10-Q
us-gaap:FinancialServiceMemberQ2us-gaap:FinancialServiceMember00018324662023-06-30--12-31us-gaap:FinancialServiceMemberfalseus-gaap:FinancialServiceMember0001832466us-gaap:CommonStockMemberus-gaap:StockAppreciationRightsSARSMember2021-03-242021-03-240001832466us-gaap:CommonStockMember2020-06-300001832466us-gaap:RestrictedStockUnitsRSUMember2021-06-300001832466us-gaap:RetainedEarningsMember2021-03-3100018324662021-03-310001832466alhc:ModificationChargeFromPerformanceBasedIncentiveUnitsAndSarMember2020-01-012020-06-300001832466us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-06-300001832466alhc:DirectlyFromCentersForMedicareAndMedicaidServicesMember2021-01-012021-06-300001832466us-gaap:HealthCarePremiumMember2020-04-012020-06-300001832466us-gaap:IPOMember2021-03-300001832466us-gaap:CommonStockMember2020-04-012020-06-300001832466alhc:OtherMember2021-01-012021-06-300001832466alhc:MedicalExpensesMember2020-01-012020-06-300001832466us-gaap:StockAppreciationRightsSARSMember2021-01-012021-03-310001832466alhc:TermLoanMember2021-01-012021-06-300001832466us-gaap:RestrictedStockMember2021-04-012021-06-300001832466us-gaap:IPOMember2021-05-172021-05-170001832466us-gaap:CommonStockMember2021-03-310001832466alhc:SeriesBAndCMember2020-12-310001832466us-gaap:IPOMember2020-01-012020-06-300001832466us-gaap:StockAppreciationRightsSARSMember2020-01-012020-06-300001832466us-gaap:BondsMember2020-12-3100018324662021-01-012021-03-3100018324662021-06-300001832466us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001832466alhc:SeriesBAndCMember2019-12-310001832466alhc:ModificationChargeFromPerformanceBasedIncentiveUnitsAndSarMember2020-04-012020-06-300001832466alhc:SoftwareMember2021-06-300001832466us-gaap:RestrictedStockUnitsRSUMember2020-12-3100018324662021-08-040001832466us-gaap:RetainedEarningsMember2020-01-012020-06-300001832466us-gaap:DomesticCountryMember2021-01-012021-06-300001832466us-gaap:USTreasurySecuritiesMember2021-06-300001832466us-gaap:LeaseholdImprovementsMember2020-12-310001832466us-gaap:LicenseMember2020-01-012020-12-310001832466us-gaap:IPOMember2021-03-302021-03-300001832466us-gaap:AdditionalPaidInCapitalMember2021-03-310001832466alhc:OfficeEquipmentAndFurnitureMembersrt:MaximumMember2021-01-012021-06-300001832466alhc:OtherMember2021-04-012021-06-300001832466us-gaap:RestrictedStockMember2021-01-012021-06-300001832466us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2020-12-310001832466us-gaap:NoncontrollingInterestMember2020-01-012020-06-300001832466us-gaap:RetainedEarningsMember2021-04-012021-06-300001832466us-gaap:CommonStockMember2020-01-012020-06-300001832466us-gaap:CommonStockMember2019-12-310001832466us-gaap:NoncontrollingInterestMember2020-03-3100018324662020-04-012020-06-3000018324662020-03-310001832466us-gaap:FairValueInputsLevel3Memberus-gaap:CertificatesOfDepositMember2020-12-310001832466us-gaap:FurnitureAndFixturesMember2021-06-300001832466us-gaap:CommonStockMember2020-03-310001832466us-gaap:FairValueInputsLevel3Memberus-gaap:BondsMember2021-06-300001832466alhc:PlanRelationshipMember2020-01-012020-12-310001832466us-gaap:FairValueInputsLevel3Memberus-gaap:CertificatesOfDepositMember2021-06-300001832466us-gaap:RestrictedStockMember2021-01-012021-03-310001832466us-gaap:StockAppreciationRightsSARSMember2021-01-012021-06-300001832466us-gaap:CommonStockMember2021-01-012021-06-300001832466us-gaap:NoncontrollingInterestMember2019-12-310001832466alhc:OfficeEquipmentAndFurnitureMembersrt:MinimumMember2021-01-012021-06-300001832466us-gaap:BondsMember2021-06-300001832466us-gaap:ComputerEquipmentMember2020-12-310001832466us-gaap:CommonStockMember2021-04-012021-06-300001832466us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2021-06-300001832466alhc:OtherMember2020-01-012020-06-300001832466us-gaap:AdditionalPaidInCapitalMember2020-03-310001832466us-gaap:IPOMember2021-01-012021-06-300001832466us-gaap:LicenseMember2020-12-310001832466us-gaap:FairValueInputsLevel3Memberus-gaap:BondsMember2020-12-310001832466alhc:OtherMember2020-12-3100018324662021-01-012021-06