Alignment Healthcare reported an $40.2 million loss in its third quarter as the startup provider of Medicare Advantage coverage spends money to expand coverage into new markets and further grow enrollment.

Alignment, which is selling its privatized Medicare Advantage plans into new markets for 2023, on Thursday reported a loss of $40.2 million, or 22 cents a share, compared to $45.8 million, or 26 cents a share in the year-ago period. Meanwhile, total revenue up nearly 23% to 360.3 million compared to $293.5 million in the year-ago quarter.

“Alignment Healthcare’s solid performance in the third quarter is a testament to the repeatability and scalability of our operating model,” Alignment founder and chief executive John Kao said. “The quarter shows how strategic long-term investments in our people and our technology allow us to effectively deliver durable financial results across the markets we serve.”

Losses for a startup like Alignment are expected, particularly in the hotly competitive Medicare Advantage business. Health plans are spending money to build out medical-care provider networks and related infrastructure to expand into new markets.

Medicare Advantage plans – which are owned by some of the biggest names in health insurance including UnitedHealth Group, CVS Health’s Aetna, Humana and Elevance Health – contract with the federal government to provide extra benefits and services to seniors, such as disease management and nurse help hotlines with some also offering vision, dental care and wellness programs. And in recent years, the Centers for Medicare & Medicaid Services has allowed Medicare Advantage plans to cover more supplemental benefits, adding to their popularity among seniors and drawing investments and capital to an array of companies including startups like Alignment.

Alignment earlier this year announced plans to expand into two new markets for 2023, launching Medicare Advantage in Florida and Texas.

Alignment, which became publicly-traded company last year in the popular and competitive Medicare Advantage business, in June said its expansion to Florida and Texas will also include launching plans “into additional counties within the four states where it currently operates.” Alignment already sells Medicare Advantage in four states: Arizona, California, Nevada and North Carolina.