ALIGNMENT HEALTHCARE, INC. – 10-K – Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the consolidated
financial statements and accompanying notes, which appear elsewhere in this
Annual Report on Form 10-K. This discussion contains forward-looking statements
that involve risks and uncertainties. Our actual results could differ materially
from those anticipated in these forward-looking statements as a result of
various factors, including those discussed below and elsewhere in this Annual
Report on Form 10-K. See Part I. Item 1A. Risk Factors and Cautionary Note
Regarding Forward-Looking Statements. For discussion of 2020 items and
year-over-year comparisons between 2021 and 2020 that are not included in this
Form 10-K, refer to Item 7. "Management's Discussion and Analysis of Financial
Condition and Results of Operations" found in our Annual Report on Form 10-K for
the year ended December 31, 2021, filed with the Securities and Exchange
Commission on March 3, 2022.

                                    Overview

Alignment is a next generation, consumer-centric platform designed to
revolutionize 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. 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 Plans"), from approximately 13,000 at inception to over 98,000 as of
December 31, 2022, representing a 29% compound annual growth rate across 52
markets and 6 states. We had approximately 108,300 Health Plan Members across
these markets as of January 1, 2023. 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.

Our model is based on a flywheel concept, referred to as our "virtuous cycle,"
which is designed to delight our senior consumers. We start by listening to and
engaging with our seniors in order to provide a superior experience in both
their healthcare and daily living needs. Through our proprietary technology
platform, Alignment's Virtual Application ("AVA"), we utilize data and
predictive algorithms that are specifically designed to ensure personalized care
is delivered to each member. When our information-enabled care model is combined
with our member engagement, we are able to improve healthcare outcomes by, for
example, reducing unnecessary hospital admissions, which in turn lowers overall
costs. Our ability to manage healthcare expenditures while maintaining quality
and member satisfaction is a distinct and sustainable competitive advantage. Our
lower total healthcare expenditures allow us to reinvest our savings into richer
coverage and benefits, which propels our growth in revenue and membership due to
the enhanced consumer value proposition. As we grow, we continue to listen to
and incorporate member feedback, and we are able to further enhance benefits and
produce strong clinical outcomes. Our virtuous cycle, based on the principle of
doing well by doing good, is highly repeatable and a core tenet of our ability
to continue to expand in existing and new markets in the future.

It is this virtuous cycle, underpinned by continuous expansion and improvement
in our technology platform, that has enabled us to achieve revenues of $1,434.2
million for the year ended December 31, 2022 and $1,167.8 million for the year
ended December 31, 2021, representing a revenue compound annual growth rate of
35% from our founding in 2013 through the fourth quarter of 2022.

                         Medicare Advantage Background

Today, seniors are confronted with a healthcare landscape that is fragmented
across disparate point solutions, tools and vendors, without an accessible,
coordinated approach to comprehensive care delivery. Under the traditional
Medicare fee-for-service ("FFS") model, seniors receive access to hospital
insurance benefits ("Part A") and outpatient services ("Part B") directly from
CMS. Original Medicare (Part A and B) does not include prescription drug
coverage ("Part D"), and most seniors enrolled in original Medicare opt to
obtain Part D and other protection for gaps in their coverage by purchasing
costly Medicare supplement insurance plans. In contrast, Medicare Advantage
plans are direct-to-consumer and provide a single point of care delivery for
Part A, Part B and often Part D coverage. Medicare Advantage penetration of the
Medicare market is rapidly increasing given the enhanced benefits and coverage
that Medicare Advantage plans offer relative to traditional Medicare FFS. In
2022, approximately 48% of the Medicare eligible population, or approximately 28
million seniors, were enrolled in a Medicare Advantage plan. Industry
projections have forecasted a continued increase in the Medicare Advantage
penetration rate from approximately 48% to approximately 61% by 2031.

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Medicare Advantage allows one entity to influence the entirety of a senior's
healthcare through a singular, direct-to-consumer product. We contract with CMS
under the Medicare Advantage program to provide health insurance coverage to
Medicare eligible persons under HMO and PPO plans in exchange for a payment per
member per month ("PMPM"). The PMPM payment varies based on geography, CMS Star
ratings and certain population-specific risk factors. Under these value-based
contracts, we assume the economic risk of funding our members' healthcare,
supplemental benefits and related administration costs. By transferring the
economic risk to managed care companies like Alignment, CMS has enabled us to
focus on proactive, cross-disciplinary care targeted at improving health
outcomes and lowering unnecessary healthcare expenditures.

The Medicare Advantage regulatory framework is designed to reward plans that
achieve the triple aim of high-quality care, low costs and better experience.
CMS payments to Medicare Advantage plans are allocated in each county or region
based on a bidding system. Each plan submits a bid based on its estimated costs
per enrollee for services covered under Medicare Parts A and B. Plans that have
a low enough cost structure to bid under the benchmark are entitled to rebates,
which enable those plans to offer enhanced supplemental benefits and medical
coverage to their members, which in turn boosts membership growth and therefore
revenue. CMS further measures Medicare Advantage beneficiaries' clinical
outcomes and experience with their health plans and the healthcare system
through a Five Star Quality Rating System. Medicare Advantage plans are eligible
to receive additional economic incentives based on their Star rating. Due to the
competitive nature of CMS's bidding system, only those plans that are able to
provide low cost and high-quality outcomes will be able to offer enhanced
benefit options, which is critical to achieving sustainable membership and
growth on a long-term basis.

