What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-02-27 · 88 added, 115 removed, 377 unchanged (35% of the section changed)

6 unchanged sentences

"Management's Discussion and Analysis of Financial Condition and Results of Operations" found in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission on February 27, 2025.

Alignment is a next generation, consumer-centric platform designed to improve the healthcare experience for seniors.

Alignment is a next generation, consumer-centric and clinically focused platform designed to improve the healthcare experience for seniors.

We deliver this experience through our Medicare Advantage plans, which are customized to meet the needs of a diverse array of seniors.

1 unchanged sentence

high quality, low cost and accompanied by a vastly improved consumer experience.

We combine a proprietary technology platform and a high-touch clinical model that enhances our members’ lifestyles and health outcomes while simultaneously controlling costs, which allows us to reinvest savings back into our platform and products to directly benefit the senior consumer.

Our model is based on a flywheel concept, referred to as our “virtuous cycle,” which reflects our unique ability to manage healthcare expenditures while maintaining quality and member satisfaction — a distinct and sustainable competitive advantage.

To execute upon this concept, we start by ingesting medical and demographic data through our proprietary AVA technology platform.

AVA’s predictive algorithms provide unique insights into each member and identify those most at risk of an acute event.

Our information-enabled care model is then combined with clinical engagement by our employed clinical teams known as Care Anywhere to improve healthcare outcomes for our members.

For example, our high-touch clinical model proactively manages chronic conditions and assists with post-discharge care navigation to reduce unnecessary hospital admissions and readmissions, which in turn improves health outcomes and quality while lowering overall costs.

We then reinvest medical cost savings into richer coverage and benefits, which propels growth in revenue and membership while maintaining margin discipline.

The strength of our model is further reinforced by delivering a premium member experience.

Our concierge and a clinical service hotline is available 24/7 at no additional cost to our members and our state-of-the-art in-house call centers provide us with more consistency and control over member-facing functions.

Our virtuous cycle, based on the principle of doing well by doing good, is highly repeatable and a core tenet of our ability to continue to expand in existing and new markets in the future.

The five-year compounded growth rate through December 31, 2024 of revenue and the number of members enrolled in our HMO and PPO contracts ("Health Plan Membership") is 29% and 31% respectively.

Medicare Advantage Background

Today, seniors are confronted with a healthcare landscape that is fragmented across disparate point solutions, tools and vendors, without an accessible, coordinated approach to comprehensive care delivery.

Under the traditional Medicare fee-for-service ("FFS") model, seniors receive access to hospital insurance benefits (“Part A”) and outpatient services (“Part B”) directly from CMS.

Original Medicare (Part A and B) does not include prescription drug coverage (“Part D”), and most seniors enrolled in original Medicare opt to obtain Part D and other protection for gaps in their coverage by purchasing costly Medicare supplement insurance plans.

In contrast, Medicare Advantage plans are direct-to-consumer and provide a single point of care delivery for Part A, Part B and often Part D coverage.

Medicare Advantage penetration of the Medicare market is rapidly increasing given the enhanced benefits and coverage that Medicare Advantage plans offer relative to traditional Medicare FFS.

In 2024, approximately 54% of the Medicare eligible population, or approximately 33 million seniors, were enrolled in a Medicare Advantage plan.

Industry projections have forecasted a continued increase in the Medicare Advantage penetration rate from approximately 54% to approximately 64% by 2033.

Medicare Advantage allows one entity to influence the entirety of a senior’s healthcare through a singular, direct-to-consumer product.

We contract with CMS under the Medicare Advantage program to provide health insurance coverage to Medicare eligible persons under HMO and PPO plans in exchange for a payment per member per month ("PMPM").

The PMPM payment varies based on geography, CMS Star ratings and certain population-specific risk factors.

Under these value-based contracts, we assume the economic risk of funding our members’ healthcare, supplemental benefits and related administration costs.

By transferring the economic risk to managed care companies like Alignment, CMS has enabled us to focus on proactive, cross-disciplinary care targeted at improving health outcomes and lowering unnecessary healthcare expenditures.

The Medicare Advantage regulatory framework is designed to reward plans that achieve the triple aim of high-quality care, low costs and better experience.

