Alignment Healthcare NASDAQ: ALHC reported fourth-quarter and full-year 2025 results that management said marked a “tremendous milestone” in the company’s profitability, highlighting strong membership growth, higher revenue, and adjusted EBITDA expansion despite continued Medicare Advantage industry disruption.
Membership growth and fourth-quarter profitability outperformance
Founder and CEO John Kao said fourth-quarter 2025 health plan membership totaled 236,300, representing approximately 25% year-over-year growth. Total revenue for the quarter was $1.0 billion, up 44% year-over-year.
Kao said the company exceeded the high end of guidance across each of its profitability metrics in the quarter. Adjusted gross profit was $125 million, with an adjusted medical benefit ratio (MBR) of 87.7%. Adjusted EBITDA was $11 million, well above the company’s prior guidance range of negative $9 million to negative $1 million.
Full-year 2025: revenue up 46% and adjusted EBITDA rises to $110 million
For full-year 2025, total revenue was $3.9 billion, a 46% year-over-year increase, supported by the same 25% growth in membership. Adjusted gross profit was $495 million, producing an MBR of 87.5%—an improvement of 130 basis points year-over-year.
Management emphasized the year-over-year shift in profitability: adjusted EBITDA rose to $110 million in 2025 from roughly breakeven ($1 million) in 2024. The adjusted EBITDA margin was 2.8%, representing 270 basis points of margin expansion, according to CFO Jim Head.
Head also pointed to cost category performance, saying Part D profitability and supplemental expenses trended in line with guidance. He added that the company’s “proactive care approach” produced inpatient admissions per thousand in the low 140s during the fourth quarter.
On operating expenses, Head said full-year 2025 GAAP SG&A was $443 million, while adjusted SG&A was $385 million, up 28% year-over-year. Adjusted SG&A as a percentage of revenue improved to 9.7% in 2025 from 11.1% in 2024, a decline of about 140 basis points.
Expansion outside California and quality performance
Kao said 2025 demonstrated the “replicability” of Alignment’s model beyond California. As of December 2025, the company had about 38,000 members outside California—roughly 16% of total membership—and “more than doubled” ex-California membership year over year.
He tied the expansion to star ratings performance and cited several plans and markets:
- A 5-star plan in North Carolina for the third consecutive year
- Two 5-star plans in Nevada
- A 4.5-star plan in Texas
- A 4-star plan in Arizona
Looking to 2026, Kao said the company plans to invest in sales and distribution, deepen broker relationships, and continue growing with “aligned provider partners” where relationships are durable. He noted that across the 23 counties outside California, Alignment has less than 4% market share, which management views as an opportunity to gain share over time.
2026 AEP results: membership reaches 275,300 in January
Discussing 2026 annual enrollment period (AEP) results, Kao said Alignment grew to 275,300 health plan members in January 2026, representing 31% year-over-year growth. He said growth was broad-based, with 23% growth in California and more than 80% growth in ex-California counties.
Management stressed a “responsible” approach to growth. Kao said the company delivered nearly 20% improvement in its AEP voluntary disenrollment metric and sourced about 80% of gross sales from plan switchers. He also said the company remains mindful of the final phase-in of the V28 risk model while pursuing growth in what he called a disruptive year for the industry.
During Q&A, Head added that about 50% of AEP growth came from members who were low-income subsidy (LIS), dual-eligible (D-SNP), or chronic special needs plan (C-SNP) eligible. Head also said new members in these categories typically carry higher MBRs in year one as they transition into Alignment’s care model.
Guidance and policy backdrop: 2026 outlook and 2027 rate notice commentary
Head provided 2026 guidance that includes:
- Full-year 2026 membership: 292,000 to 298,000
- Full-year 2026 revenue: $5.14 billion to $5.19 billion
- Full-year 2026 adjusted gross profit: $615 million to $650 million
- Full-year 2026 adjusted EBITDA: $133 million to $163 million
- First-quarter 2026 adjusted EBITDA: $26 million to $36 million
Head said the company raised year-end membership guidance by 2,000 members at the midpoint versus commentary provided in a January 8-K, citing strength in open enrollment period results and stability in retention. The midpoint of revenue guidance implies 31% year-over-year growth, driven primarily by membership, he said. Head also noted revenue PMPM assumptions are balanced by benchmark increases and the Part D direct subsidy, partially offset by the final phase-in of V28 and mix shift outside California, which carries modestly lower per-member revenue.
On margins, the adjusted gross profit guidance midpoint of $633 million implies an MBR of 87.7%. Head said tailwinds include retention of existing members and product design modifications, balanced by the third phase-in of V28 and the higher-acuity mix of new members. He also said the company’s initial 2026 guidance does not assume any “sweep pickup” benefit from new members; in 2025, that pickup was about $14 million to adjusted gross profit and EBITDA, or roughly 30 basis points to consolidated MBR.
Head said the company expects ongoing improvement in the SG&A ratio from scale and workflow enhancements, while reinvesting part of those savings into the clinical model, new market activity, and technology infrastructure—including preparation for AI workflows.
On cash and liquidity, Head said Alignment generated positive free cash flow in 2025 and ended the year with $604 million in cash and investments. He also announced the closing of a $200 million revolving credit facility, which he described as “good housekeeping,” adding that the company does not expect to draw on it in the near term.
Looking further out, Kao addressed the 2027 advance rate notice, saying it appeared to indicate a relatively flat net rate environment for the industry and reflecting a mix of cost trends and policy changes. He said Alignment’s exposure to unlinked chart reviews is limited, noting that about 1% of total HCC value is derived from chart reviews of any kind, with an even smaller subset tied to unlinked chart reviews.
Kao also said the company expects to maintain star payment advantages in 2027, with 100% of members and plans rated 4 stars or above. Throughout the call, management argued that the company’s clinically led medical cost management model positions it to perform across different rate environments, while continuing to balance growth with margin discipline.
About Alignment Healthcare NASDAQ: ALHC
Alignment Healthcare, Inc NASDAQ: ALHC is a health care company specializing in value-based care for Medicare Advantage beneficiaries. The company leverages an integrated care model that combines in-home clinical services, telehealth capabilities and digital health tools to manage chronic conditions, improve outcomes and enhance patient experience.
At the core of Alignment Healthcare's approach is a proprietary technology platform that aggregates real-time clinical and claims data to support preventive care, risk stratification and personalized care plans.
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