Alignment Healthcare delivered a quarter that exceeded Wall Street’s expectations, prompting a significant positive reaction from the market. Management attributed this outperformance to rapid membership growth, improved medical cost controls, and operational efficiencies. CEO John Kao noted that inpatient admissions per thousand fell to the low-140s—a result of closer collaboration with provider groups and data-driven care management. The company also benefited from a $14 million final sweep payment related to prior-year member risk adjustments, but even excluding this, underlying performance metrics were strong. Management credited its unified data architecture and disciplined scaling of core systems for driving lower administrative costs and higher profit margins.
Is now the time to buy ALHC? Find out in our full research report (it’s free).
Alignment Healthcare (ALHC) Q2 CY2025 Highlights:
- Revenue: $1.02 billion vs analyst estimates of $960.1 million (49% year-on-year growth, 5.7% beat)
- Adjusted EPS: $0.14 vs analyst estimates of $0.01 (significant beat)
- Adjusted EBITDA: $45.91 million vs analyst estimates of $15.79 million (4.5% margin, significant beat)
- The company lifted its revenue guidance for the full year to $3.90 billion at the midpoint from $3.79 billion, a 2.8% increase
- EBITDA guidance for the full year is $76 million at the midpoint, above analyst estimates of $51.89 million
- Operating Margin: 2.2%, up from -2.7% in the same quarter last year
- Customers: 223,700, up from 217,500 in the previous quarter
- Market Capitalization: $2.90 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 Q2 Earnings Call
- Matthew Gillmor (KeyBanc): Asked how provider collaboration differs from prior models and its impact on utilization. CEO John Kao explained that tighter alignment with IPAs and data sharing has led to better inpatient management and is now a “meaningful differentiator” under the V28 model.
- Hua Ha (Baird): Questioned the durability of sub-10% SG&A costs and the role of AI in further reducing expenses. Kao cited the company’s unified data architecture and workflow automation as lasting advantages and noted ongoing investments in AI could drive additional cost leverage in future years.
- Craig Jones (Bank of America): Inquired about marketing yield and customer acquisition costs amid competitor benefit cuts. Kao said much growth has been driven by word of mouth and broker relationships, with plans to invest in brand development as scale increases.
- Jessica Tassan (Piper Sandler): Sought updates on margin maturation for new member cohorts and care delivery innovations. CFO Jim Head reported stable cohort margin progression and highlighted consistent execution despite rapid growth in younger cohorts.
- John Ransom (Raymond James): Asked about public advocacy and the role of Alignment’s model in shifting perceptions of Medicare Advantage. Kao emphasized participation in Congressional hearings and efforts to advocate for member choice and high-quality care.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch (1) the pace of membership gains in new and existing markets, (2) the impact of automation and AI investments on SG&A efficiency, and (3) the company’s ability to maintain high star ratings as industry standards tighten. Execution on provider integration and early results from expanded care navigation will also be key signposts of sustained momentum.
Alignment Healthcare currently trades at $14.64, up from $13.05 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
Our Favorite Stocks Right Now
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
