ALHC 10-K & 10-Q changes, risk factors and insider trading

•SecurityCybersecurity breaches, loss of data and other disruptions could compromise sensitive business or member information, or prevent access to critical information and expose us to liability.

We have incurred net losses on an annual basis since our inception, including a net loss of $1.0 million and $128.1 million for the years ended December 31, 2025 and December 31, 2024. As of December 31, 2025, we had an accumulated deficit of $1,009.0 million. We expect our aggregate costs will increase substantially in the foreseeable future as we expect to invest heavily in increasing our member base, growing our provider networks, expanding our operations geographically, engaging in expanded marketing and outreach efforts, enhancing our technology, hiring additional employees, operating as a public company and acquiring companies or assets complementary to our business. These efforts may prove more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently to offset these higher expenses. In addition, even if we are successful in increasing our membership and consequently increasing our total revenues from premiums earned, we may not successfully and effectively predict, price and manage the medical costs of our members. To date, we have financed our operations principally from the sale of our equity, revenue from the CMS and the incurrence of indebtedness. We may not generate positive cash flow from operations or profitability in the future.

•when expanding into new markets, we may face competition with greater knowledge of such local markets; and

•expansion into new offerings or new markets, or the acquisition of complementary businesses or assets, may require us to raise additional capital, which may not be available on desirable terms or at all; andall.

Pursuing our growth strategy requires significant capital expenditures, the allocation of valuable management resources, and the hiring of additional personnel, and may strain our operations,operations and our financial and management controls and reporting systems and procedures. For a variety of reasons, we may not succeed in achieving scale, improving our operating efficiency or gaining operating leverage. Moreover, we have experienced and may in the future continue to experience attrition, which may further exacerbate these challenges. If we are unable to effectively execute our growth strategy and manage our growth, our results of operations and financial condition could be materially and adversely affected.

Premium increases, introduction of new product designs, and our relationships with our providers in various markets, among other issues, could also affect our membership levels. Other actions that could affect membership levels include our possible exit from or entrance into markets,markets or the entering into or termination of a largekey network contract. If we do not compete effectively in our markets, if we set rates too high or too low in highly competitive markets to keep or increase our market share, if membership does not increase as we expect, if membership declines, or if we lose membership with favorable medical cost experience while retaining or increasing membership with unfavorable medical cost experience, our results of operations, financial position, and cash flows may be materially adversely affected.

CMS measures the quality of Medicare Advantage plans through a Five Star Quality Rating System. The Star Rating system considers various measures adopted by CMS, including, among others, quality of care, preventative services, chronic illness management and member satisfaction. The achievement of Star ratings of 4-Star or higher qualifies Medicare Advantage plans for an increase in the benchmark against which they bid (potentially increasing premium payments). As of January 1, 2025,2026, approximately 98%100% of our members are enrolled in rated plans that have a 4.0 Star rating or greater for the 20252026 rating year / 20262027 payment year. However, we may not be able to maintain or improve upon these Star ratings in future years. Failure to maintain satisfactory quality and performance measures may negatively affect our premium rates, impede our ability to compete for new business in existing or new markets or result in the termination of our contracts, or affect our ability to enter into new CMS contracts or expand the service area of current health plans. Star ratings are an important component of how MA beneficiaries select an MA plan, both during each annual enrollment period and throughout each year. Low Star ratings may reduce our membership, if members choose to enroll in higher-rated plans.

CMS updates and makes changes to the Star ratings annually. Changes implemented by CMS with respect to the Five Star Quality Rating System have, in the past, and could, in the future, negatively impact our Star ratings. For example, in rating year 2024, CMS removed performance outliers from the calculation of non-Consumer Assessment of Healthcare Providers and Systems (“non-CAHPS data”) measure rating cut points using the TukeyTurkey outlier deletion method. This change increased cut points overall, making it more difficult to achieve and maintain high Star ratings. In the 20252026 Star ratings, only seven18 MA-Part D contracts earned a 5-star rating, an increase from seven in 2025 but a significant decrease from 31 in 2024,2024 and 57 in 2023, and 74 in 2022.2023.

Additionally, CMS continues to make changes to Star Ratings methodology that could negatively impact our Star Ratings in future years. For example, in April 2024, CMS finalizedrecently proposed changes tofor the measures2027 usedStar inRatings, including streamlining the Star ratings,Ratings themeasure calculationset by removing certain measures and revising aspects of the Categoricalreward Adjustmentfactor Indexmethodology and(including proposing to remove the Health Equity Index for contracts undergoing consolidation,reward and the weights assignedrevert to certainthe measures.historical reward factor). These changes, if finalized, and future adjustments to the Star rating methodology may have a negative impact on our Star ratings.

SecurityCybersecurity breaches, loss of data and other disruptions could compromise sensitive information related to our business or our members, or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation.

We are highly dependent on information technology networks and systems, including the internet, to securely process, transmit and store this sensitive data and information. SecurityCybersecurity breaches of this infrastructure, including physical or electronic break-ins, computer viruses, ransomware, attacks by hackers and other malicious actors and similar breaches, physical break-ins and employee or contractor error, negligence or malfeasance, can create system disruptions, shutdowns or unauthorized disclosure or modifications of such sensitive data or information, causing PHI or other PII to be accessed or acquired without authorization or to become publicly available. We utilize a third-party operated 24x7 security operations center that continuously monitors the security and privacy posture of our systems and have implemented the HITRUST Alliance's Common Security Framework as part of our certification by HITRUST; however, we cannot provide assurance that these measures will protect us from all cybersecurity threats and risks. As our third-party service providers manage important aspects of the collection, storage, processing and transmission of employee, user and member information, and other confidential and sensitive information, we rely on them to perform functions that have material cybersecurity risks. Because of the sensitivity of the PHI, other PII and other sensitive information we and our service providers collect, store, transmit, and otherwise process and use, the security of our technology platform and other aspects of our services, including those provided or facilitated by our third-party service providers, are important to our operations and business strategy. Measures taken to protect our systems, those of our contractors or third-party service providers, or the PHI, other PII,PII or other sensitive information we or contractors or third-party service providers process or maintain (including our requirement that our third-party service providers enter into business associate agreements or other required security agreements, if applicable), may not adequately protect us from the risks associated with the collection, storage, processing and transmission of such sensitive data and information. For example, we may be required to expend significant capital and other resources, such as in the performance of ongoing risk assessments of our and our third-party service providers’ information systems, to protect against securitycybersecurity breaches or to alleviate problems caused by securitycybersecurity breaches. Because cyber-attacks are becoming more sophisticated and frequent and the techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not identified until they are launched against a target, despite the implementation of security measures, we or our third-party service providers may be unable to anticipate these techniques or to implement adequate protective measures.

A securitycybersecurity breach or other breach or privacy violation that leads to disclosure or unauthorized use or modification of, or that prevents access to or otherwise impacts the confidentiality, security, integrity or availability of, member information, including PHIPHI, or other PII,PII or other sensitive information we or our contractors or third-party service providers maintain or otherwise process, could harm our reputation and brand, compel us to comply with breach notification laws, and cause us to incur significant costs for remediation, fines, penalties, providing notification to individuals.individuals and civil claims. We would need to identify and implement measures intended to repair or replace systems or technology and to prevent future occurrences, and we could face potential increases in insurance premiums. This is of particular risk when considering tight integration with third-party service providers who manage or provide parts of our information systems. If we are unable to prevent or mitigate such security breaches or privacy violations or implement satisfactory remedial measures, or if it is perceived that we have been unable to do so, our operations could be disrupted, we may be unable to provide access to our systems, and we could suffer a loss of members. We may also suffer loss of reputation, adverse impacts on member and investor confidence and financial loss, and we would be exposed to the risk of governmental investigations or other actions, regulatory or contractual penalties, and other claims and liabilities, including liability under laws and regulations that protect the privacy of member information or other personal information, such as HIPAA.HIPAA as well as other federal and state privacy, data security, consumer protection, biometric information, eavesdropping and wiretapping, electronic communications, and data breach notification laws that permit private rights of action or other civil claims. In addition, securitycybersecurity breaches and other inappropriate access to, or acquisition or processing of, information can be difficult to detect, and any delay in identifying such incidents or in providing any notification of such incidents may lead to increased harm.

A datacybersecurity breach could result in incorrect or delayed medical recommendations and prescriptions, missed alerts and missed opportunities to intervene for our members on a timely basis. Unauthorized access, loss or dissemination could also disrupt our operations, including our ability to perform our services, access member health information, collect, process, and prepare company financial information, provide information about our current and future services and engage in other member and clinician education and outreach efforts. Any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

CMS released a final rule on January 30, 2023, which changes both the use of extrapolation and the application of the FFS Adjuster. Specifically, under the final rule CMS willwould not extrapolate audit results for any audits covering payment years prior to 2018. Additionally, CMS willwould not apply any FFS Adjuster in RADV audits. These changes arewould be expected to have a material impact on Medicare Advantage organizations, including us. In November 2024, CMS announced it had initiated the payment year 2018 RADV audits, and it expectsexpected to begin issuing the audit findings in mid-calendar year 2026, including instructions on how the overpayments will be collected as part of the audit. In May 2025, CMS reiterated its focus on RADV audits, noting that the agency planned to complete the payment year 2018 RADV audits by early 2026 and that, going forward, CMS would audit all eligible MA contracts each payment year. However, in September 2025, a federal district court vacated CMS’s 2023 RADV final rule on procedural grounds, creating uncertainty regarding the application of that rule’s audit methodology, including the use of extrapolation and the elimination of the FFS Adjuster, and potentially delaying CMS’s ability to conclude these audits as originally anticipated. The government has filed a notice of appeal in that litigation, and the timing and methodology for issuing findings and any related payment recovery actions remain uncertain.

•Our CMS contracts that cover members’ prescription drugs under Medicare Part D contain provisions for risk sharing and certain payments for prescription drug costs for which we are not at risk. These provisions, certain of which are described below, affect our ultimate payments from CMS. Beginning in 2025, the Inflation Reduction Act (the “IRA”) imposes changes to the Medicare Part D program, including changes to catastrophic coverage, manufacturer discount obligations, and CMS reinsurance subsidies. These changes to tend to increase the portion of prescription drug costs for which we are financially responsible and may increase variability in our ultimate payments from CMS.

