Executive Summary

Alignment Healthcare delivered Q3 2025 revenue of $993.7M (+43.5% y/y) and adjusted EBITDA of $32.4M, beating the high end of guidance across all key metrics; GAAP diluted EPS was $0.02 as net income turned positive y/y .
Management raised FY25 guidance across membership, revenue, adjusted gross profit, and adjusted EBITDA; FY25 adjusted EBITDA midpoint increased to $94M from prior $76M, reflecting continued operating momentum .
Operating drivers: inpatient admissions per thousand held in the low 140s; MBR (on an adjusted basis) was 87.2% (up 120 bps y/y); SG&A leverage remained solid with an adjusted SG&A ratio of 9.6% despite seasonal spend .
Quality continues to differentiate: 100% of members in 4-star+ plans for 2026; two 5‑star contracts (NV, NC) and 4.5‑star in TX; external recognition from U.S. News “Best Insurance Companies” across all five states reinforces brand positioning .
Potential stock catalysts: sustained membership and margin execution into Q4’s seasonal headwinds; early AEP commentary pointing to ≥20% growth in 2026; continued estimate revisions following the guidance raise .

What Went Well and What Went Wrong

What Went Well

Beat and raise: Third consecutive quarter surpassing the high end of guidance across all key metrics; FY25 guidance raised on all metrics (membership, revenue, adj. gross profit, adj. EBITDA) .
Quality moat: 100% of members in 4-star+ plans for rating year 2026; two 5‑star contracts in NV and NC; 4.5‑star contract in TX; management expects the Health Equity Index (now EHOA reward) to provide cushion in CA .
Utilization discipline: Inpatient ADK in the low 140s, supporting an 87.2% MBR and 58% y/y growth in adjusted gross profit; Part D ran modestly favorable vs expectations in Q3 .

What Went Wrong

Sequential deceleration: Revenue stepped down q/q ($1,015.3M → $993.7M) and adjusted EBITDA declined q/q ($45.9M → $32.4M) due to normal seasonality and prudent Part D assumptions .
MBR up q/q: MBR rose to 87.2% from 86.7% in Q2; management flagged typical Q4 seasonality (flu, Part D changes under IRA) implying a higher Q4 MBR .
SG&A timing: Adjusted SG&A ratio increased to 9.6% from 8.8% in Q2 as investments and timing shifted expenses into 2H; management expects elevated Q4 SG&A with AEP and growth prep .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($M)	$692.4	$1,015.3	$993.7
Net Income ($M)	$(26.4)	$15.7	$3.7
Diluted EPS ($)	$(0.14)	$0.07	$0.02
Adjusted EBITDA ($M)	$5.9	$45.9	$32.4
Adjusted Gross Profit ($M)	$80.5	$135.2	$127.5

KPIs and Operating Metrics

Membership (end of period): 223,700 (Q2’25) ; 229,600 (Q3’25) .
MBR (based on adjusted gross profit): 86.7% (Q2’25) ; 87.2% (Q3’25) .
Adjusted SG&A ratio: 8.8% (Q2’25) ; 9.6% (Q3’25) .
Inpatient admissions per 1,000: “low 140s” in Q2’25 and Q3’25 .

Estimates vs. Actuals (S&P Global)

Metric	Q3 2025 Consensus	Q3 2025 Actual
Revenue ($)	981,353,040*	993,695,000*
Primary EPS ($)	-0.01*	0.0981*

Values retrieved from S&P Global.*

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Health Plan Membership	FY 2025 YE	229,000–234,000	232,500–234,500	Raised
Revenue ($B)	FY 2025	$3.885–$3.910	$3.931–$3.946	Raised
Adjusted Gross Profit ($M)	FY 2025	$452–$469	$474–$483	Raised
Adjusted EBITDA ($M)	FY 2025	$69–$83	$90–$98	Raised
Health Plan Membership	Q4 2025	n/a	232,500–234,500	New
Revenue ($M)	Q4 2025	n/a	$995–$1,010	New
Adjusted Gross Profit ($M)	Q4 2025	n/a	$104–$113	New
Adjusted EBITDA ($M)	Q4 2025	n/a	$(9)–$(1)	New

Management noted Q4 MBR will run higher than Q3 due to seasonal flu and IRA-driven Part D dynamics, and SG&A will step up with growth-related spend .

Earnings Call Themes & Trends

Topic	Q1 2025 (Prev Mentions)	Q2 2025 (Prev Mentions)	Q3 2025 (Current)	Trend
AI/Technology (AVA®)	Continued investment; scale automation and member journey integration	Investing in administrative automation and care navigation for 2026	Ongoing AVA AI clinical stratification; back-office automation to drive scalability	Intensifying
Utilization (Inpatient ADK)	153 (CA) & 145 (ex-CA) in Q1; within expectations	Low 140s; strong provider engagement	Low 140s continued underpinning MBR	Improving/Stable
Part D / IRA	Prudent stance; 2H MBR higher; revenue PMPM to rise with sweep and corridor dynamics	Slight H1 favorability; cautious for H2 trends	Modestly favorable in Q3; remain prudent for Q4	Stable/Cautious
STARS & HEI/EHOA	100% in 4★+ expected; HEI tailwinds coming	100% 4★+ for 2026; AZ upgrade; NV/NC 5★	100% 4★+ for 2026; HEI/EHOA to add cushion in CA	Strong/Durable
Provider Risk Sharing	Deepening integration with providers	Shared execution driving lower ADK	65–70% CA in shared risk; expanding de‑delegation outside CA	Expanding
Regulatory/Legal	—	—	RADV pause from courts; base case remains; compliant processes	Monitoring

Management Commentary

“Our third quarter results mark the third consecutive quarter in which we surpassed the high end of our guidance across all key metrics,” highlighting scalability of the care model and 100% of members in 4-star+ plans for 2026 .
“For the full year, we now expect to deliver $94 million of adjusted EBITDA at the midpoint,” up from initial $47.5M midpoint; revenue approaching $4B .
On AEP and 2026 growth: “Based on the strength of our early AEP results, we are confident that we are on track to grow at at least 20% year over year” .
On HEI/EHOA: Transition “will add cushion to our four-star rating in California,” rewarding plans serving vulnerable seniors .
On provider alignment: “We’re about 65% to 70%…in shared risk business” in CA and increasing de-delegation to enhance durability and outcomes .

Q&A Highlights

Growth quality mix: Early AEP shows both strong gross adds and better-than-expected retention; management balancing growth with profitability given V28’s final phase in 2026 .
Vertical integration/M&A: Evaluating tuck-ins for supplemental benefits “captives” (e.g., dental PPO, behavioral HMO) to capture 4–5% of premium with low execution risk .
SG&A cadence: Q3 had a “handful of million” favorability; investments being reinvested to support 2026 growth (automation, AI, clinical programs); Q4 SG&A to step up .
Seasonality and vaccines: Flu/vaccine utilization trending in-line; Q4 typically higher utilization and Part D costs; guidance reflects caution .
RADV outlook: Court pause noted, but base case assumes enforcement will persist; ALHC confident in compliance and documentation .

Estimates Context

Q3 2025 S&P Global consensus vs actual: Revenue $981.4M* vs $993.7M* (beat); Primary EPS -$0.01* vs $0.0981* (material beat). Four EPS estimates and 11 revenue estimates were captured for the quarter*.