-300001832466us-gaap:LicenseMember2021-01-012021-06-300001832466alhc:OtherMembersrt:MinimumMember2020-01-012020-12-310001832466us-gaap:StockAppreciationRightsSARSMemberus-gaap:CashMember2021-03-242021-03-240001832466alhc:PlanRelationshipMember2021-06-300001832466alhc:SeriesBAndCMember2021-04-012021-06-300001832466us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-04-012020-06-300001832466alhc:HealthCareCapitationMember2021-01-012021-06-300001832466us-gaap:IPOMember2021-05-170001832466us-gaap:IPOMember2021-03-252021-03-250001832466us-gaap:BondsMemberus-gaap:FairValueInputsLevel1Member2020-12-310001832466alhc:TwoThousandAndTwentyOneEquityIncentivePlanMember2021-01-012021-06-300001832466us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMember2020-12-310001832466us-gaap:LeaseholdImprovementsMember2021-06-300001832466us-gaap:EmployeeStockOptionMember2021-01-012021-06-300001832466us-gaap:StockAppreciationRightsSARSMember2020-04-012020-06-300001832466us-gaap:AdditionalPaidInCapitalMember2021-01-012021-06-300001832466us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300001832466alhc:HealthCareCapitationMember2020-01-012020-06-300001832466alhc:HealthCareCapitationMember2020-04-012020-06-300001832466us-gaap:RestrictedStockMember2021-06-300001832466us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-01-012020-06-3000018324662021-04-012021-06-300001832466us-gaap:StockAppreciationRightsSARSMember2020-12-310001832466alhc:OtherMembersrt:MinimumMember2021-01-012021-06-300001832466us-gaap:AdditionalPaidInCapitalMember2020-01-012020-06-300001832466us-gaap:RestrictedStockUnitsRSUMember2021-04-012021-06-300001832466us-gaap:FairValueInputsLevel2Member2021-06-300001832466us-gaap:CommonStockMember2020-12-310001832466alhc:SoftwareMember2020-12-310001832466us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel2Member2020-12-3100018324662020-01-012020-12-310001832466us-gaap:BondsMemberus-gaap:FairValueInputsLevel1Member2021-06-300001832466us-gaap:AdditionalPaidInCapitalMember2021-06-300001832466alhc:NonVestedAwardsRsaOptionsAndRsuMember2021-04-012021-06-300001832466us-gaap:BondsMemberus-gaap:FairValueInputsLevel2Member2021-06-300001832466us-gaap:NoncontrollingInterestMember2020-04-012020-06-300001832466alhc:HealthCareCapitationMember2021-04-012021-06-300001832466alhc:MedicalExpensesMember2021-01-012021-06-300001832466alhc:PlanRelationshipMember2020-12-310001832466alhc:SeriesBAndCMember2020-04-012020-06-300001832466us-gaap:EmployeeStockOptionMembersrt:MinimumMember2021-01-012021-06-300001832466alhc:SeriesBAndCMember2021-06-300001832466alhc:DirectlyFromCentersForMedicareAndMedicaidServicesMember2021-04-012021-06-300001832466us-gaap:ComputerEquipmentMember2021-01-012021-06-3000018324662020-01-012020-06-300001832466us-gaap:AdditionalPaidInCapitalMember2020-12-310001832466us-gaap:RetainedEarningsMember2019-12-310001832466alhc:TwoThousandAndTwentyOneEquityIncentivePlanMembersrt:MaximumMember2021-06-300001832466us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMember2021-06-300001832466us-gaap:RestrictedStockMember2020-12-310001832466us-gaap:RestrictedStockMember2021-03-310001832466alhc:SeriesBAndCMember2020-03-310001832466us-gaap:EmployeeStockOptionMembersrt:MaximumMember2021-01-012021-06-300001832466alhc:MedicareAdvantagePlanMember2021-06-300001832466alhc:OtherMember2021-06-300001832466us-gaap:CommonStockMember2021-06-300001832466us-gaap:RetainedEarningsMember2020-12-310001832466us-gaap:NoncontrollingInterestMember2020-06-300001832466alhc:MedicareAdvantagePlanMember2020-12-310001832466us-gaap:StockOptionMember2020-01-012020-06-300001832466alhc:OtherMembersrt:MaximumMember2020-01-012020-12-310001832466us-gaap:NoncontrollingInterestMember2020-12-310001832466us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-04-012021-06-300001832466us-gaap:ComputerEquipmentMember2021-06-300001832466us-gaap:HealthCarePremiumMember2021-01-012021-06-300001832466us-gaap:RetainedEarningsMember2020-04-012020-06-300001832466us-gaap:FairValueInputsLevel1Member2020-12-310001832466us-gaap:StockAppreciationRightsSARSMember2021-03-242021-03-240001832466alhc:SeriesBAndCMember2020-06-300001832466us-gaap:StockAppreciationRightsSARSMember2021-03-310001832466us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel1Member2021-06-300001832466us-gaap:IPOMember2021-06-300001832466us-gaap:FairValueInputsLevel2Member2020-12-310001832466us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310001832466alhc:SeriesBAndCMember2020-01-012020-03-310001832466alhc:MedicalExpensesMember2020-04-012020-06-300001832466us-gaap:NoncontrollingInterestMember2021-03-310001832466us-gaap:RetainedEarningsMember2021-01-012021-06-300001832466us-gaap:LeaseholdImprovementsMember2021-01-012021-06-300001832466us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-01-012021-06-300001832466us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMember2020-12-310001832466us-gaap:RestrictedStockUnitsRSUMember2021-03-310001832466us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel1Member2020-12-310001832466us-gaap:SoftwareDevelopmentMembersrt:MinimumMember2021-01-012021-06-300001832466us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel2Member2021-06-300001832466alhc:MedicareAdvantagePlanMember2021-01-012021-06-300001832466us-gaap:NoncontrollingInterestMember2021-01-012021-06-3000018324662020-12-310001832466alhc:ModificationChargeFromPerformanceBasedIncentiveUnitsAndSarMember2021-04-012021-06-300001832466us-gaap:NoncontrollingInterestMember2021-04-012021-06-300001832466alhc:SeriesBAndCMember2021-01-012021-03-310001832466alhc:TwoThousandAndTwentyOneEquityIncentivePlanMember2021-06-300001832466alhc:OtherMembersrt:MaximumMember2021-01-012021-06-300001832466us-gaap:ConstructionInProgressMember2021-06-300001832466us-gaap:ConstructionInProgressMember2020-12-310001832466us-gaap:IPOMember2020-06-3000018324662020-06-300001832466us-gaap:NoncontrollingInterestMember2021-06-300001832466us-gaap:HealthCarePremiumMember2020-01-012020-06-300001832466us-gaap:SoftwareDevelopmentMembersrt:MaximumMember2021-01-012021-06-300001832466us-gaap:RetainedEarningsMember2020-06-300001832466us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMember2021-06-300001832466us-gaap:HealthCarePremiumMember2021-04-012021-06-300001832466alhc:NonVestedAwardsRsaOptionsAndRsuMember2021-01-012021-06-300001832466alhc:ModificationChargeFromPerformanceBasedIncentiveUnitsAndSarMember2021-01-012021-06-300001832466alhc:SeriesBAndCMember2021-03-310001832466us-gaap:FairValueInputsLevel1Member2021-06-300001832466us-gaap:RetainedEarningsMember2020-03-310001832466us-gaap:USTreasurySecuritiesMember2020-12-310001832466us-gaap:StockAppreciationRightsSARSMember2021-04-012021-06-300001832466us-gaap:LicenseMember2021-06-300001832466alhc:PreIpoAwardsConvertedRestrictedStockAwardsMember2021-01-012021-06-300001832466us-gaap:CertificatesOfDepositMember2021-06-300001832466us-gaap:BondsMemberus-gaap:FairValueInputsLevel2Member2020-12-3100018324662019-12-310001832466alhc:MedicalExpensesMember2021-04-012021-06-300001832466alhc:SeriesBAndCMember2021-01-012021-06-300001832466us-gaap:RetainedEarningsMember2021-06-300001832466us-gaap:RestrictedStockMember2021-03-242021-03-240001832466us-gaap:FairValueInputsLevel3Member2020-12-310001832466us-gaap:StockAppreciationRightsSARSMember2021-06-300001832466alhc:PlanRelationshipMember2021-01-012021-06-300001832466us-gaap:FairValueInputsLevel3Member2021-06-300001832466us-gaap:AdditionalPaidInCapitalMember2019-12-310001832466us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-06-300001832466us-gaap:IPOMember2021-04-062021-04-060001832466alhc:OtherMember2020-04-012020-06-300001832466srt:MinimumMemberalhc:MedicareAdvantagePlanMember2021-01-012021-06-300001832466us-gaap:FurnitureAndFixturesMember2020-12-310001832466us-gaap:EmployeeStockOptionMemberalhc:PostIpoMember2021-01-012021-06-300001832466us-gaap:StockOptionMember2021-01-012021-06-300001832466us-gaap:CertificatesOfDepositMember2020-12-310001832466us-gaap:AdditionalPaidInCapitalMember2020-06-30alhc:Entityalhc:Segmentxbrli:purexbrli:sharesiso4217:USDxbrli:sharesiso4217:USD

