Alignment Healthcare Reports Third Quarter 2024 Results

GlobeNewswire Inc.

October 29, 2024 8:01PM GMT

  • Reports $692.4 million in total revenue, up 51.6% year-over-year
  • Increases Medicare Advantage membership, up 57.7% year-over-year to approximately 182,300 members, beating third-quarter and year-end expectations
  • One of seven Medicare Advantage Prescription Drug contracts nationally to earn 5- out of 5 stars from the Centers for Medicare & Medicaid Services (CMS), with 98% of company’s Medicare Advantage members in plans rated 4-stars or higher for 2025
  • Raises year-end health plan membership and revenue guidance, narrows full-year adjusted gross profit and adjusted EBITDA guidance

ORANGE, Calif., Oct. 29, 2024 (GLOBE NEWSWIRE) -- Alignment Healthcare, Inc. (NASDAQ: ALHC), today reported financial results for its third quarter ended Sept. 30, 2024.

“Alignment Healthcare’s excellent third-quarter results set us apart in Medicare Advantage, proving that we can do well by doing good,” said John Kao, founder and CEO. “A cornerstone of our success is the virtuous cycle of delivering high-quality care while effectively managing costs. This philosophy has resulted in the stars, growth and profitability outcomes we achieved in the third quarter. As CMS continues to focus on the Triple Aim, we are confident we have the right platform to provide the best care at the lowest cost to drive long-term value for both our members and our shareholders. Alignment is Medicare Advantage done right.”

Third Quarter 2024 Financial Highlights
All comparisons, unless otherwise noted, are to the three months ended Sept. 30, 2023

  • Health plan membership at the end of the quarter was approximately 182,300, up 57.7% year over year
  • Total revenue was $692.4 million, up 51.6% year over year. Revenue excluding ACO REACH was $692.2 million, up 62.4% year over year
  • Adjusted gross profit was $80.5 million and loss from operations was $(19.5) million
    • Adjusted gross profit excludes depreciation and amortization of $7.6 million and selling, general, and administrative expenses of $90.9 million (which includes $15.8 million of equity-based compensation). Adjusted gross profit also excludes an additional $1.5 million of equity-based compensation recorded within medical expenses
    • Medical benefits ratio based on adjusted gross profit was 88.4%.
  • Adjusted EBITDA was $5.9 million and net loss was $(26.4) million

Adjusted Gross Profit is reconciled as follows:

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

(dollars in thousands)

 

 

 

 

 

 

 

Loss from operations

$

(19,522

)

 

$

(29,756

)

 

$

(79,010

)

 

$

(85,904

)

Add back:

 

 

 

 

 

 

 

Equity-based compensation (medical expenses)

 

1,489

 

 

 

1,733

 

 

 

3,384

 

 

 

6,024

 

Depreciation (medical expenses)

 

46

 

 

 

64

 

 

 

144

 

 

 

194

 

Restructuring costs (medical expenses)

(1)

 

 

 

 

 

 

 

796

 

 

 

 

Depreciation and amortization

(2)

 

7,640

 

 

 

5,497

 

 

 

20,110

 

 

 

15,613

 

Selling, general, and administrative expenses

 

90,871

 

 

 

83,089

 

 

 

269,246

 

 

 

223,696

 

Total add back

 

100,046

 

 

 

90,383

 

 

 

293,680

 

 

 

245,527

 

Adjusted gross profit

$

80,524

 

 

$

60,627

 

 

$

214,670

 

 

$

159,623

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Represents severance and related costs incurred as part of a corporate restructuring designed to streamline our organizational structure and drive operational efficiencies.

(2) Includes $0.6 million in impairment expense related to intangible assets that were written off during the quarter.

Adjusted EBITDA is reconciled as follows:

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

(dollars in thousands)

 

 

 

 

 

 

 

Net loss

$

(26,429

)

 

$

(35,077

)

 

$

(97,007

)

 

$

(100,942

)

Less: Net loss attributable to noncontrolling interest

 

16

 

 

 

30

 

 

 

63

 

 

 

134

 

Adjustments:

 

 

 

 

 

 

 

Interest expense

 

6,937

 

 

 

5,466

 

 

 

18,055

 

 

 

15,747

 

Depreciation and amortization

(1)

 

7,686

 

 

 

5,561

 

 

 

20,254

 

 

 

15,807

 

Income taxes

 

(8

)

 

 

 

 

 

14

 

 

 

2

 

Equity-based compensation

(2)

 

17,258

 

 

 

13,569

 

 

 

54,896

 

 

 

51,183

 

Acquisition expenses

(3)

 

14

 

 

 

81

 

 

 

26

 

 

 

761

 

Litigation costs

(4)

 

456

 

 

 

1,950

 

 

 

1,177

 

 

 

1,950

 

(Gain) loss on ROU assets

(5)

 

 

 

 

 

 

 

143

 

 

 

(289

)

Gain on sale of property and equipment

 

(8

)

 

$

 

 

 

(8

)

 

 

 

Restructuring costs

(6)

 

 

 

 

 

 

 

2,363

 

 

 

 

Adjusted EBITDA

$

5,922

 

 

$

(8,420

)

 

$

(24

)

 

$

(15,647

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes $0.6 million in impairment expense related to intangible assets that were written off during the quarter.

