ORANGE, Calif., May 17, 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 first quarter ended March 31, 2021.

“I’m incredibly proud of all Alignment Healthcare has accomplished in the first quarter of 2021, from successfully completing our initial public offering, to exceeding our expectations across each and every key performance metric, including health plan membership, revenue, adjusted gross profit, and adjusted EBITDA,” said John Kao, founder and CEO. “Our founding mission -- to improve health care one senior at a time -- drives our distinct model in this category, one that uses direct engagement and purposeful technology to deliver care that is personalized, holistic and coordinated to our growing family of senior members nationwide. The result is improved care experiences and clinical outcomes that we are built to uphold with a level of scalability, repeatability and consistency as we continue to grow.” 

“Our success in the quarter was driven by continued execution on our near-term strategy of growing our membership, expanding into new markets, and establishing new beachhead markets in new states,” Kao added. “Our high-tech, high-touch clinical model is working and our product innovation continues to meet the needs of our members. We’ve made great progress so far this year and we believe our proven model will drive growth throughout 2021 and beyond.” 

First Quarter 2021 Financial Highlights
All comparisons, unless otherwise noted, are to the three months ended March 31, 2020.

  • Health plan membership at the end of the quarter was approximately 83,100, up 32% year over year
  • Total revenue was $267.1 million, up 19% year over year
  • Health plan premium revenue of $264.7 million represented 30% growth year over year; total revenue was offset by a reduction in third party payor capitation revenue
  • Medical benefit ratio was 91.5%
  • Adjusted gross profit was $22.6 million
  • Adjusted EBITDA was $(14.0) million
  • As of March 31, 2021, total cash was $528.4 million. Debt was $150.9 million; debt net of debt issuance cost amortization was $145.7 million

Outlook for Second Quarter and Fiscal Year 2021

  Three Months Ending
June 30, 2021
Twelve Months Ending
December 31, 2021
$ Millions Low High Low High
Health Plan Membership   83,300     83,700     83,500     84,500  
Revenue $ 265   $ 270   $ 1,040   $ 1,055  
Adjusted Gross Profit $ 32   $ 34   $ 116   $ 122  
Adjusted EBITDA $ (9 ) $ (10 ) $ (56 ) $ (51 )

Conference Call Details
The company will host a conference call at 5 p.m. E.T. to discuss these results and management’s 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 5475534. 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 Healthcare
Alignment 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 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 ended June 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 Form 10-Q for the quarter ended March 31, 2021, filed with the SEC on May 17, 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)

  March 31,
2021
  December 31,
2020
(1)
Assets      
Current Assets:      
Cash $ 528,417     $ 207,311  
Accounts receivable (less allowance for credit losses of $8 at March 31, 2021
and $0 at December 31, 2020, respectively)
  49,458       40,140  
Prepaid expenses and other current assets   26,773       17,225  
Total current assets   604,648       264,676  
Property and equipment, net   28,403       27,145  
Right of use asset, net   9,577       9,888  
Goodwill and intangible assets, net   34,563       34,645  
Restricted and other assets   2,153       2,148  
Total assets $ 679,344     $ 338,502  
Liabilities and Stockholders' Equity      
Current Liabilities:      
Medical expenses payable $ 128,673     $ 112,605  
Accounts payable and accrued expenses   19,639       15,675  
Accrued compensation   21,481       25,172  
Total current liabilities   169,793       153,452  
Long-term debt, net of debt issuance costs   145,734       144,168  
Long-term portion of lease liabilities   9,565       10,271  
Total liabilities   325,092       307,891  
Commitments and Contingencies (Note 12)      
Stockholders' Equity:      
Preferred stock, $.001 par value; 100,000,000 and 0 shares authorized as of
March 31, 2021 and December 31, 2020 respectively; no shares issued and
outstanding as of March 31, 2021 and December 31, 2020
  -       -  
Common stock, $.001 par value; 1,000,000,000 and 164,063,787 shares
authorized as of March 31, 2021 and December 31, 2020 respectively; 187,273,782 and
164,063,787 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively
  188       164  
Additional paid-in capital   790,509       410,018  
Accumulated deficit   (436,445 )     (379,571 )
Total stockholders' equity   354,252       30,611  
Total liabilities and stockholders' equity $ 679,344     $ 338,502  
       

 

(1)   The condensed consolidated balance sheet as of December 31, 2020 is 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)

