Form 8-K
0001832466 False 0001832466 2023-02-28 2023-02-28 iso4217:USD xbrli:shares iso4217:USD xbrli:shares
 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 8-K

_________________

CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  February 28, 2023

_______________________________

Alignment Healthcare, Inc.

(Exact name of registrant as specified in its charter)

_______________________________

Delaware001-4029546-5596242
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification No.)

1100 W. Town and Country Road, Suite 1600

Orange, California 92868

(Address of Principal Executive Offices) (Zip Code)

(844) 310-2247

(Registrant's telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

_______________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareALHCThe NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 
 
Item 2.02. Results of Operations and Financial Condition.

On February 28, 2023, Alignment Healthcare, Inc. issued a press release announcing its financial results for its fourth quarter and full year ending Dec. 31, 2022. A copy of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

The information contained in this Current Report on Form 8-K and in the accompanying exhibit are “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number Description
   
99.1 Press Release dated February 28, 2023
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 Alignment Healthcare, Inc.
   
  
Date: February 28, 2023By: /s/ Thomas Freeman        
  Thomas Freeman
  Chief Financial Officer
  

 

EdgarFiling

EXHIBIT 99.1

Alignment Healthcare Reports Fourth Quarter and Full-Year 2022 Results; Provides Full-Year 2023 Financial Guidance

ORANGE, Calif., Feb. 28, 2023 (GLOBE NEWSWIRE) -- Alignment Healthcare, Inc. (NASDAQ: ALHC), a tech-enabled Medicare Advantage company, today reported financial results for its fourth quarter and full year ending Dec. 31, 2022.

“Alignment Healthcare’s relentless focus on quality allowed us to deliver strong financial results in 2022, having exceeded or met our guidance across all four of our key performance indicators for the eighth consecutive quarter,” said John Kao, founder and CEO. “As we approach the company’s 10-year anniversary, we’re confident that strategic investments in our people and technology will continue to drive meaningful improvements in the health and quality of life of all those we serve.”

Fourth Quarter 2022 Financial Highlights
All comparisons, unless otherwise noted, are to the three months ended Dec. 31, 2021.

Full Year 2022 Financial Highlights
All comparisons, unless otherwise noted, are to the twelve months ended Dec. 31, 2021.

Adjusted Gross Profit is reconciled as follows:

 Three Months Ended
December 31,
 Year Ended
December 31,
  2022   2021   2022   2021 
(dollars in thousands)       
Loss from operations$(52,106) $(43,466) $(128,639) $(178,072)
Add back:       
Equity-based compensation (medical expenses) 2,377   3,960   9,128   15,418 
Depreciation (medical expenses) 64   61   213   220 
Depreciation and amortization 4,687   4,088   17,273   15,813 
Selling, general, and administrative expenses 83,228   78,081   295,646   290,991 
Total add back 90,356   86,190   322,260   322,442 
Adjusted gross profit$38,250  $42,724  $193,621  $144,370 
Adjusted gross profit % 10.6%  14.3%  13.5%  12.4%
Medical benefit ratio 89.4%  85.7%  86.5%  87.6%
        


Adjusted EBITDA is reconciled as follows:

 Three Months Ended
December 31,
 Year Ended
December 31,
  2022   2021   2022   2021 
(dollars in thousands)       
Net loss$(56,995) $(47,834) $(149,639) $(195,286)
Less: Net loss attributable to noncontrolling interest 92      92    
Add back:       
Interest expense 4,793   4,452   18,289   17,443 
Depreciation and amortization 4,751   4,149   17,486   16,033 
Income taxes 172      339    
EBITDA (47,187)  (39,233)  (113,433)  (161,810)
Equity-based compensation(1) 22,885   28,814   81,718   121,999 
Reorganization and transaction-related expenses(2)    527   579   4,585 
Acquisition expenses(3) 548   1,020   1,614   2,110 
Loss on sublease and disposal of assets(4) 102      611    
Loss on extinguishment of debt       2,196    
Adjusted EBITDA$(23,652) $(8,872) $(26,715) $(33,116)
        

(1)  2022 represents equity-based compensation related to grants made in the current 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. 2021 represents equity-based compensation related to the timing of the IPO as previously discussed. Equity-based compensation expense for the year ended December 31, 2021 includes $11.4 million related to the cash settlement of SARs.

