Good afternoon, everyone. Thanks for joining us. We're pleased to have Alignment Healthcare with us today. We have CEO John Kao and CFO Thomas Freeman. Welcome, guys. Thanks, Jonathan. I guess, start kinda high level. This year and last have been pretty challenging for the industry at large. Obviously, there was pricing, but these spikes in utilization have continued to pressure the industry participants. What do you see as being the issue for the industry, and at least from your vantage point and your geographies? Are we at more normal levels, or are we still catching up to the new normal? You know, I think, at a very high level, I think there's gonna be some structural changes in terms of what is required to be successful in Medicare Advantage going forward. I think, having population health management competencies, actually, a care delivery culture is gonna be super important to be successful. I think that, we'll see what happens with the funding environment with the new administration. There's a lot of speculation around that. But I think this administration has proven in the past that it's been very MA-friendly. So we'll see. But I think just the notion of transferring risk and being a plan and kind of being a marketing engine and passing the risk on to a different provider organization. I think there's gonna be a lot of lessons learned from a lot of different parties around the efficacy of that in the long term. So I would expect plans to really think about, you know, how do we create that capability inside the walls of our company? Managing risk, population health. I really think that's gonna be thematically important for the sector. In terms of additional challenges, I think V28 and Tukey on stars are gonna be front and center still. And I think certain elements of the Health Equity Index, this part of the IRA, is gonna be an important determinant on how stars is allocated going forward. And so understanding all of these things is gonna be really, really important. But at the end of the day, I think CMS has taken a view of not really compressing reimbursement. They just want the whole sector to get back to what they originally intended, which was really provide the Triple Aim: have great quality of care, a great experience at really affordable prices. And I think the sector will adjust and get back to those fundamentals. Okay. Great, so we're about a week and a half removed from your earnings call. Anything of note from AEP so far? We've obviously heard a little bit about what's going on in the marketplace, but how is it trending for you guys? And anything to call out in terms of benes benefit design between yourself and others? We feel very good about where we are at AEP. I think we still stand by our growth that we talked about back in September in terms of at least 20%, so we feel very good about that. I think we were spot on with respect to our bids in 2025, and we shared at the time also that we've always been balanced around growth and margin, but for 2025, we pivoted a little bit more towards margin expansion, and I think that's playing out the way we expected. The benefits of our competitors in the market that we're seeing, despite the fact that people's Star Ratings went down, I think we're somewhat constrained by TBC in terms of how low they could lower benefits. Because of that, I think the kind of things you're hearing from some of our competitors around, you know, the magnitude of the switching, we don't really see in our core markets. Having said that, you know, we still have enough disruption that we feel good about our growth prospects. Okay. There has been a lot more noise about suppression of new plans and moving plans to non-commissionable at the start of November from some of your larger peers. I don't know if this necessarily directly impacts you, but curious to have your thoughts on this and, if it may be helping you on the margin. Yeah. I, I think, we've also said that, for the next well, for 2025, we've said that we think we're advantaged from stars in V28. We think that tailwind's gonna continue for 2026, 2027, and 2028. You know, 2026, we're still one of two plans in California that have four stars. We'll see how that shakes out with respect to some of the litigation ongoing, but I, I feel good about that. In 2027, there's gonna be some policy changes that we think will advantage us also as it relates to stars. And specifically around the weighting around CAHPS scores is gonna go down from four weighting to two weighting. That'll place more of an emphasis on our real strength, which is HEDIS quality measures, which were five stars. So I think we're gonna that's gonna be a net tailwind for us. Then in 2028, you're gonna get paid on stars with reward factors that are gonna be influenced by this Health Equity Index. This Health Equity Index is really ensuring that a certain base amount of your membership is in low-income or disabled members. Then if you have that base threshold, you need to be able to demonstrate you can take care of these people effectively and efficiently, which we feel very comfortable with. So I think that's gonna be an opportunity for us also on extending our tailwind relative to our competitors as it relates to stars. Then I think the you know ongoing implementation of the third phase