Under the Medicare Advantage system, our members typically enroll with us for a
one-year period that can be renewed on an annual basis, resulting in revenue
that is principally based on a subscription-like PMPM recurring revenue model.
This model provides us with significant visibility into our short-term financial
performance, particularly given that the substantial majority of our members
continue to choose Alignment after their initial selection year. Further, our
HMO and PPO plans covered under Medicare Advantage contracts with CMS are
generally renewed for a calendar year term, unless CMS notifies us of its
decision not to renew by May 1 of the year in which the contract would end. When
carefully managed, this annual renewal process provides a measure of stability
and predictability to our short-term revenue streams, allowing us to focus on
improving health quality outcomes and lowering healthcare expenditures for our
population through enhanced member care on a long-term basis.

                       Factors Affecting Our Performance

Our proprietary technology platform, AVA, is a key element of our business with
capabilities that we expect to impact our future performance. AVA enables us to
personalize and manage our member relationships, care quality and experience,
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 have proven that we can compete against, and take
market share from, large established players in highly competitive markets.
According to CMS data, we were one of the top three Medicare Advantage
Organizations in terms of HMO net members growth in our California counties
between 2016 and 2023. There are approximately 4.4 million Medicare-eligible
individuals enrolled in Medicare Advantage plans in our existing 52 counties, of
which our approximately 108,300 Health Plan Members represents only 2% market
share. We believe that there are still significant opportunities for future
growth even in our most mature markets where we have a 10-20% market share.
Additionally, we are evaluating other opportunities to leverage our historical
investments in our technology platform and our comprehensive clinical model
across our existing and potentially new geographies. For example, in April 2021,
we entered into CMS Innovation Center's Direct Contracting program, which allows
us to partner directly with physicians to help manage their Medicare FFS patient
populations and participate in the upside and downside risk associated with
managing the health of such patients. CMS has announced it is replacing the DCE
program with the "ACO Realizing Equity, Access, and Community Health Model" or
"ACO REACH" model, which became effective January 1, 2023. As of January 1,
2023, we had approximately 7,900 ACO REACH seniors in our arrangement with our
clinician partners.

•

Drive Growth and Consistent Outcomes Through New Market Expansion: We enter new
markets with the goal of building brand awareness across our key stakeholders to
achieve meaningful market share over time. We intend to focus on markets with
significant senior populations where we expect to be able to replicate our model
most effectively. Our existing markets also feature a diverse array of
membership profiles across ethnicities, income levels and acuity. In 2022 and
2023, we expanded into 16 and 14 new markets, respectively, across our four
existing states and two new states, Florida and Texas.

•

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

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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 2023 Ratings occurred in
the second half of 2022 and will impact our financial performance in 2024). In
aggregate, more than 90% of our health plan members are enrolled in plans rated
4 stars and above, meaning the vast majority of members consistently receive a
high-quality care experience, as defined under CMS star measurement criteria.

•

Effectively Manage the Quality of Care to Improve Member Outcomes: Our care
delivery model is based on a clinical continuum through which we have created a
highly personalized experience that is unique to each member depending on their
personal health and circumstances. Utilizing data and predictive analytics
generated by AVA, our clinical continuum separates seniors into four categories
in order to provide optimized care for every stage of a senior's life: healthy,
healthy utilizer, pre-chronic and chronic. We partner with our broader network
of community providers to service members in our non-chronic categories, and we
have developed a Care Anywhere program implemented by our internal clinical
teams to care for our higher risk and/or chronically ill members. By investing
in our members' care proactively, our model has consistently reduced unnecessary
and costly care while improving the quality of our members' lifestyle and
healthcare experience. By delivering superior care and preventing avoidable
utilization of the healthcare system, we are able to reduce our claims
expenditures in some of our largest medical expense categories, which translates
to superior medical benefits ratio ("MBR") financial performance and ultimately
the ability to offer richer products in the market.

•

Achieve Superior Unit Economics: As our senior population ages, their healthcare
needs become more frequent and complex. To combat the healthcare cost increases
that typically result, we proactively look to (i) connect with our population
early in their enrollment with Alignment to assess their care needs, (ii)
develop care plans and engage those members with more chronic, complex health
challenges in our clinical model, and (iii) continue to monitor and evaluate our
healthier members in a preventative fashion over time. Given the Medicare
Advantage payment mechanism and the retention of the vast majority of our
members who continue to choose Alignment after their initial selection year, we
are able to focus our efforts on driving favorable long-term health outcomes for
our entire population. As a result, our clinical model efforts have demonstrated
the ability to lower the MBRs of our returning members. We believe this is
evidence of our ability to manage the financial risk of our members as they age,
and that these favorable underlying unit economic trends translate directly to
our ability to continue to deliver a richer product to the marketplace. With
this dynamic in mind, our consolidated MBR may be impacted year-to-year based on
our pace of new member growth and mix of members by cohort. However, we believe
our ability to sustain MBR performance improvement over time positions us well
to invest in new member growth to drive long-term financial performance.

•

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 supplementary 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 majority 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. 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. These plan designs generally result in us sharing a
greater portion of the responsibility for total prescription drug costs in the
early stages of the year and less in the latter stages, which typically results
in a higher MBR on our Part D program in the first half of the year relative to
the second half of the year. In addition, we expect our corporate, general and
administrative expenses to increase in absolute dollars for the foreseeable
future to support our growth and because of additional costs of being a public
company. 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.