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40295

 

ALIGNMENT HEALTHCARE, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

46-5596242

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

1100 W. Town and Country Road, Suite 1600

Orange, California

92868

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (844) 310-2247

 

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.001 per share

 

ALHC

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

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. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ☐    No  

As of August 4, 2021, the registrant had 187,273,782 shares of common stock, $0.001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

4

 

 

 

Item 1.

Financial Statements (Unaudited)

4

 

Condensed Consolidated Balance Sheets

4

 

Condensed Consolidated Statements of Operations

5

 

Condensed Consolidated Statements of Stockholders' Equity

6

 

Condensed Consolidated Statements of Cash Flows

8

 

Notes to Unaudited Condensed Consolidated Financial Statements

10

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

27

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

39

Item 4.

Controls and Procedures

39

 

 

 

PART II.

OTHER INFORMATION

40

 

 

 

Item 1.

Legal Proceedings

40

Item 1A.

Risk Factors

40

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

40

Item 3.

Defaults Upon Senior Securities

40

Item 4.

Mine Safety Disclosures

40

Item 5.

Other Information

41

Item 6.

Exhibits

42

Signatures

44

 

 

 


 

FORWARD-LOOKING STATEMENTS

Throughout this quarterly report on Form 10-Q (this “Quarterly Report”), we make “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Quarterly Report are forward-looking statements. Forward-looking statements give our current expectations relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely” and other words and terms of similar meaning. The forward-looking statements contained in this Quarterly Report are generally located in the material set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” but may be found in other locations as well. These statements are based upon management’s current expectations, assumptions and estimates and are not guarantees of timing, future results or performance. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:

our history of net losses, and our ability to achieve or maintain profitability in an environment of increasing expenses;
the impact of the COVID-19 pandemic or any other pandemic, epidemic or outbreak of an infectious disease in the United States or worldwide on our business, financial condition and results of operations;
the effect of our relatively limited operating history on investors’ ability to evaluate our current business and future prospects;
the viability of our growth strategy and our ability to realize expected results;
our ability to attract new members;
the quality and pricing of our products and services;
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;
our ability to manage our growth effectively, execute our business plan, maintain high levels of service and member satisfaction or adequately address competitive challenges;
our ability to compete in the healthcare industry;
the impact on our business of security breaches, loss of data or other disruptions causing the compromise of sensitive information or preventing us from accessing critical information;
the impact on our business of disruptions in our disaster recovery systems or management continuity planning;
the cost of legal proceedings and litigation, including intellectual property and privacy disputes;
risks associated with being a government contractor;
the impact on our business of the healthcare services industry becoming more cyclical;
our ability to manage acquisitions, divestitures and other significant transactions successfully;
our ability to maintain, enhance and protect our reputation and brand recognition;
our ability to effectively invest in, implement improvements to and properly maintain the uninterrupted operation and data integrity of our information technology and other business systems;
our ability to obtain, maintain, protect and enforce intellectual property protection for our technology;

 

1


 

the potential adverse impact of claims by third parties that we are infringing on, misappropriating or otherwise violating their intellectual property rights;
our ability to protect the confidentiality of our trade secrets, know-how and other internally developed information;
the impact of any restrictions on our use of or ability to license data or our failure to license data and integrate third-party technologies;
risks associated with our use of “open-source” software;
our dependence on our senior management team and other key employees;
the concentration of our health plans in California, North Carolina and Nevada;
the impact on our business of an economic downturn;
our management team’s limited experience managing a public company;
our ability to maintain our corporate culture;
the impact of shortages of qualified personnel and related increases in our labor costs;
the risk that our records may contain inaccurate or unsupportable information regarding risk adjustment scores of members;
our ability to accurately estimate incurred but not reported medical expenses;
the impact of negative publicity regarding the managed healthcare industry;
the impact of weather and other factors beyond our control on our clinics, the centers out of which our external providers operate, and the facilities that host our AVA platform (as defined below);
our dependence on reimbursements by CMS and premium payments by individuals;
the impact on our business of renegotiation, non-renewal or termination of risk agreements with hospitals, physicians, nurses, pharmacists and medical support staff;
risks associated with estimating the amount of liabilities that we recognize under our risk agreements with providers;
our ability to develop and maintain proper and effective internal control over financial reporting;
the potential adverse impact of legal proceedings and litigation;
the impact of reductions in the quality ratings of our health plans;
the risk of our agreements with care providers being deemed invalid;
the impact on our business of the termination of our leases, increases in rent or inability to renew or extend leases;
our ability to engage and maintain our relationships with hospitals, physicians, nurses, pharmacists and medical support staff;
the impact of state and federal efforts to reduce Medicare spending;
our ability to comply with applicable federal, state and local rules and regulations, including those relating to data privacy and security; and

 

2


 

other factors disclosed in the section entitled “Risk Factors” and elsewhere in this Quarterly Report.

We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report.

All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this Quarterly Report in the context of these risks and uncertainties.

We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this Quarterly Report are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

 

 

3


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Alignment Healthcare, Inc.

Condensed Consolidated Balance Sheets

(amounts in thousands, except par value and share amounts)

(Unaudited)

 

 

 

June 30,
2021

 

 

December 31,
2020
(1)

 

Assets

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash

 

$

494,618

 

 

$

207,311

 

Accounts receivable (less allowance for credit losses of $46 at June 30, 2021
   and $
0 at December 31, 2020, respectively)

 

 

66,472

 

 

 

40,140

 

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 and 0 shares authorized as of
   June 30, 2021 and December 31, 2020 respectively;
no shares issued and
   outstanding as of June 30, 2021 and December 31, 2020

 

 

 

 

 

 

Common stock, $.001 par value; 1,000,000,000 and 164,063,787 shares authorized
   as of June 30, 2021 and December 31, 2020 respectively;
187,273,782 and
   
164,063,787 shares issued and outstanding as of June 30, 2021 and
   December 31, 2020, respectively

 

 

188

 

 

 

164

 

Additional paid-in capital

 

 

821,384

 

 

 

410,018

 

Accumulated deficit

 

 

(481,207

)

 

 

(379,571

)

Total Alignment Healthcare, Inc. stockholders' equity

 

 

340,365

 

 

 

30,611

 

Noncontrolling interest

 

 

15

 

 

 

 

Total stockholders' equity

 

 

340,380

 

 

 

30,611

 

Total liabilities and stockholders' equity

 

$

670,056

 

 

$

338,502

 

(1)
The condensed consolidated balance sheet as of December 31, 2020 was 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 Note 1 to the condensed consolidated financial statements for additional details.

