Alignment Healthcare CEO John Kao took a more measured approach to discussing proposed 2027 Medicare Advantage rates, saying that while the flat proposal falls short of the current cost environment, the company is well positioned to adjust.
Kao said Thursday evening during the company's earnings call that Alignment "can win either way" the feds ultimately choose to go, as it already offers high-quality benefits at a lower cost. That said, Kao said that for the broader industry, he hopes the Centers for Medicare & Medicaid Services makes adjustments.
In late January, the agency released its annual Advance Notice governing Medicare Advantage and Part D, recommending a net rate increase of 0.09% for the coming plan year. Major insurers and industry groups have warned that this could lead plans to exit further markets or make benefits skimpier.
"I just think either way, we’re gonna be in a really good place," Kao said. "From an industry perspective, I hope they’re right, actually, that you’re gonna get a rate increase of 9% to 10%. Not sure that’s gonna happen."
Alignment's membership was up 25% year over year in the fourth quarter of 2025, the company said in its earnings report released late Thursday.
As of Dec. 31, 2025, the insurer had about 236,300 members across its plans. In addition, the $1.1 billion in revenue posted for the quarter reflected a 44% year-over-year increase, growing from the $701.2 million posted in the fourth quarter of 2024.
The company also slimmed its losses compared to 2024. Alignment reported a loss of $11 million in the fourth quarter, down from a $31.1 million loss in the fourth quarter of 2024.
For the full year, revenues were $3.9 billion, up from $2.7 billion. Full-year losses were $724,000 in 2025 compared to $128 million in 2024.
"We once again exceeded industry expectations and delivered continued momentum on revenue growth while taking a positive step forward in profitability and margin expansion, including producing free cash flow on a full-year basis," Kao said in the press release.
Alignment said in the announcement that its medical loss ratio in the fourth quarter was 87.7%, on par with its full-year of 87.5%.
For 2026, the company said it expects to have between 292,000 and 298,000 members. It also projected full-year revenue of $5.1 billion to $5.2 billion and earnings before interest, taxes, depreciation and amortization of $133 million to $163 million.
For the first quarter of 2026, Alignment estimates membership to fall between 281,000 and 285,000, with revenue of at least $1.2 billion.