Alignment Healthcare (ALHC) Stephens 26th Annual Investment Conference | NASH2024 summary

Financial strategy and capital structure

• Completed a $330 million private sale of Convertible Senior Notes, reducing debt cost from 11–12% to 4.25% and saving over $10 million in annual interest expense.

• Proceeds will pay down $215 million in term loans, with incremental capital used to strengthen the balance sheet and support growth.

• Maintains a target of over $100 million in parent cash at year-end, with unchanged 2025 financial outlook.

• Expects incremental margin opportunity from IRA-driven Part D revenue increases in 2025, with manageable SG&A offsets.

• Anticipates further SG&A operating leverage in 2025, though at a lower rate than 2024, as growth moderates to 20%+.

Regulatory and policy environment

• Recent CMS Administrator nomination seen as positive for Medicare Advantage, with expectations of a favorable regulatory climate.

• Confident in ability to navigate both challenging and favorable regulatory cycles, benefiting from nimble operations and high-quality, low-cost model.

• Health Equity Index viewed as a net positive if implemented, with strong eligibility and performance on quality measures.

• Stars program changes, including CAHPS weighting reduction and ongoing litigation, are not expected to materially impact competitive positioning.

Operating model and technology

• Ava and Care Anywhere platforms enable real-time identification and proactive management of high-risk members, supporting both growth and cost control.

• Predictive analytics accurately identify 60–65% of hospitalizations within the top 10% risk cohort, driving targeted interventions.

• Employed clinical teams deliver in-home and virtual care, addressing medical, pharmaceutical, and social needs to prevent avoidable utilization.

• Ongoing investments in automation, AI tools, and employee engagement aim to further reduce SG&A and medical costs.