Alignment Healthcare (ALHC) investor relations material

Strategic transformation and operational updates

• Undergoing aggressive change management, including investments in claims systems, medical management, and data architecture to support scaling and future growth.

• Most transformation initiatives are nearly complete, with remaining efforts focused on optimizing processes and capturing additional operational efficiencies in the next few quarters.

• New leadership additions are contributing positively, accelerating improvements in payment integrity and care management.

• Investments made are expected to drive multi-year growth and are not just temporary cost increases.

• The company aims to transition from a 'big small company' to a 'small big company' to enable reliable, scalable replication of its business model.

Financial performance and guidance

• Achieved strong membership and revenue growth, with EBITDA margin expansion in the second quarter.

• Despite short-term noise from transformation, the core business model remains robust, and guidance for 2026 is unchanged.

• Institutional costs, particularly hospital billing and skilled nursing, have increased but are being addressed through enhanced payment integrity and clinical resource investments.

• Prior year development issues were primarily due to claims system transition, not underlying trend errors.

• Embedded gross profit potential within the current membership is estimated at $880 million, with realization dependent on member cohort maturation and operational execution.

Market strategy and future outlook

• Expansion into new states is targeted for 2028, with lessons from previous markets emphasizing direct alignment with doctors and scalable corporate services.

• The approach to higher-acuity member growth is opportunistic and tailored by market, not expected to be a consistent strategy everywhere.

• Ongoing investments in clinical, IT, and market management resources are expected to enhance visibility and control over cost metrics.

• The company remains confident in its ability to manage costs and maintain margin improvement as member cohorts mature.

• Leadership expects that current short-term operational noise will give way to long-term value realization, with significant growth potential beyond the current market size.