CMS payments to Medicare Advantage plans are allocated in each county or region based on a bidding system.

Each plan submits a bid based on its estimated costs per enrollee for services covered under Medicare Parts A and B.

Plans that have a low enough cost structure to bid under the benchmark are entitled to rebates, which enable those plans to offer enhanced supplemental benefits and medical coverage to their members, which in turn boosts membership growth and therefore revenue.

CMS further measures Medicare Advantage beneficiaries’ clinical outcomes and experience with their health plans and the healthcare system through a Five Star Quality Rating System.

Medicare Advantage plans are eligible to receive additional economic incentives based on their Star rating.

Due to the competitive nature of CMS’s bidding system, only those plans that are able to provide low cost and high-quality outcomes will be able to offer enhanced benefit options, which is critical to achieving sustainable membership and growth on a long-term basis.

Under the Medicare Advantage system, our members typically enroll with us for a one-year period that can be renewed on an annual basis, resulting in revenue that is principally based on a subscription-like PMPM recurring revenue model.

This model provides us with significant visibility into our short-term financial performance, particularly given that the substantial majority of our members continue to choose Alignment after their initial selection year.

Further, our HMO and PPO plans covered under Medicare Advantage contracts with CMS are generally renewed for a calendar year term, unless CMS notifies us of its decision not to renew by May 1 of the year in which the contract would end.

When carefully managed, this annual renewal process provides a measure of stability and predictability to our short-term revenue streams, allowing us to focus on improving health quality outcomes and lowering healthcare expenditures for our population through enhanced member care on a long-term basis.

We have grown Health Plan Membership, which we define as members enrolled in our health maintenance organization ("HMO") and preferred provider organization ("PPO") contracts (the "Alignment Health Plan"), from approximately 13,000 at inception to 236,300 as of December 31, 2025, representing a 30% compound annual growth rate across 45 markets and 5 states.

Our ultimate goal is to bring this differentiated, advocacy-driven healthcare experience to millions of senior consumers in the United States and to become the most trusted senior healthcare brand in the country.

For the 2025 plan year, Alignment offered plans in 45 markets across California (22 markets), North Carolina (16 markets), Nevada (2 markets), Arizona (3 markets) and Texas (2 markets).

There are approximately 8.4 million Medicare-eligible seniors in our current markets.

Factors Affecting Our Performance

Our proprietary technology platform, AVA, is a key element of our business with capabilities that we expect to impact our future performance.

AVA enables us to personalize and manage our member relationships, care quality and experience, and to coordinate and manage risk with our provider partners.

Our unique clinical model, led by employed clinical teams known as Care Anywhere, acts upon insights derived from our proprietary technology platform, AVA.

This integration between our technology and employed care model is a key element of our business with capabilities that we expect to impact our future performance.

AVA’s data insights, combined with the clinical control of our care model, enable us to personalize and manage our member relationships, care quality, and to coordinate and manage risk with our provider partners.

AVA’s unified platform, analytical tools and data across the healthcare ecosystem enable us to produce consistent outcomes, unit economics and support new member growth.

3 unchanged sentences

We routinely take market share from large established players in highly competitive markets, a key source of our health plan membership growth in excess of the industry average.

We believe that there are still significant opportunities for future growth even in our most mature markets where we have a 10-30% market share.

According to CMS data, our approximately 209,900 Health Plan Members represent only 5% market share of Medicare Advantage enrollees in our markets.

We believe that there are still significant opportunities for future growth even in some of our most mature markets where we have approximately 10-30% market share.

As of January 1, 2026, we have approximately 275,300 Health Plan Members, which, according to CMS data, represent only 6% market share of Medicare Advantage enrollees in our markets.

• Drive Growth and Consistent Outcomes Through New Market Expansion:

7 unchanged sentences

These incentives impact financial performance in the year following the CMS Rating Year (for example, CMS’s announcement of the 2026 Ratings occurred in the second half of 2025 and will impact our financial performance in 2027).

In aggregate, more than 98% of our health plan members are enrolled in plans rated 4 stars and above, meaning the vast majority of members consistently receive a high-quality care experience, as defined under CMS star measurement criteria.

