Medicare Advantage insurtech Alignment Healthcare once again raised it full-year outlook after a strong quarter with 44% revenue growth and a 26% jump in health plan membership while also effectively managing medical costs.
The company, which went public in 2021, reported third-quarter revenue of $993.7 million and quarterly net income of $3.7 million. or 2 cents per share, as compared to a loss of $26 million, or a loss of 14 cents per share, in the same quarter a year ago.
The results surpassed Wall Street expectations. The consensus estimate was for a loss of 7 cents per share. The company's revenue also beat Street forecasts as analysts expected quarterly revenue of $980.9 million.
Alignment now has 229,600 health plan members. The company's adjusted gross profit of $127 million increased by 58% year over year. The company also reported a consolidated medical benefits ratio of 87.2%, an improvement of 120 basis points over the prior year, executives said during the company's third-quarter earnings call Thursday.
The company also reported adjusted EBITDA of $32 million.
"As we've demonstrated in 2024 and through our year-to-date performance in 2025, our unique model has positioned us to succeed amidst a paradigm shift in the industry marked by lower reimbursement and higher star standards," Alignment CEO and founder John Kao told investors and analysts during the call. "We continue to make investments that will improve operations to back-office automation, clinical engagement, AVA AI clinical stratification and Stars durability. These investments will further separate us from our competitors."
AVA refers to Alignment’s Virtual Applications tech platform used by the company’s Care Anywhere program to fill care coordination gaps and improve preventive treatment for polychronic individuals.
The company raised its full-year outlook for membership, revenue, adjusted gross profit and adjusted EBITDA after surpassing the high end of its guidance for the third quarter, marking the third consecutive quarter in which it surpassed the high end of its guidance across all key metrics, Kao said.
Alignment now projects it will bring in nearly $4 billion in revenue for 2025. The company raised its full-year revenue forecast to be in the range of $3.93 billion to $3.95 billion, $41 million higher at the midpoint than its previous outlook.
The company is guiding for adjusted gross profit to be between $474 million and $483 million. The company now expects to deliver $94 million of adjusted EBITDA at the midpoint of its guidance range in 2025 compared to its initial full year guidance of $47.5 million at the midpoint, Alignment Chief Financial Officer John Head said. The company's full-year outlook targets adjusted EBITDA to be in the range of $90 million to $98 million.
Health plan membership is expected to be between 232,500 and 234,500 members for the full year.
The company reported that 100% of its health plan members are in plans rated four stars or higher for the second consecutive year in 2026, including two five-star contracts in Nevada and North Carolina and a 4.5-star contract in Texas.
"Our ability to consistently earn high stars results from AVA's centralized data architecture that provides our organization and clinical resources with a cross-functional visibility to execute on each star's metric," Kao said. "Our results outside of California not only demonstrate our commitment to quality, but also underscore the replicability of our outcomes across geographies, demographics and provider relationships. Our latest results set us apart from our peers and create additional funding advantages in payment year 2027."
He noted that Alignment is leading "a paradigm shift in Medicare Advantage that prioritizes quality, access and putting seniors first.”
Alignment executives expressed strong confidence in the company’s ability to grow members at 20% or greater in 2026, based on early annual enrollment period results and overall competitive market dynamics.
The company's success in new markets "demonstrates the ability of the operating model to replicate in markets outside of California," said analysts with William Blair.
"Large-cap payers have reported mixed results thus far in the third-quarter earnings cycle; however, we continue to believe Medicare Advantage presents a more stable and attractive outlook relative to Medicaid and ACA lines of business, where Alignment Healthcare has zero exposure," William Blair analysts Ryan Daniels and Jared Haase wrote in an analyst note.
Alignment built a differentiated model that is "humming on all cylinders, balancing strong growth with medical cost management, investments in care delivery and member experience, and operating expense discipline," Daniels and Haase wrote. The company is set up for strong double-digit health plan membership growth and continued margin expansion in 2026, they noted.
Given continued disruption in the Medicare Advantage industry in 2026, Kao said he's confident there will be incremental opportunity to take share while growing adjusted EBITDA year over year.
In response to a question from an analyst, Kao said the company is eyeing opportunities to grow its geographic reach, looking at both "new markets within the existing state footprint that's going to be the most capital efficient, brand efficient as well, as well as looking at some new states for 2027."
"I think you're going to see us take a much more systematic kind of best practice playbook approach toward replicating into these new markets. I think we've come a long way in the last few years with our confidence not only in how we deploy the care model, but how we ensure that our shared services can scale in terms of ingesting the members, onboarding the members and then caring for the members. I think that's going to be good for seniors everywhere," he said.