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

4


 

Alignment Healthcare, Inc.

Condensed Consolidated Statements of Operations

(amounts in thousands, except share and 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 administrative expenses

 

 

71,150

 

 

 

33,698

 

 

 

136,064

 

 

 

66,485

 

Depreciation and amortization

 

 

3,908

 

 

 

3,526

 

 

 

7,645

 

 

 

7,091

 

Total expenses

 

 

349,443

 

 

 

231,726

 

 

 

669,189

 

 

 

461,474

 

Income (loss) from operations

 

 

(40,492

)

 

 

12,587

 

 

 

(93,156

)

 

 

7,472

 

Other expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

4,329

 

 

 

4,192

 

 

 

8,577

 

 

 

8,352

 

Other (income) expenses

 

 

(59

)

 

 

30

 

 

 

(97

)

 

 

827

 

Total other expenses

 

 

4,270

 

 

 

4,222

 

 

 

8,480

 

 

 

9,179

 

Income (loss) before income taxes

 

 

(44,762

)

 

 

8,365

 

 

 

(101,636

)

 

 

(1,707

)

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Alignment Healthcare, Inc.

 

$

(44,762

)

 

$

8,365

 

 

$

(101,636

)

 

$

(1,707

)

 

 

 

 

 

 

 

 

 

 

 

 

Total weighted-average common shares outstanding -
    basic and diluted
(1)

 

 

176,842,122

 

 

 

153,185,039

 

 

 

165,698,982

 

 

 

146,974,618

 

Net income (loss) per share - basic and diluted

 

$

(0.25

)

 

$

0.05

 

 

$

(0.61

)

 

$

(0.01

)

(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 Note 1 to the condensed consolidated financial statements for additional details.

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

5


 

Alignment Healthcare, Inc.

Condensed Consolidated Statements of Stockholders' Equity

(amounts in thousands, except par value and share amounts)

(Unaudited)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-In Capital

 

 

Accumulated
Deficit

 

 

Noncontrolling Interest

 

 

Total

 

Balance at March 31, 2021

 

 

187,273,782

 

 

$

188

 

 

$

790,509

 

 

$

(436,445

)

 

$

 

 

$

354,252

 

Net loss attributable to Alignment
    Healthcare, Inc.

 

 

 

 

 

 

 

 

 

 

 

(44,762

)

 

 

 

 

 

(44,762

)

Noncontrolling interest
    attributable to subsidiary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15

 

 

 

15

 

Adjustment to issuance cost
    estimate related to initial public
    offering

 

 

 

 

 

 

 

 

(12

)

 

 

 

 

 

 

 

 

(12

)

Equity-based compensation

 

 

 

 

 

 

 

 

30,887

 

 

 

 

 

 

 

 

 

30,887

 

Balance at June 30, 2021

 

 

187,273,782

 

 

$

188

 

 

$

821,384

 

 

$

(481,207

)

 

$

15

 

 

$

340,380

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-In Capital

 

 

Accumulated
Deficit

 

 

Noncontrolling interest

 

 

Total

 

Balance at March 31, 2020(1)

 

 

164,063,787

 

 

$

164

 

 

$

408,880

 

 

$

(366,717

)

 

$

 

 

$

42,327

 

Net income attributable to
    Alignment Healthcare, Inc.

