Executive Summary

Strong start to 2025: revenue $926.9M (+47.5% y/y), adjusted gross profit $107.2M (+87% y/y), adjusted EBITDA $20.2M, membership ~217.5k (+31.7% y/y); MBR 88.4% .
Beat S&P Global consensus: revenue $926.9M vs $888.3M*, and Primary EPS +$0.044 vs -$0.045*; company GAAP EPS was -$0.05, reflecting basis differences vs S&P “Primary EPS” [GetEstimates Q1 2025]*.
Raised FY25 guidance midpoints across membership, revenue (~$3.79B midpoint), adjusted gross profit, and adjusted EBITDA (midpoint $49M), and introduced Q2 guide (rev $950–$965M; adj. EBITDA $10–$18M) .
Call color: outperformance driven by favorable inpatient utilization, modest Part D favorability expected to reverse, and prior-year IBNR releases; continued operating leverage (adj. SG&A 9.4% of revenue) . CFO transition announced; Jim Head named CFO effective May 2, 2025 .

What Went Well and What Went Wrong

What Went Well
- Material top-line and margin expansion with disciplined utilization: revenue +47.5% y/y; adjusted gross profit +87% y/y; MBR 88.4% (250 bps y/y improvement) . “We exceeded expectations across all key measures” — John Kao, CEO .
- Clinical model scaled across geographies; inpatient admissions per 1,000 outperformed expectations (CA 153; ex-CA 145; overall 152) underpinning MBR strength .
- Operating leverage: adjusted SG&A $87M (9.4% of revenue), -160 bps y/y; adj. EBITDA margin expanded 410 bps y/y to $20M .
What Went Wrong
- GAAP still loss-making: net loss $(9.4)M and GAAP EPS $(0.05) despite adjusted EBITDA turning positive .
- Part D favorability in Q1 is expected to reverse in the remainder of the year; management remains cautious on specialty drug trends in non-LIS populations .
- Seasonality headwinds ahead: management expects second-half MBR and SG&A ratios to run higher (Q4 peak SG&A for AEP), implying back-half pressure vs 1H .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($M)	$692.4	$701.2	$926.9
Adjusted Gross Profit ($M)	$80.5	$87.9	$107.2
Adjusted EBITDA ($M)	$5.9	$1.4	$20.2
Medical Benefits Ratio (%)	88.4%	87.5%	88.4%
Net Loss ($M)	$(26.4)	$(31.1)	$(9.4)
GAAP EPS ($)	$(0.14)	$(0.16)	$(0.05)

Q1 2025 actuals vs S&P Global consensus (S&P values marked with “*”; Values retrieved from S&P Global):

Metric	Actual	Consensus	Notes
Revenue ($M)	$926.9	$888.3*	Actual above consensus*
Primary EPS ($)	$0.0443*	$(0.045)*	Basis differs from GAAP EPS; S&P “Primary EPS” indicates a positive surprise*
GAAP EPS ($)	$(0.05)	n/a	Company-reported GAAP net loss per share

Revenue composition and membership:

Metric	Q3 2024	Q4 2024	Q1 2025
Earned Premiums ($M)	$684.5	$691.8	$918.0
Other Revenue ($M)	$7.9	$9.5	$8.9
Health Plan Membership (end of period)	~182,300	~189,100	~217,500

Key performance indicators (Q1 2025):

KPI	Q1 2025
Medical Benefits Ratio (%)	88.4%
Inpatient Admissions per 1,000 (CA)	153
Inpatient Admissions per 1,000 (ex-CA)	145
Inpatient Admissions per 1,000 (overall)	152
Adjusted SG&A (% of revenue)	9.4%
Cash & Investments (period-end)	~ $480M

Non-GAAP adjustments (Q1 2025): Adjusted EBITDA of $20.2M excludes equity-based compensation ($17.2M), D&A ($7.6M), interest expense ($4.0M), and certain litigation costs ($0.5M) among others .

Guidance Changes

FY 2025 guidance vs prior (as of Feb 27, 2025):

Metric	Period	Previous Guidance (2/27/25)	Current Guidance (5/1/25)	Change
Health Plan Membership	FY 2025	227,000–233,000	228,000–233,000	Raised midpoint
Revenue ($B)	FY 2025	$3.72–$3.78	$3.77–$3.815	Raised midpoint
Adjusted Gross Profit ($M)	FY 2025	$415–$445	$420–$445	Raised low end/midpoint
Adjusted EBITDA ($M)	FY 2025	$35–$60	$38–$60	Raised low end/midpoint

Q2 2025 outlook (introduced May 1, 2025):

Metric	Period	Guidance
Health Plan Membership	Q2 2025	220,000–222,000
Revenue ($M)	Q2 2025	$950–$965
Adjusted Gross Profit ($M)	Q2 2025	$105–$113
Adjusted EBITDA ($M)	Q2 2025	$10–$18

Earnings Call Themes & Trends

Topic	Q3 2024 (Prev-2)	Q4 2024 (Prev-1)	Q1 2025 (Current)	Trend
Stars/Quality & Reimbursement	One of 7 MAPD contracts to earn 5 stars; 98% members in 4+ star plans for 2025	“Industry‑leading stars performance” entering 2025	100% CA members/plans 4+ stars by 2026; V28 less impact vs peers; favorable 2026 rates	Improving tailwinds
Membership Growth	~182.3k (+57.7% y/y)	~189.1k (+58.6% y/y)	~217.5k (+31.7% y/y)	Accelerating scale
Utilization/MBR	MBR 88.4%	MBR 87.5%	MBR 88.4%; inpatient ADK outperformed	Stable to favorable
Profitability/Leverage	Adj. EBITDA $5.9M	First full-year positive adj. EBITDA	Adj. EBITDA $20.2M; adj. SG&A 9.4%	Building leverage
Technology/AVA	—	General mention of AVA in company boilerplate	AVA scaling and next-gen innovation; President of AVA appointed (4/15)	Expanding scope

Management Commentary

“We exceeded expectations across all key measures… we’re confident in our ability to scale with purpose and deliver on our mission of Medicare Advantage done right.” — John Kao, CEO .
“Our first quarter outperformance… was driven by favorable inpatient utilization… modest favorability in our Part D MBR… and favorable prior period IBNP reserve releases.” — Thomas (Robert) Freeman, CFO .
“We are raising the midpoint of our guidance ranges across each of our 4 key metrics.” — CFO .
On AVA: “The stratification model… identification of high‑risk members… is really working well… we’ll double down on modules producing really good outcomes.” — CEO .
On 2026: “We will have 100% of our California members and plans rated 4 stars or above… we believe we will be less impacted… by V28… final rate notice… positions us well to achieve our financial objectives in 2026.” — CEO .

Q&A Highlights

Drivers of Q1 outperformance: utilization (inpatient ADK slightly better than expected), modest Part D benefit expected to reverse, and prior‑year IBNR releases (about $6M; partially shared with providers) .
2026 setup: company-weighted avg. rate ~8% vs national ~9%; management balancing growth vs margin, noting peers likely more margin-focused amid V28 pressures .
Part D dynamics: expecting MBR improvement in Q2–Q3, possible Q4 uptick; revenue PMPM to rise through year due to sweep timing and risk corridor reversal .
Provider relations: global cap IPAs typically do not take Part D or supplemental benefits risk, aligning incentives; plan to grow at‑risk book where institutional costs are managed .
Competitive landscape in CA: constructive relationship with Sutter; smaller players’ approaches seen as less durable; company well positioned heading into 2026 .

Estimates Context

Q1 2025 revenue beat: $926.9M actual vs $888.3M S&P consensus* [GetEstimates Q1 2025]*.
Q1 2025 EPS surprise: S&P “Primary EPS” +$0.044 vs -$0.045 consensus*; company GAAP EPS was -$0.05, underscoring basis differences (normalized vs GAAP)* [GetEstimates Q1 2025]*.
Estimate breadth: 10 revenue estimates and 4 EPS estimates for Q1 2025* [GetEstimates Q1 2025]*. Values retrieved from S&P Global.

Key Takeaways for Investors

Execution remains strong: membership growth and disciplined utilization produced MBR stability (88.4%) and significant adjusted EBITDA expansion; operating leverage intact (adj. SG&A 9.4%) .
FY25 risk‑reward improved: raised midpoints across all four key metrics; Q2 guide implies continued top-line strength with prudent profitability framing .
Part D/IRA is a known swing factor: Q1 favorability is expected to reverse; management remains conservative on specialty drug trends in non‑LIS cohorts .
2026 set-up compelling: widening Stars advantages in CA (100% 4+ stars), relatively lower V28 impact, and stronger benchmark rates create potential for incremental margin expansion .
Technology moat deepening: AVA leadership appointments and emphasis on high‑risk stratification/engagement indicate continued investment in scalable, data‑driven care management .
Balance sheet supports growth: ~$480M cash and investments at quarter end provides flexibility for expansion and investment without overreliance on external capital .
Near-term trading: positive estimate beat and guidance raise are catalysts, tempered by management’s caution on Part D seasonality and H2 cost cadence; watch rate/Stars discourse and CFO transition integration .

Additional Relevant Press Releases (Q1 2025 Window)

Leadership to scale AI-powered platform: Dr. Arta Bakshandeh named President of AVA; Aly Duzich promoted to Chief Experience Officer .

Alignment Healthcare, Inc. (ALHC)·Q1 2025 Earnings Summary