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                              Key Business Metrics

In addition to our financial information in accordance with accounting
principles generally accepted in the United States of America ("U.S. GAAP"), we
review a number of operating and financial metrics, including the following key
metrics, to evaluate our business, measure our performance, identify trends
affecting our business, formulate business plans and make strategic decisions.


                                            Year Ended December 31,
(dollars in '000's, except percentages)       2022            2021          % Change
Health plan membership (at period end)          98,400          86,100           14.3 %
Medical benefits ratio                            86.5 %          87.6 %         -1.1 %
Revenues                                  $  1,434,159     $ 1,167,773           22.8 %
Loss from Operations                      $   (128,639 )   $  (178,072 )        NM(2)
Net loss                                  $   (149,639 )   $  (195,286 )        NM(2)
Adjusted EBITDA(1)                        $    (26,715 )   $   (33,116 )        NM(2)
Adjusted gross profit (1)                 $    193,621     $   144,370           34.1 %


(1) See "Adjusted EBITDA" and "Adjusted Gross Profit" below for reconciliation
to the most directly comparable financial measure calculated in accordance with
GAAP and related disclosures.

(2) Not meaningful

Health Plan Membership

We define Health Plan Membership as the number of members enrolled in the
Alignment Health Plans 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 500
members and 600 members as of December 31, 2022 and December 31, 2021,
respectively. It also excludes the approximately 5,000 traditional Medicare
seniors for which we are at-risk for managing their healthcare expenditures
through our contracts with CMS under the DCE program as of December 31, 2022.

Adjusted Gross Profit and Medical Benefits Ratio, or MBR

Adjusted gross profit is a non-GAAP financial measure that we define as loss
from operations before depreciation and amortization, clinical equity-based
compensation expense, 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 loss from
operations, which is the most directly comparable financial measure calculated
in accordance with GAAP.

Our use of the term adjusted gross profit may vary from the use of similar terms
by other companies in our industry and accordingly may not be comparable to
similarly titled measures used by other companies.

Adjusted gross profit is reconciled as follows:

                                                  Year Ended December 31,
                                                    2022             2021
(dollars in thousands)
Loss from operations                            $    (128,639 )   $ (178,072 )
Add back:
Equity-based compensation (medical expenses)            9,128         

15,418

Depreciation (medical expenses)                           213            

220

Depreciation and amortization                          17,273         

15,813

Selling, general, and administrative expenses         295,646        290,991
Total add back                                        322,260        322,442
Adjusted gross profit                           $     193,621     $  144,370
Adjusted gross profit %                                  13.5 %         12.4 %




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We calculate our MBR by dividing total medical expenses, excluding depreciation
and equity-based compensation, 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 superior 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.

When we determine, on an annual basis, whether we have satisfied the CMS minimum
Medical Loss Ratio of 85%, adjustments are made to the MBR calculation to
include certain additional expenses related to improving the quality of care
provided, and to exclude certain taxes and fees, in each case as permitted or
required by CMS and applicable regulatory requirements.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we define as net loss
before interest expense, income taxes, depreciation and amortization expense,
reorganization and transaction-related expenses, equity-based compensation
expense, loss on sublease and loss on extinguishment of debt. For the year ended
December 31, 2022, we have revised our definition of Adjusted EBITDA to exclude
loss on sublease and loss on extinguishment of debt, which changes had no impact
on adjusted EBITDA in the prior year period. 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. 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, which is the most
directly comparable financial measure calculated in accordance with GAAP.

Our use of the term adjusted EBITDA may vary from the use of similar terms by
other companies in our industry and accordingly may not be comparable to
similarly titled measures used by other companies.

Adjusted EBITDA is reconciled as follows:

                                                           Year Ended December 31,
                                                             2022             2021
(dollars in thousands)
Net loss                                                 $    (149,639 )   $ (195,286 )
Less: Net loss attributable to noncontrolling interest              92      

-

Add back:
Interest expense                                                18,289      

17,443

Depreciation and amortization                                   17,486         16,033
Income taxes                                                       339              -
EBITDA                                                        (113,433 )     (161,810 )
Equity-based compensation(1)                                    81,718      

121,999

Reorganization and transaction-related expenses(2)                 579      

4,585

Acquisition expenses(3)                                          1,614      

2,110

Loss on sublease and disposal of assets(4)                         611      

-

Loss on extinguishment of debt                                   2,196              -
Adjusted EBITDA                                          $     (26,715 )   $  (33,116 )



(1) 2022 represents equity-based compensation related to grants made in the
current 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 IPO. 2021 represents equity-based compensation
related to the timing of the IPO as previously discussed. Equity-based
compensation expense for the year ended December 31, 2021 includes $11.4 million
related to the cash settlement of SARs.

(2) Represents legal, professional, accounting and other advisory fees related
to the Reorganization, IPO, and secondary offerings that are considered
non-recurring and non-capitalizable.

(3) Represents acquisition-related fees, such as legal and advisory fees, that
are non-capitalizable.

(4) Represents loss related to right of use ("ROU") assets that were subleased
in the second quarter of 2022 and loss related to disposal of assets.

