Third Quarter 2023 Results; Exceeds Guidance Across All Key Financial Metrics By: Alignment Healthcare USA, LLC via GlobeNewswire November 02, 2023 at 16:01 PM EDT Reports $456.7 million in total revenue, up 26.7% year-over-yearMedicare Advantage enrollment increases to approximately 115,600 members, up 18% year-over-yearOutperforms on four key performance indicators: membership, revenue, adjusted gross profit and adjusted EBITDARaises year-end health plan membership outlook to 117,600-118,600, indicating 20% growth year-over-year at the midpoint of the outlook rangeEarns high performance and quality ratings from Centers for Medicare & Medicaid Services, with more than 90% of company’s Medicare Advantage members in plans rated 4-stars or higher for 2024 ORANGE, Calif., Nov. 02, 2023 (GLOBE NEWSWIRE) -- Alignment Healthcare, Inc. (NASDAQ: ALHC), today reported financial results for its third quarter ended Sept. 30, 2023. “Alignment Healthcare’s third quarter results show we're doing Medicare Advantage (MA) right,” said John Kao, founder and CEO. “It’s more than just numbers – it's about service, quality and advocacy, backed by seven consecutive years of our largest MA contract achieving at least 4- out of 5-stars.” Third Quarter 2023 Financial HighlightsAll comparisons, unless otherwise noted, are to the three months ended Sept. 30, 2022. Health plan membership at the end of the quarter was approximately 115,600, up 18.0% year over yearTotal revenue was $456.7 million, up 26.7% year over yearHealth plan premium revenue of $450.2 million represented 25.1% growth year over yearAdjusted gross profit was $60.6 million and loss from operations was ($29.8) million Adjusted gross profit excludes depreciation and amortization of $5.5 million and selling, general, and administrative expenses of $83.1 million (which includes $11.8 million of equity-based compensation). Adjusted gross profit also excludes an additional $1.7 million of equity-based compensation recorded within medical expensesMedical benefits ratio based on adjusted gross profit was 86.7% Adjusted EBITDA was ($8.4) million and net loss was ($35.1) million Adjusted Gross Profit is reconciled as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Loss from operations $(29,756) $(33,410) $(85,904) $(76,533)Add back: Equity-based compensation (medical expenses) 1,733 1,912 6,024 6,751 Depreciation (medical expenses) 64 57 194 149 Depreciation and amortization 5,497 4,456 15,613 12,586 Selling, general, and administrative expenses 83,089 76,452 223,696 212,418 Total add back 90,383 82,877 245,527 231,904 Adjusted gross profit $60,627 $49,467 $159,623 $155,371 Medical benefit ratio 86.7% 86.3% 88.2% 85.5% Adjusted EBITDA is reconciled as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Net loss $(35,077) $(40,247) $(100,942) $(92,644)Less: Net loss attributable to noncontrolling interest 30 — 134 — Add back: Interest expense 5,466 4,605 15,747 13,496 Depreciation and amortization 5,561 4,513 15,807 12,735 Income taxes - 167 2 167 EBITDA (24,020) (30,962) (69,252) (66,246)Equity-based compensation(1) 13,569 18,687 51,183 58,833 Reorganization and transaction-related expenses(2) — 579 — 579 Acquisition expenses(3) 81 7 761 1,066 Litigation costs and settlement (4) 1,950 — 1,950 — (Gain) loss on sublease(5) — — (289) 509 Loss on extinguishment of debt — 2,196 — 2,196 Adjusted EBITDA $(8,420) $(9,493) $(15,647) $(3,063) (1) Represents equity-based compensation related to grants made in the applicable year, as well as equity-based compensation related to the timing of the IPO, which includes previously issued stock appreciation rights ("SARs") liability awards, modifications related to transaction vesting units, and grants made in conjunction with the IPO. (2) Represents legal, professional, accounting and other advisory fees related to a secondary offering that are considered non-recurring and non-capitalizable. (3) Represents acquisition-related fees, such as legal and advisory fees, that are non-capitalizable. (4) Represents (a) $0.1 million in legal fees and a $0.9 million reserve for settlement related to a wage and hour class action lawsuit and (b) $0.9 million in legal fees related to legal action initiated by the Company seeking injunctive relief prohibiting member solicitation in violation of CMS regulations. Refer to Note 12, "Commitments and Contingencies" in our condensed consolidated financial statements for more information regarding certain related litigation. Costs reflected consist of litigation costs considered outside of the ordinary course of business based on the following considerations which we assess regularly: (i) the frequency of similar cases that have been brought to date, or are expected to be brought within two years, (ii) complexity of the case, (iii) nature of the remedies sought, (iv) litigation posture of the Company, (v) counterparty involved, and (vi) the Company's overall litigation strategy. (5) Represents gain or loss related to right of use ("ROU") assets that were subleased in the respective period.Outlook for Fourth Quarter and Fiscal Year 2023 Three Months Ending December 31, 2023Twelve Months EndingDecember 31, 2023$ MillionsLowHighLowHighHealth Plan Membership117,600118,600117,600118,600Revenue$422$442$1,780$1,800Adjusted Gross Profit1$46$54$206$214Adjusted EBITDA2($18)($10)($34)($26) _______________________ Adjusted gross profit is a non-GAAP financial measure that is presented as supplemental disclosure, that we define as loss from operations before depreciation and amortization, clinical equity-based compensation expense, and selling, general, and administrative expenses. We cannot reconcile our estimated ranges for adjusted gross profit to loss from operations, the most directly comparable GAAP measure, and cannot provide estimated ranges for loss from operations, without unreasonable efforts because of the uncertainty around certain items that may impact loss from operations, including equity-based compensation expense and depreciation and amortization, that are not within our control or cannot be reasonably predicted.Adjusted EBITDA is a non-GAAP financial measure that is presented as supplemental disclosure, that we define as net loss before interest expense, income taxes, depreciation and amortization expense, reorganization and transaction-related expenses, acquisition expenses, certain litigation costs and settlements, gains or losses from subleases and equity-based compensation expense. We cannot reconcile our estimated ranges for Adjusted EBITDA to net loss, the most directly comparable GAAP measure, and cannot provide estimated ranges for net loss, without unreasonable efforts because of the uncertainty around certain items that may impact net loss, including equity-based compensation expense and depreciation and amortization, that are not within our control or cannot be reasonably predicted. Conference Call DetailsThe company will host a conference call at 5:30 p.m. EDT today to discuss these results and management’s outlook for future financial and operational performance. A live audio webcast will be available online at https://ir.alignmenthealth.com/. At the start of the conference call, participants may access the webcast at the following link: https://edge.media-server.com/mmc/p/wsums52s. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web links, and will remain available for approximately 12 months. About Alignment HealthAlignment Health is championing a new path in senior care that empowers members to age well and live their most vibrant lives. A consumer brand name of Alignment Healthcare (NASDAQ: ALHC), Alignment Health offers more than 40 benefits-rich, value-driven Medicare Advantage plans that serve 52 counties across six states. The company partners with nationally recognized and trusted local providers to deliver coordinated care, powered by its customized care model, 24/7 concierge care team and purpose-built technology, AVAⓇ. Based in California, the company’s mission-focused team makes high-quality, low-cost care a reality for members every day. As it expands its offerings and grows its national footprint, Alignment upholds its core values of leading with a serving heart and putting the senior first. For more information, visit www.alignmenthealth.com. Forward-Looking Statements This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements include statements regarding our future growth and our financial outlook for the quarter and year ending December 31, 2023. Forward-looking statements are subject to risks and uncertainties and are based on assumptions that may prove to be inaccurate, which could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. Important risks and uncertainties that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: our ability to attract new members and enter new markets, including the need for certain governmental approvals; our ability to maintain a high rating for our plans on the Five Star Quality Rating System; our ability to develop and maintain satisfactory relationships with care providers that service our members; risks associated with being a government contractor; changes in laws and regulations applicable to our business model; risks related to our indebtedness, including the potential for rising interest rates; changes in market or industry conditions and receptivity to our technology and services; results of litigation or a security incident; the impact of shortages of qualified personnel and related increases in our labor costs; and the impact of COVID-19 on our business and results of operation. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our Annual Report on Form 10-K for the year ended December 31, 2022, and the other periodic reports we file with the SEC. All information provided in this release and in the attachments is as of the date hereof, and we undertake no duty to update or revise this information unless required by law. Condensed Consolidated Balance Sheets(in thousands, except par value and share amounts)(Unaudited) September 30, 2023 December 31, 2022Assets Current Assets: Cash and cash equivalents $391,643 $409,549 Accounts receivable (less allowance for credit losses of $91 at September 30, 2023 and $0 at December 31, 2022, respectively) 105,523 92,890 Short-term investments 123,926 — Prepaid expenses and other current assets 45,878 42,107 Total current assets 666,970 544,546 Property and equipment, net 47,162 37,169 Right of use asset, net 10,472 5,825 Goodwill and intangible assets, net 40,106 40,288 Other assets 6,082 6,035 Total assets $770,792 $633,863 Liabilities and Stockholders' Equity Current Liabilities: Medical expenses payable $203,435 $170,135 Accounts payable and accrued expenses 25,356 31,980 Deferred premium revenue 146,342 308 Accrued compensation 35,141 27,538 Total current liabilities 410,274 229,961 Long-term debt, net of debt issuance costs 161,595 160,902 Long-term portion of lease liabilities 9,318 3,698 Total liabilities 581,187 394,561 Commitments and Contingencies Stockholders' Equity: Preferred stock, $.001 par value; 100,000,000 and 100,000,000 shares authorized as of September 30, 2023 and December 31, 2022, respectively; no shares issued and outstanding as of September 30, 2023 and December 31, 2022 — — Common stock, $.001 par value; 1,000,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 188,911,520 and 187,280,015 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively 189 187 Additional paid-in capital 1,021,363 970,180 Accumulated deficit (833,049) (732,241)Total Alignment Healthcare, Inc. stockholders' equity 188,503 238,126 Noncontrolling interest 1,102 1,176 Total stockholders' equity 189,605 239,302 Total liabilities and stockholders' equity $770,792 $633,863 Condensed Consolidated Statements of Operations(in thousands, except per share amounts)(Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenues: Earned premiums $450,235 $359,978 $1,341,924 $1,071,450 Other 6,474 370 16,319 898 Total revenues 456,709 360,348 1,358,243 1,072,348 Expenses: Medical expenses 397,879 312,850 1,204,838 923,877 Selling, general, and administrative expenses 83,089 76,452 223,696 212,418 Depreciation and amortization 5,497 4,456 15,613 12,586 Total expenses 486,465 393,758 1,444,147 1,148,881 Loss from operations (29,756) (33,410) (85,904) (76,533)Other expenses: Interest expense 5,466 4,605 15,747 13,496 Other expenses (income) (145) (131) (711) 252 Loss on extinguishment of debt — 2,196 — 2,196 Total other expenses 5,321 6,670 15,036 15,944 Loss before income taxes (35,077) (40,080) (100,940) (92,477)Provision for income taxes — 167 2 167 Net loss $(35,077) $(40,247) $(100,942) $(92,644)Less: Net loss attributable to noncontrolling interest 30 — 134 — Net loss attributable to Alignment Healthcare, Inc. $(35,047) $(40,247) $(100,808) $(92,644)Total weighted-average common shares outstanding - basic and diluted 187,328,318 182,123,363 185,493,345 180,765,300 Net loss per share - basic and diluted $(0.19) $(0.22) $(0.54) $(0.51) Condensed Consolidated Statements of Cash Flows (in thousands)(Unaudited) Nine Months Ended September 30, 2023 2022 Operating Activities: Net loss $(100,942) $(92,644)Adjustments to reconcile net loss to net cash provided by operating activities: Provision for credit loss 91 150 (Gain) loss on sublease (289) 510 Depreciation and amortization 15,807 12,735 Amortization-investment discount (3,349) (8)Amortization-debt issuance costs 1,037 1,616 Amortization of payment-in-kind interest — 2,943 Equity-based compensation 51,183 58,833 Non-cash lease expense 1,653 2,151 Loss on extinguishment of debt — 2,196 Changes