(2)  Represents legal, professional, accounting and other advisory fees related to our pre-IPO corporate 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-capitalizable.

(4)  Represents loss related to right of use (“ROU”) assets that were subleased in the second quarter of 2022 and loss related to disposal of assets.

Outlook for First Quarter and Fiscal Year 2023

 Three Months Ending
March 31, 2023
Twelve Months Ending|
March 31, 2023
$ MillionsLow High
 Low
 High
Health Plan Membership 109,300   109,500   113,000   115,000 
Revenue $429   $434   $1,705   $1,730 
Adjusted Gross Profit1 $38   $41   $205   $217 
Adjusted EBITDA2 ($17)   ($14)   ($34)   ($20) 

_______________________

  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, 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, reorganization and transaction-related expenses, equity-based compensation expense, loss on sublease and loss on extinguishment of debt. 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. EST 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.alignmenthealthcare.com/. At the start of the conference call, participants may access the webcast at the following link: https://edge.media-server.com/mmc/p/83hqdb3q. 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 is a tech-enabled Medicare Advantage company that offers more than 40 benefits-rich, value-driven 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 first quarter ending March 31, 2023, 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; 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.



Consolidated Balance Sheets
(in thousands, except par value and share amounts)

 December 31,
2022
 December 31,
2021
Assets   
Current Assets:   
Cash$409,549  $466,600 
Accounts receivable (less allowance for credit losses of $0 at December 31, 2022 and $111 at December 31, 2021, respectively) 92,890   58,512 
Prepaid expenses and other current assets 42,107   27,747 
Total current assets 544,546   552,859 
Property and equipment, net 37,169   30,358 
Right of use asset, net 5,825   7,853 
Goodwill and intangible assets, net 40,288   35,116 
Other assets 6,035   4,709 
Total assets$633,863  $630,895 
Liabilities and Stockholders' Equity   
Current Liabilities:   
Medical expenses payable$170,135  $125,886 
Accounts payable and accrued expenses 32,288   17,431 
Accrued compensation 27,538   23,928 
Total current liabilities 229,961   167,245 
Long-term debt, net of debt issuance costs 160,902   150,620 
Long-term portion of lease liabilities 3,698   6,975 
Total liabilities 394,561   324,840 
Stockholders' Equity:   
Preferred stock, $.001 par value; 100,000,000 and 100,000,000 shares authorized as of December 31, 2022 and December 31, 2021, respectively; no shares issued and outstanding as of December 31, 2022 and December 31, 2021     
Common stock, $.001 par value; 1,000,000,000 shares authorized as of December 31, 2022 and December 31, 2021; 187,280,015 and 187,193,613 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively 187   187 
Additional paid-in capital 970,180   888,547 
Accumulated deficit (732,241)  (582,694)
Total Alignment Healthcare, Inc. stockholders' equity 238,126   306,040 
Noncontrolling interest 1,176   15 
Total stockholders' equity 239,302   306,055 
Total liabilities and stockholders' equity$633,863  $630,895 
    



Consolidated Statements of Operations
(in thousands, except per share amounts)
(Quarterly data unaudited)