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                             Results of Operations

We operate and manage our business as a single reporting and operating segment,
which is to provide healthcare services to our seniors. The components of our
results of operations are as follows:

Revenues

Our revenue is comprised of earned premiums and other revenue. We receive and
record premium revenue on a monthly basis from the federal government based on
our contract with CMS. In accordance with this arrangement, we assume the
responsibility for the outcomes and the economic risk of funding our members'
healthcare, supplemental benefits and related administration costs. We recognize
premium revenue in the month that members are entitled to receive healthcare
services, and premiums collected in advance are deferred. The monthly premium
that we receive under our contract with CMS includes a PMPM which is adjusted
based on certain risk factors derived from medical diagnoses for our members.
The adjustments are estimated by projecting the ultimate annual premium and are
recognized ratably during the year, with adjustments in each period to the
amount of revenue recognized to reflect changes in the estimated ultimate
premium. Premiums are also recorded net of estimated uncollectible amounts and
retroactive membership adjustments.

Our recognized premium revenue for the Alignment Health Plans 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, 2022 and December 31, 2021.

The premiums we receive 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, members receive standard drug benefits. We may also provide enhanced
benefits at our own expense. We recognize revenue for providing this insurance
coverage in the month that members are entitled to receive healthcare services.
Our CMS payment related to Medicare Part D is subject to risk sharing through
the Medicare Part D risk corridor provisions. See "-Critical Accounting
Policies-Revenue" below.

Our capitation revenue consists primarily of capitated fees for medical care
services provided by us under arrangements with our third-party payors and from
CMS related to our Direct Contracting Entity ("DCE"). Under those arrangements,
we receive a PMPM payment for a defined member population, and we are
responsible to provide 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, providing 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. Capitation revenue is
recognized in the month that members are entitled to receive health care
services and capitation revenue collected in advance is deferred. We report this
capitation revenue as part of earned premiums. CMS has announced it is replacing
the DCE program with the "ACO Realizing Equity, Access, and Community Health
Model" or "ACO REACH" model, which became effective January 1, 2023.

Expenses

Medical Expenses. Medical expenses include claim payments, capitation payments,
pharmacy costs net of rebates, allocations of certain centralized expenses,
supplemental benefits, internal care delivery expenses and various other costs
incurred to provide health insurance coverage to members, as well as estimates
of future payments to hospitals and others for medical care previously provided
to our members.

We have contracts with a network of hospitals, physicians, and other providers
and compensate those providers and ancillary organizations based on contractual
arrangements or CMS Medicare compensation guidelines. We pay these contracting
providers either through fee-for-service arrangements in which the provider is
paid negotiated rates for specific services provided, or through capitation
payments, which represent monthly contractual fees disbursed for each member
regardless of medical services provided to the member. We are ultimately
responsible for the entirety of the cost of healthcare services related to our
member population, in addition to supplemental benefits that we provide to our
seniors.

Capitation-related expenses are recorded on an accrual basis during the coverage
period. Expenses related to fee-for-service contracts are recorded in the period
in which the related services are dispensed.

Pharmacy costs represent payments for members' prescription drug benefits, net
of rebates from drug manufacturers. Receivables for such pharmacy rebates are
included in accounts receivable in the consolidated balance sheet.

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Selling, General and Administrative Expenses. Selling, general and
administrative expenses consist of (i) personnel expenses including salaries,
bonuses, equity-based compensation expense and benefits for non-clinical
employees; (ii) all corporate technology, occupancy costs and allocated overhead
costs; (iii) professional and outside services, including external vendors and
professional services; (iv) costs associated with administering our contracts
with CMS, including claims adjudication, member and concierge services, provider
engagement, and other health plan functions; and (v) central and community-based
advertising costs to generate greater awareness, engagement and retention among
our current and prospective members, as well as the infrastructure required to
support all of our marketing efforts and ongoing commission payments. These
expenses also include certain growth expenditures, including business
development and various new market expansion activities. Our investments in our
sales, marketing and other growth activities are an important component of our
selling, general and administrative expenses in a typical year given our desire
to continue to grow on an accelerated trajectory. We anticipate continuing to
invest heavily in our growth efforts in the near future, which we believe will
be an important driver of long-term value creation. We expect selling, general
and administrative expenses to increase in absolute dollars as we incur costs
associated with being a public company and growing our business.

Depreciation and Amortization. Depreciation and amortization expenses are
primarily attributable to our capital investment and consist of fixed asset
depreciation, amortization of intangibles considered to have definite lives and
amortization of capitalized internal-use software costs.

Other Expense

Interest Expense. Interest expense consists primarily of interest payments on
our outstanding borrowings under our Term Loan (as defined below). See
"-Liquidity and Capital Resources-Term Loan."

Other (Income) Expenses. Other (income) expenses consist primarily of gains or
losses on the disposition of assets.