in operating assets and liabilities: Accounts receivable (12,724) (29,840)Prepaid expenses and other current assets (3,771) (8,742)Other assets (119) (137)Medical expenses payable 33,299 45,509 Accounts payable and accrued expenses (4,613) 2,030 Deferred premium revenue 146,034 116,298 Accrued compensation 7,604 7,484 Lease liabilities (2,622) (3,126)Payment-in-kind interest — (14,122)Net cash provided by operating activities 128,279 103,836 Investing Activities: Purchase of business, net of cash received — (2,393)Purchase of investments (281,582) (2,825)Sale of investments 160,735 2,425 Acquisition of property and equipment (25,398) (17,317)Net cash used in investing activities (146,245) (20,110)Financing Activities: Repurchase of noncontrolling interest — (100)Issuance of long-term debt — 165,000 Debt issuance costs — (4,601)Repayment of long-term debt — (143,179)Contributions from noncontrolling interest holders 60 — Net cash provided by financing activities 60 17,120 Net decrease in cash (17,906) 100,846 Cash, cash equivalents and restricted cash at beginning of period 411,299 468,350 Cash, cash equivalents and restricted cash at end of period $393,393 $569,196 Supplemental disclosure of cash flow information: Cash paid for interest $13,943 $22,447 Supplemental non-cash investing and financing activities: Acquisition of property in accounts payable $117 $290 Purchase of business in accounts payable $— $375 The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the total above: September 30, 2023 September 30, 2022Cash and cash equivalents $391,643 $567,446Restricted cash in other assets 1,750 1,750Total $393,393 $569,196 Non-GAAP Financial Measures Certain of these financial measures are considered “non-GAAP” financial measures within the meaning of Item 10 of Regulation S-K promulgated by the SEC. We believe that non-GAAP financial measures provide an additional way of viewing aspects of our operations that, when viewed with the GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business. These non-GAAP financial measures are also used by our management to evaluate financial results and to plan and forecast future periods. However, non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Non-GAAP financial measures used by us may differ from the non-GAAP measures used by other companies, including our competitors. To supplement our consolidated financial statements presented on a GAAP basis, we disclose the following non-GAAP measures: Medical Benefits Ratio, Adjusted EBITDA and Adjusted Gross Profit as these are performance measures that our management uses to assess our operating performance. Because these measures facilitate internal comparisons of our historical operating performance on a more consistent basis, we use these measures for business planning purposes and in evaluating acquisition opportunities. Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that we define as net loss before interest expense, income taxes, depreciation and amortization expense, reorganization and transaction-related expenses, acquisition expenses, certain litigation costs and settlements, gains or losses on subleases and equity-based compensation expense. Adjusted EBITDA should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA in lieu of net loss, which is the most directly comparable financial measure calculated in accordance with GAAP. Our use of the term Adjusted EBITDA may vary from the use of similar terms by other companies in our industry and accordingly may not be comparable to similarly titled measures used by other companies. Medical Benefits Ratio (MBR) We calculate our MBR by dividing total medical expenses, excluding depreciation and equity-based compensation, by total revenues in a given period. Adjusted Gross Profit Adjusted gross profit is a non-GAAP financial measure that we define as loss from operations before depreciation and amortization, clinical equity-based compensation expense, and selling, general, and administrative expenses. Adjusted gross profit should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of adjusted gross profit in lieu of loss from operations, which is the most directly comparable financial measure calculated in accordance with GAAP. Our use of the term adjusted gross profit may vary from the use of similar terms by other companies in our industry and accordingly may not be comparable to similarly titled measures used by other companies. Investor Contact Harrison Zhuohzhuo@ahcusa.com Media Contact Maggie HabibmPR, Inc. for Alignment Healthalignment@mpublicrelations.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Alignment Healthcare Reports Third Quarter 2023 Results; Exceeds Guidance Across All Key Financial Metrics By: Alignment Healthcare USA, LLC via GlobeNewswire November 02, 2023 at 16:01 PM EDT Reports $456.7 million in total revenue, up 26.7% year-over-yearMedicare Advantage enrollment increases to approximately 115,600 members, up 18% year-over-yearOutperforms on four key performance indicators: membership, revenue, adjusted gross profit and adjusted EBITDARaises year-end health plan membership outlook to 117,600-118,600, indicating 20% growth year-over-year at the midpoint of the outlook rangeEarns high performance and quality ratings from Centers for Medicare & Medicaid Services, with more than 90% of company’s Medicare Advantage members in plans rated 4-stars or higher for 2024 ORANGE, Calif., Nov. 02, 2023 (GLOBE NEWSWIRE) -- Alignment Healthcare, Inc. (NASDAQ: ALHC), today reported financial results for its third quarter ended Sept. 30, 2023. “Alignment Healthcare’s third quarter results show we're doing Medicare Advantage (MA) right,” said John Kao, founder and CEO. “It’s more than just numbers – it's about service, quality and advocacy, backed by seven consecutive years of our largest MA contract achieving at least 4- out of 5-stars.” Third Quarter 2023 Financial HighlightsAll comparisons, unless otherwise noted, are to the three months ended Sept. 30, 2022. Health plan membership at the end of the quarter was approximately 115,600, up 18.0% year over yearTotal revenue was $456.7 million, up 26.7% year over yearHealth plan premium revenue of $450.2 million represented 25.1% growth year over yearAdjusted gross profit was $60.6 million and loss from operations was ($29.8) million Adjusted gross profit excludes depreciation and amortization of $5.5 million and selling, general, and administrative expenses of $83.1 million (which includes $11.8 million of equity-based compensation). Adjusted gross profit also excludes an additional $1.7 million of equity-based compensation recorded within medical expensesMedical benefits ratio based on adjusted gross profit was 86.7% Adjusted EBITDA was ($8.4) million and net loss was ($35.1) million Adjusted Gross Profit is reconciled as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Loss from operations $(29,756) $(33,410) $(85,904) $(76,533)Add back: Equity-based compensation (medical expenses) 1,733 1,912 6,024 6,751 Depreciation (medical expenses) 64 57 194 149 Depreciation and amortization 5,497 4,456 15,613 12,586 Selling, general, and administrative expenses 83,089 76,452 223,696 212,418 Total add back 90,383 82,877 245,527 231,904 Adjusted gross profit $60,627 $49,467 $159,623 $155,371 Medical benefit ratio 86.7% 86.3% 88.2% 85.5% Adjusted EBITDA is reconciled as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Net loss $(35,077) $(40,247) $(100,942) $(92,644)Less: Net loss attributable to noncontrolling interest 30 — 134 — Add back: Interest expense 5,466 4,605 15,747 13,496 Depreciation and amortization 5,561 4,513 15,807 12,735 Income taxes - 167 2 167 EBITDA (24,020) (30,962) (69,252) (66,246)Equity-based compensation(1) 13,569 18,687 51,183 58,833 Reorganization and transaction-related expenses(2) — 579 — 579 Acquisition expenses(3) 81 7 761 1,066 Litigation costs and settlement (4) 1,950 — 1,950 — (Gain) loss on sublease(5) — — (289) 509 Loss on extinguishment of debt — 2,196 — 2,196 Adjusted EBITDA $(8,420) $(9,493) $(15,647) $(3,063) (1) Represents equity-based compensation related to grants made in the applicable year, as well as equity-based compensation related to the timing of the IPO, which includes previously issued stock appreciation rights ("SARs") liability awards, modifications related to transaction vesting units, and grants made in conjunction with the IPO. (2) Represents legal, professional, accounting and other advisory fees related to a secondary offering that are considered non-recurring and non-capitalizable. (3) Represents acquisition-related fees, such as legal and advisory fees, that are non-capitalizable. (4) Represents (a) $0.1 million in legal fees and a $0.9 million reserve for settlement related to a wage and hour class action lawsuit and (b) $0.9 million in legal fees related to legal action initiated by the Company seeking injunctive relief prohibiting member solicitation in violation of CMS regulations. Refer to Note 12, "Commitments and Contingencies" in our condensed consolidated financial statements for more information regarding certain related litigation. Costs reflected consist of litigation costs considered outside of the ordinary course of business based on the following considerations which we assess regularly: (i) the frequency of similar cases that have been brought to date, or are expected to be brought within two years, (ii) complexity of the case, (iii) nature of the remedies sought, (iv) litigation posture of the Company, (v) counterparty involved, and (vi) the Company's overall litigation strategy. (5) Represents gain or loss related to right of use ("ROU") assets that were subleased in the respective period.Outlook for Fourth Quarter and Fiscal Year 2023 Three Months Ending December 31, 2023Twelve Months EndingDecember 31, 2023$ MillionsLowHighLowHighHealth Plan Membership117,600118,600117,600118,600Revenue$422$442$1,780$1,800Adjusted Gross Profit1$46$54$206$214Adjusted EBITDA2($18)($10)($34)($26) _______________________ Adjusted gross profit is a non-GAAP financial measure that is presented as supplemental disclosure, that we define as loss from operations before depreciation and amortization, clinical equity-based compensation expense, and selling, general, and administrative expenses. We cannot reconcile our estimated ranges for adjusted gross profit to loss from operations, the most directly comparable GAAP measure, and cannot provide estimated ranges for loss from operations, without unreasonable efforts because of the uncertainty around certain items that may impact loss from operations, including equity-based compensation expense and depreciation and amortization, that are not within our control or cannot be reasonably predicted.Adjusted EBITDA is a non-GAAP financial measure that is presented as supplemental disclosure, that we define as net loss before interest expense, income taxes, depreciation and amortization expense, reorganization and transaction-related expenses, acquisition expenses, certain litigation costs and settlements, gains or losses from subleases and equity-based compensation expense. We cannot reconcile our estimated ranges for Adjusted EBITDA to net loss, the most directly comparable GAAP measure, and cannot provide estimated ranges for net loss, without unreasonable efforts because of the uncertainty around certain items that may impact net loss, including equity-based compensation expense and depreciation and amortization, that are not within our control or cannot be reasonably predicted. Conference Call DetailsThe company will host a conference call at 5:30 p.m. EDT today to discuss these results and management’s outlook for future financial and operational performance. A live audio webcast will be available online at https://ir.alignmenthealth.com/. At the start of the conference call, participants may access the webcast at the following link: https://edge.media-server.com/mmc/p/wsums52s. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web links, and will remain available for approximately 12 months. About Alignment HealthAlignment Health is championing a new path in senior care that empowers members to age well and live their most vibrant lives. A consumer brand name of Alignment Healthcare (NASDAQ: ALHC), Alignment Health offers more than 40 benefits-rich, value-driven Medicare Advantage plans that serve 52 counties across six states. The company partners with nationally recognized and trusted local providers to deliver coordinated care, powered by its customized care model, 24/7 concierge care team and purpose-built technology, AVAⓇ. Based in California, the company’s mission-focused team makes high-quality, low-cost care a reality for members every day. As it expands its offerings and grows its national footprint, Alignment upholds its core values of leading with a serving heart and putting the senior first. For more information, visit www.alignmenthealth.com. Forward-Looking Statements This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements include statements regarding our future growth and our financial outlook for the quarter and year ending December 31, 2023. Forward-looking statements are subject to risks and uncertainties and are based on assumptions that may prove to be inaccurate, which could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. Important risks and uncertainties that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: our ability to attract new members and enter new markets, including the need for certain governmental approvals; our ability to maintain a high rating for our plans on the Five Star Quality Rating System; our ability to develop and maintain satisfactory relationships with care providers that service our members; risks associated with being a government contractor; changes in laws and regulations applicable to our business model; risks related to our indebtedness, including the potential for rising interest rates; changes in market or industry conditions and receptivity to our technology and services; results of litigation or a security incident; the impact of shortages of qualified personnel and related increases in our labor costs; and the impact of COVID-19 on our business and results of operation. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our Annual Report on Form 10-K for the year ended December 31, 2022, and the other periodic reports we file with the SEC. All information provided in this release and in the attachments is as of the date hereof, and we undertake no duty to update or revise this information unless required by law. Condensed Consolidated Balance Sheets(in thousands, except par value and share amounts)(Unaudited) September 30, 2023 December 31, 2022Assets Current Assets: Cash and cash equivalents $391,643 $409,549 Accounts receivable (less allowance for credit losses of $91 at September 30, 2023 and $0 at December 31, 2022, respectively) 105,523 92,890 Short-term investments 123,926 — Prepaid expenses and other current assets 45,878 42,107 Total current assets 666,970 544,546 Property and equipment, net 47,162 37,169 Right of use asset, net 10,472 5,825 Goodwill and intangible assets, net 40,106 40,288 Other assets 6,082 6,035 Total assets $770,792 $633,863 Liabilities and Stockholders' Equity Current Liabilities: Medical expenses payable $203,435 $170,135 Accounts payable and accrued expenses 25,356 31,980 Deferred premium revenue 146,342 308 Accrued compensation 35,141 27,538 Total current liabilities 410,274 229,961 Long-term debt, net of debt issuance costs 161,595 160,902 Long-term portion of lease liabilities 9,318 3,698 Total liabilities 581,187 394,561 Commitments and Contingencies Stockholders' Equity: Preferred stock, $.001 par value; 100,000,000 and 100,000,000 shares authorized as of September 30, 2023 and December 31, 2022, respectively; no shares issued and outstanding as of September 30, 2023 and December 31, 2022 — — Common stock, $.001 par value; 1,000,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 188,911,520 and 187,280,015 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively 189 187 Additional paid-in capital 1,021,363 970,180 Accumulated deficit (833,049) (732,241)Total Alignment Healthcare, Inc. stockholders' equity 188,503 238,126 Noncontrolling interest 1,102 1,176 Total stockholders' equity 189,605 239,302 Total liabilities and stockholders' equity $770,792 $633,863 Condensed Consolidated Statements of Operations(in thousands, except per share amounts)(Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenues: Earned premiums $450,235 $359,978 $1,341,924 $1,071,450 Other 6,474 370 16,319 898 Total revenues 456,709 360,348 1,358,243 1,072,348 Expenses: Medical expenses 397,879 312,850 1,204,838 923,877 Selling, general, and administrative expenses 83,089 76,452 223,696 212,418 Depreciation and amortization 5,497 4,456 15,613 12,586 Total expenses 486,465 393,758 1,444,147 1,148,881 Loss from operations (29,756) (33,410) (85,904) (76,533)Other expenses: Interest expense 5,466 4,605 15,747 13,496 Other expenses (income) (145) (131) (711) 252 Loss on extinguishment of debt — 2,196 — 2,196 Total other expenses 5,321 6,670 15,036 15,944 Loss before income taxes (35,077) (40,080) (100,940) (92,477)Provision for income taxes — 167 2 167 Net loss $(35,077) $(40,247) $(100,942) $(92,644)Less: Net loss attributable to noncontrolling interest 30 — 134 — Net loss attributable to Alignment Healthcare, Inc. $(35,047) $(40,247) $(100,808) $(92,644)Total weighted-average common shares outstanding - basic and diluted 187,328,318 182,123,363 185,493,345 180,765,300 Net loss per share - basic and diluted $(0.19) $(0.22) $(0.54) $(0.51) Condensed Consolidated Statements of Cash Flows (in thousands)(Unaudited) Nine Months Ended September 30, 2023 2022 Operating Activities: Net loss $(100,942) $(92,644)Adjustments to reconcile net loss to net cash provided by operating activities: Provision for credit loss 91 150 (Gain) loss on sublease (289) 510 Depreciation and amortization 15,807 12,735 Amortization-investment discount (3,349) (8)Amortization-debt issuance costs 1,037 1,616 Amortization of payment-in-kind interest — 2,943 Equity-based compensation 51,183 58,833 Non-cash lease expense 1,653 2,151 Loss on extinguishment of debt — 2,196 Changes in operating assets and liabilities: Accounts receivable (12,724) (29,840)Prepaid expenses and other current assets (3,771) (8,742)Other assets (119) (137)Medical expenses payable 33,299 45,509 Accounts payable and accrued expenses (4,613) 2,030 Deferred premium revenue 146,034 116,298 Accrued compensation 7,604 7,484 Lease liabilities (2,622) (3,126)Payment-in-kind interest — (14,122)Net cash provided by operating activities 128,279 103,836 Investing Activities: Purchase of business, net of cash received — (2,393)Purchase of investments (281,582) (2,825)Sale of investments 160,735 2,425 Acquisition of property and equipment (25,398) (17,317)Net cash used in investing activities (146,245) (20,110)Financing Activities: Repurchase of noncontrolling interest — (100)Issuance of long-term debt — 165,000 Debt issuance costs — (4,601)Repayment of long-term debt — (143,179)Contributions from noncontrolling interest holders 60 — Net cash provided by financing activities 60 17,120 Net decrease in cash (17,906) 100,846 Cash, cash equivalents and restricted cash at beginning of period 411,299 468,350 Cash, cash equivalents and restricted cash at end of period $393,393 $569,196 Supplemental disclosure of cash flow information: Cash paid for interest $13,943 $22,447 Supplemental non-cash investing and financing activities: Acquisition of property in accounts payable $117 $290 Purchase of business in accounts payable $— $375 The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the total above: September 30, 2023 September 30, 2022Cash and cash equivalents $391,643 $567,446Restricted cash in other assets 1,750 1,750Total $393,393 $569,196 Non-GAAP Financial Measures Certain of these financial measures are considered “non-GAAP” financial measures within the meaning of Item 10 of Regulation S-K promulgated by the SEC. We believe that non-GAAP financial measures provide an additional way of viewing aspects of our operations that, when viewed with the GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business. These non-GAAP financial measures are also used by our management to evaluate financial results and to plan and forecast future periods. However, non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Non-GAAP financial measures used by us may differ from the non-GAAP measures used by other companies, including our competitors. To supplement our consolidated financial statements presented on a GAAP basis, we disclose the following non-GAAP measures: Medical Benefits Ratio, Adjusted EBITDA and Adjusted Gross Profit as these are performance measures that our management uses to assess our operating performance. Because these measures facilitate internal comparisons of our historical operating performance on a more consistent basis, we use these measures for business planning purposes and in evaluating acquisition opportunities. Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that we define as net loss before interest expense, income taxes, depreciation and amortization expense, reorganization and transaction-related expenses, acquisition expenses, certain litigation costs and settlements, gains or losses on subleases and equity-based compensation expense. Adjusted EBITDA should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA in lieu of net loss, which is the most directly comparable financial measure calculated in accordance with GAAP. Our use of the term Adjusted EBITDA may vary from the use of similar terms by other companies in our industry and accordingly may not be comparable to similarly titled measures used by other companies. Medical Benefits Ratio (MBR) We calculate our MBR by dividing total medical expenses, excluding depreciation and equity-based compensation, by total revenues in a given period. Adjusted Gross Profit Adjusted gross profit is a non-GAAP financial measure that we define as loss from operations before depreciation and amortization, clinical equity-based compensation expense, and selling, general, and administrative expenses. Adjusted gross profit should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of adjusted gross profit in lieu of loss from operations, which is the most directly comparable financial measure calculated in accordance with GAAP. Our use of the term adjusted gross profit may vary from the use of similar terms by other companies in our industry and accordingly may not be comparable to similarly titled measures used by other companies. Investor Contact Harrison Zhuohzhuo@ahcusa.com Media Contact Maggie HabibmPR, Inc. for Alignment Healthalignment@mpublicrelations.com
Reports $456.7 million in total revenue, up 26.7% year-over-yearMedicare Advantage enrollment increases to approximately 115,600 members, up 18% year-over-yearOutperforms on four key performance indicators: membership, revenue, adjusted gross profit and adjusted EBITDARaises year-end health plan membership outlook to 117,600-118,600, indicating 20% growth year-over-year at the midpoint of the outlook rangeEarns high performance and quality ratings from Centers for Medicare & Medicaid Services, with more than 90% of company’s Medicare Advantage members in plans rated 4-stars or higher for 2024 ORANGE, Calif., Nov. 02, 2023 (GLOBE NEWSWIRE) -- Alignment Healthcare, Inc. (NASDAQ: ALHC), today reported financial results for its third quarter ended Sept. 30, 2023. “Alignment Healthcare’s third quarter results show we're doing Medicare Advantage (MA) right,” said John Kao, founder and CEO. “It’s more than just numbers – it's about service, quality and advocacy, backed by seven consecutive years of our largest MA contract achieving at least 4- out of 5-stars.” Third Quarter 2023 Financial HighlightsAll comparisons, unless otherwise noted, are to the three months ended Sept. 30, 2022. Health plan membership at the end of the quarter was approximately 115,600, up 18.0% year over yearTotal revenue was $456.7 million, up 26.7% year over yearHealth plan premium revenue of $450.2 million represented 25.1% growth year over yearAdjusted gross profit was $60.6 million and loss from operations was ($29.8) million Adjusted gross profit excludes depreciation and amortization of $5.5 million and selling, general, and administrative expenses of $83.1 million (which includes $11.8 million of equity-based compensation). Adjusted gross profit also excludes an additional $1.7 million of equity-based compensation recorded within medical expensesMedical benefits ratio based on adjusted gross profit was 86.7% Adjusted EBITDA was ($8.4) million and net loss was ($35.1) million Adjusted Gross Profit is reconciled as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Loss from operations $(29,756) $(33,410) $(85,904) $(76,533)Add back: Equity-based compensation (medical expenses) 1,733 1,912 6,024 6,751 Depreciation (medical expenses) 64 57 194 149 Depreciation and amortization 5,497 4,456 15,613 12,586 Selling, general, and administrative expenses 83,089 76,452 223,696 212,418 Total add back 90,383 82,877 245,527 231,904 Adjusted gross profit $60,627 $49,467 $159,623 $155,371 Medical benefit ratio 86.7% 86.3% 88.2% 85.5% Adjusted EBITDA is reconciled as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Net loss $(35,077) $(40,247) $(100,942) $(92,644)Less: Net loss attributable to noncontrolling interest 30 — 134 — Add back: Interest expense 5,466 4,605 15,747 13,496 Depreciation and amortization 5,561 4,513 15,807 12,735 Income taxes - 167 2 167 EBITDA (24,020) (30,962) (69,252) (66,246)Equity-based compensation(1) 13,569 18,687 51,183 58,833 Reorganization and transaction-related expenses(2) — 579 — 579 Acquisition expenses(3) 81 7 761 1,066 Litigation costs and settlement (4) 1,950 — 1,950 — (Gain) loss on sublease(5) — — (289) 509 Loss on extinguishment of debt — 2,196 — 2,196 Adjusted EBITDA $(8,420) $(9,493) $(15,647) $(3,063) (1) Represents equity-based compensation related to grants made in the applicable year, as well as equity-based compensation related to the timing of the IPO, which includes previously issued stock appreciation rights ("SARs") liability awards, modifications related to transaction vesting units, and grants made in conjunction with the IPO. (2) Represents legal, professional, accounting and other advisory fees related to a secondary offering that are considered non-recurring and non-capitalizable. (3) Represents acquisition-related fees, such as legal and advisory fees, that are non-capitalizable. (4) Represents (a) $0.1 million in legal fees and a $0.9 million reserve for settlement related to a wage and hour class action lawsuit and (b) $0.9 million in legal fees related to legal action initiated by the Company seeking injunctive relief prohibiting member solicitation in violation of CMS regulations. Refer to Note 12, "Commitments and Contingencies" in our condensed consolidated financial statements for more information regarding certain related litigation. Costs reflected consist of litigation costs considered outside of the ordinary course of business