  For the Three Months Ended March 31,
    2021       2020  
Revenues:      
Earned premiums $ 267,000     $ 224,266  
Other   82       367  
Total revenues   267,082       224,633  
Expenses:      
Medical expenses   251,095       193,396  
Selling, general, and administrative expenses   64,914       32,787  
Depreciation and amortization   3,737       3,565  
Total expenses   319,746       229,748  
Loss from operations   (52,664 )     (5,115 )
Other expenses:      
Interest expense   4,248       4,160  
Other (income) expenses   (38 )     797  
Total other expenses   4,210       4,957  
Loss before income taxes   (56,874 )     (10,072 )
Provision for income taxes   -       -  
Net loss $ (56,874 )   $ (10,072 )
       
Total weighted-average common shares outstanding - basic and diluted(1)   154,432,027       140,764,196  
Net loss per share - basic and diluted $ (0.37 )   $ (0.07 )
       

 

(1)   The weighted-average shares used in computing net loss per share, basic and 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)

  For the Three Months Ended March 31,
    2021       2020  
Operating Activities:      
Net loss $ (56,874 )   $ (10,072 )
Adjustments to reconcile net loss to net cash used in operating activities:      
Provision for doubtful accounts   8       10  
Depreciation and amortization   3,789       3,670  
Amortization-debt issuance costs and investment discount   550       540  
Payment-in-kind interest   1,015       982  
Loss on disposal of property and equipment   -       860  
Equity-based compensation and common stock payments   20,388       326  
Non-cash lease expense   648       573  
Changes in operating assets and liabilities:      
Accounts receivable   (9,326 )     (9,671 )
Prepaid expenses and other current assets   (9,547 )     (8,908 )
Other assets   (6 )     2  
Medical expenses payable   16,069       (5,516 )
Accounts payable and accrued expenses   (298 )     6,544  
Accrued compensation   (3,691 )     (1,101 )
Lease liabilities   (832 )     3,883  
Noncurrent liabilities   -       (3,941 )
Net cash used in operating activities   (38,107 )     (21,819 )
Investing Activities:      
Purchase of investments   (750 )     (1,000 )
Sale of investments   750       250  
Acquisition of property and equipment   (4,446 )     (3,085 )
Proceeds from the sale of property and equipment   -       100  
Net cash used in investing activities   (4,446 )     (3,735 )
Financing Activities:      
Equity repurchase   (1,474 )     (516 )
Issuance of common stock   390,600       135,000  
Common stock issuance costs   (25,467 )     (3,000 )
Net cash provided by financing activities   363,659       131,484  
Net increase in cash   321,106       105,930  
Cash and restricted cash at beginning of period   207,811       86,484  
Cash and restricted cash at end of period $ 528,917     $ 192,414  
Supplemental disclosure of cash flow information:      
Cash paid for interest $ 2,682     $ 2,637  
Supplemental non-cash investing and financing activities:      
Acquisition of property in accounts payable $ 474     $ 93  
Common stock issuance costs included in accounts payable and accrued expenses $ 3,532     $ 700  
The following table provides a reconciliation of cash and restricted cash reported
within the consolidated balance sheets to the total above
     
Cash $ 528,417     $ 192,414  
Restricted cash in restricted and other assets   500       -  
Total $ 528,917     $ 192,414  
       

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 Reconciliation

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.

Adjusted EBITDA is reconciled as follows:

  Three Months Ended March 31,
    2021       2020  
(dollars in thousands)      
Net loss $ (56,874 )   $ (10,072 )
Add back:      
Interest expense $ 4,248     $ 4,160  
Depreciation and amortization   3,789       3,670  
EBITDA   (48,837 )     (2,242 )
Equity-based compensation   31,787       326  
Reorganization and transaction-related expenses   3,008       -  
Adjusted EBITDA $ (14,042 )   $ (1,916 )
       

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 Reconciliation

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.

Adjusted Gross Profit is reconciled as follows:

  Three Months Ended March 31,
    2021       2020  
(dollars in thousands)      
Revenues $ 267,082     $ 224,633  
Medical expenses   251,095       193,396  
Gross profit   15,987       31,237  
Gross profit %   6.0 %     13.9 %
Add back:      
Equity-based compensation (medical expenses) $ 6,566     -  
Depreciation (medical expenses)   52       105  
Total add back   6,618       105  
Adjusted gross profit $ 22,605     $ 31,342  
Adjusted gross profit %   8.5 %     14.0 %
Medical benefits ratio   91.5 %     86.0 %

Investor Contact
Bob East
ICR Westwicke for Alignment Healthcare
AlignmentIR@westwicke.com
(443) 213-0500

Media Contact
Maggie Habib
mPR, Inc. for Alignment Healthcare
maggie@mpublicrelations.com
(310) 916-6934

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