The following table sets forth our consolidated statements of operations data
for the periods indicated:

                                                            Years Ended December 31,
                                                             2022              2021
(dollars in thousands)
Revenues:
Earned premiums                                          $   1,431,550     $  1,167,085
Other                                                            2,609              688
Total revenues                                               1,434,159        1,167,773
Expenses:
Medical expenses                                             1,249,879        1,039,041
Selling, general, and administrative expenses                  295,646      

290,991

Depreciation and amortization                                   17,273           15,813
Total expenses                                               1,562,798        1,345,845
Loss from operations                                          (128,639 )       (178,072 )
Other expenses:
Interest expense                                                18,289           17,443
Other expenses (income)                                            176             (229 )
Loss on extinguishment of debt                                   2,196                -
Total other expenses                                            20,661           17,214
Loss before income taxes                                      (149,300 )       (195,286 )
Provision for income taxes                                         339                -
Net loss                                                 $    (149,639 )   $   (195,286 )
Less: Net loss attributable to noncontrolling interest              92      

-

Net loss attributable to Alignment Healthcare, Inc. $ (149,547 ) $ (195,286 )

The following table sets forth our consolidated statements of operations data
expressed as a percentage of total revenues for the periods indicated:

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                                                                 Years Ended December 31,
                                                              2022                      2021
(% of revenue)
Revenues:
Earned premiums                                                      100 %                     100 %
Other                                                                  -                         -
Total revenues                                                       100                       100
Expenses:
Medical expenses                                                      87                        89
Selling, general and administrative expenses                          21                        25
Depreciation and amortization                                          1                         1
Total expenses                                                       109                       115
Loss from operations                                                  (9 )                     (15 )
Other expenses:
Interest expense                                                       1                         2
Other expenses (income)                                                -                         -
Loss on extinguishment of debt                                         -                         -
Total other expenses                                                   1                         2
Loss before income taxes                                             (10 )                     (17 )
Provision for income taxes                                             -                         -
Net loss                                                             (10 )%                    (17 )%
Less: Net loss attributable to noncontrolling interest                 -                         -
Net loss attributable to Alignment Healthcare, Inc.                  (10 )%                    (17 )%



Revenues

                           Year Ended December 31,               Change
                             2022            2021             $            %
(dollars in thousands)
Revenues:
Earned premiums          $  1,431,550     $ 1,167,085     $ 264,465        22.7 %
Other                           2,609             688         1,921       279.2 %
Total revenues           $  1,434,159     $ 1,167,773     $ 266,386        22.8 %



Revenues. Revenues were $1,434.2 million and $1,167.8 million for the years
ended December 31, 2022 and 2021, respectively, an increase of $266.4 million or
22.8%. The increase was driven by a combination of growth in our Health Plan
Membership and higher revenue PMPM in 2022 as compared to 2021. Health Plan
Membership increased 14.3% between December 31, 2022 and December 31, 2021. The
increase in revenue PMPM is primarily attributable to an increase in the CMS
benchmark rates.

Expenses

                                   Year Ended December 31,                   Change
                                     2022            2021              $               %
(dollars in thousands)
Expenses:
Medical expenses                 $  1,249,879     $ 1,039,041     $   210,838             20.3 %
Selling, general and
administrative expenses               295,646         290,991           4,655              1.6 %
Depreciation and amortization          17,273          15,813           1,460              9.2 %
Total expenses                   $  1,562,798     $ 1,345,845     $   216,953             16.1 %



Medical Expenses. Medical expenses were $1,249.9 million and $1,039.0 million
for the years ended December 31, 2022 and 2021, respectively, an increase of
$210.9 million, or 20.3%. The increase was driven primarily by the growth in
Alignment Health Plan membership. Overall, medical expenses for the year
December 31, 2022 grew at a lower rate than the total revenue growth rate
compared to the year ended December 31, 2021 primarily due to the impact of
COVID-19 on utilization in 2021. For the three months ended March 31, 2021, we
experienced an increase in inpatient admissions due to COVID-related
hospitalizations. However, for the remainder of fiscal year 2021 and fiscal year
2022, we saw a decline in COVID-related inpatient utilization (compared to the
first quarter of 2021) as vaccination rates improved across our senior
population and the

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milder variants became dominant. The ultimate impact of COVID-19 to us and our
financial condition is presently unknown and we continue to monitor the impact
of COVID-19 on our claims reserve estimate.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $295.7 million and $291.0 million for the years
ended December 31, 2022 and 2021, respectively, an increase of $4.7 million, or
1.6%, due to headcount increases to support membership growth, recurring
commission payments, ongoing expenditures in sales and marketing, investments in
new market entries, and other general investments to support Alignment's
long-term growth. This increase was offset by a decrease in equity-based
compensation. Excluding equity-based compensation, for the year ended December
31, 2022, our selling, general and administrative expenses increased 21.0% from
the year ended December 31, 2021.

Depreciation and Amortization. Depreciation and amortization expense was $17.3
million and $15.8 million for the years ended December 31, 2022 and 2021,
respectively, an increase of $1.5 million, or 9.5%. The increase was primarily
due to the amount of our capital expenditures and the associated depreciation
relative to 2021.

Other Expenses

Interest expense. Interest expense was $18.3 million and $17.4 million for the
years ended December 31, 2022 and 2021, respectively, an increase of $0.9
million or 5.1%. The increase in interest expense was primarily due to a higher
principal balance caused by the payment-in-kind interest under our previous CRG
loan agreement (described below), as well as interest expense and amortization
of deferred debt issuance costs related to the Oxford loan agreement (described
below).

Other (income) expenses. Other (income) expenses were $0.2 million and $(0.2)
million for the years ended December 31, 2022 and 2021, respectively, an
increase of $0.4 million. The increase in expense was primarily due to a loss
recorded on ROU assets that were subleased.

Loss on extinguishment of debt. During the year ended December 31, 2022 we
recorded a $2.2 million loss on extinguishment of debt due to the write-off of
debt issuance costs related to our debt refinance discussed below. There was no
such loss recorded in 2021.

                        Liquidity and Capital Resources

General

To date, we have financed our operations principally through our IPO, private
placements of our equity securities, revenues, and certain term loans (described
below). As of December 31, 2022, we had $409.5 million in cash.

We operate as a holding company in a highly regulated industry. Alignment
Healthcare, Inc., our 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. Cash at the parent company was $245.9 million at December 31,
2022.

We may incur operating losses in the future due to the investments we intend to
continue to make in expanding our operations and sales and marketing, in further
developing our technology and due to the general and administrative costs we
expect to incur in connection with continuing to operate as a public company. As
a result, we may require additional capital resources to execute strategic
initiatives to grow our business.

We believe that our 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.

We have based this estimate on assumptions that may prove to be wrong, and we
could use our available capital resources sooner than we currently expect. We
may be required to seek additional equity or debt financing. In the event that
additional financing is required from outside sources, we may not be able to
raise it on terms acceptable to us or at all. If we are unable to raise
additional capital when desired, or if we cannot expand our operations or
otherwise capitalize on our business opportunities because we lack sufficient
capital, our business, results of operations, and financial condition would be
adversely affected.

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

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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. Our
health plans or risk-bearing entities were in compliance with the minimum
capital requirements for all periods presented.

CRG Term Loan

On August 21, 2018, we entered into a term loan agreement (the "CRG Term Loan")
with CR Group ("CRG") for $80.0 million, with an option to borrow up to an
additional $20.0 million. In April 2019, we amended the CRG Term Loan to
increase its borrowing capacity by $75.0 million and drew down $35.0 million in
May 2019. The CRG Term Loan was subject to a commitment fee of $6.8 million and
we incurred debt issuance costs of $3.6 million. The commitment fees were
deferred as part of debt issuance costs and were amortized to interest expense
over the term using the effective interest method. The debt issuance costs were
amortized to interest expense over the term using the effective interest method.

The CRG Term Loan bore interest at a rate of 10.25% payable on a quarterly
basis. We had the option to pay a portion of the interest in cash with the
remaining portion of the interest added to the principal balance as a
payment-in-kind. The payment-in-kind was also subject to a commitment fee of 5%.
The cash and payment-in-kind interest rates were 7.75% and 2.50%, respectively,
through April 2019, and then converted to 7.50% and 2.75%, respectively. In 2022
and 2021, we utilized our option to pay the quarterly interest payments in both
cash and payment-in-kind. The amount was included in the long-term debt balance.
In connection with the new credit facility with Oxford Finance, as noted below,
we repaid all amounts outstanding under the term loan with CRG on September 2,
2022.

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 (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 (the "Initial Term
Loan") and may borrow up to an additional $85.0 million of Term Loans at its
option (such additional Term Loans, the "Delayed Draw Term Loans"). Interest on
the Term Loans is 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%. All unpaid
principal and accrued and unpaid interest with respect to each Term Loan is due
and payable in full on September 1, 2027. The interest rate applied during the
month ended September 30, 2022 through the month ended December 31, 2022 ranged
from 9.02% to 10.63%.

The term loan was subject to a commitment fee of $1.7 million and an origination
fee of $1.7 million. The Delayed Draw Term Loans are subject to a commitment fee
of $0.9 million. We incurred additional debt issuance costs of $1.1 million
related to attorney fees and other third-party costs. The commitment and
origination fees are included within debt issuance costs and were deferred and
will be amortized to interest expense over the debt term using the straight line
method, which is materially consistent with the effective interest method. The
debt issuance costs related to the term loan are presented in the consolidated
balance sheet as a direct deduction from the carrying value of the term loan.
The debt issuance costs related to the delayed draw term loan are presented in
the consolidated balance sheet as other assets.

Substantially all of the proceeds from the Initial Term Loan were used to repay
in full the $159.3 million aggregate principal amount, accrued interest
(including "payment in kind" interest) and fees related to the CRG Term Loan, as
well as certain fees and expenses payable to Oxford.

The Term Loans are guaranteed by certain of our wholly owned subsidiaries and
collateralized by all unrestricted assets.

For certain prepayments of the Term Loans prior to the second anniversary of the
Effective Date, the Borrower will be required to pay a prepayment fee ranging
from 1.00% to 2.00% of the principal amount of the Term Loans being prepaid.

The Oxford Loan Agreement includes customary events of default, including, among
others, payment defaults, breach of representations and warranties, covenant
defaults, judgment defaults, insolvency and bankruptcy defaults, and change of
control. The occurrence of an event of default could result in the acceleration
of the obligations under the Loan Agreement, termination of the Term Loan
commitments and the right to foreclose on the collateral securing the
obligations. During the existence of an event of default, the outstanding Term
Loans will accrue interest at a rate per annum equal to 2.00% plus the otherwise
applicable interest rate. Additionally, in the event of any contemplated asset
sale or series of asset sales yielding net proceeds in excess of $2,500, except
those excluded per the Loan Agreement, we are required to prepay the aggregate
outstanding principal balance of the Term Loans in an amount equal to the entire
amount of the asset sale net proceeds, plus any accrued and unpaid interest.


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The Oxford Loan Agreement includes financial covenants that require the Borrower
Parties to (i) maintain minimum liquidity, as defined in the Loan Agreement, of
$23.0 million and (ii) satisfy a maximum permitted ratio of debt to trailing
twelve-month revenue, as set forth in the Loan Agreement. As of December 31,
2022, we were in compliance with the financial covenants.