 Three Months Ended
December 31,
 Year Ended
December 31,
  2022   2021   2022   2021 
Revenues:       
Earned premiums$360,100  $298,071  $1,431,550  $1,167,085 
Other 1,711   203   2,609   688 
Total revenues 361,811   298,274   1,434,159   1,167,773 
Expenses:       
Medical expenses 326,002   259,571   1,249,879   1,039,041 
Selling, general, and administrative expenses 83,228   78,081   295,646   290,991 
Depreciation and amortization 4,687   4,088   17,273   15,813 
Total expenses 413,917   341,740   1,562,798   1,345,845 
Loss from operations (52,106)  (43,466)  (128,639)  (178,072)
Other expenses:       
Interest expense 4,793   4,452   18,289   17,443 
Other expenses (income) (76)  (84)  176   (229)
Loss on extinguishment of debt       2,196    
Total other expenses 4,717   4,368   20,661   17,214 
Loss before income taxes (56,823)  (47,834)  (149,300)  (195,286)
Provision for income taxes 172      339    
Net loss$(56,995) $(47,834) $(149,639) $(195,286)
Less: Net loss attributable to noncontrolling interest 92      92    
Net loss attributable to Alignment Healthcare, Inc.$(56,903) $(47,834) $(149,547) $(195,286)
Total weighted-average common shares outstanding - basic and diluted 182,540,539   178,396,999   181,212,757   171,956,849 
Net loss per share attributable to Alignment Healthcare, Inc. - basic and diluted$(0.31) $(0.27) $(0.83) $(1.14)
        



Consolidated Statements of Cash Flows
(in thousands)

 Year Ended
December 31,
  2022   2021 
Operating Activities:   
Net loss$(149,639) $(195,286)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:   
Provision for credit loss 150   111 
Loss on sublease 510    
Depreciation and amortization 17,486   16,033 
Amortization-debt issuance costs and investment discount 1,850   2,254 
Amortization of payment-in-kind interest 2,943   4,197 
Loss on disposal of property and equipment 101    
Equity-based compensation and common stock payments 81,718   110,600 
Non-cash lease expense 2,811   2,731 
Loss on extinguishment of debt 2,196    
Changes in operating assets and liabilities:   
Accounts receivable (34,377)  (17,608)
Prepaid expenses and other current assets (14,356)  (10,340)
Other assets (86)  644 
Medical expenses payable 44,250   12,512 
Accounts payable and accrued expenses 13,743   437 
Accrued compensation 3,609   (1,244)
Lease liabilities (4,214)  (3,817)
Payment-in-kind interest (14,122)   
Noncurrent liabilities     
Net cash (used in) provided by operating activities (45,427)  (78,776)
Investing Activities:   
Purchase of business, net of cash received (4,043)   
Asset acquisition, net of cash received    (1,405)
Purchase of investments (2,825)  (2,475)
Sale of investments 2,425   1,425 
Acquisition of property and equipment (23,774)  (18,360)
Proceeds from the sale of property and equipment     
Net cash used in investing activities (28,217)  (20,815)
Financing Activities:   
Repurchase of noncontrolling interest (100)   
Contributions from noncontrolling interest holders 68   15 
Equity repurchase    (1,474)
Issuance of long-term debt 165,000    
Debt issuance costs (5,196)   
Repayment of long-term debt (143,179)   
Issuance of common stock    390,600 
Common stock issuance costs    (29,011)
Net cash provided by financing activities 16,593   360,130 
Net (decrease) increase in cash (57,051)  260,539 
Cash and restricted cash at beginning of period 468,350   207,811 
Cash and restricted cash at end of period$411,299  $468,350 
Supplemental disclosure of cash flow information:   
Cash paid for interest$22,447  $10,992 
Supplemental non-cash investing and financing activities:   
Acquisition of property in accounts payable$47  $347 
Purchase of business in accounts payable$505  $ 



The following table provides a reconciliation of cash and restricted cash reported within the condensed consolidated balance sheets to the total above:

 December 31, 2022 December 31, 2021 December 31, 2020
Cash$409,549  $466,600  $207,311 
Restricted cash in other assets 1,750   1,750   500 
Total$411,299  $468,350  $207,811 


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, equity-based compensation expense, loss on sublease and loss on extinguishment of debt.

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 Zhuo
hzhuo@ahcusa.com

Media Contact
Maggie Habib
mPR, Inc. for Alignment Health
alignment@mpublicrelations.com