Thanks everybody. I'm Scott Fidel. I'm the healthcare services analyst with Goldman Sachs. Really thrilled to have Alignment Healthcare with us today. Up on the podium with me, we've got the CEO and Founder, John Kao, and then we've also got the Chief Financial Officer, Jim Head, and then in the audience, I see over there, Head of Investor Relations, Harrison, as well. Guys, first welcome to the conference. Thank you. It's great to have you here. It feels like there's nothing to talk about, right, with Alignment these days. Yeah. I've just really been looking forward to this fireside chat. It feels like coming out of the first quarter. Yeah. A number of different topics that came up in the first quarter. Certainly I appreciated the transparency of you guys giving us some visibility under the hood. Some of those may not have been particularly material in terms of dollars, but are still important for us to understand about the business. I think in terms of where I'd want to start with is just around the model, we'll sort of work our way through it. The model as it relates to the sort of built in California, very successful, continuing to grow in California, then expanding out into other markets as well, that may have different sort of local systems to them. Let's just start with the core of when we think about that internal key, that value drivers of the company and it relates to things like medical management and sort of what you control inside versus what you may subcontract or delegate outside. Why don't we talk about that to start with, in terms of how was the core model developed around that, John? Then as you've started to more expand into other states, have there been adjustments that have been made to that to sort of accommodate expansion and entry and growth? Yeah, everything is predicated on using a lot of data, and it's specifically lab data, pharmacy data, encounter data, authorization data, admission, discharge, transfer data, to help us identify who is the cohort in that 10% of the population we think are polychronic, high risk, then we engage that population. We do that with interdisciplinary care teams of providers that are employed by the company. We think that core competency about medical management is what differentiates us from everybody else. I would say that is very replicable in the new markets. In fact, that's what's given us the confidence to grow 100% last year, 80% this year ex-California growth. Our ability to engage with individual practitioners as opposed to working through IPAs, which is really much the norm in California, has allowed us to do really good things with respect to stars and medical management. I'm very comfortable with all the work we've done there. I think the way to look at it is what we did in California was very much paying off in terms of the cohort maturation that you're seeing. In California, we still have, I think, Jim, it's 60% or so of members that are in a year one or year two cohort. Ex-California, you have 90% of our members are in a year one or year two cohort. As the model takes hold, you're going to start seeing just kind of overall MLR improvements. I think we think of things in a portfolio context. We're very comfortable with what's going on in California, comfortable with what's going on ex-California. As you have more maturation, that embedded earnings value in the ex-California businesses are going to start paying off. Okay. Maybe we'll unpack a few of those pieces and maybe just start with the growth strategy, which we're already sort of talking to some degree. It feels like there's a few different layers to that right now. You've got the new market expansions, and you alluded to there may or may not be some coming for next year. I'd love to maybe touch on that. Yeah Before we do, just lay out some of the different pieces for you. Then from the product side, you've also now been, it feels like expanding out from some of the more traditional HMO product that you had in California, and broadening out basically the types of members that you're looking to acquire in terms of you've been talking more about the higher acuity side that would relate to C-SNPs across the board, it feels like, on the C-SNP side. Then also there's been some more PPO growth, I've noticed as well. Maybe let's just start with that last piece, John, because that's probably something that was a little bit more. Yeah Unexpected in terms of seeing some of that growth on the PPO side. Yeah. I would say that on the PPO side. A lot of that growth was actually in globally capitated networks. Okay. Okay. And we did that in concert with. I do not expect that to be a meaningful, just generally speaking. Right. I think that to the extent that we have it in the future, and I won't get into the bid strategy, but suffice it to say, I think the premiums will be priced accordingly. Ryan Daniels is not on the call. Yeah. I think that's on the last one, the PPO. On your first question, I would say it's not either/or, it's both/and in terms of thinking about a portfolio inside California. I think there's still opportunity for us to take share inside of California. We were, I think, relatively reserved last year, actually, for 2026. We shared that with people. We could've grown a lot more, but we were very mindful of both growing and improving margins. I would suspect that a lot of the folks that grew really a lot last year are going to experience some degree of indigestion this year. I think that's going to be opportunistic for us. The and part is the ex-California, last year we grew 100%. Ex-California this year for 2026, we're growing 80%. What's driving that is, again, our confidence in your first question, which is the care model is actually performing really well. With respect to the second question, which was the C-SNP growth, I would characterize that as very opportunistic, market-by-market business plans. We just saw an opportunity for us to take share in that market. We happen to do very well with that cohort, and we also think that we have enough, call it, the realization of the embedded earnings strength gives us the flexibility to be able to observe early year higher MLRs associated with those C-SNP members. We're factoring all of these