Alignment Healthcare, Inc.

What they do

Alignment contracts directly with CMS to offer private Medicare Advantage plans, receiving a capitated fixed monthly payment per member (PMPM) in exchange for coordinating and covering all Medicare Parts A and B services plus Part D drugs. The company pairs its own health plan with an employed clinical team called Care Anywhere and a proprietary technology platform, AVA, which it uses to target proactive care and manage chronic conditions. Plans are offered in California (22 markets), North Carolina (16), Nevada (2), Arizona (3) and Texas (2), covering about 8.5 million Medicare-eligible seniors.

Revenue drivers

• Medicare Advantage capitated premiums (Parts A/B) — The core business: CMS pays a fixed monthly amount per member based on geography, member risk profile and plan Star Ratings, and Alignment bears the total cost of members' care. Membership grew from about 13,000 at inception to 294,100 as of June 30, 2026, driving total revenue of $1.34 billion in the second quarter of 2026.
• Medicare Part D prescription drug payments — Alignment receives a separate PMPM payment from CMS for prescription drug coverage under Part D, layered on top of the Parts A and B premium for plans that include drug coverage.
• Supplemental benefits in plan design — Certain plans offer extra benefits such as dental and vision, which are funded out of the capitated payment and used to differentiate Alignment's plans in competitive markets.
• Clinical cost management / adjusted gross profit — Profitability depends on managing medical costs below the capitated premium; adjusted gross profit was $182.9 million in Q2 2026, up 35.3% year-over-year, at an 86.3% medical benefits ratio.

Recent performance

For the second quarter of 2026, total revenue was $1,335.6 million, up 31.6% year-over-year, with health plan membership of approximately 294,100, up 31.5%. Net income was $36.6 million versus $15.7 million a year earlier, income from operations was $42.1 million, and adjusted EBITDA was $68.1 million (a 5.1% margin), up 48.4%. Adjusted gross profit was $182.9 million and the medical benefits ratio based on adjusted gross profit improved about 40 basis points year-over-year to 86.3%. Reported revenue has grown from $1.17 billion in 2021 to $3.95 billion in 2025, while operating cash flow turned positive at $34.8 million in 2024 and $139.9 million in 2025.

Strategy

Management is pursuing growth in existing markets, where the company says it holds roughly 10-30% share in mature markets but only about 6% of Medicare Advantage enrollees in its markets overall. It has expanded into 29 markets and four new states since 2020 and may enter additional markets with large senior populations. The company continues to invest in its clinical model (Care Anywhere), AI-enabled capabilities and operational infrastructure, and it frames better outcomes, member experience and profitable growth as jointly achievable. It also focuses on CMS Star Ratings, which affect revenue in the year following the rating announcement.

Risks

• History of net losses — Alignment reported net losses every year from 2021 through 2024 and only marginal net income in 2025, and its own risk factors cite the possibility it may not achieve or maintain profitability as expenses rise.
• CMS concentration and government contracting — Substantially all revenue comes from CMS as a government contractor, exposing the company to potential loss of CMS contracts, suspension from Medicare Advantage, premium changes, risk-sharing changes under Part D, and government audits or investigations.
• Star Ratings dependence — Plan quality ratings determine bonus payments and affect revenue in the following year, and the company warns that failing to maintain or improve Star ratings could have a direct and substantial adverse impact on revenue.
• Geographic concentration — Plans are concentrated in a limited number of states, with 22 of 45 markets in California and 16 in North Carolina, so adverse regulatory, competitive or reimbursement changes in those states could disproportionately affect results.

Outlook

For the third quarter of 2026, management guided to health plan membership of 295,500-297,500, revenue of $1,300-$1,320 million, adjusted gross profit of $148-$158 million and adjusted EBITDA of $20-$30 million. For full-year 2026, guidance is membership of 298,000-301,000, revenue of $5,195-$5,225 million, adjusted gross profit of $630-$650 million and adjusted EBITDA of $145-$163 million. The company said it raised the midpoint of all full-year guidance metrics after Q2 results exceeded the high end of guidance. Management cannot provide estimated ranges for comparable GAAP measures without unreasonable efforts due to uncertainty around equity-based compensation and depreciation and amortization.