Alignment Healthcare’s third quarter results were met with a positive market reaction, supported by outsized membership growth and operational improvements. Management cited a 26% year-over-year increase in health plan membership and disciplined care management as core factors behind the quarter’s strong performance. CEO John Kao attributed the momentum to the company’s ability to “manage risk in Medicare Advantage by placing care delivery at the center of our operations,” highlighting improved clinical engagement and lower inpatient admissions. The company also emphasized the scalability of its platform, which helped lower administrative costs and boost margins.
Is now the time to buy ALHC? Find out in our full research report (it’s free for active Edge members).
Alignment Healthcare (ALHC) Q3 CY2025 Highlights:
- Revenue: $993.7 million vs analyst estimates of $981.5 million (43.5% year-on-year growth, 1.2% beat)
- Adjusted EPS: $0.10 vs analyst estimates of -$0.01 (significant beat)
- Adjusted EBITDA: $32.44 million vs analyst estimates of $11.92 million (3.3% margin, significant beat)
- Revenue Guidance for Q4 CY2025 is $1.00 billion at the midpoint, above analyst estimates of $978.7 million
- EBITDA guidance for the full year is $94 million at the midpoint, above analyst estimates of $79.28 million
- Operating Margin: 0.8%, up from -2.8% in the same quarter last year
- Customers: 229,600, up from 223,700 in the previous quarter
- Market Capitalization: $3.41 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Alignment Healthcare’s Q3 Earnings Call
- Scott Fidel (Goldman Sachs) asked about market share opportunities from industry disruption. CEO John Kao highlighted strong growth across geographies and a focus on high-performing provider networks, stressing the company’s risk management abilities.
- Matthew Gillmor (KeyBanc) inquired about risk sharing with physicians. Kao detailed that 65-70% of business is in shared risk arrangements, allowing better clinical and financial outcomes and anticipating continued growth in this model.
- Michael Ha (Baird) questioned the impact of new marketing investments on member acquisition costs. CFO James Head explained that while SG&A will naturally decline with scale, investments are being balanced between brand building and clinical infrastructure to maintain growth momentum.
- Jessica Tassan (Piper Sandler) asked about the balance between gross new adds and retention during the annual enrollment period. Kao confirmed both metrics are strong, attributing retention to improved member experience and stability in core benefits.
- Craig Jones (Bank of America) sought clarity on potential regulatory changes and the impact of the Health Equity Index. Kao noted the new index may provide a “cushion” to Star ratings, but uncertainty remains regarding CMS cut points and future policy moves.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch (1) the pace of membership growth and retention during the annual enrollment period, (2) the impact of ongoing investments in automation and clinical programs on operating margins, and (3) the ability to maintain high Star ratings and quality metrics amid changing reimbursement standards. Execution in new markets and the success of technology upgrades will also be key to tracking Alignment Healthcare’s progress.
Alignment Healthcare currently trades at $16.66, down from $17.18 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).
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