GlobeNewswire Inc | Aug 9, 2021 04:05PM EDT

August 09, 2021

ORANGE, Calif., Aug. 09, 2021 (GLOBE NEWSWIRE) -- Alignment Healthcare, Inc. (Alignment Healthcare or the Company) (Nasdaq: ALHC), a mission-based, tech-enabled Medicare Advantage company, today reported financial results for its second quarter ended June 30, 2021.

Our results in the second quarter exceeded our expectations across the boardincluding our membership, revenue, adjusted gross profit and adjusted EBITDA,leading us to raise our outlook for the full year of 2021,said John Kao, founder and CEO.During the quarter, the team made notable progress on our growth strategy by entering new states, expanding to contiguous markets, and developing new, innovative customer-focused plans all of which put us in a solid position for 2022. We also expanded our provider network to support our growth in these new markets by signing several partnerships with high-quality providers. The power of our AVA technology and our expertise in Medicare Advantage offers a compelling value proposition for providers, helping them grow and gain market share.

The positive feedback we are receiving from our members gives me increased confidence that we are on the right track, and I believe the action we took in the second quarter should set us up to deliver sustainable long-term growth, Kao added.

Second Quarter 2021 Financial HighlightsAll comparisons, unless otherwise noted, are to the three months ended June 30, 2020.

-- Health plan membership at the end of the quarter was approximately 84,700, up 32% year over year -- Total revenue was $309.0 million, up 26% year over year -- Health plan premium revenue of $293.4 million represented 32% growth year over year -- Adjusted gross profit was $37.1 million, which excludes depreciation of $0.05 million and equity-based compensation of $2.5 million from medical expense Medical benefits ratio based on adjusted gross profit was 88%

Adjusted Gross Profit is reconciled as follows:

Three Months Ended June Six Months Ended June 30, 30, 2021 2020 2021 2020 (dollars in thousands) Revenues $ 308,951 $ 244,313 $ 576,033 $ 468,946 Medical expenses 274,385 194,502 525,480 387,898 Gross profit 34,566 49,811 50,553 81,048 Gross profit % 11.2 % 20.4 % 8.8 % 17.3 %Add back: Equity-basedcompensation (medical 2,457 ? 9,023 ? expenses)Depreciation 54 88 106 193 Total add back 2,511 88 9,129 193 Adjusted gross profit $ 37,077 $ 49,899 $ 59,682 $ 81,241 Adjusted gross profit % 12.0 % 20.4 % 10.4 % 17.3 %Medical benefits ratio 88.0 % 79.6 % 89.6 % 82.7 %

-- Adjusted EBITDA was ($4.7) million and net loss was ($44.8) million

Adjusted EBITDA is reconciled as follows:

Three Months Ended June Six Months Ended June 30, 30, 2021 2020 2021 2020 (dollars in thousands) Net income (loss) $ (44,762 ) $ 8,365 $ (101,636 ) $ (1,707 )Add back: Interest expense 4,329 4,192 8,577 8,352 Depreciation and 3,962 3,614 7,751 7,284 amortizationEBITDA (36,471 ) 16,171 (85,308 ) 13,929 Equity-based 30,887 350 62,674 676 compensation^(1)Reorganization andtransaction-related 593 ? 3,601 ? expenses^(2)Acquisition expenses^(3) 301 ? 301 ? Adjusted EBITDA $ (4,690 ) $ 16,521 $ (18,732 ) $ 14,605

2021 represents equity-based compensation related to the timing of the IPO, including the previously issued SARs liability awards, modifications(1) related to transaction vesting units, and new grants made in conjunction with the IPO. 2020 represents equity-based compensation related to the Incentive Units. Represents legal, professional, accounting and other advisory fees related(2) to the Reorganization and the IPO that are considered non-recurring and non-capitalizable.(3) Represents acquisition-related fees, such as legal and advisory fees, that are non-recurring and non-capitalizable.

-- As of June 30, 2021, total cash was $494.6 million and debt was $152.0 million (excluding unamortized debt issuance costs)

Outlook for Third Quarter and Fiscal Year 2021



Three Months Ending Twelve Months Ending September 30, 2021 December 31, 2021$ Millions Low High Low HighHealth Plan Membership 84,800 85,200 85,000 85,800Revenue $270 $275 $1,105 $1,120Adjusted Gross Profit^1 $30 $32 $117 $123Adjusted EBITDA^2 ($19) ($17) ($55) ($50)

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-- Adjusted gross profit is a non-GAAP financial measure that is presented as supplemental disclosure, that we define as revenue less medical expenses before depreciation and amortization and equity-based compensation expense. We cannot reconcile our estimated ranges for adjusted gross profit to gross profit, the most directly comparable GAAP measure, and cannot provide estimated ranges for gross profit, without unreasonable efforts because of the uncertainty around certain items that may impact gross profit, 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 income (loss) before interest expense, income taxes, depreciation and amortization expense, reorganization and transaction-related expenses 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 p.m. E.T. today to discuss these results and managements outlook for future financial and operational performance. The conference call can be accessed by dialing (833) 607-1669 for U.S. participants, or (914) 987-7881 for international participants, and referencing participant code 8778115. A live audio webcast will be available online at https://ir.alignmenthealthcare.com/. 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 link, and will remain available for approximately 12 months.

About Alignment HealthcareAlignment Healthcare is a consumer-centric platform delivering customized health care in the United States to seniors and those who need it most, the chronically ill and frail, through its Medicare Advantage plans. Alignment Healthcare provides partners and patients with customized care and service where they need it and when they need it, including clinical coordination, risk management and technology facilitation. Alignment Healthcare offers health plan options through Alignment Health Plan, and also partners with select health plans to help deliver better benefits at lower costs.

Forward Looking Statements

This release contains forward-looking statements within the meaning of Section27A of the Securities Act of 1933, as amended, and Section21E 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 third quarter ended September 30, 2021 and year ended December 31, 2021. 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. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our SEC reports, including our amended registration statement relating to our initial public offering, filed with the Securities and Exchange Commission (the SEC) on March 23, 2021 and our quarterly report on Form10-Qfor the quarter ended June 30, 2021, filed with the SEC on August 9, 2021. 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)

June 30, December 31, 2021 2020 ^(1)Assets Current Assets: Cash $ 494,618 $ 207,311 Accounts receivable (less allowance for creditlosses of $46 at June 30, 2021 and $0 at December 66,472 40,140 31, 2020, respectively)Prepaid expenses and other current assets 31,801 17,225 Total current assets 592,891 264,676 Property and equipment, net 29,532 27,145 Right of use asset, net 8,876 9,888 Goodwill and intangible assets, net 35,310 34,645 Other assets 3,447 2,148 Total assets $ 670,056 $ 338,502 Liabilities and Stockholders' Equity Current Liabilities: Medical expenses payable $ 136,478 $ 112,605 Accounts payable and accrued expenses 14,615 15,675 Accrued compensation 22,643 25,172 Total current liabilities 173,736 153,452 Long-term debt, net of debt issuance costs 147,333 144,168 Long-term portion of lease liabilities 8,607 10,271 Total liabilities 329,676 307,891 Commitments and Contingencies (Note 12) Stockholders' Equity: Preferred stock, $.001 par value; 100,000,000 and0 shares authorized as of June 30, 2021 andDecember 31, 2020 respectively; no shares issued ? ? and outstanding as of June 30, 2021 and December31, 2020Common stock, $.001 par value; 1,000,000,000 and164,063,787 shares authorized as of June 30, 2021and December 31, 2020 respectively; 187,273,782 188 164 and 164,063,787 shares issued and outstanding asof June 30, 2021 and December 31, 2020,respectivelyAdditional paid-in capital 821,384 410,018 Accumulated deficit (481,207 ) (379,571 )Total Alignment Healthcare, Inc. stockholders' 340,365 30,611 equityNoncontrolling interest 15 ? Total stockholders' equity 340,380 30,611 Total liabilities and stockholders' equity $ 670,056 $ 338,502

The condensed consolidated balance sheet as of December 31, 2020 was(1) derived from the audited consolidated financial statements as of that date and was retroactively adjusted, including shares and per share amounts, as a result of the Reorganization. See Form 10-Q for additional details.

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

Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Revenues: Earned premiums $ 308,739 $ 243,956 $ 575,739 $ 468,222 Other 212 357 294 724 Total revenues 308,951 244,313 576,033 468,946 Expenses: Medical expenses 274,385 194,502 525,480 387,898 Selling,general, and 71,150 33,698 136,064 66,485 administrativeexpensesDepreciation and 3,908 3,526 7,645 7,091 amortizationTotal expenses 349,443 231,726 669,189 461,474 Income (loss) (40,492 ) 12,587 (93,156 ) 7,472 from operationsOther expenses: Interest expense 4,329 4,192 8,577 8,352 Other (income) (59 ) 30 (97 ) 827 expensesTotal other 4,270 4,222 8,480 9,179 expensesIncome (loss)before income (44,762 ) 8,365 (101,636 ) (1,707 )taxesProvision for ? ? ? ? income taxesNet income(loss)attributable to $ (44,762 ) $ 8,365 $ (101,636 ) $ (1,707 )AlignmentHealthcare, Inc. Totalweighted-averagecommon shares 176,842,122 153,185,039 165,698,982 146,974,618 outstanding -basic anddiluted^(1)Net income(loss) per share $ (0.25 ) $ 0.05 $ (0.61 ) $ (0.01 )- basic anddiluted

The weighted-average shares used in computing net loss per share, basic and(1) diluted were retroactively adjusted as a result of the Reorganization. See Form 10-Q for additional details.

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

Six Months Ended June 30, 2021 2020 Operating Activities: Net loss $ (101,636 ) $ (1,707 )Adjustments to reconcile net loss to net cash used in operating activities:Provision for credit loss 46 35 Depreciation and amortization 7,751 7,284 Amortization-debt issuance costs and investment 1,110 1,082 discountPayment-in-kind interest 2,054 1,974 Loss on disposal of property and equipment ? 990 Equity-based compensation and common stock 51,275 676 paymentsNon-cash lease expense 1,314 1,151 Changes in operating assets and liabilities: Accounts receivable (25,503 ) (18,674 )Prepaid expenses and other current assets (14,393 ) (6,729 )Other assets 6 35 Medical expenses payable 23,105 (1,108 )Accounts payable and accrued expenses (2,368 ) 6,408 Accrued compensation (2,529 ) 1,052 Lease liabilities (1,788 ) 3,140 Noncurrent liabilities ? (3,941 ) Net cash used in operating activities (61,556 ) (8,332 )Investing Activities: Asset acquisition, net of cash received (1,405 ) ? Purchase of investments (800 ) (1,000 )Sale of investments 800 250 Acquisition of property and equipment (9,462 ) (6,725 )Proceeds from the sale of property and equipment ? 100 Net cash used in investing activities (10,867 ) (7,375 )Financing Activities: Purchase of noncontrolling interest 15 ? Equity repurchase (1,474 ) (1,023 )Issuance of common stock 390,600 135,000 Common stock issuance costs (29,011 ) (3,371 )Net cash provided by financing activities 360,130 130,606 Net increase in cash 287,707 114,899 Cash and restricted cash at beginning of period 207,811 86,484 Cash and restricted cash at end of period $ 495,518 $ 201,383 Supplemental disclosure of cash flow information: Cash paid for interest $ 5,413 $ 5,293 Supplemental non-cash investing and financing activities:Acquisition of property in accounts payable $ 418 $ 258 The following table provides a reconciliation ofcash and restricted cash reported within the consolidated balance sheets to the total aboveCash $ 494,618 $ 200,883 Restricted cash in other assets 900 500 Total $ 495,518 $ 201,383

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 income (loss) before interest expense, income taxes, depreciation and amortization expense, reorganization and transaction-related expenses 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 income (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 revenue less medical expenses before depreciation and amortization and equity-based compensation expense.

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 gross profit, 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 Bob East ICR Westwicke for Alignment Healthcare AlignmentIR@westwicke.com(443) 213-0500

Media Contact Maggie HabibmPR, Inc. for Alignment Healthcarealignment@mpublicrelations.com