Additionally, the California HMO plan has achieved a 4 star or greater rating for seven consecutive years.

One hundred percent of our health plan members are enrolled in plans rated 4 stars and above, meaning our members consistently receive a high-quality care experience, as defined under CMS star measurement criteria.

The California HMO plan has achieved a 4 star or greater rating for nine consecutive years.

• Effectively Manage the Quality of Care to Improve Member Outcomes:

7 unchanged sentences

As our senior population ages, their healthcare needs become more frequent and complex.

To combat the healthcare cost increases that typically result, we proactively look to (i) connect with our population early in their enrollment with Alignment to assess

their care needs, (ii) develop care plans and engage those members with more chronic, complex health challenges in our clinical model, and (iii) continue to monitor and evaluate our healthier members in a preventative fashion over time.

To combat the healthcare cost increases that typically result, we proactively look to (i) connect with our population early in their enrollment with Alignment to assess their care needs, (ii) develop care plans and engage those members with more chronic, complex health challenges in our clinical model, and (iii) continue to monitor and evaluate our healthier members in a preventative fashion over time.

Given the Medicare Advantage payment mechanism and the retention of the vast majority of our members who continue to choose Alignment after their initial selection year, we are able to focus our efforts on driving favorable long-term health outcomes for our entire population.

5 unchanged sentences

We plan to continue to invest in our business in order to further develop our AVA platform, pursue new expansion opportunities and create innovative product offerings.

In addition, in order to maintain a differentiated value proposition for our members, we continue to invest in innovative product offerings and supplementary benefits to meet the evolving needs of the senior consumer.

In addition, in order to maintain a differentiated value proposition for our members, we continue to invest in innovative product offerings and supplemental benefits to meet the evolving needs of the senior consumer.

We anticipate further investments in our business as we expand into new markets and pursue strategic acquisitions, which we expect will primarily be focused on healthcare delivery groups in key geographies, standalone and provider-sponsored Medicare Advantage plans and other complementary risk bearing assets.

4 unchanged sentences

As the year progresses, our per-member revenue often declines as new members join us, typically with less complete or accurate documentation (and therefore lower risk-adjustment scores), and senior mortality disproportionately impacts our higher-acuity (and therefore greater revenue) members.

Medical costs will vary seasonally depending on a number of factors, but most significantly the weather.

Medical costs will vary seasonally depending on a number of factors, but most significantly the seasons.

Certain illnesses, such as the influenza virus, are far more prevalent during colder months of the year, which will result in an increase in medical expenses during these time periods.

1 unchanged sentence

The design of our prescription drug coverage (Medicare Part D) results in coverage that varies as a member’s cumulative out-of-pocket costs pass through successive stages of a member’s plan period, which begins annually on January 1 for renewals.

We anticipate that, starting in 2025, the benefit redesign under the Inflation Reduction Act will result in much more moderate seasonality than we have experienced in past years.

Members will still pass through the benefit phases, but our share of the total liability will be more consistent through each phase than it has been in the past.

Starting in 2025, the benefit redesign under the Inflation Reduction Act resulted in more moderate seasonality than we have experienced in past years.

Members still pass through the benefit phases, but our share of the total liability is more consistent through each phase than it has been in the past.

In addition, we expect our corporate, general and administrative expenses to increase in absolute dollars for the foreseeable future to support our growth.

8 unchanged sentences

Revenues $ 3,948,719 $ 2,703,561 46.1 %

Loss from Operations $ (101,555) $ (127,817) 20.5 %

Income (loss) from operations $ 14,752 $ (101,555) 114.5 %

Net loss $ (978) $ (128,071) 99.2 %

7 unchanged sentences

We believe this is an important metric to assess growth of our underlying business, which is indicative of our ability to consistently offer a superior value proposition to seniors.

This metric excludes third-party payor members with respect to which we are at-risk for managing their healthcare expenditures, which represented 400 members as of December 31, 2024 and December 31, 2023.

This metric excludes third-party payor members which we are at-risk for managing their healthcare expenditures, which represented approximately 300 and 400 members as of December 31, 2025 and December 31, 2024, respectively.

It also excludes approximately 6,400 and 8,300 ACO REACH members as of December 31, 2025 and December 31, 2024, respectively.

We discontinued our participation in the ACO REACH model as of December 31, 2025.

Adjusted Gross Profit and Medical Benefits Ratio

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 is a non-GAAP financial measure that we define as income (loss) from operations before depreciation and amortization, medical equity-based compensation expense, clinical restructuring costs and selling, general, and administrative expenses.

Adjusted gross profit is a key measure used by our management and Board to understand and evaluate our operating performance and trends before the impact of our consolidated 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.

There are a number of limitations related to the use of adjusted gross profit in lieu of income (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.

2 unchanged sentences

(dollars in thousands)

Loss from operations $ (101,555) $ (127,817)

Income (loss) from operations $ 14,752 $ (101,555)

Equity-based compensation (medical expenses) 6,134 4,930

6 unchanged sentences

Adjusted gross profit $ 494,775 302,607

(1) Represents severance and related costs incurred as part of a corporate restructuring, that took place during 2024, designed to streamline our organizational structure and drive operational efficiencies

(2) Includes $0.6 million in impairment expense related to intangible assets that were written off during the year

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.

We believe our MBR is an indicator of our gross profit for our Medicare Advantage plans and demonstrates the ability of our clinical model to produce superior outcomes by identifying and providing targeted care to our high-risk members resulting in improved member health and reduced total population medical expenses.

(1) Represents severance and related costs incurred as part of a corporate restructuring designed to streamline our organizational structure and drive operational efficiencies

(2) Amortization expense for the year ended December 31, 2025 includes $0.6 million in impairment expense related to the remeasurement of goodwill associated with one of our subsidiaries.

Amortization expense for the year ended December 31, 2024 includes $0.6 million in impairment expense related to intangible assets that were written off during the year.

We calculate our MBR by dividing total medical expenses, excluding depreciation, medical equity-based compensation and clinical restructuring costs, by total revenues in a given period.

We believe our MBR is an indicator of our gross profit for our Medicare Advantage plans and demonstrates the ability of our clinical model to produce differentiated outcomes by identifying and providing targeted care to our high-risk members resulting in improved member health and reduced total population medical expenses.

We expect that this metric may fluctuate over time due to a variety of factors, including our pace of new member growth given that new members typically join Alignment with higher MBRs, while our model has demonstrated an ability to improve MBR for a given cohort over time.

1 unchanged sentence

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, acquisition expenses, certain litigation costs, gains or losses on right of use ("ROU") assets, gains or losses on sale of property and equipment, restructuring costs, equity-based compensation expense and loss on extinguishment of debt.

Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) before interest expense, income taxes, depreciation and amortization expense, acquisition expenses, certain litigation costs, gains or losses on right of use ("ROU") assets, gains or losses on sale of property and equipment, restructuring costs, equity-based compensation expense, and loss on extinguishment of debt.

Adjusted EBITDA is a key measure used by our management and our Board to understand and evaluate our operating performance and trends, to prepare and approve our annual budget and to develop short and long-term operating plans.

In particular, we believe that the exclusion of the amounts eliminated in calculating Adjusted EBITDA provides useful measures for period-to-period comparisons of our business, as we do not consider the excluded items to be part of our ongoing results of operations.

Given our intent to continue to invest in our

platform and the scalability of our business in the short to medium-term, we believe Adjusted EBITDA over the long term will be an important indicator of value creation.

Given our intent to continue to invest in our platform and the scalability of our business in the short to medium-term, we believe Adjusted EBITDA over the long term will be an important indicator of value creation.

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.

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.

7 unchanged sentences

30,482 27,062

Income tax expense (benefit) 21 (22)

Income tax expense 20 21

Equity-based compensation (2)

7 unchanged sentences

Adjusted EBITDA $ 109,944 $ 1,339

(1) Includes $0.6 million in impairment expense related to intangible assets that were written off during the year

(2) 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

(1) Amortization expense for the year ended December 31, 2025 includes $0.6 million in impairment expense related to the remeasurement of goodwill associated with one of our subsidiaries.

Amortization expense for the year ended December 31, 2024 includes $0.6 million in impairment expense related to intangible assets that were written off during the year.

(2) Represents equity-based compensation related to grants made in the applicable year

(3) Represents acquisition-related fees, such as legal and advisory fees, that are non-capitalizable

(4) Represents certain litigation costs considered outside of the ordinary course of business based on the following considerations which we assess regularly:

(4) 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

(5) Represents gains or losses related to ROU assets that were terminated or subleased in the respective period

(6) Represents severance and related costs incurred as part of a corporate restructuring, that took place during 2024, designed to streamline our organizational structure and drive operational efficiencies

(6) Represents severance and related costs incurred as part of a corporate restructuring designed to streamline our organizational structure and drive operational efficiencies

Results of Operations

8 unchanged sentences

Premiums are also recorded net of estimated uncollectible amounts and retroactive membership adjustments.

Our recognized premium revenue for the Alignment Health Plans is subject to a minimum annual medical loss ratio (“MLR”) of 85%.

Our recognized premium revenue for the Alignment Health Plan is subject to a minimum annual medical loss ratio (“MLR”) of 85%.

The MLR represents medical costs as a percentage of premium revenue.

2 unchanged sentences

The amounts payable under this provision were immaterial at December 31, 2025 and December 31, 2024.

The premiums we receive from CMS for our members are based on the annual bid that we submit to CMS.

The premium and capitation payments we receive monthly from CMS for our members are based on the annual bid that we submit to CMS.

These payments represent revenues for providing healthcare coverage, including Medicare Part D benefits.

Under the Medicare Part D program, members receive standard drug benefits.

Under the Medicare Part D program, our members and the members of the third-party payors receive standard drug benefits.

We may also provide enhanced benefits at our own expense.

We recognize revenue for providing this insurance coverage in the month that members are entitled to receive healthcare services.

We recognize premium or capitation revenue for providing this insurance coverage in the month that members are entitled to receive health care services and any premium or capitation collected in advance is deferred.

Our CMS payment related to Medicare Part D is subject to risk sharing through the Medicare Part D risk corridor provisions.

See “— Critical Accounting Estimates — Revenue” below .

Our capitation revenue consists primarily of capitated fees for medical care services provided by us under arrangements with our third-party payors and from CMS related to our ACO REACH entity.

We also participate in the CMS “ACO Realizing Equity, Access, and Community Health Model” or “ACO REACH” model, formerly the Direct Contracting Model ("DCE").

CMS serves as the claim adjudicator for institutional and specialists care, and directly pays for such fee for service claims.

The ACO REACH entity ("ACO") is responsible for the cost of health care services related to the patient population attributed to the ACO by participating in 100% savings/losses via the risk share model and in some cases, are financially responsible for the supplemental benefits provided to the patients.

In 2024, we entered into a management services and risk management agreement with a third-party healthcare company.

The third-party is responsible for arranging and controlling the health care services provided to the ACO members, and for providing certain management and support services with respect to ACO operations.

The third-party also assumes specified upside and downside financial risk relative to the ACO’s performance.

As a result of this arrangement, revenue is recorded on a net basis within other revenue on the consolidated statement of operations for the year ended December 31, 2024.

The third-party also assumes specified upside and downside financial risks relative to the ACO’s performance.

As a result of this arrangement, revenue is recorded on a net basis within other revenue on the consolidated statement of operations for the years ended December 31, 2025 and 2024.

On July 30, 2025, we notified CMS that we will discontinue our participation in the ACO REACH model as of December 31, 2025.

We expect this to have an immaterial impact to our financial results.

Medical Expenses.

21 unchanged sentences

Interest Expense.

Interest expense consists primarily of interest payments on our outstanding borrowings under our Term Loan (as defined below), as well as interest related to the convertible notes that were issued in November 2024.

Interest expense consists primarily of interest payments related to the convertible notes that were issued in November 2024.

See “— Liquidity and Capital Resources.

Other (Income) Expenses.

Other (income) expenses consist primarily of gains or losses on the disposition of assets, as well as gains and losses related to subleased ROU assets.

Other (income) expenses consist primarily of gains or losses on the disposition of assets, as well as sublease income.

The following table sets forth our consolidated statements of operations data for the periods indicated:

8 unchanged sentences

Total expenses 3,933,967 2,805,116

Loss from operations (101,555) (127,817)

Income (loss) from operations 14,752 (101,555)

Other expenses:

Interest expense 15,799 23,547

Other (income) expenses, net (72) (853)

Other income, net (89) (72)

Loss on extinguishment of debt — 3,020

1 unchanged sentence

Loss before income taxes (958) (128,050)

Provision for income tax expense (benefit) 21 (22)

Provision for income tax expense 20 21

Net loss $ (978) $ (128,071)

6 unchanged sentences

Earned premiums 99.1 % 98.8 %

Other 0.9 1.2

Total revenues 100.0 100.0

3 unchanged sentences

Total expenses 99.6 103.7

Loss from operations (4) (7)

Income (loss) from operations 0.4 (3.7)

Other expenses:

Interest expense 0.4 0.9

Other (income) expenses, net — —

Other income, net — —

Loss on extinguishment of debt — 0.1

1 unchanged sentence

Loss before income taxes — (4.7)

Provision for income taxes — —

Provision for income tax expense — —

Net loss — (4.7)

9 unchanged sentences

Earned premium revenues were $3,911.7 million and $2,671.9 million for the years ended December 31, 2025 and 2024, respectively, an increase of $1,239.8 million or 46.4%.

The increase was primarily driven by growth in our Health Plan membership, which increased 58.6% between December 31, 2024 and December 31, 2023.

The increase was offset by a decrease in ACO REACH revenue due to the change from gross to net revenue treatment.

ACO REACH revenue decreased $125.2 million, or 101.0%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The increase was primarily driven by growth in our Health Plan membership, which increased 25.0% between December 31, 2025 and December 31, 2024 and higher revenue per member per month.

The increase in revenue per member per month is primarily attributable to an increase in the CMS benchmark rates and Part D revenue rates from changes arising from the Inflation Reduction Act.

Other Revenues.

Other revenues increased $5.4 million for the year ended December 31, 2025 compared to the year ended December 31, 2024.

The increase is mainly attributable to an increase in the interest rate of our interest earning cash balances.

Additionally, the change from gross to net revenue treatment for ACO REACH increased other revenues by $2.3 million.

The increase is mainly attributable to an increase in the interest rate of our interest earning cash balances and current investments and an increase in revenue from services provided to third-party providers.

Cash and cash equivalents, and other current investments were $604.2 million as of December 31, 2025 compared to $470.7 million as of December 31, 2024.

Year Ended December 31, Change

7 unchanged sentences

Medical expenses were $3,460.2 million and $2,406.9 million for the years ended December 31, 2025 and 2024, respectively, an increase of $1,053.3 million, or 43.8%.

The increase was driven primarily by the growth in Alignment Health Plan membership, which increased 58.6% between December 31, 2024 and December 31, 2023.

Overall, medical expenses for the year ended December 31, 2024 grew at a slightly higher rate than earned premium revenues compared to the year ended December 31, 2023, primarily due to 2024 having a higher percentage of new members relative to returning members, richer member benefits and increases in unit costs.

This increase was offset by lower inpatient admissions per thousand and the change from gross to net revenue treatment for ACO REACH.

The increase was driven primarily by the growth in Alignment Health Plan membership, which increased 25.0% between December 31, 2025 and December 31, 2024, an increase in unit costs and an increase to our Part D cost sharing due to changes arising from the Inflation Reduction Act.

Overall, medical expenses for the year ended December 31, 2025 grew at a lower rate than earned premium revenues compared to the year ended December 31, 2024, primarily due to a higher percentage of new members relative to returning members in 2024 compared to 2025.

The increase was offset by increases in unit costs.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses were $443.4 million and $371.4 million for the years ended December 31, 2025 and 2024, respectively, an increase of $72.0 million, or 19.4%.

The increase was primarily due to an increase in ongoing investments and expenditures in network development, operations and sales and marketing to drive the growth of Alignment's Health Plan membership.

Selling, general, and administrative expenses grew at a slower rate than revenue for the year ended December 31, 2024 compared to the year ended December 31, 2023 due to economies of scale gained from Alignment's 2024 membership growth.

The increase was primarily due to an increase in ongoing investments and expenditures in operations, network development and sales and marketing to support the growth of Alignment's Health Plan membership.

Selling, general, and administrative expenses as a percentage of revenue decreased for the year ended December 31, 2025 compared to the year ended December 31, 2024 due to economies of scale gained from Alignment's membership growth.

Depreciation and Amortization.

1 unchanged sentence

The increase was primarily due to the amount and timing of our capital expenditures and the associated depreciation relative to 2024.

Additionally, for the year ended December 31, 2024, we recorded amortization expense of $0.6 million related to the impairment of intangible assets associated with an inactive Medicare license that was terminated during the period.

Other Expenses

Interest expense.

Interest expense was $23.5 million and $21.2 million for the years ended December 31, 2024 and 2023, respectively, an increase of $2.3 million or 10.8%.

The increase in interest expense was partially due to an increase in the debt balance as a result of the $50.0 million drawdown of the Oxford Delayed Draw term loan in June 2024.

Additionally, we experienced a higher interest rate on our debt balance during the majority of the year, which then decreased as a result of the issuance of the convertible notes and repayment of the Oxford term loan as discussed below.

Prior to the repayment of the Oxford term loans, the average interest rate during 2024 was 11.77% compared to an average interest rate of 11.35% during the year ended December 31, 2023.

The convertible notes have an interest rate of 4.25%.

Other (income) expenses, net .

Other (income) expenses were $(0.1) million and $(0.9) million for the years ended December 31, 2024 and 2023, respectively, a decrease of $0.8 million.

The decrease is primarily attributable to the timing of gains and losses related to ROU assets subleased during the respective periods.

Loss on extinguishment of debt.

During the year ended December 31, 2024 we recorded a $3.0 million loss on extinguishment of debt due to the write-off of debt issuance costs related to the Oxford term loans repayment which is discussed below.

Interest expense was $15.8 million and $23.5 million for the years ended December 31, 2025 and 2024, respectively, a decrease of $7.7 million or 32.8%.

The decrease in interest expense was mainly attributable to a decrease in the interest rate on our debt following refinancing in November 2024.

The convertible notes have an interest rate of 4.25%, compared to our prior term loans which had an average interest rate of 11.77% for the year ended December 31, 2024.

The decrease in interest rate was offset by an increase in our average long-term debt balance which was $330.0 million for the year ended December 31, 2025 compared to an average balance of $247.5 million for the year ended December 31, 2024.

Other income, net .

Other income was $0.1 million and $0.1 million for the years ended December 31, 2025 and 2024.

Liquidity and Capital Resources

9 unchanged sentences

Our assessment of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties.

Our actual results could vary because of, and our future capital requirements will depend on, many factors, including our growth rate, the timing and extent of spending to expand our presence in existing markets, expand into new markets, increase our sales and marketing activities and develop our technology.

Our actual results could vary because of, and our future capital requirements will depend

on, many factors, including our growth rate, the timing and extent of spending to expand our presence in existing markets, expand into new markets, increase our sales and marketing activities and develop our technology.

Additionally, in the future we may enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property rights, which may also substantially increase our capital needs.

7 unchanged sentences

Certain states in which our health plans or risk bearing entities operate have adopted the RBC rules.

Other states in which our health plans or risk bearing entities operate have chosen not to adopt the RBC rules, but instead have designed and implemented their own rules regarding capital adequacy.

Other states in which our health plans or risk bearing entities operate have chosen not to adopt the RBC rules, but instead have designed and implemented their own rules regarding capital adequacy, such as the tangible net equity ("TNE") requirements for our health plans in California.

As of December 31, 2025, our health plans or risk-bearing entities were in compliance with the minimum capital requirements.

2 unchanged sentences

Pursuant to the Oxford Loan Agreement, the Borrower received an initial Term Loan of $165.0 million on the Effective Date and had the option to borrow up to an additional $85.0 million of Term Loans (such additional Term Loans, the “Delayed Draw Term Loans”).

