Alignment Healthcare, Inc. (NASDAQ: ALHC), today reported financial
results for its first quarter ended March 31, 2024.
“Alignment Healthcare’s first quarter results are a testament to
the strength and resilience of our Medicare Advantage platform,
reflecting our commitment to delivering exceptional care while
effectively managing medical costs,” said John Kao, founder and
CEO. “Through the integration of our advanced technology with
effective clinical oversight, we've met or exceeded expectations
across membership, revenue, adjusted gross profit and adjusted
EBITDA, setting a solid foundation for achieving our full-year
outlook.”
First Quarter 2024 Financial HighlightsAll
comparisons, unless otherwise noted, are to the three months ended
March 31, 2023
- Health plan membership at the end of the quarter was
approximately 165,100, up 50.5% year over year
- Total revenue was $628.6 million, up 43.1% year over year.
Revenue excluding ACO REACH was $627.6 million, up 54.2% year over
year.
- Adjusted gross profit was $57.3 million and loss from
operations was $(41.1) million
- Adjusted gross profit excludes depreciation and amortization of
$6.0 million and selling, general, and administrative expenses of
$90.5 million (which includes $19.7 million of equity-based
compensation). Adjusted gross profit also excludes $0.8 million of
restructuring costs and an additional $1.1 million of equity-based
compensation recorded within medical expenses
- Medical benefits ratio based on adjusted gross profit was
90.9%
- Adjusted EBITDA was $(12.0) million and net loss was $(46.6)
million
Adjusted Gross Profit is reconciled as follows:
|
Three Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
(dollars in
thousands) |
|
|
|
Loss from operations |
$ |
(41,106 |
) |
|
$ |
(32,489 |
) |
Add back: |
|
|
|
Equity-based compensation (medical expenses) |
|
1,133 |
|
|
|
2,524 |
|
Depreciation (medical expenses) |
|
52 |
|
|
|
61 |
|
Restructuring costs (medical expenses) |
|
775 |
|
|
|
— |
|
Depreciation and amortization |
|
5,977 |
|
|
|
4,921 |
|
Selling, general, and administrative expenses |
|
90,512 |
|
|
|
70,408 |
|
Total add back |
|
98,449 |
|
|
|
77,914 |
|
Adjusted gross profit |
$ |
57,343 |
|
|
$ |
45,425 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA is reconciled as follows:
|
Three Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
(dollars in
thousands) |
|
|
|
Net loss |
$ |
(46,575 |
) |
|
$ |
(37,371 |
) |
Less: Net loss attributable to
noncontrolling interest |
|
54 |
|
|
|
87 |
|
Adjustments: |
|
|
|
Interest expense |
|
5,427 |
|
|
|
5,019 |
|
Depreciation and amortization |
|
6,029 |
|
|
|
4,982 |
|
Income taxes |
|
— |
|
|
|
1 |
|
Equity-based compensation(1) |
|
20,854 |
|
|
|
21,978 |
|
Acquisition expenses(2) |
|
— |
|
|
|
132 |
|
Litigation costs (3) |
|
320 |
|
|
|
— |
|
Loss on ROU assets(4) |
|
143 |
|
|
|
— |
|
Restructuring costs(5) |
|
1,768 |
|
|
|
— |
|
Adjusted EBITDA |
$ |
(11,980 |
) |
|
$ |
(5,172 |
) |
|
|
|
|
|
|
|
|
(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
acquisition-related fees, such as legal and advisory fees, that are
non-capitalizable.(3) 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.(4) Represents loss related to ROU assets that were
terminated or subleased in the respective period.(5) Represents
severance and related costs incurred as part of a corporate
restructuring designed to streamline our organizational structure
and drive operational efficiencies. |
|
Outlook for Second Quarter and Fiscal Year
2024
|
Three Months
EndingJune 30, 2024 |
Twelve
Months EndingDecember 31, 2024 |
$
Millions |
Low |
High |
Low |
High |
Health Plan Membership |
167,000 |
169,000 |
170,000 |
172,000 |
Revenue |
$625 |
$635 |
$2,495 |
$2,525 |
Adjusted
Gross Profit(1) |
$71 |
$77 |
$280 |
$310 |
Adjusted
EBITDA(2) |
$0 |
$6 |
$(12) |
$12 |
|
|
|
|
|
_______________________
- 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.
- 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,
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/urdy6wve. 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 50 benefits-rich, value-driven Medicare Advantage plans that
serve 53 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 StatementsThis 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 second quarter ending June
30, 2024 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) |
|
March 31,2024 |
|
December 31,2023 |
Assets |
|
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$ |
238,903 |
|
|
$ |
202,904 |
|
Accounts receivable (less allowance for credit losses of $0 at
March 31, 2024 and December 31, 2023) |
|
165,071 |
|
|
|
119,749 |
|
Investments - current |
|
62,809 |
|
|
|
115,914 |
|
Prepaid expenses and other current assets |
|
53,856 |
|
|
|
44,970 |
|
Total current assets |
|
520,639 |
|
|
|
483,537 |
|
Property and equipment, net |
|
57,211 |
|
|
|
51,901 |
|
Right of use asset, net |
|
8,549 |
|
|
|
9,959 |
|
Goodwill |
|
34,826 |
|
|
|
34,826 |
|
Intangible Assets, net |
|
5,224 |
|
|
|
5,252 |
|
Other assets |
|
6,781 |
|
|
|
6,405 |
|
Total assets |
$ |
633,230 |
|
|
$ |
591,880 |
|
Liabilities and Stockholders' Equity |
|
|
|
Current Liabilities: |
|
|
|
Medical expenses payable |
$ |
276,464 |
|
|
$ |
205,399 |
|
Accounts payable and accrued expenses |
|
22,671 |
|
|
|
23,511 |
|
Accrued compensation |
|
31,607 |
|
|
|
34,112 |
|
Total current liabilities |
|
330,742 |
|
|
|
263,022 |
|
Long-term debt, net of debt issuance costs |
|
162,030 |
|
|
|
161,813 |
|
Long-term portion of lease liabilities |
|
8,441 |
|
|
|
8,974 |
|
Total liabilities |
|
501,213 |
|
|
|
433,809 |
|
Commitments and
Contingencies |
|
|
|
Stockholders' Equity: |
|
|
|
Preferred stock, $.001 par value; 100,000,000 shares authorized at
March 31, 2024 and December 31, 2023, respectively; no shares
issued and outstanding at March 31, 2024 and December 31, 2023 |
|
— |
|
|
|
— |
|
Common stock, $.001 par value; 1,000,000,000 shares authorized at
March 31, 2024 and December 31, 2023; 191,156,569 and 188,951,643
shares issued and outstanding at March 31, 2024 and December 31,
2023, respectively |
|
191 |
|
|
|
189 |
|
Additional paid-in capital |
|
1,057,519 |
|
|
|
1,037,015 |
|
Accumulated deficit |
|
(926,779 |
) |
|
|
(880,258 |
) |
Total Alignment Healthcare, Inc. stockholders' equity |
|
130,931 |
|
|
|
156,946 |
|
Noncontrolling interest |
|
1,086 |
|
|
|
1,125 |
|
Total stockholders' equity |
|
132,017 |
|
|
|
158,071 |
|
Total liabilities and stockholders' equity |
$ |
633,230 |
|
|
$ |
591,880 |
|
Condensed Consolidated Statements of
Operations(in thousands, except per share
amounts)(Unaudited) |
|
Three Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
Revenues: |
|
|
|
Earned premiums |
$ |
621,556 |
|
|
$ |
434,812 |
|
Other |
|
7,045 |
|
|
|
4,343 |
|
Total revenues |
|
628,601 |
|
|
|
439,155 |
|
Expenses: |
|
|
|
Medical expenses |
|
573,218 |
|
|
|
396,315 |
|
Selling, general, and administrative expenses |
|
90,512 |
|
|
|
70,408 |
|
Depreciation and amortization |
|
5,977 |
|
|
|
4,921 |
|
Total expenses |
|
669,707 |
|
|
|
471,644 |
|
Loss from operations |
|
(41,106 |
) |
|
|
(32,489 |
) |
Other expenses: |
|
|
|
Interest expense |
|
5,427 |
|
|
|
5,019 |
|
Other expenses (income) |
|
42 |
|
|
|
(138 |
) |
Total other expenses |
|
5,469 |
|
|
|
4,881 |
|
Loss before income taxes |
|
(46,575 |
) |
|
|
(37,370 |
) |
Provision for income taxes |
|
— |
|
|
|
1 |
|
Net loss |
$ |
(46,575 |
) |
|
$ |
(37,371 |
) |
Less: Net loss attributable to
noncontrolling interest |
|
54 |
|
|
|
87 |
|
Net loss attributable to
Alignment Healthcare, Inc. |
$ |
(46,521 |
) |
|
$ |
(37,284 |
) |
Total weighted-average common shares outstanding - basic and
diluted |
|
189,005,394 |
|
|
|
183,113,945 |
|
Net loss per share - basic and
diluted |
$ |
(0.25 |
) |
|
$ |
(0.20 |
) |
Condensed Consolidated Statements of Cash
Flows (in thousands)(Unaudited) |
|
Three Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
Operating
Activities: |
|
|
|
Net loss |
$ |
(46,575 |
) |
|
$ |
(37,371 |
) |
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities: |
|
|
|
Provision for credit loss |
|
— |
|
|
|
1 |
|
Loss on right of use assets |
|
143 |
|
|
|
— |
|
Depreciation and amortization |
|
6,029 |
|
|
|
4,982 |
|
Amortization-investment discount |
|
(1,153 |
) |
|
|
(351 |
) |
Amortization-debt issuance costs |
|
520 |
|
|
|
305 |
|
Equity-based compensation |
|
20,854 |
|
|
|
21,978 |
|
Non-cash lease expense |
|
472 |
|
|
|
717 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(45,322 |
) |
|
|
(32,387 |
) |
Prepaid expenses and other current assets |
|
(8,886 |
) |
|
|
(15,786 |
) |
Other assets |
|
(114 |
) |
|
|
4 |
|
Medical expenses payable |
|
71,065 |
|
|
|
15,535 |
|
Accounts payable and accrued expenses |
|
48 |
|
|
|
(9,211 |
) |
Deferred premium revenue |
|
(59 |
) |
|
|
140,773 |
|
Accrued compensation |
|
(2,505 |
) |
|
|
(2,966 |
) |
Lease liabilities |
|
(755 |
) |
|
|
(1,113 |
) |
Net cash (used in) provided by operating activities |
|
(6,238 |
) |
|
|
85,110 |
|
Investing
Activities: |
|
|
|
Purchase of investments |
|
(21,564 |
) |
|
|
(104,243 |
) |
Maturities of investments |
|
75,390 |
|
|
|
1,100 |
|
Acquisition of property and equipment |
|
(11,121 |
) |
|
|
(7,285 |
) |
Net cash provided by (used in) investing activities |
|
42,705 |
|
|
|
(110,428 |
) |
Financing
Activities: |
|
|
|
Payment of employment taxes related to release of restricted
stock |
|
(350 |
) |
|
|
— |
|
Contributions from noncontrolling interest holders |
|
15 |
|
|
|
30 |
|
Net cash (used in) provided by financing activities |
|
(335 |
) |
|
|
30 |
|
Net increase (decrease) in
cash |
|
36,132 |
|
|
|
(25,288 |
) |
Cash, cash equivalents and
restricted cash at beginning of period |
|
204,954 |
|
|
|
411,299 |
|
Cash, cash equivalents and
restricted cash at end of period |
$ |
241,086 |
|
|
$ |
386,011 |
|
Supplemental disclosure
of cash flow information: |
|
|
|
Cash paid for interest |
$ |
5,175 |
|
|
$ |
4,277 |
|
Supplemental non-cash
investing and financing activities: |
|
|
|
Acquisition of property in accounts payable |
$ |
156 |
|
|
$ |
10 |
|
|
|
|
|
|
|
|
|
The following table provides a reconciliation of cash, cash
equivalents and restricted cash reported within the consolidated
balance sheets to the total above:
|
March 31, 2024 |
|
March 31, 2023 |
Cash and cash equivalents |
$ |
238,903 |
|
$ |
384,261 |
Restricted cash in other
assets |
|
2,183 |
|
|
1,750 |
Total |
$ |
241,086 |
|
$ |
386,011 |
Non-GAAP Financial MeasuresCertain 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 EBITDAAdjusted 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, 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
Zhuohzhuo@ahcusa.com
Media Contact Priya ShahmPR, Inc. for Alignment
Healthalignment@mpublicrelations.com
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