Cash Flows

The following table presents a summary of our consolidated cash flows from
operating, investing and financing activities for the periods indicated.

                                                    Year Ended December 31,
(dollars in thousands)                                2022             2021
Net cash used in operating activities             $    (45,427 )     $ (78,776 )
Net cash used in investing activities                  (28,217 )       (20,815 )
Net cash provided by financing activities               16,593         

360,130

Net change in cash                                     (57,051 )       

260,539

Cash and restricted cash at beginning of period 468,350 207,811
Cash and restricted cash at end of period $ 411,299 $ 468,350

Operating Activities

For the year ended December 31, 2022, net cash used in operating activities was
$45.4 million, a decrease of $33.4 million compared to net cash used in
operating activities of $78.8 million for the year ended December 31, 2021. The
decrease is mainly attributable to the decrease in net loss for the year ended
December 31, 2022 as compared to the year ended December 31, 2021, as well as an
improvement in our working capital accounts. This decrease was offset by an
increase in cash paid for payment-in-kind interest of $14.1 million due to the
payoff of the CRG Term Loan. The decrease in net loss was mainly attributable to
revenue growth exceeding the increase in medical expenses and selling, general
and administrative expenses, as discussed above.

Investing Activities

For the year ended December 31, 2022, net cash used in investing activities was
$28.2 million, an increase of $7.4 million compared to net cash used in
investing activities of $20.8 million for the year ended December 31, 2021. The
increase primarily relates to incremental capital expenditures related to
information technology and infrastructure projects, as well as an increase in
cash paid for acquisitions.

Financing Activities

For the year ended December 31, 2022, net cash provided by financing activities
was $16.6 million, a decrease of $343.5 million compared to net cash provided by
financing activities of $360.1 million for the year ended December 31, 2021. The
decrease primarily relates to proceeds from the IPO in the first quarter of
2021, partially offset by net cash received in connection with our refinancing
of the CRG Term Loan with the Oxford Term Loans. $14.1 million of cash paid for
the repayment of long-term debt relates to payment-in-kind interest and is
included in operating activities.

    Material cash requirements from known contractual and other obligations

Our principal commitments consist of repayments of long-term debt, operating
leases and certain purchase obligations. The following table summarizes our
contractual and other obligations as of December 31, 2022:

                                                          Payments due by Period
                                                Less than                         3-5          More than
                                   Total         1 year         1-3 years        years          5 years
(dollars in thousands)                                        (in 

thousands)

Long term debt obligations(1) $ 165,000 $ - $ 1,650

    $ 163,350     $           -
Operating lease obligations          7,629           4,051           3,285           293                 -
Purchase obligations(2)             12,216           7,452           4,764             -                 -
Other obligations                      271             151             120             -
Total                            $ 185,115     $    11,653     $     9,819     $ 163,643     $           -

(1) Represents the estimated full cash repayment to Oxford Finance upon maturity
of the Term Loan in September 2027.

(2) Includes fixed, minimum and estimated payments under our existing
contractual obligations that are legally enforceable and binding for goods and
services. These obligations include agreements that are cancelable 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. Purchase obligations exclude agreements that are cancelable
without penalty.


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Not included in the table above are our medical expenses payable which are
included within current liabilities in our financial statements included in this
Annual Report on Form 10-K.

                   Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements, which have been prepared
in accordance with U.S. GAAP and include the accounts of our wholly-owned
subsidiaries and three variable interest entities ("VIEs") in California and
North Carolina that meet the consolidation requirements for accounting purposes.
All intercompany transactions have been eliminated in consolidation.
Noncontrolling interest is presented within the equity section of our
consolidated balance sheets.

Certain accounting policies involve significant judgments and assumptions by
management, which have a material impact on the carrying value of assets and
liabilities and the recognition of income and expenses. Management considers
these accounting policies to be critical accounting policies. The estimates and
assumptions used by management are based on historical experience and other
factors, which are believed to be reasonable under the circumstances. The
significant accounting policies which we believe are the most critical to aid in
fully understanding and evaluating our reported financial results are described
below. Refer to Note 2 "Summary of Significant Accounting Policies" to our
audited consolidated financial statements for more detailed information
regarding our critical accounting policies.

Revenue

Payments by CMS to health plans are determined through a competitive bidding
process with CMS and are based on the cost of care in a local market and the
average utilization of services by the member enrolled. These payments are
subject to periodic adjustments under CMS's "risk adjustment model," which
compensates health plans based on the health severity and certain demographic
factors of each individual member. Members diagnosed with certain conditions are
paid at a higher monthly payment than members who are healthier. Under this risk
adjustment model, CMS calculates the risk adjustment payment using diagnosis
data from hospital inpatient, hospital outpatient and physician treatment
settings. We and healthcare providers collect, capture, and submit the necessary
and available diagnosis data to CMS within prescribed deadlines. Both premium
and capitation revenue (including Medicare Part D) are subject to adjustments
under the risk adjustment model.

Throughout the year, we estimate risk adjustment payments based upon the
diagnosis data submitted and expected to be submitted to CMS. The risk
adjustment payments are recorded as an adjustment to premium and capitation
revenue. Our risk adjustment data is also subject to review by the government,
including audit by regulators.

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 estimated uncollectible accounts and retroactive membership
adjustments.

Medical Expenses Payable

Medical expenses payable includes estimates of our obligations for medical care
services that have been rendered on behalf of our members and the members of
third-party payors, but for which claims have either not yet been received or
processed, loss adjustment expense reserve for the expected costs of settling
these claims, and for liabilities related to physician, hospital and other
medical cost disputes.

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. Medical expenses payable
also includes an estimate for the costs necessary to process unpaid claims at
the end of each period. We estimate IBNR liability using actuarial methods that
are commonly used by health insurance actuaries and meet Actuarial Standards of
Practice. These actuarial methods consider factors, such as cost trends and
completion factors that are assessed based on historical data for payment
patterns, product mix, seasonality, utilization of health care services, and
other relevant factors.

Completion Factors. A completion factor is an actuarial estimate, based upon
historical experience and analysis of current trends, of the percentage of
incurred claims during a given period adjudicated by us at the date of
estimation. Completion factors are the most significant factors we use in
developing our medical expenses payable estimates for periods prior to the most
recent three months. Completion factors include judgments in relation to claim
submissions such as the time from date of service to claim receipt, claim levels
and processing cycles, as well as other factors. If actual claims submission
rates from providers (which can be influenced by a number of factors, including
provider mix and electronic versus manual submissions) or our claim processing
patterns are different than estimated, our reserve estimates may be
significantly impacted.

The following table illustrates the sensitivity of these factors and the
estimated potential impact on our medical expenses payable estimates for those
periods as of December 31, 2022:

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                                                               Increase (Decrease) In
                                                                  Medical Expenses
Completion Factors                                                     Payable

(Decrease) Increase in Factors

                                                                   (in thousands)
(3)%                                                           $                11,859
(2)                                                                              7,906
(1)                                                                              3,953
1                                                                               (3,953 )
2                                                                               (7,906 )
3                                                                              (11,859 )


Medical Cost Per Member Per Month Trend Factors. Medical cost PMPM trend factors
are significant factors we use in developing our medical expenses payable
estimates for the most recent three months. Medical cost trend factors are
developed through a comprehensive analysis of claims incurred in prior months,
provider contracting and expected unit costs, benefit design and a review of a
broad set of health care utilization indicators. These factors include but are
not limited to pharmacy utilization trends and inpatient hospital authorization
data. A large number of factors can cause the medical cost trend to vary from
our estimates, including: our ability and practices to manage medical and
pharmaceutical costs, changes in level and mix of services utilized; mix of
benefits offered, including the impact of co-pays and deductibles; changes in
medical practices; and catastrophes, epidemics and pandemics, such as COVID-19.

The following table illustrates the sensitivity of these factors and the
estimated potential impact on our medical expenses payable estimates for the
most recent two months as of December 31, 2022:

                                                               Increase (Decrease) In
Medical Cost PMPM Quarterly Trend                             Medical Expenses Payable
Increase (Decrease) in Factors
                                                                   (in thousands)
3%                                                            $                  3,126
2                                                                                2,084
1                                                                                1,042
(1)                                                                             (1,042 )
(2)                                                                             (2,084 )
(3)                                                                             (3,126 )


Each period, we re-examine previously established IBNR estimates based on actual
claim submissions and other changes in facts and circumstances. As the IBNR
estimates recorded in prior periods develop, we adjust the amount of the
estimates and include the changes in estimates in medical expenses in the period
in which the change is identified.

Actuarial Standards of Practice generally require that the IBNP estimates be
adequate to cover obligations under moderately adverse conditions. Moderately
adverse conditions are situations in which the actual claims are expected to be
higher than the otherwise estimated value of such claims at the time of
estimate.

In many situations, the claims amount ultimately settled will be different than
the estimate that satisfies the Actuarial Standards of Practice. We include in
our IBNP an estimate for medical claims liability under moderately adverse
conditions, which represents the risk of adverse deviation of the estimates in
its actuarial method of reserving.

We believe that medical expenses payable is adequate to cover future claims
payments required. However, such estimates are based on knowledge of current
events and anticipated future events. Therefore, the actual liability could
differ materially from the amounts provided. The following tables provide
information about incurred and paid claims development as of December 31, 2022:

                            Cumulative Incurred Claims, net of reinsurance for the
                                           Years Ended December 31,
Claims Incurred Year         2020                    2021                    2022
 2020                  $         281,965       $         276,074       $         275,220
 2021                                                    327,085                 312,537
 2022                                                                            400,939
Total                                                                  $         988,696




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                                                                                                       Cumulative
                                                                                                         Number
                                         Cumulative Claims paid, net of reinsurance for the              of Paid
                                                      Years Ended December 31,                           Claims
Claims Incurred Year                     2020                   2021                   2022
 2020                              $        207,130       $        274,979       $        274,826           342,754
 2021                                                              251,629                310,392           276,897
 2022                                                                                     315,187           325,776
Total                                                                            $        900,405

Substantially all of the claims incurred but not paid balance as of December 31,
2022 relate to the current year.

There is no single or common claim frequency metric used in the health care
industry. We believe a relevant metric for our health insurance business is the
cumulative number of claims paid for each incurred year. Claims that did not
result in a liability are not included in the frequency metric.

                        Recent Accounting Pronouncements

See Note 2 to our audited consolidated financial statements "Summary of
Significant Accounting Policies-Recent Accounting Pronouncements Adopted" for
more information.