based on the following considerations which we assess regularly: (i) the frequency of similar cases that have been brought to date, or are expected to be brought within two years, (ii) complexity of the case, (iii) nature of the remedies sought, (iv) litigation posture of the Company, (v) counterparty involved, and (vi) the Company's overall litigation strategy. (5) Represents gain or loss related to right of use ("ROU") assets that were subleased in the respective period.Outlook for Fourth Quarter and Fiscal Year 2023 Three Months Ending December 31, 2023Twelve Months EndingDecember 31, 2023$ MillionsLowHighLowHighHealth Plan Membership117,600118,600117,600118,600Revenue$422$442$1,780$1,800Adjusted Gross Profit1$46$54$206$214Adjusted EBITDA2($18)($10)($34)($26) _______________________ Adjusted gross profit is a non-GAAP financial measure that is presented as supplemental disclosure, that we define as loss from operations before depreciation and amortization, clinical equity-based compensation expense, and selling, general, and administrative expenses. We cannot reconcile our estimated ranges for adjusted gross profit to loss from operations, the most directly comparable GAAP measure, and cannot provide estimated ranges for loss from operations, without unreasonable efforts because of the uncertainty around certain items that may impact loss from operations, including equity-based compensation expense and depreciation and amortization, that are not within our control or cannot be reasonably predicted.Adjusted EBITDA is a non-GAAP financial measure that is presented as supplemental disclosure, that we define as net loss before interest expense, income taxes, depreciation and amortization expense, reorganization and transaction-related expenses, acquisition expenses, certain litigation costs and settlements, gains or losses from subleases and equity-based compensation expense. We cannot reconcile our estimated ranges for Adjusted EBITDA to net loss, the most directly comparable GAAP measure, and cannot provide estimated ranges for net loss, without unreasonable efforts because of the uncertainty around certain items that may impact net loss, including equity-based compensation expense and depreciation and amortization, that are not within our control or cannot be reasonably predicted. Conference Call DetailsThe company will host a conference call at 5:30 p.m. EDT today to discuss these results and management’s outlook for future financial and operational performance. A live audio webcast will be available online at https://ir.alignmenthealth.com/. At the start of the conference call, participants may access the webcast at the following link: https://edge.media-server.com/mmc/p/wsums52s. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web links, and will remain available for approximately 12 months. About Alignment HealthAlignment Health is championing a new path in senior care that empowers members to age well and live their most vibrant lives. A consumer brand name of Alignment Healthcare (NASDAQ: ALHC), Alignment Health offers more than 40 benefits-rich, value-driven Medicare Advantage plans that serve 52 counties across six states. The company partners with nationally recognized and trusted local providers to deliver coordinated care, powered by its customized care model, 24/7 concierge care team and purpose-built technology, AVAⓇ. Based in California, the company’s mission-focused team makes high-quality, low-cost care a reality for members every day. As it expands its offerings and grows its national footprint, Alignment upholds its core values of leading with a serving heart and putting the senior first. For more information, visit www.alignmenthealth.com. Forward-Looking Statements This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements include statements regarding our future growth and our financial outlook for the quarter and year ending December 31, 2023. Forward-looking statements are subject to risks and uncertainties and are based on assumptions that may prove to be inaccurate, which could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. Important risks and uncertainties that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: our ability to attract new members and enter new markets, including the need for certain governmental approvals; our ability to maintain a high rating for our plans on the Five Star Quality Rating System; our ability to develop and maintain satisfactory relationships with care providers that service our members; risks associated with being a government contractor; changes in laws and regulations applicable to our business model; risks related to our indebtedness, including the potential for rising interest rates; changes in market or industry conditions and receptivity to our technology and services; results of litigation or a security incident; the impact of shortages of qualified personnel and related increases in our labor costs; and the impact of COVID-19 on our business and results of operation. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our Annual Report on Form 10-K for the year ended December 31, 2022, and the other periodic reports we file with the SEC. All information provided in this release and in the attachments is as of the date hereof, and we undertake no duty to update or revise this information unless required by law. Condensed Consolidated Balance Sheets(in thousands, except par value and share amounts)(Unaudited) September 30, 2023 December 31, 2022Assets Current Assets: Cash and cash equivalents $391,643 $409,549 Accounts receivable (less allowance for credit losses of $91 at September 30, 2023 and $0 at December 31, 2022, respectively) 105,523 92,890 Short-term investments 123,926 — Prepaid expenses and other current assets 45,878 42,107 Total current assets 666,970 544,546 Property and equipment, net 47,162 37,169 Right of use asset, net 10,472 5,825 Goodwill and intangible assets, net 40,106 40,288 Other assets 6,082 6,035 Total assets $770,792 $633,863 Liabilities and Stockholders' Equity Current Liabilities: Medical expenses payable $203,435 $170,135 Accounts payable and accrued expenses 25,356 31,980 Deferred premium revenue 146,342 308 Accrued compensation 35,141 27,538 Total current liabilities 410,274 229,961 Long-term debt, net of debt issuance costs 161,595 160,902 Long-term portion of lease liabilities 9,318 3,698 Total liabilities 581,187 394,561 Commitments and Contingencies Stockholders' Equity: Preferred stock, $.001 par value; 100,000,000 and 100,000,000 shares authorized as of September 30, 2023 and December 31, 2022, respectively; no shares issued and outstanding as of September 30, 2023 and December 31, 2022 — — Common stock, $.001 par value; 1,000,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 188,911,520 and 187,280,015 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively 189 187 Additional paid-in capital 1,021,363 970,180 Accumulated deficit (833,049) (732,241)Total Alignment Healthcare, Inc. stockholders' equity 188,503 238,126 Noncontrolling interest 1,102 1,176 Total stockholders' equity 189,605 239,302 Total liabilities and stockholders' equity $770,792 $633,863 Condensed Consolidated Statements of Operations(in thousands, except per share amounts)(Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenues: Earned premiums $450,235 $359,978 $1,341,924 $1,071,450 Other 6,474 370 16,319 898 Total revenues 456,709 360,348 1,358,243 1,072,348 Expenses: Medical expenses 397,879 312,850 1,204,838 923,877 Selling, general, and administrative expenses 83,089 76,452 223,696 212,418 Depreciation and amortization 5,497 4,456 15,613 12,586 Total expenses 486,465 393,758 1,444,147 1,148,881 Loss from operations (29,756) (33,410) (85,904) (76,533)Other expenses: Interest expense 5,466 4,605 15,747 13,496 Other expenses (income) (145) (131) (711) 252 Loss on extinguishment of debt — 2,196 — 2,196 Total other expenses 5,321 6,670 15,036 15,944 Loss before income taxes (35,077) (40,080) (100,940) (92,477)Provision for income taxes — 167 2 167 Net loss $(35,077) $(40,247) $(100,942) $(92,644)Less: Net loss attributable to noncontrolling interest 30 — 134 — Net loss attributable to Alignment Healthcare, Inc. $(35,047) $(40,247) $(100,808) $(92,644)Total weighted-average common shares outstanding - basic and diluted 187,328,318 182,123,363 185,493,345 180,765,300 Net loss per share - basic and diluted $(0.19) $(0.22) $(0.54) $(0.51) Condensed Consolidated Statements of Cash Flows (in thousands)(Unaudited) Nine Months Ended September 30, 2023 2022 Operating Activities: Net loss $(100,942) $(92,644)Adjustments to reconcile net loss to net cash provided by operating activities: Provision for credit loss 91 150 (Gain) loss on sublease (289) 510 Depreciation and amortization 15,807 12,735 Amortization-investment discount (3,349) (8)Amortization-debt issuance costs 1,037 1,616 Amortization of payment-in-kind interest — 2,943 Equity-based compensation 51,183 58,833 Non-cash lease expense 1,653 2,151 Loss on extinguishment of debt — 2,196 Changes in operating assets and liabilities: Accounts receivable (12,724) (29,840)Prepaid expenses and other current assets (3,771) (8,742)Other assets (119) (137)Medical expenses payable 33,299 45,509 Accounts payable and accrued expenses (4,613) 2,030 Deferred premium revenue 146,034 116,298 Accrued compensation 7,604 7,484 Lease liabilities (2,622) (3,126)Payment-in-kind interest — (14,122)Net cash provided by operating activities 128,279 103,836 Investing Activities: Purchase of business, net of cash received — (2,393)Purchase of investments (281,582) (2,825)Sale of investments 160,735 2,425 Acquisition of property and equipment (25,398) (17,317)Net cash used in investing activities (146,245) (20,110)Financing Activities: Repurchase of noncontrolling interest — (100)Issuance of long-term debt — 165,000 Debt issuance costs — (4,601)Repayment of long-term debt — (143,179)Contributions from noncontrolling interest holders 60 — Net cash provided by financing activities 60 17,120 Net decrease in cash (17,906) 100,846 Cash, cash equivalents and restricted cash at beginning of period 411,299 468,350 Cash, cash equivalents and restricted cash at end of period $393,393 $569,196 Supplemental disclosure of cash flow information: Cash paid for interest $13,943 $22,447 Supplemental non-cash investing and financing activities: Acquisition of property in accounts payable $117 $290 Purchase of business in accounts payable $— $375 The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the total above: September 30, 2023 September 30, 2022Cash and cash equivalents $391,643 $567,446Restricted cash in other assets 1,750 1,750Total $393,393 $569,196 Non-GAAP Financial Measures Certain of these financial measures are considered “non-GAAP” financial measures within the meaning of Item 10 of Regulation S-K promulgated by the SEC. We believe that non-GAAP financial measures provide an additional way of viewing aspects of our operations that, when viewed with the GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business. These non-GAAP financial measures are also used by our management to evaluate financial results and to plan and forecast future periods. However, non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Non-GAAP financial measures used by us may differ from the non-GAAP measures used by other companies, including our competitors. To supplement our consolidated financial statements presented on a GAAP basis, we disclose the following non-GAAP measures: Medical Benefits Ratio, Adjusted EBITDA and Adjusted Gross Profit as these are performance measures that our management uses to assess our operating performance. Because these measures facilitate internal comparisons of our historical operating performance on a more consistent basis, we use these measures for business planning purposes and in evaluating acquisition opportunities. Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that we define as net loss before interest expense, income taxes, depreciation and amortization expense, reorganization and transaction-related expenses, acquisition expenses, certain litigation costs and settlements, gains or losses on subleases and equity-based compensation expense. Adjusted EBITDA should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA in lieu of net loss, which is the most directly comparable financial measure calculated in accordance with GAAP. Our use of the term Adjusted EBITDA may vary from the use of similar terms by other companies in our industry and accordingly may not be comparable to similarly titled measures used by other companies. Medical Benefits Ratio (MBR) We calculate our MBR by dividing total medical expenses, excluding depreciation and equity-based compensation, by total revenues in a given period. Adjusted Gross Profit Adjusted gross profit is a non-GAAP financial measure that we define as loss from operations before depreciation and amortization, clinical equity-based compensation expense, and selling, general, and administrative expenses. Adjusted gross profit should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of adjusted gross profit in lieu of loss from operations, which is the most directly comparable financial measure calculated in accordance with GAAP. Our use of the term adjusted gross profit may vary from the use of similar terms by other companies in our industry and accordingly may not be comparable to similarly titled measures used by other companies. Investor Contact Harrison Zhuohzhuo@ahcusa.com Media Contact Maggie HabibmPR, Inc. for Alignment Healthalignment@mpublicrelations.com