Reinsurance and low-income cost subsidies represent payments from CMS in connection with the Medicare Part D program. Pursuant to the IRA, CMS’s share of costs in the catastrophic coverage phase decreased from 80% in 2024 to 20% in 2025, meaning that we are responsible for a greater portion of prescription drug costs above the out-of-pocket threshold. Reinsurance subsidies represent payments for CMS’s portion of claims costs which exceed the member’s out-of-pocket threshold, or the catastrophic coverage level. Low-income cost subsidies represent payments 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. Monthly prospective payments from CMS for reinsurance and low-income cost subsidies are based on assumptions submitted with our annual bid. A reconciliation and settlement of CMS’s prospective subsidies against actual prescription drug costs we paid, as well as other factors, is made after the end of the applicable year.

The Inflation Reduction Act of 2022 (“IRA”), signed into law on August 16, 2022, reflects an ongoing effort to control prescription drug costs and reduce spending by the federal government. The IRA contains several provisions that impact the Part D program and that may influence our benefit design and profitability. For example, beginning in 2024, Part D plans were required to eliminate member cost-sharing in the catastrophic phase of the benefit, and beginning in 2025, the coverage gap phase was eliminated. For 2026, Part D plans must now also implement a cap on member out-of-pocket spending of $2,000.$2,100. These changes have the potential to increase the financial responsibility of Part D plan sponsors. Furthermore, beginning in 2025, Part D plans must offer enrollees the option to pay out-of-pocket prescription drug costs in the form of capped monthly payments through the Medicare Prescription Payment Plan instead of all at once at the pharmacy. This may increase administrative burdens for plans by requiring new payment tracking systems and risk management strategies. These changes may significantly alter the plans that we offer and may adversely affect our business, results of operations and financial condition.

A substantial portion of our revenue is driven by CMS payments in connection with our health plans in California, North Carolina, Nevada, Arizona and Texas, with overapproximately 94%84% of our members concentrated in California as of December 31, 2024.2025. As a result, our exposure to many of the risks described herein is not mitigated by a diversification of geographic focus. Unfavorable changes in healthcare or other benefit costs or reimbursement rates or increased competition in these areas or any other geographic area where our membership becomes concentrated in the future could therefore have a disproportionately adverse effect on our operating results. Furthermore, due to the concentration of our operations in these states and in California in particular, our business may be adversely affected by economic, health or other conditions that disproportionately affect these states as compared to other states (e.g., outbreaks of infectious disease) or by natural disasters such as major earthquake, wildfire or hurricane. Any of these factors could have a significant impact on the health of a large number of our covered members, access to care may be more difficult and proposed responses, including telehealth, may not be available. Moreover, regulatory changes undertaken in response to such events could require us to cover health care costs for members for which we would not typically be responsible.

Additionally, CMS audits Medicare Advantage organizations for documentation to support RAF-related payments for members. The Medicare Advantage organizations ask providers to submit the underlying documentation for members that they serve. It is possible that claims associated with members with higher RAF scores could be subject to more scrutiny in a CMS or plan audit. CMS may impose penalties as a result of its audits. In addition, we could be liable for penalties to the government under the FCA that range from $5,500 to $11,000 (adjusted for inflation) for each false claim, plus up to three times the amount of damages caused by each false claim, which can be as much as the amounts received directly or indirectly from the government for each such false claim. On FebruaryJuly 12,3, 2024,2025, the DOJ issued a final rule announcing adjustments to FCA penalties, under which the per claim penalty range was increased to a range from $13,946$14,308 to $27,894$28,619 for penalties assessed after FebruaryJuly 12,3, 20242025 with respect to violations occurring after November 2, 2015. As discussed above, there is ongoing litigation regarding CMS’s 2023 RADV final rule, which would allow CMS has indicated that, for some audits of plan years beginning with 2018, payment adjustments will not be limited to RAFextrapolate scoresfindings forin theRADV specificaudits, Medicarepotentially Advantage enrollees for which errors are found but may also be extrapolatedleading to themuch entirelarger Medicare Advantage plan membership.recoveries.

We rely on a number of vendors and other third parties to perform various functions and fulfill our obligations to CMS and members. Our ability to operate our business depends on the performance of, and continued contracts with, these vendors. The functions performed by our major vendors include, but are not limited to, information technology support, claims processing, pharmaceutical benefit management, supplemental benefits (e.g., our "black card" benefit, vision benefits, dental benefits and transportation benefits) and other business process outsourcing. We also rely in part on third-party brokers for the marketing and sale of our insurance plans and on our IPAs, which perform certain functions on our behalf.

The Patient Protection and Affordable Care Act and The Health Care and Education Reconciliation Act of 2010 (which we collectively refer to as the “Health Care Reform Law”) enacted significant reforms to various aspects of the U.S. health insurance industry. Certain significant provisions of the Health Care Reform Law include, among others, mandated coverage requirements, mandated benefits and guarantee issuance associated with commercial medical insurance, rebates to policyholders based on minimum benefit ratios, adjustments to Medicare Advantage premiums, the establishment of federally facilitated or state-based exchanges coupled with programs designed to spread risk among insurers, and the introduction of plan designs based on set actuarial values. Some of these changes impact us and other entities that offer MedicateMedicare Advantage plans.

The use of individually identifiable health data by our business is regulated at federal and state levels. These laws and rules are changed frequently by legislation or administrative interpretation. Various state laws address the use and maintenance of PII. Among these state laws, which we describe in more detail below, we are most substantially affected by the California Consumer Privacy Act,Act ("CCPA"), which uniquely among general consumer privacy laws did not exempt employee information, business contact information, and only maintains narrow exemptions for data subject to HIPAA or the Gramm-Leach-Bliley Act. We mayare needrequired to changecomply with these laws in the way we create, receive, maintain or transmit PII to comply with these state laws.PII.

HIPAA imposes mandatory penalties for certain violations. In 2024,2026, penalties for violations of HIPAA and its implementing regulations started at $141$145 per violation and could not exceed approximately $71,162$73,011 per violation, subject to a cap of approximately $2.1$2.2 million for violations of the same standard in a single calendar year.year]. However, a single breach incident can result in violations of multiple standards. Additionally, the penalty amounts listed above are also due for inflation adjustments in 2025.2026.

HIPAA also authorizes state attorneys general to file suit on behalf of their residents for statutory damagesviolations of up to $25,000.HIPAA. While HIPAA does not create a private right of action allowing individuals to sue in civil court for violations of HIPAA, its standards have been used as the basis for duty of care in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.

HIPAA further requires that members be notified of any unauthorized acquisition, access, use or disclosure of their unsecured PHI that compromises the privacy or security of such information, with certain exceptions related to unintentional or inadvertent use or disclosure by employees or authorized individuals. HIPAA specifies that such notifications must be made without unreasonable delay and in no case later than 60 calendar days after discovery of the breach. If a breach affects 500 patientsindividuals or more, it must be reported to HHS without unreasonable delay, and HHS will post the name of the breaching entity on its public website. Breaches affecting more than 500 patientsindividuals in the same state or jurisdiction must also be reported to prominent media outlets serving the localstate media.or jurisdiction. If a breach involves fewer than 500 people,individuals, the covered entity must record it in a log and notify HHS at least annually.

Data privacy and security at the state level remains an evolving landscape. For example, CCPA, which came into effect on January 1, 2020, requires companies that process personal information onof California residents to make disclosures to consumers about their data collection, use and sharing practices, allow consumers to exercise certain rights with respect to their data, including the right to opt out of certain data sharing with third parties and provides a cause of action for data breaches. In addition, on November 3, 2020, California voters approved amendments to the CCPA, known as the CPRA,California Privacy Rights Act ("CPRA"), which significantly modifies the CCPA, including by expanding consumers’ rights with respect to certain personal information and creating a state agency, the California Privacy Protection Agency (“CPPA”), to oversee implementation and enforcement efforts. The CPPA is able to finance operations through penalties issued and with the CPRA’s removal of the mandatory cure period from CCPA, we will have less warning before compliance risk results in legal action. The CPRA’s amendments became effective on January 1, 2023. The CCPA contains exemptions for medical information governed by the California Confidentiality of Medical Information Act, and for PHI collected by a covered entity or business associate governed by the privacy, security, and breach notification rule established pursuant to HIPAA.

TheOn September 23, 2025, the CPPA hasfinalized released for public comment draftits regulations on risk assessments, cybersecurity assessments, and automated decision-making technologies, which close on February 19, 2025.technologies. These regulations are the final components of the CPRA's amendments to the CCPA, which granted the CPPA the authority to pass additional regulations. These regulations in their draft form contain substantial new compliance obligations with respect to PII we process.

While the CPRA/CCPA is an example of consumer privacy law, the NAIC’s Model Insurance Data Security Law (the "Model law") is a different type of law focused on securing insurance licensees’ information systems. Versions of this Model Law have been passed in many states and are expected to be passed in more states in the coming years. Similar to HIPAA, the Model Law requires the implementation of technical, administrative, and procedural information security practices and procedures and includes reporting requirements for data breaches. These Model Laws exist in a majority of states and are typically enforced by state insurance regulators.

Our business and operations may also be subject to federal, state, and local consumer protection laws governing marketing communications, including the Telephone Consumer Protection Act,Act (“TCPA”), which places restrictions on the use of automated tools and technologies to communicate with wireless telephone subscribers or communications services consumers generally and the CAN-SPAM Act, which regulates the transmission of marketing emails. Under the TCPA, entities using an automatic telephone dialing system to send communications must obtain prior express consent for non-marketing communications and prior express written consent for marketing communications. The TCPA has a private right of action, allowing individuals who have received unsolicited communications (phone calls, text messages or faxes) made using an “automatic telephone dialing system” to seek statutory damages of $500 per violation, or $1,500 if the violation was made willfully or knowingly. Despite our compliance efforts, we could nevertheless be forced to defend private class actions or government enforcement based on the communications we send to members.

As described above, substantially all of our relevant member data is maintained on our technology platform, AVA, which aggregates and provides us with access to extensive member datasets, including individually identifiable PHI. As a result, any breach of our technology platform could expose us to substantial liability under HIPAA, the HITECH Act and other applicable laws, regulations or rules. See “Risk Factors—SecurityCybersecurity breaches, loss of data and other disruptions could compromise sensitive information related to our business or our members, or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation.”

As a corporate entity, we are not licensed to practice medicine. Many states in which we operate through our subsidiaries limit the practice of medicine to licensed individuals or professional organizations exclusively owned and comprised of licensed individuals, and business corporations generally may not exercise control over the medical decisions of physicians.licensed physicians or other licensed clinicians. Statutes, regulations and court decisions relating to the practice of medicine, fee-splitting between physicians and referral sources, and similar issues vary widely from state to state. In addition, various state laws also generally prohibit the sharing of professional services income with nonprofessional or business interests. While we endeavor to comply with state corporate practice of medicine laws and regulations as we interpret them, the laws and regulations in these areas are complex, changing, and often subject to varying interpretations. The interpretation and enforcement of these laws vary significantly from state to state.

Under business support services agreements between certain of our subsidiaries and affiliated physician-owned professional groups, these groups retain sole responsibility for all medical decisions, as well as for hiring and managing physicians and other licensed healthcare providers, developing operating policies and procedures, implementing professional standards and controls, and maintaining malpractice insurance. Regulatory authorities and other parties may assert that, despite the business support services agreements and other arrangements through which we operate, we are engaged in the prohibited corporate practice of medicine or that our arrangements constitute unlawful fee-splitting. Penalties for violations of the corporate practice of medicine or fee-splitting laws vary by state and may result in physicians being subject to disciplinary action, as well as to forfeiture of revenue from payors for services rendered. For business entities such as us, violations may also bring both civil and, in more extreme cases, criminal liability for engaging in medical practice without a license, our agreements could be found legally invalid and unenforceable (in whole or in part) or we could be required to restructure our contractual arrangements. Recently, Oregon and California have passed laws codifying and strengthening their existing corporate practice of medicine prohibitions in ways which may require us to adjust contractual arrangements with our affiliated physician-owned professional groups, and we are aware of a number of other states considering similar legislation.

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. Our innovative model of consumer-centric healthcare is purpose-built to provide seniors with care as it should be: 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.consumers.

Our unique clinical model, led by employed clinical teams known as Care Anywhere, acts upon insights derived from our proprietary technology platform, AVA,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. AVAAVA’s enablesdata insights, combined with the clinical control of our care model, enable us to personalize and manage our member relationships, care quality and experience,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. Additionally, our historical financial performance has been, and we expect our financial performance in the future will be, driven by our ability to:

•Capitalize on Our Existing Market Growth Opportunity: Our ability to attract and retain members to grow in our existing markets depends on our ability to offer a superior value proposition. 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 some of our most mature markets where we have aapproximately 10-30% market share. AccordingAs of January 1, 2026, we have approximately 275,300 Health Plan Members, which, according to CMS data, our approximately 209,900 Health Plan Members represent only 5%6% market share of Medicare Advantage enrollees in our markets.

•Provide Superior Service, Care and Consumer Satisfaction: We are highly focused on providing superior service and care to our members and on maintaining high levels of consumer satisfaction, which are key to our financial performance and growth. The CMS Five Star Quality Rating System provides economic incentives to Medicare Advantage plans that achieve higher Star ratings by (i) meeting certain care criteria (such as completing particular preventative screening procedures or ensuring proper follow-up care is provided for specific conditions or episodes) and (ii) receiving high member satisfaction ratings. These incentives impact financial performance in the year following the CMS Rating Year (for example, CMS’s announcement of the 20252026 Ratings occurred in the second half of 20242025 and will impact our financial performance in 20262027). InOne aggregate,hundred more than 98%percent of our health plan members are enrolled in plans rated 4 stars and above, meaning the vast majority ofour members consistently receive a high-quality care experience, as defined under CMS star measurement criteria. Additionally, theThe California HMO plan has achieved a 4 star or greater rating for sevennine consecutive years.

•Invest in our Platform and Growth: 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 supplementarysupplemental 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.

•Navigate Seasonality to our Business: Our operational and financial results will experience some variability depending upon the time of year in which they are measured. We experience the largest portion of member growth during the first quarter, when plan enrollment selections made during the annual enrollment period ("AEP") from October 15th through December 7th of the prior year take effect. As a result, we expect to see a significant percentage of our member growth occur on January 1 of a given calendar year. 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.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. We therefore expect to see higher levels of per-member medical costs in the first and fourth quarters. 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, startingStarting in 2025, the benefit redesign under the Inflation Reduction Act will resultresulted 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 beis 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. Due to the timing of many of these investments, including our primary sales and marketing season, we typically incur a greater level of investment in the second half of the year relative to the first half of the year.

We define Health Plan Membership as the number of members enrolled in our HMO and PPO contracts as of the end of a reporting period. 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 approximately 300 and 400 members as of December 31, 20242025 and December 31, 2023.2024, respectively. It also excludes approximately 8,3006,400 and 7,3008,300 ACO REACH members as of December 31, 20242025 and December 31, 2023,2024, respectively. We discontinued our participation in the ACO REACH model as of December 31, 2025.

Adjusted gross profit is a non-GAAP financial measure that we define as income (loss) from operations before depreciation and amortization, clinicalmedical 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 income (loss) from operations, which is the most directly comparable financial measure calculated in accordance with GAAP.

(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, 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 superiordifferentiated 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.

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 expenseexpense, 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.

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,income (loss), which is the most directly comparable financial measure calculated in accordance with GAAP.

(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 IPOyear (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: (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,restructuring designed to streamline our organizational structure and drive operational efficiencies

Our recognized premium revenue for the Alignment Health PlansPlan is subject to a minimum annual medical loss ratio (“MLR”) of 85%. The MLR represents medical costs as a percentage of premium revenue. The Code of Federal Regulations defines what specifically constitutes medical expenses and premium revenue for the MLR test, and if the minimum MLR is not met, we are required to remit a portion of the premiums back to the federal government. The amount remitted, if any, is recognized as an adjustment to premium revenues in the consolidated statement of operations. The amounts payable under this provision were immaterial at December 31, 20242025 and December 31, 2023.2024.

The premiumspremium 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, 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 premium or capitation revenue for providing this insurance coverage in the month that members are entitled to receive healthcarehealth services.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.

OurWe capitationalso revenueparticipate consistsin primarilythe 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 capitated fees for medicalhealth care services provided by us under arrangements with our third-party payors and from CMS related to ourthe patient population attributed to the ACO REACHby entity.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 riskrisks 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 yearyears 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.

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. 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 gainssublease and losses related to subleased ROU assets.income.

Earned Premiums. Earned premium revenues were $2,671.9$3,911.7 million and $1,800.9$2,671.9 million for the years ended December 31, 20242025 and 2023,2024, respectively, an increase of $871.0$1,239.8 million or 48.4%.46.4%. The increase was primarily driven by growth in our Health Plan membership, which increased 58.6%25.0% between December 31, 2025 and December 31, 2024 and Decemberhigher 31,revenue 2023.per member per month. The increase wasin offsetrevenue byper amember decreaseper month is primarily attributable to an increase in ACOthe REACHCMS benchmark rates and Part D revenue duerates tofrom changes arising from the changeInflation fromReduction 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.Act.

Other Revenues. Other revenues increased $8.9$5.4 million for the year ended December 31, 20242025 compared to the year ended December 31, 2023.2024. The increase is mainly attributable to an increase in the interest rate of our interest earning cash balances.balances Additionally,and thecurrent changeinvestments and an increase in revenue from grossservices provided to netthird-party revenueproviders. treatmentCash forand ACOcash REACHequivalents, increasedand other revenuescurrent byinvestments $2.3were million.$604.2 million as of December 31, 2025 compared to $470.7 million as of December 31, 2024.

Medical Expenses. Medical expenses were $2,406.9$3,460.2 million and $1,622.6$2,406.9 million for the years ended December 31, 20242025 and 2023,2024, respectively, an increase of $784.3$1,053.3 million, or 48.3%.43.8%. The increase was driven primarily by the growth in Alignment Health Plan membership, which increased 58.6%25.0% between December 31, 20242025 and December 31, 2023.2024, 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, 20242025 grew at a slightly higherlower rate than earned premium revenues compared to the year ended December 31, 2023,2024, primarily due to 2024 having a higher percentage of new members relative to returning members, richer member benefits and increasesmembers in unit2024 costs.compared Thisto 2025. The increase was offset by lowerincreases inpatientin admissionsunit per thousand and the change from gross to net revenue treatment for ACO REACH.costs.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $371.4$443.4 million and $307.4$371.4 million for the years ended December 31, 20242025 and 2023,2024, respectively, an increase of $63.9$72.0 million, or 20.8%.19.4%. The increase was primarily due to an increase in ongoing investments and expenditures in operations, network development, operationsdevelopment and sales and marketing to drivesupport the growth of Alignment's Health Plan membership. Selling, general, and administrative expenses grew atas a slowerpercentage rate thanof revenue decreased for the year ended December 31, 20242025 compared to the year ended December 31, 20232024 due to economies of scale gained from Alignment's 2024 membership growth.

Depreciation and Amortization. Depreciation and amortization expense was $26.9$30.4 million and $21.4$26.9 million for the years ended December 31, 20242025 and 2023,2024, respectively, an increase of $5.5$3.5 million, or 25.5%.13.1%. The increase was primarily due to the amount and timing of our capital expenditures and the associated depreciation relative to 2023. 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.2024.

Other (income) expenses,income, net. Other (income) expenseswas were $(0.1)$0.1 million and $(0.9)$0.1 million for the years ended December 31, 20242025 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.2024.

Certain states in which we operate as a CMS-licensed Medicare Advantage company may require us to meet certain capital adequacy performance standards and tests. 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 healthcare coverage. The requirements take the form of risk-based capital (“RBC”) rules, which may vary from state to state. 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.adequacy, such as the tangible net equity ("TNE") requirements for our health plans in California. As of December 31, 2024,2025, our health plans or risk-bearing entities were in compliance with the minimum capital requirements.

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 (together with the Company and the Borrower, the “Borrower Parties”) entered into a term loan agreement (the “Oxford Loan Agreement”) with Oxford Finance LLC (“Oxford”), 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 $250.0 million in a series of term loans (the “Term Loans”). 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$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%.

For the year ended December 31, 2024,2025, net cash provided by operating activities was $34.8$139.9 million, an increase of $94.0$105.2 million compared to net cash usedprovided inby operating activities of $59.2$34.8 million for the year ended December 31, 2023.2024. The increase is mainly attributable to an increase in medicalmembership expensesand payable as a resultreduction of thenet increasedloss, Healthan Planincrease membershipin growthmedical duringexpense thepayables year ended December 31, 2024 comparedrelated to the yeartiming endedof Decemberour 31,payments, 2023,and aschanges wellto asthe 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 decreasechange in our netPart lossD overbalances arising from the sameInflation period.Reduction Act.

For the year ended December 31, 2024,2025, net cash used in investing activities was $15.0 million, a decrease of $54.2 million compared to net cash provided by investing activities wasof $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, 2023.2024. The increase in cash used primarily relates to purchasesreduced ofinvestment short-term treasury securities which were $379.1 millionmaturities during the year ended December 31, 20232025 compared to $82.2 million during the year ended December 31, 2024,2024. aThe decrease ofin 296.9investment million. The increasematurities was partially offset by a decrease in maturitiescapital ofexpenditures, short-termwhich investments.decreased $14.6 million for the year ended December 31, 2025 compared to the year ended December 31, 2024.

For the year ended December 31, 2024,2025, net cash provided by financing activities was $156.0$18.0 million, ana increasedecrease of $155.9$138.0 million compared to net cash provided by financing activities of $0.1$156.0 million for the year ended December 31, 2023.2024. The increase in net cash provided by financing activitiesdecrease is mainlyprimarily attributable to cash received of $330.0 million in connection with the issuance of the convertible notesnote discussedrefinance above, as well asand the $50.0 million draw down of the Oxford Delayed Draw term loan inthat Juneoccurred during the year ended December 31, 2024. This decrease was offset by $18.1 million in proceeds from the repaymentexercise of $215.0stock million related to the Oxford term loans, as discussed above.options.

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 members at inception to 284,800294,100 members as of MarchJune 31,30, 2026, representing a 30% compound annual growth rate. 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.

•Capitalize on Our Existing Market Growth Opportunity: Our ability to attract and retain members to grow in our existing markets depends on our ability to offer a superior value proposition. 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 some of our most mature markets where we have approximately 10-30% market share. As of MarchJune 31,30, 2026, we have approximately 284,800294,100 Health Plan Members, which, according to CMS data, represent only 6% market share of Medicare Advantage enrollees in our markets.

(1)Amortization expense for the threesix months ended MarchJune 31,30, 2025 includes $0.6 million in impairment expense related to the remeasurement of goodwill associated with one of our subsidiaries. There was no impairment expense for the three months ended June 30, 2025.

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

(1)Amortization expense for the threesix months ended MarchJune 31,30, 2025 includes $0.6 million in impairment expense related to the remeasurement of goodwill associated with one of our subsidiaries. There was no impairment expense for the three months ended June 30, 2025.

Earned Premiums. Earned premium revenues were $1,226.6$1,326.6 million and $918.0$1,006.2 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, an increase of $308.5$320.4 million or 33.6%.31.8%. Earned premium revenues were $2,553.2 million and $1,924.2 million for the six months ended June 30, 2026 and 2025, respectively, an increase of $628.9 million or 32.7%. The increase was primarily driven by growth in our Health Plan membership, which increased 30.9%31.5% between MarchJune 31,30, 2025 and MarchJune 31,30, 2026. The increase in revenue per member per month is attributable to 2026 increases in the CMS benchmark rates and Part D direct subsidy.

Other Revenue. Other revenue decreased $0.1 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, a decrease of 0.8%. Other revenue decreased $0.3 million for the threesix months ended MarchJune 31,30, 2026 compared to the threesix months ended MarchJune 31,30, 2025, a decrease of 2.9%.1.9%. The decrease is mainly attributable to the Company no longer participating in the ACO Reach program and a decrease in revenue from services provided to third-party providers. This decrease was offset by an increase in our average interest earning cash balances and current investments. Cash and cash equivalents, and other current investments were $726.3$701.7 million as of MarchJune 31,30, 2026 compared to $479.5$503.7 million as of MarchJune 31,30, 2025.

Medical Expenses.Expenses Medical expenses were $1,090.7$1,154.7 million and $820.9$881.7 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, an increase of $269.8$272.9 million, or 32.9%.31.0%. Medical expenses were $2,245.4 million and $1,702.6 million for the six months ended June 30, 2026 and 2025, respectively, an increase of $542.8 million, or 31.9%. The increase was driven primarily by the growth in Alignment’s Health Plan membership, which increased 30.9%31.5% between MarchJune 31,30, 2025 and MarchJune 31,30, 2026.2026 The increase was also due to higher benefits for members in certain plans and an increase in unit costs.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $121.1$131.0 million and $103.8 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, an increase of $17.3$27.2 million, or 16.7%.26.2%. Selling, general and administrative expenses were $252.1 million and $207.6 million for the six months ended June 30, 2026 and 2025, respectively, an increase of $44.5 million, or 21.4%. The increase was primarily due to an increase in ongoing investments and expenditures in operations, technology, network development, and sales and marketing to drive the growth of Alignment's Health Plan membership. Selling, general, and administrative expenses as a percentage of revenue decreased from 11%10.2% to 10%9.8% for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 20252025, dueand from 10.7% to 9.8% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease as a percentage of revenues is mainly attributable to economies of scale gained from Alignment's membership growth and a reduction in equity-based compensation.growth.

Depreciation and Amortization. Depreciation and amortization expense was $7.8$7.9 million and $7.6$7.0 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, an increase of $0.2$0.9 million, or 3.2%.12.2%. Depreciation and amortization expense was $15.7 million and $14.6 million for the six months ended June 30, 2026 and 2025, respectively, an increase of $1.1 million, or 7.5%. The increase was primarily due to the amount and timing of our capital expenditures and the associated depreciation relative to 2025. The six month increase was offset by a decrease in amortization expense. For the threesix months ended MarchJune 31,30, 2025, we recorded impairment expense of $0.6 million related to the remeasurement of goodwill associated with one of our subsidiaries. The goodwill impairment was recorded to amortization expense.

Interest expense. Interest expense was $4.1$4.3 million and $4.0 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, an increase of $0.1$0.3 million or 2.5%.7.5%. Interest expense was $8.3 million and $7.9 million for the six months ended June 30, 2026 and 2025, respectively, an increase of $0.4 million or 5.1%. The increase in interest expense was mainly attributable to an increase in debt issuance cost amortization related to the Revolving Credit Facility that was entered into in February 2026.

To date, we have financed our operations principally through our IPO, private placements of our equity securities, revenues, and convertible notes (described below). As of MarchJune 31,30, 2026, we had $726.3$701.7 million in cash, cash equivalents and short-term investments.

We operate as a holding company in a highly regulated industry. Alignment Healthcare, Inc., the parent company, is dependent upon dividends and administrative expense reimbursements from our subsidiaries, most of which are subject to regulatory restrictions. We maintain significant levels of aggregate excess statutory capital and surplus in our state-regulated operating subsidiaries. As of MarchJune 31,30, 2026, the operating parent company (an indirect wholly owned subsidiary of the parent company) had $135.8$135.4 million in cash, cash equivalents and short-term investments.

We believe that our cash flows from operations and liquid assets will be sufficient to fund our operating and organic capital needs for at least the next 12 months. 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. 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.

Certain states in which we operate as a CMS-licensed Medicare Advantage company may require us to meet certain capital adequacy performance standards and tests. 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 healthcare coverage. The requirements take the form of risk-based capital (“RBC”) rules, which may vary from state to state. 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, such as the tangible net equity ("TNE") requirements for our health plans in California. As of MarchJune 31,30, 2026, our health plans or risk-bearing entities were in compliance with the minimum capital requirements.

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. This represents an initial conversion price of approximately $16.04 per share. The initial conversion price of the Notes represents a premium of approximately 25% to the closing price of the Company's common stock on November 14, 2024. The Company has used the proceeds from the sale of the Notes to repay in full the $215.0 million aggregate principal amount, accrued interest and fees related to the OxfordCompany's previous term loans,loans with a separate financing company, as well as certain fees and expenses incurred in connection with the transaction.

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 theJune Effective30, Date.2026.

For the threesix months ended MarchJune 31,30, 2026, net cash provided by operating activities was $128.7$111.4 million, an increase of $112.1$65.6 million compared to net cash provided by operating activities of $16.6$45.7 million for the threesix months ended MarchJune 31,30, 2025. The increase is mainly attributable to an increase in membership and net income, an increase in medical expense payables related to the timing of our payments,income and the timing of accounts receivable settlements. This increase was partially offset by the timing of our medical expense payments and an increase in accrued compensation and prepaid expenses and other current assets.

For the threesix months ended MarchJune 31,30, 2026, net cash provided by investing activities was $0.6$3.0 million, an increase of $4.1$13.1 million compared to net cash used in investing activities of $3.5$10.1 million for the threesix months ended MarchJune 31,30, 2025. The increase primarily relates to a decrease in investment purchases during the threesix months ended MarchJune 31,30, 2026. This increase was partially offset by a decrease in investment maturities.

For the threesix months ended MarchJune 31,30, 2026, net cash provided by financing activities was $0.5$3.3 million, an increase of $0.3$1.5 million, compared to net cash provided by financing activities of $0.2$1.8 million for the threesix months ended MarchJune 31,30, 2025. The increase is primarily attributable to an increase in proceeds from stock option exercises for the threesix months ended MarchJune 31,30, 2026 compared to the threesix months ended MarchJune 31,30, 2025. This increase was offset by an increase in debt issuance costs related to the revolving credit facility.

There have been no significant changes in our critical accounting estimate policies or methodologies to our condensed consolidated financial statements. For a description of our policies regarding our critical accounting policies, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates" in the Annual Report.