into our Jim and the team on the portfolio strategy. I think we feel very good about that as well. The thing that it's important to look at is of the consolidated MLR, think in terms of what percentage of your, whatever it is, 87.7 or something like that for the year. What percentage of that is associated with supplemental benefits? We think that's about 5%-ish. If you take that off the 87.7, you're at 82.7. From that number, that's your medical MLR, percent. You say, well, what percentage of that is newer members? We just said, 90% is in a year one or year two cohort, ex-California, we're still about 60% in California are year one, year two members. As that matures, you start looking at that 82.7, you say, "Well, what percentage of that is your loyal, and what's your MLR for your loyal?" Which are people that have been with us longer than two years. It's really pretty good. Yeah. That's what gives us confidence that the model can be repeatable. We've been spending a lot of time internally on getting all the other operational workflows, technologies, investments in AVA, all of that to further accelerate margin expansion in the future, both on the MLR side and the operating leverage side. Great. There was a lot of good stuff in that. Just to put a bow on the PPO, and it's a small amount of membership, so I'm not trying to say, again, it was a little bit of an outlier. In the global cap structure that you have, and I know you said that you'd be looking to reset premiums there, I guess, how tightly can you manage the costs on that this year? Is that something that, or any sort of observations, is that something that's been running a little bit hot or? Well, I personally think. PPO in general, just on a sector basis, not just based on alignment, but it can work if you get the risk adjustment. With V28, I don't think it tightened up all the risk adjustment, and I don't think it's a surprise that a lot of players have really narrowed their growth expectations around PPO. I don't think we're going to be an exception to that. I think the premiums have to just be priced accordingly. You can still have it as a product strategy, I don't think we're going to bank on it for our growth. Yeah. I'm sure you've seen with our work that's been a big focus as well. Yeah. Why don't we bring that up to some of the modeling questions as it relates to the MLR for this year. Since we've been talking about mix, why don't we aggregate that together? One of the questions I get asked a lot about, the one that I'm thinking about all the time as well, is just around with that mix shift. First of all, I guess the price question was that fully contemplated around the mix of the growth? Then obviously the output of that would be that as we model, if that's then aligned with how you've guided for MLR. How the seasonality may shift year-over-year because of the shift in the mix. Let's just start with, was that contemplated? Roughly 50% of the growth being in 2026, being in higher acuity members, and the answer is absolutely yes. Going back to John's point, we remain very disciplined, but we saw an opportunity to emphasize growth in those areas. We think it's a really good proposition over the long run, but the market was there for us. That doesn't mean it's structurally we're going for that every year, because we're going to see how that plays out. That's right. That's number one. When we started the quarter, we talked about that being part of our guide, right? This was all contemplated. The A/K was going to be a little bit higher, ticked up a little bit higher, all things being equal, because of that mix shift. When we went through Q1, we saw that we performed within the range that we thought was going to happen in Q1. As we come into Q2, we continue to see our medical indicators performing very, very well. We're two months into the quarter, as you know. We're just feeling very good about how we're managing- Two months into 2Q. Yeah. Okay. We're feeling very good about how we're managing that. John, if you've got anything. Yeah, we feel very, very confident and comfortable with our Q2 guidance. Very comfortable with it. Lots of good visibility. A lot of work, as we've shared, in terms of our investments in scaling the business around every single area of the company. I'm actually very, very proud of the team for being able to grow as much as we have, hit our numbers like we did in Q1. We're very comfortable with Q2, while also making a lot of these operational improvements. It's not an easy thing to do. The team's done a very good job. I'm going to just sort of repeat for the stock, because it hasn't been listening, that John just said, comfortable and confident into 2Q, two months into the quarter. I think that's an important thing for the stock. Yeah hear because it hasn't seemed to be hearing that theme recently. Thank you for that update. Certainly allows me to ask questions that I was going to ask you circuitously a little bit differently. Okay. I think we've hit the mix point pretty well. Let's talk about just utilization, since you guys sort of led us there. Just, again, just for some of the, maybe a little bit of coloring for you guys in terms of how I'm thinking about it. Certainly feels like for the end market, that things are finally in a better spot than we've been in some time in terms of industry trend. First quarter, a lot of debate around just how much of it was seasonal. Feels like into 2Q, that argument recedes, and most of what we've seen through all of our very robust checks seems pretty benign for the industry. Right. You have to look at the stocks, and that would tell you that as well. I'll just ask you sort of straightforward about utilization. Yep. Would love to then unpack inpatient- Right As well. Why don't we just sort of overall inpatient, we'll follow with inpatient. I would say that your description of benign utilization environment is, I think, accurate. We're a little bit different because we have a much more active care model, right? We're a little bit more out front in terms of managing our costs and utilization in the first instance. That's one of the reasons why you didn't see our utilization blip last year when others were saying it was different. Okay? As we go into this year, things are tracking very nicely. Maybe what we can do is walk down the cost side and think about. Bravo. 80K, as we said just now, 80K admissions per 1,000 in the hospitals is tracking in line with our expectations. Okay? That's with the mix and everything else through today. That feels good. The other cost categories we talked about on the first quarter, we're tracking nicely as well. Other medical expenses, including Part D, supplementals. Other healthcare costs, are actually tracking very nicely. We talked about on Q1, we feel good about where we're at on that. Broadly speaking, it's in line with our expectations and stable. Now, that is benign, that's how we feel about it today. My work is done. Thank you for that. That's clearly very helpful. In terms of the, let's just sort of talk about the stat data. That sort of has come out and I get a little bit frustrated because Harrison, you could probably vouch for that was our sort of product, right? We had rolled out a while back, with trying to be, I think, also responsible around it. Right Having spent plenty of time with you guys talking about it, just some of the variability, some of the noise, right? Sure. That is in that data month-to-month. Yeah We still publish it, we publish it on a quarterly basis for that reason. That's why when there was all that sort of big volatility in the stock the other day we weren't out on it. Good We're sticking with that. I think it's really sort of important maybe to spend a minute, maybe you could sort of explain to the market around why month- to- month. That noise can occur, and then once you get to the quarter, it sort of settles out into. Yeah More of a- Well, there's two dimensions to this. There's the quarterly versus the monthly, and then there's statutory filings at a regulated sub versus consolidated GAAP filings across the business. On the latter, I would just say you have to be mindful that that is not a completely accurate snapshot of what's going on in the business, even on a quarterly basis, because it's statutory accounting at a regulated sub. It doesn't include the whole picture. Okay. As it pertains to month- to- month, you're totally right, which is in any given month, there's accruals, there's allocations, and there's also reconciliations with CMS payments, things like that. Any given month can be a little bit different. By the end of the quarter, it usually smooths out a little bit. I would just say quarterly is better, but statutory filings are a signal, but it's not a true signal. Yeah. We'll continue to stay with that, our approach. Look forward to seeing that second quarter as well. Well, in particular in Q2, what the April stats don't capture are the sweeps. Right. For those of you that don't understand that's a big deal. It typically comes in in May, June, and so that's why we talk about it at the end of the quarter. Yeah. I think that is something that, again, we feel very, very comfortable with where we are in Q2. I remember when we were building that product out initially, your predecessor, Thomas, was emphasizing that point about the sweeps. I guess, given where we are at this point in June, do you have visibility into the sweeps now, or? We do. In May, we get the newbie final, the midyears come in June. There's nothing to report right now. We'll do it at the quarter. Okay. It is a known timing of those two sweeps that happen every year. Understood. I would just step back and say, this is normal course of business. Okay. This is a normal part of our business. It is reimbursement that we deserve, and I think the only notable difference with us is, or at least the way we account for it is, on the final sweep from 2025 for our new members, we are booking to what we get paid from CMS until we see the final sweep. Okay. In Q2, we'll have that incorporated into our numbers. We don't want to guess and put ourselves in a position, because it's an unknown factor. How the newbies get accrued for RAF by CMS is not known until May. Okay. All right. Great. Maybe let's just sort of tunnel a little bit further into because, again, part of the model, I think an important thing that I wanted to talk to you guys about, was around some of the delegation dynamics that you brought up on the first quarter. Maybe just to bring us in and give us some visibility into, let's just start at the top in terms of how, in your model, how you integrate or how you integrate delegates doesn't sound very illustrious. Where does delegation play into that in your model? How does that decision get prompted, and is there a difference in California versus outside of California in how you think about that? Yeah. No, without doubt. I think when people talk about California being different, it really is the saturation of the marketplace with medical groups and IPAs, independent physician associations, that either take some form of global cap or value-based capitation on a global basis or some form of a shared risk basis. Typically, the shared risk is comprised of professional capitation, so for specialty and primary care, and then some really aligned metric around working together between the plan and the IPA and the medical group to align around institutional costs. Okay. As part and parcel with that historical capitation, there's a delegation that I think is unique in California, where the plans have delegated certain functions that typically, outside of California, reside exclusively with the plan. Most notably, claims, payment, and utilization management. All right. In California, a lot of those administrative functions have been delegated to the IPAs. What we did and what we've shared with you for the last year or so is start to de-delegate certain UM functions related to inpatient authorizations. We've taken over that function, and we have the tools and the technology in AVA to allow us to do that in a way that is actually appreciated from the IPAs now. It's just more accurate, and what that allows is better overall plan performance, where we can actually fully benefit from the care anywhere care models, fully benefit from the AVA technology, the stratification I just talked about. If somebody is admitted into a hospital on an inpatient basis, they get admitted on an inpatient basis, they get admitted on an observation basis. It's just accurate. That has yielded win-win benefits for pretty much everybody, the member, the plan, and as well as the IPA. Everybody's kind of aligned in that regard, and that manifests itself in these shared risk gain share payments to the IPAs. Those dollars have gone up. Everybody's more aligned, deepens the relationship, and allows us to work together even closer around other opportunities for dedelegation, where they're actually leveraging our technology. It's something that we did, I'd say about a year and a half ago with one IPA, and then we've gotten through about 70% of the shared risk IPAs last year and into this year. I think there's still opportunity for us for the rest of this year, for the remaining 30%. Again, those are the factors that give us confidence for not only the quarter, but also for the year. That helps. I think you can just see some trends. I was talking to some of the other plan CEOs, and they really admire what we did, and so they're starting to think about some of that, some of the capabilities. Okay. Just one follow-up just on that sort of related California, or not California, but the related cost that you had signaled in the first quarter. I just want to confirm, is that still the number? One thing I was just thinking about- Yeah Was timing, were there any prior period- No sort of events that came in or? No. We said it was stable when we dealt with it in February, and it continued to be stable. Right. That's just a non-issue. It was a one-month blip that we've already. Yeah Operationalized, Yeah Every month since has been tracking exactly where we want it to be. Exactly. Great. I've got two topics I definitely want to still hit on, but I do want to pause just to see if there's anybody have any questions in the audience. Okay, great. I have a lot more questions, we're only four minutes. Let's talk about new markets and maybe certainly feel free to share whatever you're sort of comfortable sharing on that. The way I'll frame the question is, as you've now had more sort of experience, right, and more markets so far, talk about what are those lessons, and this could be a 30-minute question itself, right? I'm trying to think about maybe we'll spend a minute on it, but what have been the key lessons that you've learned that are guiding how you may have advanced the criteria that you're using for new market selection at this point? Clearly, that's weighted towards geography, within that would be inside of that geography is clearly product as well. Yeah. No. I'll call it demographic filters. First phase, just raw demographic filters. Number of seniors, number of seniors in an MA plan is important to us. Most of our, I think 80 something% of our members are switchers. Right. Members that have made the transition from fee-for-service, original Medicare to MA, they find our products to be a better experience, a better mousetrap. We get those. Those are important. Market share, kind of 40, 50, 60% market share that are MA are important markets. The provider composition. Hospitals have been reaching out to us in a very constructive way. They like what we do. They like the fact that a lot of these name brand health systems are over capacity, so they're about 120% of their beds. Because. That's usually a key nexus, right? You sort of start with. Yeah Having that anchor. Well, yeah. Partner as you go into the market. Yeah. If they're over capacity, that means they don't want to fill heads and beds. In fact, they'd rather put heads and beds of commercial members, which are getting paid 150% or 200% of Medicare, not just getting paid Medicare. They want market share. They like our product mix. They like the fact that we're integrating a lot of our clinical programs, a lot of their facilities and their ambulatory programs. To the extent that we can move market share into their system without necessarily filling heads in acute beds, that's a strategic advantage for a lot of these hospitals. They like working with us in that regard. Our prior auth rates, in terms of denial rates, are less than 2%. That's just not our program. That's not the game we play. We play about actually providing more care. It's just pinpointed to those seniors that need the care. That's in that 10% polychronic cohort. All those things are things that we think about. That's at the market level. The other part is, what are we ready to deploy as a franchise? What is the franchise playbook of how we deploy clinical resources, call capabilities, claims capabilities, UM capabilities, finance, HR, all these different competencies where we are ready to franchise this in a highly reliable way, more efficient way, where at the end of the day, you're going to get faster growth, better stars, better ADK, more reliably to mitigate risk of a new market. That's why in 2027, we've said that we're going to be entering a couple of new markets in existing states, they're big markets. I think you'll see more of that in 2028. It's both the filtering of where you're going to go, but also how ready are we to get all the core operations, the technologies to support that in a, again, I'll just call it a franchise way. It's very reliable. We're getting really close to that. Well, a lot of detail in that, and I know we're at time. Around that last comment, John, I guess it seems clear, should we be anticipating as it's more likely that there won't be new states, it will be more in-state expansions, or are new states on the table as well? For 2027 or 2028? For 2027. 2028. Yeah, I would say they're definitely both on the table. I would tend to be more conservative for 2027. I think we're really well-positioned in those new markets. Overall, it's just the growth is going to come from both California and the ex-California markets. Once you get the ex-California markets to start maturing, those embedded earnings are going to start paying off for everybody. Right. Great. Well, I think that was a very productive conversation. Again, thanks so much for being here with us. Thank you. At the conference. It's great to see you guys, hopefully, the rest of the day is productive for you as well. Thank you, Scott. Thanks, guys. Thanks, everybody.