in the V28 in 2026 is gonna be a further advantage for us. So I feel like the next three years or so, plus what I think may or may not be going on with the new administration is gonna be very favorable for us. Okay. For 2025, you know, going to some of your comments, oh, you talked about erring a bit more towards margin expansion, but did suggest that could change going into 2026. We're obviously not at 2026 yet, but what are the decision points for the company to make that switch at that time? Yes. I wouldn't characterize it as a switch so much as we wanna continue to strike that balance on growth and profitability in both 2025, 2026, and even beyond that. I think what we are seeing is, as John was saying, in 2025, some of our competitors have reduced benefits more materially but have been capped out ultimately by TBC limits. Others that I think will likely need to reduce benefits further. I'm not sure the second shoe has dropped, so to speak, but we think it may in 2026, and what I mean by that is, you got V28 starting in 2024, for year one. 2025 is year two. I think most plans navigated 2024 without a huge hiccup. I think some are starting to feel it more in 2025. I think that third year in 2026 is gonna be disproportionately impacting those who had those higher-than-average RAF scores. I think when you put the stars pressure on top of that and being a two-and-a-half or a three or three-and-a-half star plan for not just one year but for two years or in some cases three or four years in a row, I think that's just gonna put a lot more pressure on some of our competitors. So when we think about 2026, it, it's not that I think we're gonna shift the dial back to just pursue growth at all costs by any means. I think we're gonna kinda try to stay middle of the fairways we've always done. It's just that we continue to see 2026 looking like a, a pretty good growth opportunity year while we still advance our margin progression opportunities. It's really a replay of 2024 where we did that. We didn't chase growth. We found the right balance, but I think we were right with respect to the relative advantages that we had in the benefit design. Okay. You've also talked about hunkering down and focusing on members, and, you know, there's plenty of share for you to capture in your markets. What's the critical point for the company to make the decision to let it grow and focusing capital towards newer areas? Is it market share, specific margin scenario? What's that decision tree? Yeah. Yeah. I think there's lots of growth pathway for us in California. I think overall in California, we have something like only 4% market share. So I think to extend that through the existing footprint that we have, we feel really good about our growth just in California. And what we've said is we really want to get to enterprise-wide, not only EBITDA positive but cash flow positive, and use that cash flow from operations to fund new market entries. And I think you'll expect us to do that in the existing footprint in California but also in Nevada, Arizona, Texas, and North Carolina, and to really emphasize growth in those existing footprints in 2026, in addition to California, that I think is just gonna continue to grow. And I think for new market and new state expansions, you can expect us to, you know, kinda initiate that in 2027. And I think as we mature as an organization and as our workflows deepen and our automation is accelerated and AI is more and more of an important part of our business, and we just mature as an organization, I think the whole idea is how do you take these best practices that we're developing and then that we're codifying and systematizing that will allow us to effectively franchise this model in own stores, managed stores, joint venture stores, whatever you wanna call it, in a very reliable way. And I think the way we're gonna do that also is gonna be very different than what we've done in the past where we've treated these as, kind of network expansions. We're gonna really think about this more so as business investments with standalone business plans and supported by kind of a best practices playbook with shared services that can support this. So I that all of that work is what's been going on in the backdrop. The notion of can these folks scale operationally I think is something we answered this year. I'm really proud of the team, the ingestion of whatever it is 80,000 new members, the management of that new membership, the operational stars gap closures, risk adjustment gap closure, all this operational work on the kind of growth and to manage MLR the way we have, I think is proof of the pudding. We this can scale. Yeah. This kind of goes into my next question, which was, you know, when you think about taking that expertise and approach outside of California, what's a timetable to get that framework down to be successful in a new geography? And, what do you need to happen to achieve that similar success level as you did in California? Yeah. 2023 is when we really started the reinvention process, in terms of our member experience and our stars processes. And so we called last year the year of the consumer. Everything was around product design, sales operations, member experience. We insourced a lot of functions that had previously been outsourced. We took control of that. This year has been all about the year of the provider, making sure all the different provider operational touchpoints are seamless, end-to-end, and integrated with the goal of really working with our provider partners and having them surplus and make more money and getting more aligned with them. In the meantime, we've also had to prune certain partners that weren't behaving as partners. And so the most impressive thing about this year, I think, is we've been able to grow, manage margin, and prune the delivery system. That's not easy to do. That gives us the durability we want going forward. The back office operations also is and the shared services infrastructure is something that we are really proud of, not only from a financial point of view, getting scale economies down to under 11% of premium, which I think is really good for a company of our size, without missing a beat operationally, getting the stars, managing the operations. That's working really well. And so you put all that together going forward, I think 2025 we're gonna finish some of this provider work. And as I said, 2026 we're gonna start investing. And we have to start doing some of that work right now already for 2026. And then 2027 we're starting the work now to build the development pipeline, basically. Okay, so one of the things we saw within the landscape files was a fairly large expansion of SNP plans over traditional MA plans. You guys had your own increase. But what's your perspective on this increase across the space for 2025? Yeah. I, I think it really has to do with the stars, and the expansion of the importance of having a percentage of your members in low-income and/or disabled populations. And so this whole initiative is referred to as the Health Equity Index, which is gonna be a consideration for the definition of the reward factor in stars. And so the current policy has been to advocate and to push that. In California, we have not benefited from a reward factor in the past, and we've still been able to get four stars. If that is implemented on the Health Equity Index, I think you're gonna have another tailwind for us with respect to the 2028 payment. And so all the different plans out there have kind of eliminated more traditional HMO and more likely PPO plans in favor of these DSNPs and CSNPs to address that specific issue. So I think that's one of the motivations. I think the ability to actually manage that higher acuity population is something that people should watch carefully with the increased membership. We feel very comfortable with our ability to manage that. So I think that's gonna be an area to watch. Yeah. That makes a lot of sense. I guess stepping away from just, the Health Equity Index, what other, rules and regs right now do you see as most impactful to yourself, but also the rest of the industry and how are you preparing for it? You know, like I said, I, I think what is going to be successful in the next 10 years is gonna be different from the last 10 years in Medicare Advantage. I think the notion of care delivery or the philosophy of care delivery, I think the notion of having the most efficient delivery of care such that the Triple Aim is met, is, is a model in which margin that would otherwise accrue to the benefit of a global cap provider is in turn redirected to richer benefits. And so by definition, that means the plan needs to have the inherent competencies and structure to manage these different populations. And the other thing we've learned from just years of doing this is the most efficient way to solve for the utilization problem is, again, using data to identify who the polychronic population that typically is 10%, know who they are, and then envelop those individuals with a lot of care at the home. That's the most efficient deployment of capital. We learned long ago bricks and mortar is really, really expensive. To do bricks and mortar, you gotta have a multi-payer model. But even with a multi-payer model in a compressed reimbursement environment, it's really hard, as we're all finding out. So it's, it's that, I think, is going to be what people are gonna start, like, waking up to and acknowledging. It's population health, which is a form of art that was talked about like 10 years ago, is just coming back. It's like nothing's changed in many respects. Except this time around, I think there's a lot more data, and automation that can be introduced to the whole population health sector. Okay. Going to the Health Equity Index, obviously, it's a big positive for you guys. There was a weekly analysis we saw suggesting that a decent portion of contracts that receive a reward factor today may not be eligible for the Health Equity Index moving forward. What's your perspective on that and how will it benefit you relative to your current geography? Yeah. I mean, 90% of our members are in California. We don't benefit from a Reward Factor right now. And this Health Equity Index would, we think, really position us well to benefit from that. So it's a potential tailwind, you know, but that's what the current regs are right now. We'll see if it actually gets implemented. It's part of IRA. And again, we'll see how that goes. But I think the takeaway is if you have a culture and a philosophy of service and taking care of members the way that CMS intended you to take care of them, which is taking care of these members as if they were your family member, it's the right way to do business. If you can provide the quality and early on in the IPO, we used to say, "Look, just they want high quality, low cost." Well, what that means now is you gotta have high stars and low MLR. That's basically what it all means. The way to have high stars is you gotta have a culture of service and you have to have a competency to manage care to control costs. Those two things, I think, are the cornerstones of what's gonna be required going forward. Okay. So obviously we have a new administration, something that could be paused or rolled back. You know, Health Equity Index, you know, in theory may be part of that, component V28. You know, we had an earlier session today where it was suggested that maybe they just pause it to try to figure out what's going on with the provider partners. Kinda, what's your thoughts and, you know, crystal ball it? You know, we've been pretty consistent with respect to stars and we've been consistent around, you know, a need for addressing risk adjustment. And we've said this for, you know, the last three years. You know, I don't know yet is the real answer. I think from our perspective, the company was built to have durability irrespective of what happens to reimbursement. So if reimbursement goes back up, I think our competitive relative advantage on our ability to manage costs would, I think, be a margin expander for us. If nothing changes and there needs to be subsidies for whatever tax initiatives that are on the agenda, I think we'll continue to win as well. And so that's the beauty of this thing. We have the discipline to not get swept up in, you know, some of this coding frenzy that was going on in the sector. We were very disciplined and very conservative on the way we ran the business. And I think that strong foundation is gonna be really good for us and our investors because there's just consistency in the model, but if history serves as a teacher, this is an administration that is going to want more seniors to get more benefits. That's like at the very macro level. I think it's gonna be very good for MA. I think this golden age is gonna apply to MA for the next four years. Okay. Great. And just going to the stars, you know, stars overall, you've done very well. But, you know, the cut points continue to rise, continue to get more challenging. Obviously, you guys have kept up, maybe not the rest of the industry. But how do you feel about your relative positioning in keeping and holding those stars as, you know, the cut points get more difficult? And then you obviously will have your competitors effectively trying to catch up, which in turn makes the cut points harder as well. So, you know, how do you see yourself progressing and what's helped you maintain your current positioning? It's a great question. It starts with the cultural and philosophical commitment that, gee, wouldn't it be really good if you really provided that member with a great experience, great clinical outcomes? And so it starts there. It's a philosophy. It's not a department. It's literally an enterprise-wide cultural philosophy and a commitment for every single employee in the company to have a service mindset. That combined with just this maniacal attention to detail. Every single day, I know what numerators and denominators for all 44 measures exist and how we're closing those gaps. I don't think people do that at an enterprise level. You can't run that business and get the stars outcomes unless you do that. Having said that, we're very proud of the fact we retained our stars, but we really should be at four and a half stars, I think. So this quest to continuously get better and better and better is what we're gonna be pushing for. I think that if some of our competitors get from three and a half to four stars through whatever litigation measures may occur, I think the outcome of that should actually have somewhat of a waterfall effect on us from a policy point of view to get us relatively lifted up. But it's both a cultural commitment, which again is what I think CMS wants, and it's an attention to detail. And it's daily. It literally is a daily exercise that we have. Okay. So over the next few years at least, definitely seems like there's gonna be a bit of a retrenchment and repair across the industry. You had Humana, you know, having their stumbles, Aetna running into a lot of issues. But we'll also still have some of the largest of the large gaining share in the markets. You know, how do you see yourself kind of taking part in this shakeup and capitalizing on it? It goes hand in hand with what you said before, which was, you know, where do you get your geographic expansion initiatives launched. I think we got three more years of kind of this unit economic tailwind for us as an enterprise in terms of stars advantages and V28 advantages. I think we know how hard it is to build this data architecture that we have, how hard it is to actually create a clinical operation model that can be reproduced in each one of our markets. It is gonna take time for anybody to do that. You know, if we the goal, the plan is to get to cash flow fund the new market expansion cash flow. And I you know, if I know these larger plans, they are gonna figure it out. They will figure it out. They gotta get through a bit of the pig through the python, so to speak, with respect to TBC and the benefits. I think it's gonna take a couple years for that to happen, but they will figure it out, and we need to be there. And, you know, I think that if the whole sector adopts this more population health management capability that leads to really good clinical outcomes and experience for the consumer, you know, we can feel proud of that. And I think that's the direction that this whole thing is striving to in the long term. It's just about service to mom and dad. Yep. So as you think about target margins of the industry, we typically hear, you know, three to five, four to six, depending on who you are. You guys still have a ways to go to get into that range. But what level of margin is the right level for Alignment? Could it be more or less based on how your business is designed? Yeah. You know, we have said all along, and echoing comments of many others that, you know, a 4.5%-5% pre-tax margin, 67% adjusted EBITDA margin, is structurally supported by the design of the Medicare Advantage program. What I mean by that is the maximum gross margin you can ultimately earn is really governed by the 85% MLR rule. And both in our case and many other cases out there, it has been demonstrated that you can run our business model at 10% SG&A as a percentage of premium, more or less. And so in the last year or two, I think there have been questions around, well, is that really sustainable long term given changes with stars, given changes with V28, given that unit cost annualization has outpaced benchmark trend? And our perspective is yes across the board. In other words, nothing has structurally changed. The 85% rule is unchanged. The SG&A it takes to run the business is unchanged. All that's different is the level of benefits that certain plans can afford given these changes in stars and risk adjustment and utilization. And those that have managed each of those factors effectively, which I would put us in that category, obviously, I think gives us the opportunity to both hit that long-term margin target and continue to grow. If you don't do a good job on stars, you don't do a good job on care management, so on and so forth, you can still get to a 5% pre-tax margin, but you may be shrinking membership along the way 'cause your benefits aren't gonna be competitive. But I think we feel really good about the long-term margin profile of business today, same as we did when we went public three years ago. Okay. Great, and then, you know, the last pair of questions I have is, one of the overarching themes from your larger peers has been a focus on expanding into other service lines that help support their plans, but also other plans that are out there. I mean, you guys are obviously much smaller at this point in time, but what's your perspective on this as you continue to grow? Yeah. It's another great question. The geographic footprint expansion, getting more members, getting the cash flow, getting more members, and I do think the opportunity is more vertical integration, particularly around some of the supplemental benefit areas. I think is an opportunity for us. And the bigger we get, the more margin expansion that we can deploy on. Just an example, you know, transportation vendors, you know, that's being outsourced right now. If we brought that in-house, that's margin expansion 'cause we're paying ourselves, so to speak. That's an opportunity for that to be a separate distinct business line. You know, dental PPO, vision PPO. I mean, I'm not saying we're gonna do this overnight, but I think once we have a large enough footprint, getting more vertical and building businesses is something that is a structural advantage that our larger competitors have that will whittle away at, that I think will get us even better when you combine that with our medical management capability. Okay. And then, I guess the last bonus question is, you know, as you think about where we're gonna be next year, meet back here in the same seat, you know, how do you expect the business to have been and, you know, what's your thoughts on, you know, where you're going? I think, I think you all are gonna be giving us high fives and patting us on the back and also beating us up to say, "Okay, we want more of this." And how fast are you gonna be growing? And I kinda mean that seriously. I, I think we are gonna do. I feel really good about our, our 2025 positioning. I feel I have my biases that I think are very encouraging for 2026 and 2027 and 2028. I think, I, I think our execution around a lot of the internal, performance, management improvement objectives are gonna be really important. We've got initiatives around back office operations, clinical operations, automating workflows. I mean, all that stuff that gets us to be more and more grown up, I think, is, has yet to be embedded in, in some of our, margin expansion opportunities. I think once that starts kicking in, which I expect to be in 2025, heading into 2026, it's gonna be pretty, pretty, pretty powerful. Okay. Well, that I'm out of questions. So, thanks, thanks for joining us. Thanks, Jonathan. Appreciate it. Thanks, everyone.