 

 

 

 

 

 

 

 

 

 

 

8,365

 

 

 

 

 

 

8,365

 

Adjustment to issuance cost
   estimates relating to issuance of
    common stock

 

 

 

 

 

 

 

 

329

 

 

 

 

 

 

 

 

 

329

 

Equity-based compensation

 

 

 

 

 

 

 

 

350

 

 

 

 

 

 

 

 

 

350

 

Equity repurchase

 

 

 

 

 

 

 

 

(507

)

 

 

 

 

 

 

 

 

(507

)

Balance at June 30, 2020 (1)

 

 

164,063,787

 

 

$

164

 

 

$

409,052

 

 

$

(358,352

)

 

$

 

 

$

50,864

 

(1)
The consolidated balances as of March 31, 2020 and June 30, 2020 were derived from the audited consolidated financial statements as of that date and were retroactively adjusted, including shares and per share amounts, as a result of the Reorganization. See Note 1 to the condensed consolidated financial statements for additional details.

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

6


 

Alignment Healthcare, Inc.

Condensed Consolidated Statements of Stockholders' Equity

(amounts in thousands, except par value and share amounts)

(Unaudited)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-In Capital

 

 

Accumulated
Deficit

 

 

Noncontrolling interest

 

 

Total

 

Balance at December 31, 2020(1)

 

 

164,063,787

 

 

$

164

 

 

$

410,018

 

 

$

(379,571

)

 

$

 

 

$

30,611

 

Net loss attributable to Alignment
    Healthcare, Inc.

 

 

 

 

 

 

 

 

 

 

 

(101,636

)

 

 

 

 

 

(101,636

)

Noncontrolling interest
    attributable to subsidiary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15

 

 

 

15

 

Issuance of common stock upon
    initial public offering at $
18.00
    per share, net of issuance costs
    of $
29,011

 

 

21,700,000

 

 

 

22

 

 

 

361,567

 

 

 

 

 

 

 

 

 

361,589

 

Issuance of common stock
    third-party business partners

 

 

573,782

 

 

 

1

 

 

 

6,479

 

 

 

 

 

 

 

 

 

6,480

 

Issuance of common stock to
    stock appreciation rights holders

 

 

936,213

 

 

 

1

 

 

 

11,509

 

 

 

 

 

 

 

 

 

11,510

 

Equity-based compensation

 

 

 

 

 

 

 

 

33,285

 

 

 

 

 

 

 

 

 

33,285

 

Equity repurchase

 

 

 

 

 

 

 

 

(1,474

)

 

 

 

 

 

 

 

 

(1,474

)

Balance at June 30, 2021

 

 

187,273,782

 

 

$

188

 

 

$

821,384

 

 

$

(481,207

)

 

$

15

 

 

$

340,380

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-In Capital

 

 

Accumulated
Deficit

 

 

Noncontrolling interest

 

 

Total

 

Balance at December 31, 2019(1)

 

 

147,157,801

 

 

$

147

 

 

$

277,787

 

 

$

(356,645

)

 

$

 

 

$

(78,711

)

Net loss attributable to Alignment
    Healthcare, Inc.

 

 

 

 

 

 

 

 

 

 

 

(1,707

)

 

 

 

 

 

(1,707

)

Issuance of common stock at
    $
7.99 per share, net of issuance
    costs of $
3,371

 

 

16,905,986

 

 

 

17

 

 

 

131,612

 

 

 

 

 

 

 

 

 

131,629

 

Equity-based compensation

 

 

 

 

 

 

 

 

676

 

 

 

 

 

 

 

 

 

676

 

Equity repurchase

 

 

 

 

 

 

 

 

(1,023

)

 

 

 

 

 

 

 

 

(1,023

)

Balance at June 30, 2020

 

 

164,063,787

 

 

$

164

 

 

$

409,052

 

 

$

(358,352

)

 

$

 

 

$

50,864

 

(1)
The consolidated balances as of December 31, 2020 and 2019 were derived from the audited consolidated financial statements as of that date and were retroactively adjusted, including shares and per share amounts, as a result of the Reorganization. See Note 1 to the condensed consolidated financial statements for additional details.

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

7


 

Alignment Healthcare, Inc.

Condensed Consolidated Statements of Cash Flows

(amounts 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 discount

 

 

1,110

 

 

 

1,082

 

Payment-in-kind interest

 

 

2,054

 

 

 

1,974

 

Loss on disposal of property and equipment

 

 

 

 

 

990

 

Equity-based compensation and common stock payments

 

 

51,275

 

 

 

676

 

Non-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

 

 

 

8


 

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

 

 

 

June 30, 2021

 

 

June 30, 2020

 

Cash

 

$

494,618

 

 

$

200,883

 

Restricted cash in other assets

 

 

900

 

 

 

500

 

Total

 

$

495,518

 

 

$

201,383

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

 

9


 

Alignment Healthcare, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(amounts in thousands, except share amounts)

1. Organization

Alignment Healthcare, Inc. (collectively, “we” or “us” or “our” or the “Company”), formerly, Alignment Healthcare Holdings, LLC, is a next generation, consumer-centric health care platform that is purpose-built to provide seniors with high quality, affordable care with a vastly improved consumer experience. Enabled by our innovative technology and care delivery model, the Company focuses on improving outcomes in the Medicare Advantage sector.

The Company’s operations primarily consist of the following:

The Company owns Medicare Advantage Plans in the states of California, North Carolina and Nevada.
The Company coordinates and provides covered health care services, including professional, institutional, and ancillary services, to members enrolled in certain benefit plans of unaffiliated Medicare Advantage Health Maintenance Organizations (“HMO”) (collectively, “Third-Party Payors”). The Company’s contracts with two different Third-Party Payors terminated on December 31, 2020 and 2019, respectively. The Company continues to service the claims in runoff related to their respective agreements.

Reorganization

We historically operated as a Delaware limited liability company under the name Alignment Healthcare Holdings, LLC. On March 17, 2021, Alignment Healthcare Holdings, LLC converted to a Delaware corporation pursuant to a statutory conversion and we changed our name to Alignment Healthcare, Inc. for purposes of completing an initial public offering ("IPO") ("the Reorganization"). As part of the Reorganization, Alignment Healthcare Partners, LP ("the Parent"), the sole unitholder of Alignment Healthcare Holdings, LLC, exchanged its membership units for our common stock and became the sole holder of our shares of common stock. Prior to the closing of the IPO, the Parent merged with and into the Company with Alignment Healthcare, Inc. surviving the merger.

The membership units that were owned by the Parent prior to the Reorganization were converted to our common stock using an approximately 1 to 260 common stock split. All share and per share amounts in these condensed consolidated financial statements and related notes have been retroactively adjusted, where applicable, for all periods presented to give effect to the common stock split and exchange ratio applied in connection with the Reorganization. As a result, we reclassified the capital contributions associated with the issuance of the membership units to additional paid-in capital and common stock using a par value of $0.001 for all periods presented within the condensed consolidated financial statements.

Initial Public Offering

On March 25, 2021, our Registration Statement on Form S-1 for the initial public offering of 27,200,000 shares of common stock was declared effective by the Securities and Exchange Commission. Our common stock began trading on March 26, 2021 on the Nasdaq Global Select Market under the ticker symbol “ALHC."

We completed an IPO through issuing and selling 21,700,000 shares of common stock and certain stockholders selling 5,500,000 shares of common stock, in each case at a price of $18.00 per share. On April 6, 2021, pursuant to a partial exercise of the underwriters' over-allotment option, certain selling stockholders sold an additional 3,314,216 shares of common stock at the IPO price. The Company did not receive any proceeds from the sale of shares of common stock by the selling stockholders in the IPO. We received proceeds of $361,589 after deducting underwriting discounts and commissions of $24,389 and deferred offering costs of $4,622. Deferred direct offering costs were capitalized and consisted of fees and expenses incurred in connection with the sale of our common stock in the IPO, including legal, accounting, printing and other offering related costs. Upon completion of the IPO, these deferred offering costs were reclassified from prepaid and other current assets to stockholders' equity and recorded against the net proceeds from the offering.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial

 

10


 

information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such regulations. These financial statements have been prepared on a basis consistent with the accounting principles applied for the fiscal year ended December 31, 2020 as presented in the Company’s Form S-1, as amended, filed with the SEC. In the opinion of management, all adjustments (consisting of all normal and recurring adjustments) considered necessary for a fair presentation have been included.   These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto