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Item 8. Financial Statements and Supplementary Data

2026-02-27 compared with 2025-02-27 · 243 added, 162 removed, 927 unchanged (30% of the section changed)

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Critical Audit Matter Description

Medical expenses payable includes estimates of obligations for medical care services that have been rendered on behalf of members and the members of contracted third-party payors, but for which claims have either not yet been received or processed.

Medical expenses payable includes estimates of obligations for medical care services that have been rendered on behalf of Alignment's members and the members of contracted third party payors, but for which claims have either not yet been received or processed.

These estimates are referred to as incurred but not yet paid (IBNP) claim liabilities, which totaled $297.4 million as of December 31, 2025, and includes an estimate for claims incurred but not reported (IBNR).

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▪ Performing an overlay of the historical claims data used in management’s actuarial model to the data used in prior periods to determine whether there were material changes to the claims data tested in prior periods.

▪ Performing a retrospective review comparing management’s prior year estimate of the IBNR IBNP claim liability to claims processed in 2024 with dates of service in 2023 and prior.

▪ Developing an independent estimate of the IBNR claim liability and compared our estimate to management’s estimate.

▪ Performing a retrospective review comparing management’s prior year estimate of the IBNR claim liability to claims processed in 2025 with dates of service in 2024 and prior.

▪ Developing an independent estimate of the IBNR claim liability and comparing our estimate to management’s estimate.

Our independent estimate included development of per member per month claims cost trends and completion factors using management’s data, and comparison of these assumptions to current and historical claims trends and current industry benchmarks.

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Cash and cash equivalents $ 575,817 $ 432,859

Accounts receivable (less allowance for credit losses of $ 0 at December 31, 2024 and 2023)

Accounts receivable (less allowance for credit losses of $ 833 at December 31, 2025 and $ 0 at December 31, 2024)

253,207 153,904

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Total expenses 3,933,967 2,805,116 1,951,447

Loss from operations ( 101,555 ) ( 127,817 ) ( 128,639 )

Income (loss) from operations 14,752 ( 101,555 ) ( 127,817 )

Other expenses:

Interest expense 15,799 23,547 21,231

Other (income) expenses, net ( 72 ) ( 853 ) 176

Other income, net ( 89 ) ( 72 ) ( 853 )

Loss on extinguishment of debt — 3,020 —

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Forfeitures ( 6,270 ) — — — — —

Shares withheld related to net restricted stock settlement ( 69,820 ) — ( 350 ) — — ( 350 )

Equity-based compensation — — 71,132 — — 71,132

Stock options exercised 17,662 — 155 — — 155

Noncontrolling interest attributable to subsidiary — — — — 15 15

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Forfeitures ( 277 ) — — — — —

Shares withheld related to net restricted stock settlement ( 69,820 ) — ( 350 ) — — ( 350 )

Equity-based compensation — 12 62,070 — — 62,082

Stock options exercised 1,097,827 1 18,067 — — 18,068

Noncontrolling interest attributable to subsidiary — — — — 15 15

Sale of consolidated subsidiary — — — — ( 850 ) ( 850 )

Balance at December 31, 2025 204,153,619 $ 205 $ 1,188,089 $ ( 1,009,017 ) $ — $ 179,277

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Amortization-investment discount ( 1,298 ) ( 2,579 ) ( 4,917 )

Amortization of payment-in-kind interest — — 2,943

Loss on disposal of property and equipment — — 101

Equity-based compensation 62,082 71,132 66,835

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Lease liabilities ( 1,504 ) ( 1,525 ) ( 3,510 )

Payment-in-kind interest — — ( 14,122 )

Net cash provided by (used in) operating activities 139,927 34,770 ( 59,187 )

Investing Activities:

Purchase of business, net of cash received — — ( 4,043 )

Purchase of investments ( 65,633 ) ( 82,200 ) ( 379,058 )

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Maturities of investments 76,300 162,795 267,790

Acquisition of property and equipment ( 41,418 ) ( 35,995 ) ( 23,774 )

Sale of business 1,065 — —

Acquisition of property and equipment, net ( 26,781 ) ( 41,418 ) ( 35,995 )

Net cash provided by (used in) investing activities ( 14,974 ) 39,191 ( 147,263 )

Financing Activities:

Repurchase of noncontrolling interest — — ( 100 )

Proceeds from long-term debt — 380,000 —

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Acquisition of property in accounts payable $ 97 $ 70 $ 59

Purchase of business in accounts payable $ — $ — $ 505

Debt issuance costs in accounts payable $ — $ 512 $ —

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

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

December 31, 2025 December 31, 2024 December 31, 2023

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Alignment Healthcare, Inc.

(collectively, “we” or “us” or “our” or the “Company”), 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 Medicare Advantage Plans in the states of California, North Carolina, Nevada, Arizona, Florida and Texas.

(collectively, “we” or “us” or “our” or the “Company”), is a next generation, consumer-centric and clinically focused platform designed to improve the healthcare experience for seniors enrolled in Medicare who choose a private Medicare Advantage plan.

Our goal is to provide seniors with easier access to care, better coordination among providers, fewer gaps in care and avoidable hospital visits, and support that meets them where they are—at home, online, or in their community.

We deliver this experience through our wide variety of Medicare Advantage plans, which offer varied benefits tailored to the diverse needs, preferences, and lifestyles of seniors.

The Company’s operations primarily consist of Medicare Advantage Plans in the states of California, North Carolina, Nevada, Arizona and Texas.

Summary of Significant Accounting Policies

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Noncontrolling interest is presented within the equity section of the consolidated balance sheets.

We have no components of other comprehensive income (loss), and accordingly, comprehensive income (loss) is the same as the net income (loss) for all periods presented.

As of December 31, 2025, the Company sold the subsidiary that included the noncontrolling interest.

The gain/loss on the sale was immaterial.

We have no components of other comprehensive income (loss), and accordingly, comprehensive income (loss) is the same as the net loss for all periods presented.

Use of Estimates

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Net loss $ ( 978 ) $ ( 128,071 ) $ ( 148,173 )

(1) Other segment items included in segment net income includes equity-based compensation, depreciation and amortization in medical expense, other expenses (income), loss on extinguishment of debt, and provision for income taxes.

(1) Other segment items included in segment net loss includes equity-based compensation, depreciation and amortization, other expenses (income), and provision for income tax expenses (benefit).

Fair Value Measurements

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Treasury bills was determined based on Level 1 inputs.

The fair value of the convertible senior note and certificate of deposits, which are recorded in long-term debt and other assets in the consolidated balance sheets, respectively, were determined based on Level 2 inputs.

The fair value of the convertible senior notes and certificate of deposits, which are recorded in long-term debt and other assets in the consolidated balance sheets, respectively, were determined based on Level 2 inputs.

There were no assets or liabilities measured at fair value using Level 3 inputs as of December 31, 2025 and December 31, 2024.

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Earned premium revenue consisting of premium revenue and capitation revenue for the years ended December 31, 2025, 2024, and 2023 were as follows:

Year Ended December 31,

2025 2024 2023

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Capitation 5,067 5,118 132,802

$ 2,671,931 $ 1,800,933 $ 1,431,550

Total $ 3,911,718 $ 2,671,931 $ 1,800,933

Premium revenue is derived monthly from the federal government based on our contracts with the Centers for Medicare and Medicaid Services (“CMS”).

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Under those arrangements with third-party payors, we receive a PMPM payment for a defined member population, and we are responsible for providing health care services to the member population over the contract period.

We are solely responsible for the cost of health care services related to the member population and in some cases, we are financially responsible for the supplemental benefits provided by us to the members.

We are solely responsible for the cost of health care services related to the member population and in some cases, we are financially responsible for the supplemental benefits

provided by us to the members.

We act as a principal in arranging for and controlling the services provided by our provider network and we are at risk for arranging and providing health care services.

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

In 2023, capitation revenue consisted primarily of revenue from CMS related to our participation in the CMS “ACO Realizing Equity, Access, and Community Health Model” or “ACO REACH” model, formerly the Direct Contracting Model ("DCE").

We also participated 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.

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.

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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 year ended December 31, 2024.

Revenue recognized by the ACO for the years ended December 31, 2024 was $ 984 .

Prior to 2024, the ACO acted as a principal in arranging for and controlling services provided directly by their contracts with primary care physicians, as well as services provided by preferred institutional care providers and specialists.

Capitation payments for the ACO program are determined from an annual benchmark established by CMS.

These payments, which are adjusted for variable considerations, represented revenue for providing health care services, including primary care as well as institutional and specialist care.

The ACO recognized capitation revenue for providing these services in the period in which the performance obligations were satisfied by transferring services to the members.

Revenue recognized by the ACO for the years ended, 2023 and 2022 was $ 123,972 and $ 50,946 , respectively.

As a result of this arrangement, revenue is recorded on a net basis within other revenue on the consolidated statement of operations.

Revenue recognized by the ACO for the year ended December 31, 2025 and 2024 was $ 1,244 and $ 984 , respectively.

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

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

Interest income earned on our cash deposits and short-term investments is included within other revenue on the consolidated statements of operations.

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Our risk adjustment data is also subject to review by the government, including audit by regulators.

Our recognized premium revenue for our Medicare Advantage Plans in California, North Carolina, Nevada, Arizona, Texas and Florida are each subject to a minimum annual medical loss ratio (“MLR”) of 85 %.

Our recognized premium revenue for our Medicare Advantage Plans are each subject to a minimum annual medical loss ratio (“MLR”) of 85 %.

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

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Medicare Part D payments are also subject to a federal risk corridor program, which limits a health plan’s overall losses or profit if actual spending for basic Medicare Part D benefits is much higher or lower than what was anticipated.

Risk corridor is recorded within premium revenue.

Risk corridor adjustments are recorded within premium revenue.

The risk corridor provisions compare costs targeted in our bids or third-party payors’ bids to actual prescription drug costs, limited to actual costs that would have been incurred under the standard coverage as defined by CMS.

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We estimate and recognize an adjustment to premium revenue related to these provisions based upon pharmacy claims experience.

We record a receivable or payable at the contract level and classify the amount as current or long-term in our consolidated balance sheet based on the timing of expected settlement.

Variable consideration estimates related to ACO contract revenue are based on the most likely outcome method and that a significant reversal in the amount of cumulative revenue recognized would not occur.

We record a receivable or payable at the contract level and classify the amount as current or long-term in our consolidated balance sheets based on the timing of expected settlement.

Receivables, including risk adjusted premium due from the government or through third-party payors, pharmacy rebates, and other receivables, are shown net of allowances for credit losses and retroactive membership adjustments.

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Carrying value approximates fair value due to the short-term maturity of the investments.

As of December 31, 2024 and 2023, cash equivalents were $ 32,494 and $ 22,232 , respectively.

Investment securities are classified as held-to-maturity or available-for-sale at the time of purchase.

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Expenses for our operating and finance leases are recognized on a straight-line basis over the lease term and are recorded as selling, general and administrative expenses for operating leases and as depreciation expense and interest expense for finance leases.

We elected practical expedients permitted under the transition guidance, which allowed the carryforward of historical lease classification, assessment on whether a contract was or contains a lease and allowed for a cumulative-effect adjustment as of January 1, 2020 and did not restate previously reported results in the comparative periods.

We also elected to account for lease and non-lease components as a single lease component.

Leases with an initial term of 12 months are not included within the ROU assets and lease liabilities and the associated lease payments are recognized in the consolidated statements of income on a straight-line basis over the lease term.

Operating leases are included in ROU assets and lease liabilities are included in accounts payable and accrued expenses and long-term portion of lease liabilities on the consolidated balance sheets .

Goodwill and Intangible Assets

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We are responsible for the entirety of the cost of health care services related to the member population, in addition to supplemental benefits provided by us to our seniors.

In 2023, we also recorded claims expenses related to our institutional and specialist care related to our ACO program with CMS as we acted as the principal in the transaction.

As discussed above, beginning in 2024, claims expense related to the ACO program is netted against ACO revenue as we act as the agent in these transactions.

Capitation-related expenses are recorded on an accrual basis during the coverage period.

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The provisions of the law are set to take effect over the next seven years.

There was an immaterial impact on our consolidated financial statements at December 31, 2024 and the 2025 bid pricing and budget reflect the expected impact the IRA will have on our business for fiscal year 2025.

For the year ended December 31, 2025, we experienced an increase in both Part D premium revenues and medical expenses as a result of the IRA.

Our 2025 bid pricing and budget reflect the expected impact the IRA will have on our business for fiscal year 2025.

The impact of the IRA was immaterial for the year ended December 31, 2024 .

Medical Expenses Payable

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We develop estimates for medical expenses incurred but not yet paid (“IBNP”), which includes an estimate for claims incurred but not reported (“IBNR”) and a payable for adjudicated claims.

IBNR is estimated using an actuarial process that is consistently applied and centrally controlled.

IBNR is estimated using an actuarial process that is consistently applied and

centrally controlled.

Medical expenses payable also includes an estimate for the costs necessary to process unpaid claims at the end of each period.

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Part D Subsidies

We also receive advance payments each month from CMS related to Catastrophic Reinsurance, Coverage Gap Discount, and the Low-Income Member Cost Sharing Subsidy (“Subsidies”).

Reinsurance subsidies represent funding from CMS for our portion of prescription drug costs, which exceed the member’s out-of-pocket threshold or the catastrophic coverage level.

Low-income cost subsidies represent funding from CMS for all or a portion of the deductible, the coinsurance and co-payment amounts above the out-of-pocket threshold for low-income beneficiaries.

Additionally, the Health Care Reform Law mandates consumer discounts of 75% on brand-name prescription drugs for Part D plan participants in the coverage gap.

The majority of the discounts are funded by the pharmaceutical manufacturers, while we fund a smaller portion and administer the application of the total discount.

In 2025, the IRA retires the Coverage Gap Discount Program and introduces the Manufacturer Discount Program.

While CMS’s share of the drug cost liability is expected to decline from Catastrophic Reinsurance and Low-Income Member Cost Sharing, prescription drug manufacturers are expected to experience increased liability.

These program changes and the corresponding changes in prepayments were embedded in the 2025 bid pricing.

These Subsidies represent cost reimbursements under the Medicare Part D program and are recorded as deposits or payables.

We also receive advance payments each month from CMS related to Catastrophic Reinsurance, Manufacturer Discount Program, and the Low-Income Member Cost Sharing Subsidy (“Part D Subsidies”).

Reinsurance subsidies represent funding from CMS for our portion of prescription drug costs that exceed the member’s out-of-pocket threshold or the catastrophic coverage level.

Low-income cost sharing subsidies represent funding from CMS for all or a portion of the deductible, the coinsurance and co-payment for low-income beneficiaries.

Additionally, the Inflation Reduction Act mandates consumer discounts on most brand-name prescription drugs for Part D plan participants in the initial coverage and catastrophic phases.

These discounts are ultimately funded by the pharmaceutical manufacturers.

In 2025, the IRA retired the Coverage Gap Discount Program, introduced the Manufacturer Discount Program, and change the members cost thresholds for the catastrophic phase.

These program changes and the corresponding changes in prepayments are reflected in our 2025 experience.

These Part D Subsidies represent cost reimbursements under the Medicare Part D program and are recorded as deposits or payables.

These Subsidies received in excess of, or less than, actual subsidized benefits paid are refundable to or recoverable from CMS through an annual reconciliation process following the end of the contract year.:

The amounts refundable to or recoverable from CMS, including risk corridor as discussed above, were recorded in the following accounts within the consolidated balance sheets:

December 31, 2025 December 31, 2024

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Deficits are charged to shared risk providers’ risk pool as per the contractual term and evaluated for collectability at each reporting period.

We record risk-sharing receivables and payables on a gross basis on the consolidated balance sheet.

We record risk-sharing receivables and payables on a gross basis on the consolidated balance sheets.

Throughout the year, we evaluate expected losses on risk-sharing receivables and record the resulting expected losses to the reserve.

We systematically build and release reserves based on adequacy and its assessment of expected losses on a monthly basis.

Credit loss associated with risk share deficit receivables are recorded within medical expense in the consolidated statements of operations.

Credit loss associated with risk share deficit

receivables are recorded within medical expense in the consolidated statements of operations.

As of December 31, 2025 and December 31, 2024, we recorded an allowance for credit losses for substantially all of the risk-sharing receivable balance due to collection risk related to the balance.

The risk-sharing payable is included within medical expenses payable on the consolidated balance sheet.

The risk-sharing payable is included within medical expenses payable on the consolidated balance sheets.

Concentrations of Credit Risk

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Accounts at each financial institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to certain limits.

At December 31, 2024 and December 31, 2023, there was $ 469,373 and $ 316,977 , respectively, in excess of FDIC-insured limits.

We account for income taxes using the asset and liability method.

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These member acquisition costs related to our health services contract with our members are expensed as incurred and are recorded as selling, general and administrative expenses.

These short-term health services contract typically have a one-year term and may be canceled by the member.

The short-term health services contract typically have a one-year term and may be canceled by the member.

Advertising Expenses

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The grant date fair value of stock options is estimated using the Black-Scholes option pricing model.

The grant date fair value of restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) is estimated based on the fair value of our underlying common stock on the date of grant.

The grant date fair value of restricted stock units (“RSUs”), performance stock units ("PSUs") and restricted stock awards (“RSAs”) is estimated based on the fair value of our underlying common stock on the date of grant.

The Black-Scholes option pricing model requires the use of highly subjective assumptions, including the award’s expected term, the fair value of the underlying common stock, the expected volatility of the price of the common stock, risk-free interest rates, and the expected dividend yield of the common stock.

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The expected term represents the period the stock-based awards are expected to be outstanding.

As we do not have sufficient historical experience for determining the expected term of the stock option awards granted, we utilize the simplified method available under U.S.

As we do not have a substantial trading history,

volatility assumptions were developed using a combination of the Company's historical volatility and the historical volatilities of a set of peer companies, adjusted for debt-equity leverage.

Equity-based compensation expense for awards with service-based vesting only is recognized on a graded vesting schedule over the requisite service period of the awards, which is generally four years .

Equity-based compensation expense for RSU awards with performance-based vesting is recognized over the requisite service period on a graded vesting schedule and is only recognized when the Company concludes that it is probable that the performance condition(s) will be achieved.

As we do not have sufficient historical experience for determining the expected term of the stock option awards granted, we utilize the simplified method available under GAAP.

As we do not have a substantial trading history, volatility assumptions were developed using a combination of the Company's historical volatility and the historical volatilities of a set of peer companies, adjusted for debt-equity leverage.

Equity-based compensation expense for PSU awards with performance-based vesting is recognized over the requisite service period on a graded vesting schedule and is only recognized when the Company concludes that it is probable that the performance condition(s) will be achieved.

At each reporting period, the Company reassesses the probability of achieving the performance criteria.

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Net Loss per Share

Net loss per share is calculated based on net loss attributable to Alignment Healthcare, Inc.'s shareholders.

The following table sets forth the computation of basic and diluted net loss per share for the years ended December 31, 2024, 2023, and 2022:

Net income or loss per share is calculated based on net income or loss attributable to Alignment Healthcare, Inc.'s stockholders.

Potentially dilutive common stock equivalents for the Company include stock options, unvested RSUs, unvested PSUs, and convertible senior notes.

The following table sets forth the computation of basic and diluted net income (loss) per share for the years ended December 31, 2025, 2024, and 2023:

Year Ended December 31,

2025 2024 2023

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Net loss per share - basic and diluted $ 0.00 $ ( 0.67 ) $ ( 0.79 )

Basic net loss per share is the same as diluted net loss per share for periods presented as the inclusion of all potentially dilutive shares would have been anti-dilutive.

Basic net loss per share is the same as diluted net loss per share for periods presented as the inclusion of all potentially dilutive shares

would have been anti-dilutive.

In addition to the restricted shares of common stock, we also excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share as of December 31, 2025, 2024, 2023:

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Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update ("ASU") No.

2023-07 around segment disclosures.

The new standard requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide, in interim periods, all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.

Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker.

The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments.

The guidance was for annual periods beginning with the Company's fiscal year 2024, and in interim periods within the Company's fiscal year

The Company adopted the requirements of this ASU within our segment disclosure in Note 2 Summary of Significant Accounting Policies above.

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures”, which requires public entity to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold.

In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received.

For public entities, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025 and

continuing to provide the pre-ASU disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all period presented.

The Company adopted the requirements of this ASU for the year ended December 31, 2025, and provided the revised disclosures for all previous periods presented within our income taxes disclosure in Note 9 Income Taxes.

The adoption only impacted our disclosures with no impact to our results of operations, cash flows or financial condition.

Recent Accounting Pronouncements Issued

In November 2024, the FASB issued ASU 2024-04 “ Debt with Conversion and Other Options ”, which improves and clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for an as induced conversion.

ASU 2024-04 is effective for annual periods beginning after December 15, 2025 (and interim reporting periods within those annual reporting periods).

In September 2025, the FASB issued ASU 2025-06 "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software", which removes the multi-stage model when determining internal-use software development cost capitalization.

Under the new ASU, such software costs are capitalized when management has authorized and committed to funding the software project, and if it is probable that the project will be completed and the software will be used to perform the function intended.

If a project is still subject to major uncertainty, capitalization is prohibited.

ASU 2025-06 is effective for

annual periods beginning after December 15, 2027 (and interim reporting periods within those annual reporting periods).

The Company is currently evaluating the impact of this ASU on its financial statements.

Additionally, in November 2024, the FASB issued ASU 2024-03 “ Disaggregation of Income Statement Expenses ”, which improve income statement presentation and disclosures related to expenses.

In November 2024, the FASB issued ASU 2024-04 “Debt with Conversion and Other Options”, which improves and clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion.

ASU 2024-04 is effective for annual periods beginning after December 15, 2025 (and interim reporting periods within those annual reporting periods).

The Company does not expect the adoption of this guidance to have a material impact on its financial statements.

In November 2024, the FASB issued ASU 2024-03 “Disaggregation of Income Statement Expenses”, which improves income statement presentation and disclosures related to expenses.

It requires a public entity to disaggregate key expense categories such as employee compensation, depreciation and intangible asset amortization within its financial statements.

ASU 2024-03 is effective for annual periods beginning with the Company's fiscal year 2027, and interim periods within the Company's fiscal year 2028, with early adoption permitted.

ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within the Company's fiscal year 2027, with early adoption permitted.

The Company is currently evaluating the impact of this ASU on its disclosures of income statement expenses.

In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures ", which requires public entity to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold.

For public entities, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all period presented.

We expect this ASU to only impact our disclosures with no impacts to our results of operations, cash flows, and financial condition.

The following tables present the carrying value and fair value of these financial instruments as of December 31, 2025 and 2024:

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Total $ 73,441 $ 71,135 $ 2,321 $ —

The carrying value of long-term debt represents the outstanding balance, net of unamortized debt issuance costs.

As of December 31, 2024 and 2023, the fair value of our long-term debt approximates the carrying value.

The Company estimates the fair value of its convertible senior notes based on valuations provided by third-party pricing services.

Fair value of the long-term debt as of December 31, 2025 was approximately $ 514,164 .

The Company's fair value of long-term debt disclosure is classified within Level 2 of the valuation hierarchy.

As of December 31, 2024, the fair value of our long-term debt approximated the carrying value.

The carrying value of long-term debt represents the outstanding balance, net of unamortized debt issuance costs, which was $ 323,176 and $ 321,428 as of December 31, 2025 and 2024, respectively

Our nonfinancial assets and liabilities, which include goodwill, intangible assets, property, and equipment, are not required to be measured at fair value on a recurring basis.

However, on a periodic basis, or whenever events or changes in circumstances indicate that their carrying value may not be recoverable, we assess these assets for impairment.

We recorded an impairment charge related to intangible assets during the year ended December 31, 2024.

No such impairment resulted during the years ended December 31, 2023 and 2022.

Please refer to Note 6 Goodwill and Intangible Assets for more information on the impairment charge.

We recorded an impairment charge related to goodwill as of December 31, 2025 and December 31, 2024.

No such impairment resulted during the year ended December 31, 2023.

Please refer to Note 6 Goodwill and Intangible Assets.

Treasury Securities Investments

As of December 31, 2024, the Company had $ 37,791 of investments in U.S.

As of December 31, 2025 and 2024, the Company had $ 28,413 and $ 37,791 of investments in U.S.

Treasury bills which were classified as held to maturity and carried at amortized cost.

These investments are included in short-term investments in the consolidated balance sheets as the original

maturities are greater than three months and less than twelve months.

The Company has the intent and ability to hold these securities to maturity and gross unrecognized gains were $ 16 .

These investments are included in short-term investments in the consolidated balance sheets as the original maturities are greater than three months and less than twelve months.

The Company has the intent and ability to hold these securities to maturity and gross unrecognized gains and losses were immaterial.

As of December 31, 2024 the Company had $ 32,296 of investments in U.S.

Treasury bills with an original maturity of less than three months.

These investments are considered cash equivalents and are included in cash and cash equivalents in the consolidated balances sheets.

These investments are considered cash equivalents and are included in cash and cash equivalents in the consolidated balance sheets.

Restricted Investments

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Due to the nature of the state's requirements, these assets are classified as noncurrent assets regardless of the contractual maturity date.

Money Market Funds

As of December 31, 2025 the Company had $ 216,155 in money market funds, which are recorded at fair value and included in cash and cash equivalents in the consolidated balance sheet.

Accounts Receivable

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Included within the amortization balance for the years ended December 31, 2025 was $ 634 in impairment charges related to intangible assets that were written off related to an inactive Medicare license that was terminated during the period.

There were no impairment charges related to goodwill and intangible assets for the years ended December 31, 2023 and 2022.

During the year ended December 31, 2025, the Company derecognized goodwill of $ 2,132 related to the sale of a subsidiary.

There were $ 645 impairment charges related to goodwill and intangible assets for the year ended December 31, 2024 and no impairment charges related to goodwill and intangible assets for the year ended December 31, 2023.

Medical Expenses Payable

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2024 832,819 809,297

2025 1,136,448

Total $ 2,426,157

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Oxford Term Loan

On September 2, 2022 (the “Effective Date”), we, Alignment Healthcare USA, LLC, an indirect subsidiary of the Company (the “Borrower”) and certain of our other subsidiaries entered into a term loan agreement (the “Oxford Loan Agreement”) with Oxford Finance LLC, as administrative agent, collateral agent and a lender, and the other lenders from time to time party thereto (collectively, the “Lenders”), pursuant to which the Lenders have agreed to lend the Borrower an aggregate principal amount of up to $ 250,000 in a series of term loans (the “Term Loans”).

Pursuant to the Oxford Loan Agreement, the Borrower received an initial Term Loan of $ 165,000 on the Effective Date and had the option to borrow up to an additional $ 85,000 of Term Loans.

On September 2, 2022 (the “Effective Date”), Alignment Healthcare USA, LLC, an indirect subsidiary of the Company (the “Borrower”) and certain of our other subsidiaries entered into a term loan agreement (the “Oxford Loan Agreement”) with Oxford Finance LLC, as administrative agent, collateral agent and a lender, and the other lenders from time to time party thereto (collectively, the “Lenders”), pursuant to which the Lenders have agreed to lend the Borrower an aggregate principal amount of up to $ 250,000 in a series of term loans (the “Term Loans”).

Pursuant to the Oxford Loan Agreement, we received an initial Term Loan of $ 165,000 on the Effective Date and had the option to borrow up to an additional $ 85,000 of 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.

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 %.

Interest on the Term Loans was a variable rate equal to (i) the secured overnight financing rate (“SOFR”) 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 %.

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

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On or after August 15, 2029, the Notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

Upon conversion, the

Notes may be settled in shares of Company common stock, cash or a combination of cash and shares of Company common stock, at the Company’s election.

The Notes have an initial conversion rate of 62.4 shares of Company common stock per $1,000 principal amount of the Notes.

Upon conversion, the Notes may be settled in shares of Company common stock, cash or a combination of cash and shares of Company common stock, at the Company's election.

The Notes have an initial conversion rate of approximately 62.4 shares of Company common stock per $1 principal amount of the Notes.

The conversion rate will be subject to adjustment in certain events, including adjustment in the event of certain significant corporate transactions.

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The Company has recognized the Notes in their entirety as a liability on the consolidated balance sheet and no portion of the proceeds from the issuance of the convertible debt instrument was accounted for separately as an embedded conversion feature within stockholders’ equity.

Revolving Credit Facility

Subsequent to the balance sheet date, on February 26, 2026, (the “Effective Date”), the Company, Alignment Healthcare USA, LLC, an indirect wholly owned subsidiary of the Company (the “Borrower”) and certain other subsidiaries of the Company (together with the Company and the Borrower, the “Borrower Parties”) entered into a Credit Agreement with Citibank, N.A., as administrative agent, and the lenders party thereto (the “Credit Agreement”).

The Credit Agreement matures on February 26, 2029, and provides for a $ 200,000

senior secured revolving credit facility (the “Credit Facility”), with sublimits of up to $ 20,000 for the issuance of letters of credit and $ 5,000 for swingline loans.

Subject to meeting certain customary conditions, the Borrower may increase the commitments under the Credit Facility or establish one or more new term loan facilities by up to an amount equal to the greater of $ 50,000 or 100 % of the Borrower Parties’ Consolidated EBITDA (as defined in the Credit Agreement) for the most recently completed four fiscal quarters of the Borrower Parties for which financial statements have been delivered.

Borrowings under the Credit Facility may be used for permitted acquisitions, working capital, the payment of fees, costs and expenses incurred in connection with the Credit Agreement and other general corporate purposes.

The Borrower did not borrow any amounts under the Credit Facility as of the Effective Date.

Loans under the Credit Facility will bear interest at a floating rate, which can be either, at the Borrower’s option, (a) Term SOFR (as defined in the Credit Agreement) plus an applicable margin that ranges from 2.00 % to 2.5 % per annum with respect to Term SOFR loans or (b) a Base Rate (as defined in the Credit Agreement) plus an applicable margin that ranges from 1.0 % to 1.5 % per annum with respect to Base Rate loans , based on the Borrower Parties’ consolidated senior secured leverage ratio, as calculated in accordance with the Credit Agreement.

The Borrower is also required to pay certain fees in connection with the Credit Agreement, including commitment fees on a quarterly basis in respect of the unutilized portion of the commitments under the Credit Agreement and certain fees to each of the lenders upon the effectiveness of the Credit Agreement.

The Borrower may voluntarily repay outstanding borrowings under the Credit Facility at any time, without premium or penalty.

The Credit Agreement includes financial covenants that require the Borrower Parties to maintain, as of the last day of each fiscal quarter (commencing with the fiscal quarter ending June 30, 2026), (i) a ratio of senior secured indebtedness that is not subordinated in right of payment to the obligations under the Credit Agreement to Consolidated EBITDA (as defined in the Credit Agreement) for the period of four consecutive fiscal quarters ended on such date, of not more than 2.5 to 1.0 and (ii) Consolidated EBITDA for the period of four consecutive fiscal quarters ended on such date, of amounts specified in the Credit Agreement starting from $ 60,000 as of June 30, 2026, increasing to $ 70,000 as of June 30, 2027, and $ 80,000 as of June 30, 2028 and each fiscal quarter thereafter.

The Borrower’s obligations under the Credit Agreement are guaranteed by the Company and certain subsidiaries of the Company and secured by substantially all of the assets of the Borrower, the Company and such subsidiaries of the Company, subject to customary exceptions.

None of the Company’s health plan subsidiaries or other regulated entities are guarantors under the Credit Agreement and the equity in such subsidiaries was not pledged.

The Credit Agreement contains customary representations and warranties, as well as affirmative and negative covenants.

Negative covenants include, among others, customary covenants that restrict the ability of the Company and its subsidiaries, without the approval of requisite lenders, to engage in certain fundamental transactions, incur debt and liens, enter into transactions with affiliates and make certain restricted payments and restricted investments, in each case, as set forth in the Credit Agreement and subject to certain thresholds and exceptions.

The Credit Agreement also contains other customary covenants and events of default for secured credit facilities of this type.

Upon an event of default that is not cured or waived within any applicable cure periods, in addition to other remedies that may be available to the lenders, the obligations under the Credit Agreement may be accelerated.

Future maturities under the term loan as of December 31, 2025 are as follows:

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Loss before tax at statutory federal rate $ ( 201 ) 21.0 % $ ( 26,891 ) 21.0 % $ ( 31,121 ) 21.0 %

Valuation allowance 25,677 ( 20.1 ) 29,426 ( 19.9 ) 82,922 ( 55.5 )

State income tax - net of federal tax benefit ( 5,771 ) 4.5 ( 5,173 ) 3.4 ( 58,286 ) 39.0

Nondeductible expenses 180 ( 0.1 ) 169 ( 0.1 ) 334 ( 0.2 )

Equity-based compensation — — — — — —

Cumulative deferred adjustment and other 844 ( 0.7 ) ( 947 ) 0.6 ( 1,510 ) 1.1

Provision to return adjustment ( 2,721 ) 2.1 908 ( 0.6 ) 231 ( 0.2 )

State and local income taxes, net of federal income tax effect 221 ( 23.0 ) 1,815 ( 1.4 ) 1,133 ( 0.8 )

Enactment of new tax laws — — — — — —

Effect of cross-border tax laws — — — — — —

Tax credits — — — — — —

Change in valuation allowance 517 ( 53.9 ) 17,107 ( 13.4 ) 23,955 ( 16.1 )

Nondeductible Items

Stock Compensation ( 6,271 ) 653.6 — — — —

Nondeductible executive compensation 6,518 ( 679.8 ) 8,703 ( 6.8 ) 6,716 ( 4.5 )

Net income tax expense (benefit) $ 21 ( 0.1 ) % $ ( 22 ) 0.1 % $ 339 ( 0.2 ) %

Nondeductible entertainment 159 ( 16.6 ) 138 ( 0.2 ) 48 —

Other 193 ( 20.3 ) 43 — 120 ( 0.1 )

Worldwide changes in unrecognized tax benefits — — — — — —

Federal deferred tax adjustments ( 1,941 ) 202.4 844 ( 0.7 ) ( 947 ) 0.6

Federal tax return true-up 825 ( 86.0 ) ( 1,738 ) 1.4 74 —

Foreign Tax Effects

Total $ 20 ( 2.6 ) % $ 21 ( 0.1 ) % $ ( 22 ) 0.1 %

In each year, California comprised the majority of the state and local income taxes, net of federal effect.

The cash paid for income taxes (net of refunds) during the year was as follows:

December 31, 2025 December 31, 2024 December 31, 2023

Federal $ — $ — $ —

State and local

California 6 — 190

Colorado 5 7 —

Massachusetts 7 4 —

New Jersey 2 2 —

Total state and local 25 20 205

Total $ 25 $ 20 $ 205

The components of deferred income taxes as of December 31, 2025 and 2024, were as follows:

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Other 1,930 3,330

Gross deferred tax assets 243,175 216,281

R&D credits 839 —

ROU lease liabilities 2,314 2,446

Stock compensation 48,053 48,416

Total deferred tax assets 248,973 243,175

Deferred tax liabilities:

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Depreciation ( 1,453 ) ( 214 )

Lease liabilities ( 2,105 ) ( 2,755 )

ROU assets ( 1,950 ) ( 2,105 )

Other ( 80 ) ( 31 )

Gross deferred tax liabilities ( 3,754 ) ( 4,339 )

Net deferred tax assets 239,421 211,942

Total deferred tax liabilities ( 9,610 ) ( 3,754 )

Valuation allowance ( 239,363 ) ( 239,421 )

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In June 2024, California’s Governor signed into law Assembly Bill (“AB”) 167 suspending California NOL utilization for taxpayers with more than $1 million of taxable income, effective for tax years 2024, 2025, and 2026.

AB 85 includes an extended carryover period for the suspended NOLs with an additional year carryforward for each year of suspension.

Subsequently, on February 9, 2022, the California governor signed Senate Bill 113 (S.B.

113), which restores the NOL deduction and eliminates the $5 million annual cap on business incentive tax credits, effective for tax years beginning on or after January 1, 2022.

In June 2024, California’s Governor signed into law AB 167 suspending California NOL utilization for taxpayers with more than $1 million of taxable income, effective for tax years 2024, 2025, and 2026.

AB 167 includes an extended carryover period for suspended NOLs that would have been utilized if not for AB 167.

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We continue to monitor changes in ownership with respect to these income tax provisions.

As of December 31, 2024 and 2023, there were no liabilities for unrecognized tax benefits.

We record uncertain tax positions in accordance with ASC 740, on the basis of a two-step process in which (i) we determine whether it is more likely than not a tax position will be sustained on the basis of the technical merits of such position and (ii) for those tax positions meeting the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50.0% likely to be realized upon ultimate settlement with the related tax authority.

The following table summarizes the gross amount of our uncertain tax positions:

December 31, 2025

Gross unrecognized tax benefits at the beginning of the year $ —

Increases related to prior year tax positions $ 1,019

Increases from tax positions taken in the current year $ 192

Gross unrecognized tax benefits at the end of the year $ 1,211

Due to the existence of the valuation allowance, future changes in our unrecognized tax benefits will not impact our effective tax rate.

Our policy is to recognize interest and penalties related to income tax matters as a component of income tax expense.

As of December 31, 2025, no interest and penalties have been recognized.

The One Big Beautiful Bill Act (“OBBB Act”) was enacted on July 4, 2025 in the United States.

The OBBB Act includes several significant provisions, including re-establishing a 100% bonus depreciation deduction, re-establishing rules in calculating business interest expense limitations pursuant to §163(j), and removing the capitalization requirements for domestic research or experimental (“R&E”) expenditures paid or incurred in tax years beginning after December 31, 2024.

We have considered applicable tax impacts of the OBBB Act within the 2025 financial statements.

Equity-Based Compensation

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The maximum number of shares available for issuance under the 2021 Plan may not exceed 20,744,444 shares (subject to a discretionary annual increase of up to 4 % effective as of January 1 of each year for 10 years).

On December 22, 2025, we registered an additional 27,915,561 shares of common stock that can be issued under the 2021 Equity Incentive Plan to eligible participants, including employees, directors, and consultants.

Equity Awards

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Aggregate intrinsic value represents the difference between the exercise price of the option and the closing price of our common stock.

The aggregate intrinsic value of options exercised for the years ended December 31, 2024 was $ 39 .

There were no options exercised during the years ended December 31, 2023 and 2022.

The aggregate intrinsic value of options exercised for the years ended December 31, 2025 and 2024 was $ 3,616 and $ 39 , respectively.

No options were exercised during the year ended December 31, 2023.

There were no options granted during the years ended December 31, 2025, 2024, and 2023.

The fair value of options granted during the year ended December 31, 2022 was $ 5,685 .

Restricted Stock Awards

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Restricted Stock Units

Our outstanding restricted stock units ("RSU") generally vest 25 % annually over four years .

Our outstanding Restricted Stock Units ("RSU") generally vest 33 % annually over three years or 25 % annually over four years .

The following is a summary of RSU transactions as of and for the years ended December 31, 2025, 2024 and 2023:

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Granted 2,987,921 15.52

( 2,993,372 ) 8.37

Vested ( 5,527,208 ) 10.05

Forfeited ( 1,448,709 ) 9.29

Unvested and outstanding as of December 31, 2025 9,356,689 $ 10.49

(1) Includes 107,948 shares that vested, but the issuance and delivery of the shares was deferred.

Performance-based Restricted Stock Units ("PSUs")

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Health Plan Revenue Growth Percentage ( 60 %), At-Risk Returning Member Medical Benefit Ratio ( 20 %) and Adjusted EBITDA, less Capital Expenditures ( 20 %).

50 % of the total number of earned PSUs will become vested upon certification of achievement of the performance metrics by the Compensation Committee on or about March 1, 2025 and the remaining 50 % of earned PSUs will be become vested as of December 31, 2025, subject to continued service to the Company through such dates.

50 % of the total number of earned PSUs vested upon certification of achievement of the performance metrics by the Compensation Committee in March 2025 and the remaining 50 % of earned PSUs vested as of December 31, 2025.

On March 13, 2024, the Compensation Committee of the Board of Directors of the Company approved additional grants of PSUs under the Company's 2021 Equity Incentive Plan.

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The achievement of PSUs relative to the approved target is based on the following performance metrics and relative weighting:

Revenue 50 % and Adjusted EBITDA 50 %.

Revenue ( 50 % weighting) and Adjusted EBITDA ( 50 % weighting).

100 % of the total number of earned PSUs will become vested upon certification of achievement of the performance metrics by the Compensation Committee on or about March 1, 2027, subject to continued service to the Company through such date.

On March 13, 2025, the Compensation Committee of the Board of Directors of the Company approved additional grants of PSUs under the Company's 2021 Equity Incentive Plan.

Each grantee is eligible to vest in a number of PSUs ranging from 0 % to 200 % of the target number of PSUs granted, based on the aggregated achievement by the Company of certain performance metrics during the performance period beginning on January 1, 2027 and ending on December 31, 2027.

The achievement of PSUs relative to the approved target is based on the following performance metrics and relative weighting:

Revenue ( 50 % weighting) and Adjusted EBITDA ( 50 % weighting).

100 % of the total number of earned PSUs will become vested upon certification of achievement of the performance metrics by the Compensation Committee on or about March 1, 2028, subject to continued service to the Company through such date.

The following is a summary of PSU transactions for the year ended December 31, 2025 :

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Unvested and outstanding as of December 31, 2023 7,233,205 $ 5.74

Granted 1,160,000 5.00

Cancelled/forfeited ( 318,334 ) 5.69

Unvested and outstanding as of December 31, 2024 8,074,871 $ 5.64

Granted 795,786 15.48

Vested ( 6,667,948 ) 5.74

Cancelled/forfeited ( 517,302 ) 7.39

Unvested and outstanding as of December 31, 2025 1,685,407 $ 9.35

Kao Equity Award

Subsequent to the balance sheet date, on February 24, 2026 (the “Grant Date”), the Board of Directors of the Company approved the grant of certain performance share units (“PSUs”) to John Kao, the Company’s Chief Executive Officer (the “PSU Award”), under the Company’s 2021 Equity Incentive Plan (the “Plan”).

The PSU Award supplements the annual equity awards that Mr.

Kao will continue to be eligible for in the future.

In approving the award, the Board, with input from the Compensation Committee and its independent compensation consultant, considered the importance of retaining Mr.

Kao, a recognized industry leader, while incentivizing long-term, sustained business performance and alignment with stockholder interests.

The material terms of the PSU Award are described below.

Capitalized terms that are not otherwise defined have the meanings set forth in the Plan.

Except as set forth below, tranches of the PSU Award will be earned and vest only upon both (i) the achievement of pre-determined price per share goals (described below) over the period commencing on the Grant Date and ending on the fifth anniversary of the Grant Date (the “Measurement Period”);

Kao’s continued employment or service as the Company’s Chief Executive Officer through the third anniversary of the Grant Date, unless otherwise agreed to (the “Service Requirement”).

The PSUs will become earned (“Earned PSUs”) in three tranches based on the achievement of the following volume-weighted average price per share goals during the Measurement Period (the “Stock Price Hurdles”):

Price Per Share Goals Number of Earned PSUs

First Stock Price Hurdle $ 33.75 333,333

Second Stock Price Hurdle $ 44.00 333,333

Third Stock Price Hurdle $ 55.25 333,334

A Stock Price Hurdle is achieved if the volume-weighted average price per share over any 30 -consecutive-trading-day period during the Measurement Period equals or exceeds the applicable price.

Any tranche of PSUs that Mr.

Kao has earned will become vested upon the later of (i) the date on which the applicable Stock Price Hurdle has been achieved or (ii) the date on which the Service Requirement has been met, subject to his continued service though such later date.

Except as described below, PSUs for which the relevant Stock Price Hurdle has not been achieved by the end of the Measurement Period will be forfeited.

Equity-Based Compensation Expense

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Total equity-based compensation expense $ 62,082 $ 71,132 $ 66,835

$ 71,132 $ 66,835 $ 81,718

As of December 31, 2024, there was $ 61,809 in unrecognized compensation expense related to all non-vested awards (RSAs, options and RSUs) that will be recognized over the weighted-average period of 1.55 years.

As of December 31, 2023 and December 31, 2022, there was $ 98,004 and $ 120,241 , respectively, in unrecognized compensation expense related to all non-vested awards (RSAs, options and RSUs) that will be recognized over the weighted-average period of 1.88 and 2.42 years, respectively.

As of December 31, 2025, there was $ 46,535 in unrecognized compensation expense related to all non-vested awards (Options, RSUs and PSUs) that will be recognized over the weighted-average period of 1.51 years.

As of December 31, 2024 and December 31, 2023, there was $ 61,809 and $ 98,004 , respectively, in unrecognized compensation expense related to all non-vested awards (Options, RSUs and PSUs) that will be recognized over the weighted-average period of 1.55 and 1.88 years, respectively.

Regulatory Requirements and Restricted Funds

Our health plans or risk-bearing entities are required to maintain minimum capital requirements prescribed by various regulatory authorities in each of the states in which it operates.

Risk-Based Capital Regulatory

The National Association of Insurance Commissioners has adopted rules, which, if implemented by the states, set minimum capitalization requirements for insurance companies, HMOs, and other entities bearing risk for health care coverage.

Risk-Based Capital

The National Association of Insurance Commissioners has adopted rules, which, if implemented by the states, set minimum capitalization requirements for insurance companies, health maintenance organizations ("HMOs"), and other entities bearing risk for health care coverage.

The requirements take the form of risk-based capital (“RBC”) rules, which may vary from state to state.

2 unchanged sentences

Tangible Net Equity

Our health plan in California is required to comply with the tangible net equity (“TNE”) requirements.

The required amount is the larger of:

(2) 2% of the first $150,000 of annualized premium revenue, plus 1% of annualized premium revenue in excess of $150,000;

or (3) 8% of the first $150,000 of annualized health care expenditures, except for those paid on a capitated or managed hospital payment basis, plus 4% of the annualized health care expenditures in excess of $150,000, except those paid on a capitated or managed hospital payment basis, plus 4% of annualized hospital expenditures paid on a managed hospital payment basis.

We were in compliance with the TNE requirement for all periods presented.

We have the ability to provide additional capital to each of our health plans or risk-bearing entities when necessary to ensure that the RBC and TNE requirements are met.

Our health plans in California are required to comply with the tangible net equity ("TNE") requirements.

The required amount is 150% of the larger of:

(2) the sum of 2% of the first $150,000 of annualized premium revenue and 1% of annualized premium revenue in excess of $150,000;

or (3) 8% of the first $150,000 of annualized health care expenditures except those paid on a capitated or managed hospital payment basis, plus 4% of the annualized health care expenditures in excess of $150,000, except those paid on a capitated or managed hospital payment basis, plus 4% of annualized hospital expenditures paid on a managed hospital payment basis.

For newer health plans, through the first three years immediately following the health plan’s operational start date, the required amount is 200% of the larger of the TNE calculation described above.

We were in compliance with the TNE requirements as of December 31, 2025.

Certain states regulate the payment of dividends, loans, or other cash transfers from our regulated subsidiaries to our non-regulated subsidiaries and parent company.

Such payments may require approval by state regulatory authorities and are limited based on certain

financial criteria, such as the entity’s level of statutory income and statutory capital and surplus, or the entity’s level of tangible net equity or net worth, among other measures.

Such payments may require approval by state regulatory authorities and are limited based on certain financial criteria, such as the entity’s level of statutory income and statutory capital and surplus, or the entity’s level of tangible net equity or net worth, amongst other measures.

These regulations vary by state.

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We were in compliance with the RBC and TNE requirements as of December 31, 2025.

We have the ability to provide additional capital to each of our health plans or risk-bearing entities when necessary to ensure that the RBC and TNE requirements are met.

Restricted Assets

Pursuant to the regulations governing our subsidiaries, we maintain certain deposits required by the government authorities in the form of cash, certificates of deposit and Treasury bills as protection in the event of insolvency.

Pursuant to the regulations governing our subsidiaries, we maintain certain deposits required by the government authorities in the form of cash, certificate of deposit and Treasury bills as protection in the event of insolvency.

The use of funds from these investments is limited as required by regulation in the various states in which we operate, or as needed in the event of insolvency.

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The weighted average remaining lease term for operating leases is 3.9 years with a weighted average discount rate 11.6 % at December 31, 2025.

The weighted average remaining lease term for operating leases is 4.40 years with a weighted average discount rate 12.0 % at December 31, 2024

The weighted average remaining lease term for finance leases is 3.3 years with a weighted average discount rate 4.3 % at December 31, 2025.

In the year ended December 31, 2025, $ 213 and $ 0 of operating lease and finance lease assets, respectively, were exchanged for lease liabilities related to newly commenced leases.

In the year ended December 31, 2024, $ 26 and $ 0 of operating lease and finance lease assets, respectively, were exchanged for lease liabilities related to newly commenced leases

The following table summarizes our lease assets and liabilities as of December 31, 2025 and 2024:

15 unchanged sentences

Present value of lease liabilities $ 8,153

Maturities of lease liabilities under finance leases by fiscal year are as follows:

As of December 31, 2025

2030 and thereafter —

Total lease payments $ 289

Present value of lease liabilities $ 272

We sublease space not used in our operations.

For the years ended December 31, 2025, 2024 and 2023, sublease income was $ 16 , $ 206 , and $ 565 , respectively.

For the year ended December 31, 2024, we recorded ROU asset impairment of $ 143 .

We recorded no ROU asset impairment for the year ended December 31, 2023, and there was $ 510 of ROU asset impairment recorded for the year ended December 31, 2022.

For the year ended December 31, 2025, no ROU asset impairment was recorded.

We recorded $ 143 ROU asset impairment for the year ended December 31, 2024, and there was no ROU asset impairment recorded for the year ended December 31, 2023.

Employee Benefit Plans

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On August 15, 2023, the Company entered into a tentative settlement of the action in consideration of an aggregate payment of $ 913 .

The settlement of this matter is subject to approval by the court which is expected in the first quarter of 2025.

As a result of the tentative settlement, the Company has accrued for a potential liability of $ 913 as of December 31, 2025 for this matter, which was recorded within accounts payable and accrued expenses on the consolidated balance sheet and selling, general and administrative expenses on the consolidated statement of operations.

Subsequent to period end, the settlement was approved by the court and the Company made payment in January 2026.

On July 7, 2023, a stockholder of Alignment ﬁled a purported class action lawsuit (Maglione v.

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On May 24, 2024, the parties filed a stipulation and proposed order voluntarily dismissing the action as moot, which the court granted.

Pursuant to the order, the court retained jurisdiction regarding attorneys’ fees.

The Company has entered into discussions with plaintiffs’ counsel to negotiate with respect to attorney’s fees.

Plaintiff’s counsel made a settlement demand and the Company presented a counteroffer that was rejected by plaintiff’s counsel.

Negotiations remain ongoing.

The Company expects losses related to this case to be immaterial.

Pursuant to the order, the court retained jurisdiction regarding attorneys’ fees.The Company entered into discussions with plaintiffs’ counsel to negotiate with respect to attorney’s fees.

In March 2025 the parties reached an agreement on settlement fees in the amount of $ 950 .

The settlement was paid in April 2025.

We may be involved in various litigation matters in the ordinary course of business.

1 unchanged sentence

Amounts accrued for legal proceedings were not material as of December 31, 2025 and 2024.

Risk Adjustment Data Validation Audit

On June 25, 2025, the Company was notified that its California HMO plan had been selected for an audit of Medicare Advantage contract-specific risk adjustment data validation (“RADV”) with respect to payment year 2019.

CMS conducts RADV audits in order to validate the coding practices of and supporting documentation maintained by health care providers and such audits may result in retrospective adjustments to payments made to the Company’s health plans.

Under CMS’s final rule issued in 2023, CMS announced its intent to apply a revised methodology, including extrapolated audit findings to estimate contract-wide overpayments and without application of the previously employed “fee-for-service adjuster” that accounted for the error rate in the original Medicare data that CMS used to develop the risk adjustment model.

Additionally, in May 2025, CMS announced a significant expansion to its RADV audit program, stating, among other things, that it intended to conduct RADV audits with extrapolation on all eligible MA plans on an annual basis and that it would accelerate the timetable for clearing its backlog of audits with respect to payment years 2018-24.

However, on September 25, 2025, a Federal District Court in Texas vacated CMS’s final rule regarding extrapolation of results of RADV audits for payment years beginning with payment year 2018.

As of December 31, 2025, the Company is in the process of collecting and reviewing medical records with respect to the member cohort selected for the RADV audit.

The Company is continuing to monitor developments with respect to these audits and continuing to assess their potential impact.

Purchase Obligations

We have agreements for goods and services which include fixed, minimum and estimated payments under existing contractual obligations that are legally enforceable and binding.

These obligations include agreements that are cancellable with the payment of an early termination penalty and other funding commitments that require fixed or minimum levels of service to be purchased with a specific timing established.We have purchase obligation commitments of $ 14,253 in 2026, $ 13,585 in 2027, $ 12,975 in 2028, $ 6,075 in 2029, and $ 1,478 in 2030.

Purchase obligations exclude agreements that are cancellable without penalty.

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We utilize medical insurance (or stop-loss agreements) to limit excess losses on individual members.

Under the terms of the stop-loss agreements, we are reimbursed for certain proportions of the cost of each member’s hospital expenses in excess of a specified deductible in a coverage period, limited to $ 2,000 in aggregate per member per coverage period.

In 2024, all of our markets were covered by stop-loss agreements which included dates of service prior to October 1, 2024, and we have until April 30, 2025, to submit claims to the reinsurance carrier for reimbursement.

We began a new policy on October 1, 2024, which will cover dates of service through September 30, 2025, and will allow us to submit claims for reimbursement through November 31, 2026.

The new policy includes both professional and hospital expenses in the calculation against the specified deductibles and removes the recovery limit of $ 2,000 in aggregate per member per policy period.

Under the terms of the stop-loss agreements, we are reimbursed for certain proportions of the cost of each member’s medical expenses in excess of a specified deductible in a coverage period, limited to $ 2,000 in aggregate per member per coverage period.

In 2025, all of our markets were covered by stop-loss agreements which included dates of service prior to October 1, 2025, and we have until November 1, 2026, to submit claims to the reinsurance carrier for reimbursement.

We began a new policy on October 1, 2025, which will cover dates of service through September 30, 2026, and will allow us to submit claims for reimbursement until November 1, 2027.

Reinsurance premiums are included in medical costs in the consolidated statement of operations.

8 unchanged sentences

Refer to Note 11 Regulatory Requirements and Restricted Funds for more information.

Since the restricted net assets of our subsidiaries exceed 25% of

our consolidated net assets, the accompanying condensed parent company financial statements have been prepared in accordance with Rule 12-04, Schedule 1 of Regulation S-X.

Since the restricted net assets of our subsidiaries exceed 25% of our consolidated net assets, the accompanying condensed parent company financial statements have been prepared in accordance with Rule 12-04, Schedule 1 of Regulation S-X.

This information should be read in conjunction with our consolidated financial statements.

38 unchanged sentences

Net loss of Parent Company ( 16,332 ) ( 2,143 ) ( 488 )

Subsidiary's net loss ( 125,928 ) ( 147,685 ) ( 149,201 )

Subsidiary's Net income (loss) 15,354 ( 125,928 ) ( 147,685 )

Net loss ( 978 ) ( 128,071 ) ( 148,173 )

13 unchanged sentences

Amortization of debt issuance costs 1,761 220 —

Changes in operating assets and liabilities:

Due to subsidiary 14,063 1,923 488

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Contribution of equity to subsidiary related to equity-based compensation $ 62,082 $ 71,132 $ 66,835

Distribution from subsidiary $ — $ — $ 85

Debt issuance costs in accounts payable $ 26 $ 512 $ —

22 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 8. Financial Statements and Supplementary Data