(2) 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.

(3) Represents acquisition-related fees, such as legal and advisory fees, that are non-capitalizable.

(4) Represents 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 gains or losses related to ROU assets that were terminated or subleased in the respective period.

(6) Represents severance and related costs incurred as part of a corporate restructuring designed to streamline our organizational structure and drive operational efficiencies.

Outlook for Fourth Quarter and Fiscal Year 2024

 

Three Months Ending
December 31, 2024

Twelve Months EndingDecember 31, 2024

$ Millions

Low

High

Low

High

Health Plan Membership

184,000

186,000

184,000

186,000

Revenue

663

678

2,665

2,680

Adjusted Gross Profit(1)

67

82

282

297

Adjusted EBITDA(2)

(10)

5

(10)

5

_______________________

  1. 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, clinical restructuring costs 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.
  2. 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, acquisition expenses, certain litigation costs, gains or losses on right of use ("ROU") assets, gains or losses on sale of property and equipment, restructuring costs 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 Details
The company will host a conference call at 5 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/dh2kdfjr. 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 Health
Alignment 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’s mission-focused team makes high-quality, low-cost care a reality for its Medicare Advantage members every day. Based in California, 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. 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, 2024. 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; and the impact of shortages of qualified personnel and related increases in our labor costs. 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, 2023, 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 30,2024

 

December 31,2023

Assets

 

 

 

Current Assets:

 

 

 

Cash and cash equivalents

$

340,300

 

 

$

202,904

 

Accounts receivable (less allowance for credit losses of $123 at September 30, 2024 and $0 at December 31, 2023)

 

138,852

 

 

 

119,749

 

Investments - current

 

40,676

 

 

 

115,914

 

Prepaid expenses and other current assets

 

53,779

 

 

 

44,970

 

Total current assets

 

573,607

 

 

 

483,537

 

Property and equipment, net

 

64,692

 

 

 

51,901

 

Right of use asset, net

 

8,124

 

 

 

9,959

 

Goodwill

 

34,826

 

 

 

34,826

 

Intangible Assets, net

 

4,550

 

 

 

5,252

 

Other assets

 

6,488

 

 

 

6,405

 

Total assets

$

692,287

 

 

$

591,880

 

Liabilities and Stockholders' Equity

 

 

 

Current Liabilities:

 

 

 

Medical expenses payable

$

297,125

 

 

$

205,399

 

Accounts payable and accrued expenses

 

25,394

 

 

 

23,511

 

Accrued compensation

 

33,951

 

 

 

34,112

 

Current maturities of long-term debt

 

1,613

 

 

 

 

Total current liabilities

 

358,083

 

 

 

263,022

 

Long-term debt, net of current maturities and debt issuance costs

 

210,386

 

 

 

161,813

 

Long-term portion of lease liabilities

 

8,191

 

 

 

8,974

 

Total liabilities

 

576,660

 

 

 

433,809

 

Stockholders' Equity:

 

 

 

Preferred stock, $.001 par value; 100,000,000 shares authorized as of September 30, 2024 and December 31, 2023, respectively; no shares issued and outstanding as of September 30, 2024 and December 31, 2023

 

 

 

 

 

Common stock, $.001 par value; 1,000,000,000 shares authorized as of September 30, 2024 and December 31, 2023; 191,595,786 and 188,951,643 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

 

191

 

 

 

189

 

Additional paid-in capital

 

1,091,561

 

 

 

1,037,015

 

Accumulated deficit

 

(977,202

)

 

 

(880,258

)

Total Alignment Healthcare, Inc. stockholders' equity

 

114,550

 

 

 

156,946

 

Noncontrolling interest

 

1,077

 

 

 

1,125

 

Total stockholders' equity

 

115,627

 

 

 

158,071

 

Total liabilities and stockholders' equity

$

692,287

 

 

$

591,880

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations(in thousands, except per share amounts)(Unaudited)

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

Revenues:

 

 

 

 

 

 

 

Earned premiums

$

684,496

 

 

$

450,235

 

 

$

1,980,146

 

 

$

1,341,924

 

Other

 

7,937

 

 

 

6,474

 

 

 

22,174

 

 

 

16,319

 

Total revenues

 

692,433

 

 

 

456,709

 

 

 

2,002,320

 

 

 

1,358,243

 

Expenses:

 

 

 

 

 

 

 

Medical expenses

 

613,444

 

 

 

397,879

 

 

 

1,791,974

 

 

 

1,204,838

 

Selling, general, and administrative expenses

 

90,871

 

 

 

83,089

 

 

 

269,246

 

 

 

223,696

 

Depreciation and amortization

 

7,640

 

 

 

5,497

 

 

 

20,110

 

 

 

15,613

 

Total expenses

 

711,955

 

 

 

486,465

 

 

 

2,081,330

 

 

 

1,444,147

 

Loss from operations

 

(19,522

)

 

 

(29,756

)

 

 

(79,010

)

 

 

(85,904

)

Other expenses:

 

 

 

 

 

 

 

Interest expense

 

6,937

 

 

 

5,466

 

 

 

18,055

 

 

 

15,747

 

Other income, net

 

(22

)

 

 

(145

)

 

 

(72

)

 

 

(711

)

Total other expenses

 

6,915

 

 

 

5,321

 

 

 

17,983

 

 

 

15,036

 

Loss before income taxes

 

(26,437

)

 

 

(35,077

)

 

 

(96,993

)

 

 

(100,940

)

Provision (benefit) for income taxes

 

(8

)

 

 

 

 

 

14

 

 

 

2

 

Net loss

$

(26,429

)

 

$

(35,077

)

 

$

(97,007

)

 

$

(100,942

)

Less: Net loss attributable to noncontrolling interest

 

16

 

 

 

30

 

 

 

63

 

 

 

134

 

Net loss attributable to Alignment Healthcare, Inc.

$

(26,413

)

 

$

(35,047

)

 

$

(96,944

)

 

$

(100,808

)

Total weighted-average common shares outstanding - basic and diluted

 

191,361,283

 

 

 

187,328,318

 

 

 

190,423,014

 

 

 

185,493,345

 

Net loss per share - basic and diluted

$

(0.14

)

 

$

(0.19

)

 

$

(0.51

)

 

$

(0.54

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows(in thousands)(Unaudited)

 

 

 

Nine Months Ended September 30,

 

2024

 

2023

Operating Activities:

 

 

 

Net loss

$

(97,007

)

 

$

(100,942

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Provision for credit loss

 

123

 

 

 

91

 

Loss (gain) on right of use assets

 

135

 

 

 

(289

)

Gain on sale of property and equipment

 

(8

)

 

 

 

Depreciation and amortization

 

20,254

 

 

 

15,807

 

Amortization-investment discount

 

(2,084

)

 

 

(3,349

)

Amortization-debt issuance costs

 

978

 

 

 

1,037

 

Equity-based compensation

 

54,896

 

 

 

51,183

 

Non-cash lease expense

 

1,360

 

 

 

1,653

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(19,226

)

 

 

(12,724

)

Prepaid expenses and other current assets

 

(8,809

)

 

 

(3,771

)

Other assets

 

77

 

 

 

(119

)

Medical expenses payable

 

91,726

 

 

 

33,299

 

Accounts payable and accrued expenses

 

2,835

 

 

 

(4,613

)

Deferred premium revenue

 

(116

)

 

 

146,034

 

Accrued compensation

 

(161

)

 

 

7,604

 

Lease liabilities

 

(1,492

)

 

 

(2,622

)

Net cash provided by operating activities

 

43,481

 

 

 

128,279

 

Investing Activities:

 

 

 

Purchase of investments

 

(75,524

)

 

 

(281,582

)

Sale of property and equipment

 

14

 

 

 

 

Maturities of investments

 

152,755

 

 

 

160,735

 

Acquisition of property and equipment

 

(32,134

)

 

 

(25,398

)

Net cash provided by (used in) investing activities

 

45,111

 

 

 

(146,245

)

Financing Activities:

 

 

 

Proceeds from long-term debt

 

50,000

 

 

 

 

Debt issuance costs

 

(512

)

 

 

 

Payment of employment taxes related to release of restricted stock

 

(350

)

 

 

 

Contributions from noncontrolling interest holders

 

15

 

 

 

60

 

Net cash provided by financing activities

 

49,153

 

 

 

60

 

Net increase (decrease) in cash

 

137,745

 

 

 

(17,906

)

Cash, cash equivalents and restricted cash at beginning of period

 

204,954

 

 

 

411,299

 

Cash, cash equivalents and restricted cash at end of period

$

342,699

 

 

$

393,393

 

Supplemental disclosure of cash flow information:

 

 

 

Cash paid for interest

$

15,602

 

 

$

13,943

 

Supplemental non-cash investing and financing activities:

 

 

 

Acquisition of property in accounts payable

$

112

 

 

$

117

 

 

 

 

 

 

 

 

 

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, 2024

 

September 30, 2023

Cash and cash equivalents

$

340,300

 

 

$

391,643

 

Restricted cash in other assets

 

2,399

 

 

 

1,750

 

Total

$

342,699

 

 

$

393,393

 

 

 

 

 

 

 

 

 

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, acquisition expenses, certain litigation costs, gains or losses on right of use ("ROU") assets, gains or losses on sale of property and equipment, restructuring costs 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, equity-based compensation and clinical restructuring costs, 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, clinical restructuring costs 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 Zhuo
hzhuo@ahcusa.com

Media Contact
Priya Shah
mPR, Inc. for Alignment Health
alignment@mpublicrelations.com