Alignment Healthcare (ALHC) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01We have a history of net losses, we anticipate increasing expenses in the future, and we may not be able to achieve or maintain profitability100% rewritten
2. 02Our growth strategy may not prove viable and we may not realize expected results
3. 03If we are unable to attract new members, our revenue growth will be adversely affected
4. 04Our inability to enroll new members and retain existing members would harm our ability to execute our growth strategy and may have a material adverse effect on our business operations and financial position
5. 05We may not be successful in maintaining or improving our Star ratings in future years, which may have a direct and substantial adverse impact on our revenue23% rewritten
6. 06If we fail to develop and maintain satisfactory relationships with care providers to service our members, our business may be adversely affected
7. 07If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service and member satisfaction or adequately address competitive challenges
8. 08We have entered into certain key contracts with large independent physician associations, hospitals and other provider networks to serve our membership base. The loss or renegotiation of any of these contracts could negatively impact our results
9. 09Cybersecurity 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
10. 10Our use of machine learning and artificial intelligence, including within our AVA platform, may introduce operational, regulatory and legal risks that could adversely affect our business, financial condition and results of operationsNew
11. 11Disruptions in our disaster recovery systems or management continuity planning could limit our ability to operate our business effectively and adequately care for our members
12. 12A significant portion of our revenue relates, directly or indirectly, to the Medicare Advantage program, which accounted for substantially all of our total revenue for the year ended December 31, 2025. Participating in the Medicare Advantage program exposes us to various risks, as described further below
13. 13The Inflation Reduction Act of 2022 contains several provisions that affect the Part D program. These changes may require us to change our prescription drug offerings, reduce our profitability, and otherwise impact our financial performance38% rewritten
14. 14We may be subject to legal proceedings and litigation, including intellectual property and privacy disputes, which are costly and could materially harm our business and results of operations
15. 15Our business may be adversely impacted if the healthcare services industry becomes more cyclical
16. 16Any failure by us to manage acquisitions, joint ventures, divestitures and other significant transactions successfully may have a material adverse effect on our results of operations, financial position, and cash flows
17. 17If we are not able to maintain, enhance and protect our reputation and brand recognition, including through the maintenance and protection of trademarks, our business and results of operations will be harmed
18. 18Our business depends on our ability to effectively invest in, implement improvements to and properly maintain the uninterrupted operation and data integrity of our information technology platform and other business systems
19. 19If we are unable to protect the confidentiality of our trade secrets, know-how and other proprietary and internally developed information, the value of our technology could be adversely affected
20. 20Any restrictions on our use of, or ability to license, data, or our failure to license data and integrate third-party technologies, could have a material adverse effect on our business, financial condition and results of operations
21. 21Our use of “open-source” software could adversely affect our ability to offer our products and services and subject us to possible litigation
22. 22We depend on our senior management team and other key employees, and the loss of one or more of these employees or an inability to attract and retain other highly skilled employees could harm our business
23. 23Our membership is concentrated in a limited number of U.S. states, and so we are subject to risks associated with our geographic concentration, including unanticipated changes in population morbidity, which could significantly increase utilization rates and medical costs
24. 24Competition for physicians and nurses, shortages of qualified personnel or other factors could increase our labor costs and adversely affect our revenue, profitability and cash flows
25. 25If our records, including those submitted to us by our external providers, contain inaccurate or unsupportable information regarding risk adjustment scores of members, we might overstate or understate our revenue and be subject to various penalties22% rewritten
26. 26A failure to accurately estimate incurred but not reported medical expense could adversely affect our results of operations
27. 27Negative publicity regarding the managed healthcare industry generally could adversely affect our results of operations or business
28. 28Federal reductions in Medicare Advantage funding could adversely affect our financial condition and results of operations
29. 29The centers out of which our external providers operate and the facilities that host our AVA platform may be negatively impacted by weather and other factors beyond our control
30. 30If we are unable to offer new and innovative products and services or our products and services fail to keep pace with advances in industry standards, technology and our members’ needs, our members may terminate or fail to renew their membership with us and our revenue and results of operations may suffer
31. 31We are a holding company with no operations of our own, and we depend on our subsidiaries for cash
32. 32Our ability to obtain funds from certain of our licensed subsidiaries is restricted by state insurance regulations
33. 33If we are required to maintain higher statutory capital levels for our existing operations or if we are subject to additional capital reserve requirements as we pursue new business opportunities, our cash flows and liquidity may be adversely affected
34. 34We are subject to risks associated with delegating services and functions to vendors, including supplemental benefit providers and third-party brokers
35. 35Our reliance on third-party vendors may directly and adversely impact our health plan membership. To the extent a vendor’s inadequate performance impacts our members, their satisfaction with our health insurance plans and customer service may be diminished

Risks Related to Regulation

1. 36The Health Care Reform Law and Other Current or Future Legislative, Judicial or Regulatory Changes52% rewritten
2. 37On September 23, 2025, the CPPA finalized its regulations on risk assessments, cybersecurity assessments, and automated decision-making technologies. These regulations contain substantial new compliance obligations with respect to PII we processNew
3. 38Corporate Practice of Medicine and Other Laws
4. 39Anti-Kickback, Physician Self-Referral and Other Fraud and Abuse Laws
5. 40State Regulation of Insurance-Related Products
6. 41If we are unable to effectively adapt to changes in the healthcare industry, including changes to laws and regulations regarding or affecting the U.S. healthcare reform, our business may be harmed38% rewritten
7. 42New federal restrictions on plans that CMS believes resemble dual-eligible special needs plans and new state-level restrictions on actual dual-eligible special needs plans may restrict the types and number of plans that we can offer, thus potentially adversely impacting our membership, revenue and/or profitability
8. 43If we lost the services of the licensed physicians who own our associated physician practices for any reason, the contractual arrangements with our associated physician practices could be in jeopardy26% rewritten
9. 44The contractual arrangements we have with our associated physician practices are not as secure as direct ownership of such entities25% rewritten
10. 45Changes in tax laws may adversely affect us, and the Internal Revenue Service or a court may disagree with tax positions taken by us, which may result in adverse effects on our financial condition or the value of our common stock

Risks Related to Our Indebtedness and our Capital Requirements

1. 46Our existing indebtedness could adversely affect our business and growth prospects36% rewritten
2. 47We may not be able to generate sufficient cash flow to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under such indebtedness, including refinancing such indebtedness, which may not be successful
3. 48The terms and conditions of our Revolving Credit Facility restrict our current and future operations, particularly our ability to respond to changes or to take certain actionsNew
4. 49Our failure to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies in the future could reduce our ability to compete successfully and harm our results of operations

Risks Related to Our Common Stock

1. 50Our operating results and stock price may be volatile, including as a result of factors that are beyond our control
2. 51Our actual operating results may not meet or exceed our guidance and investor expectations, which would likely cause our stock price to decline
3. 52An active, liquid trading market for our common stock may not be sustained74% rewritten
4. 53Conversion of our convertible notes may dilute the percentage of ownership of our stockholders and could negatively impact the trading prices of our common stock
5. 54Our outstanding convertible notes may impact the trading price of our common stock
6. 55If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our shares or if our results of operations do not meet their expectations, our stock price and trading volume could decline
7. 56We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our common stock, which could depress the price of our common stock
8. 57We have no current plans to pay regular cash dividends on our common stock for the foreseeable future
9. 58Provisions of our corporate governance documents could make an acquisition of us more difficult and may prevent attempts by our shareholders to replace or remove our current management, even if beneficial to our shareholders
10. 59The provision of our certificate of incorporation requiring exclusive forum in the Court of Chancery of the State of Delaware or the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers

General Risk Factors

1. 60Economic downturn or unstable market and economic conditions, including rising rates of inflation, may have serious adverse consequences on our business, financial condition and share price
2. 61Our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the innovation, creativity and teamwork fostered by our culture and our business may be harmed
3. 62The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business
4. 63Third parties may initiate legal proceedings alleging that we are infringing, misappropriating or otherwise violating their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on our business, financial condition and results of operations