On June 14, 2024, we borrowed $50,000 in aggregate principal amount of the Delayed Draw Term Loans prior to the expiration date for such amount of the Delayed Draw Term Loans of June 30, 2024.

On June 14, 2024, we borrowed $50.0 million in aggregate principal amount of the Delayed Draw Term Loans prior to the expiration date for such amount of the Delayed Draw Term Loans of June 30, 2024.

Interest on the Term Loans was a variable rate equal to (i) the secured overnight financing rate administered by the Federal Reserve Bank of New York for a one-month tenor, subject to a floor of 1.00%, plus (ii) an applicable margin of 6.50%.

The interest rate applied during the year ended December 31, 2024 ranged from 11.35% to 11.84%.

In connection with the issuance of the convertible senior notes, as noted below, we repaid all amounts outstanding under the term loans with Oxford Finance on November 22, 2024.

20 unchanged sentences

(dollars in thousands) 2025 2024

Net cash provided by (used in) operating activities $ 34,770 $ (59,187)

Net cash provided by operating activities $ 139,927 $ 34,770

Net cash provided by (used in) investing activities (14,974) 39,191

4 unchanged sentences

Operating Activities

For the year ended December 31, 2024, net cash provided by operating activities was $34.8 million, an increase of $94.0 million compared to net cash used in operating activities of $59.2 million for the year ended December 31, 2023.

The increase is mainly attributable to an increase in medical expenses payable as a result of the increased Health Plan membership growth during the year ended December 31, 2024 compared to the year ended December 31, 2023, as well as a decrease in our net loss over the same period.

For the year ended December 31, 2025, net cash provided by operating activities was $139.9 million, an increase of $105.2 million compared to net cash provided by operating activities of $34.8 million for the year ended December 31, 2024.

The increase is mainly attributable to an increase in membership and reduction of net loss, an increase in medical expense payables related to the timing of our payments, and changes to the Part D program related to the Inflation Reduction Act.

This increase was partially offset by an increase in prepaid expenses and other current assets due to a change in our Part D balances arising from the Inflation Reduction Act.

Investing Activities

For the year ended December 31, 2024, net cash provided by investing activities was $39.2 million, an increase of $186.5 million compared to net cash used in investing activities of $147.3 million for the year ended December 31, 2023.

The increase primarily relates to purchases of short-term treasury securities which were $379.1 million during the year ended December 31, 2023 compared to $82.2 million during the year ended December 31, 2024, a decrease of 296.9 million.

The increase was partially offset by a decrease in maturities of short-term investments.

For the year ended December 31, 2025, net cash used in investing activities was $15.0 million, a decrease of $54.2 million compared to net cash provided by investing activities of $39.2 million for the year ended December 31, 2024.

The increase in cash used primarily relates to reduced investment maturities during the year ended December 31, 2025 compared to the year ended December 31, 2024.

The decrease in investment maturities was offset by a decrease in capital expenditures, which decreased $14.6 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 .

Financing Activities

For the year ended December 31, 2024, net cash provided by financing activities was $156.0 million, an increase of $155.9 million compared to net cash provided by financing activities of $0.1 million for the year ended December 31, 2023.

The increase in net cash provided by financing activities is mainly attributable to cash received of $330.0 million in connection with the issuance of the convertible notes discussed above, as well as the $50.0 million draw down of the Oxford Delayed Draw term loan in June 2024.

This was offset by the repayment of $215.0 million related to the Oxford term loans, as discussed above.

For the year ended December 31, 2025, net cash provided by financing activities was $18.0 million, a decrease of $138.0 million compared to net cash provided by financing activities of $156.0 million for the year ended December 31, 2024.

The decrease is primarily attributable to the convertible note refinance and the $50.0 million draw down of the Oxford Delayed Draw term loan that occurred during the year ended December 31, 2024.

This decrease was offset by $18.1 million in proceeds from the exercise of stock options.

Material cash requirements from known contractual and other obligations

84 unchanged sentences

2023 832,819 809,297

2024 1,136,448

Total $ 2,426,157

16 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis