Alignment Healthcare Revenue Jumps 36.7% to $1.3583 Billion in Third Quarter
Key Facts
Alignment Healthcare reported revenue of $1.3583 billion in the third quarter of 2026, up 36.7% from the same period last year, as its membership base expanded to about 301,200. The company said membership at quarter-end increased 31.2% year over year, signaling continued growth in its health plan business. But revenue growth did not translate into net profit; the company posted a net loss of $8.1 million, compared with net income of $3.7 million a year earlier. Chief Executive John Kao attributed the period's performance to continued demand, but noted that "medical cost trends came in higher than expected." The results showed a widening gap between business growth and pressure on the costs of delivering care.
Adjusted gross profit was $142.2 million, up 11.6% year over year, while the company posted an operating loss of $3.8 million. Adjusted earnings before interest, taxes, depreciation and amortization fell to $21.8 million, down 32.8% from the prior year, with a 1.6% margin. The medical benefit ratio, calculated on an adjusted gross profit basis, also rose to 89.5%, an increase of about 240 basis points year over year. The company said the increase was tied to higher costs for appeals and disputes, catastrophic cases and skilled nursing facilities, as well as Part D seasonality and the timing of clinical investments. These items show how revenue and adjusted gross profit growth coincided with a decline in adjusted earnings before interest, taxes, depreciation and amortization.
The company raised the floor of its fiscal 2026 revenue outlook to $5.245 billion, citing continued sales momentum, and also raised its forecast for health plan membership growth. At the same time, it cut the floor of its adjusted gross profit outlook to $575 million and adjusted earnings before interest, taxes, depreciation and amortization to $100 million. Alignment said the profitability outlook revision reflected higher medical costs recorded in the third quarter, despite an improved revenue trajectory. The update puts growth expectations on a different path from profitability estimates, with the company expecting sales to continue rising while care costs face greater pressure. The revised outlook did not assume any benefit from ongoing actions, according to Kao.
For the fourth quarter of 2026, the company set a revenue floor of $1.316 billion and adjusted gross profit of $104 million, and forecast an adjusted earnings before interest, taxes, depreciation and amortization loss of as much as $28 million. Kao said: "We are taking a cautious approach to the fourth quarter and lowering our outlook based on current headwinds." The figures reflect the company's expectation that cost pressures will continue to affect profitability at year-end, while revenue growth remains a separate focus in its annual guidance. The company was scheduled to hold a call to discuss its results and outlook on October 29, 2026, at 5 p.m. Eastern time. This followed the publication of results on October 29, while the stock had closed at $8.18 on October 28, a price from before the announcement.
In the October 29 session, the company's stock closed at $8.06, down 1.47%, then fell to $7.35 in after-hours trading, a decline of 8.81%, according to market data. The move followed the release of results and guidance that combined a higher floor for annual revenue with lower forecasts for adjusted gross profit and adjusted earnings before interest, taxes, depreciation and amortization. Fourth-quarter guidance, which includes an expected adjusted loss of as much as $28 million, highlights the pressures facing the company's near-term profitability. The $8.18 price recorded on October 28 preceded the announcement and does not represent the market's reaction to it. The company's fourth-quarter and fiscal-year estimates remain subject to changes in care costs, which it said affected third-quarter results.