ALHC

Wall Street expects a year-over-year decline in earnings on higher revenues when Alignment Healthcare (ALHC) reports results for the quarter ended September 2026. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on October 29. On the other hand, if they miss, the stock may move lower. While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise. This Medicare Advantage insurer is expected to post quarterly loss of $0.04 per share in its upcoming report, which represents a year-over-year change of -300%. Revenues are expected to be $1.31 billion, up 31.9% from the year-ago quarter. The consensus EPS estimate for the quarter has been revised 150% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts. Price, Consensus and EPS Surprise Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction) -- has this insight at its core. The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For Alignment Healthcare, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -37.50%. On the other hand, the stock currently carries a Zacks Rank of #4. So, this combination makes it difficult to conclusively predict that Alignment Healthcare will beat the consensus EPS estimate. Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that Alignment Healthcare would post earnings of $0.13 per share when it actually produced earnings of $0.17, delivering a surprise of +30.77%. Over the last four quarters, the company has beaten consensus EPS estimates four times. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. Alignment Healthcare doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. Among the stocks in the Zacks Medical Services industry, Icon PLC (ICLR), is soon expected to post earnings of $2.64 per share for the quarter ended September 2026. This estimate indicates a year-over-year change of -20.2%. This quarter's revenue is expected to be $2.01 billion, down 1.7% from the year-ago quarter. The consensus EPS estimate for Icon PLC has been revised 1.2% higher over the last 30 days to the current level. However, a lower Most Accurate Estimate has resulted in an Earnings ESP of -1.26%. When combined with a Zacks Rank of #4 (Sell), this Earnings ESP makes it difficult to conclusively predict that Icon PLC will beat the consensus EPS estimate. Over the last four quarters, the company surpassed consensus EPS estimates two times. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Alignment Healthcare, Inc. (ALHC) : Free Stock Analysis Report ICON PLC (ICLR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Alignment Healthcare has seen its share price fall sharply over 2026, even with a recent bounce, which puts fresh focus on whether the current valuation lines up with what the business earns. With the stock reacting not only to performance but also to questions around financial reporting, the key issue for investors is how much of its earnings story is already reflected in the price. - The share price is down 56.9% year to date, so any view on Alignment Healthcare now rests heavily on what investors think its earnings profile is worth. - Fresh scrutiny of the company's financial disclosures and medical cost pressures can influence how reliable its adjusted earnings look and how much confidence investors place in future profitability. - Your read on Alignment Healthcare is one view; the desks covering it have another. See what analysts think Alignment Healthcare's shares could be worth. The stock's next move may depend on whether Alignment Healthcare's current share price is supported by its earnings when measured against the Fair Ratio benchmark. To pressure test whether Alignment Healthcare's earnings story and Fair Ratio benchmark still make sense to you, it can help to line it up against 31 resilient stocks with low risk scores. The P/E multiple is a useful lens for Alignment Healthcare because it anchors the current share price to the earnings investors are paying for today. Alignment Healthcare trades on a P/E of 44.4x, compared with a Healthcare industry average of 24.7x and a peer group around 35.3x, so the equity changes hands at a clear premium to both broad sector and more direct comparators. On Simply Wall St's Fair Ratio framework, which adjusts the P/E you might expect for Alignment Healthcare based on factors such as growth profile, margins, market size and risk, the current 44.4x sits very close to the modelled level. Because the expanded Hagens Berman investigation raises questions around how adjusted earnings have been reported, this kind of earnings based valuation asks you to decide how comfortable you are with the quality and sustainability of the profit stream that the market is effectively capitalising at more than 40x. Explore the numbers behind Alignment Healthcare's P/E valuation. Alignment Healthcare Narratives pick up where the P/E debate leaves off. They spell out which earnings, growth and margin paths would need to occur for the stock to look meaningfully under or overvalued relative to today's price. Each one treats Alignment Healthcare's fair value as a hypothesis about the business that you can watch play out over time on Simply Wall St's Community page. One of the top community narratives on Alignment Healthcare: 61% undervalued "Alignment's robust, technology-enabled care model and investments in administrative automation, workflow standardization, and digital health platforms position the company to significantly lower SG&A expenses..." Discover why this Narrative puts Alignment Healthcare at 61% undervalued. Balance sheet metrics and earnings multiples only tell part of Alignment Healthcare's story. The people steering the business and how their incentives are set can sharply influence how those numbers evolve over time. See who runs Alignment Healthcare and how they are paid. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ALHC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let's take a look at how Alignment Healthcare (NASDAQ:ALHC) and the rest of the health insurance providers stocks fared in Q2. Upfront premiums collected by health insurers lead to reliable revenue, but profitability ultimately depends on accurate risk assessments and the ability to control medical costs. Health insurers are also highly sensitive to regulatory changes and economic conditions such as unemployment. Going forward, the industry faces tailwinds from an aging population, increasing demand for personalized healthcare services, and advancements in data analytics to improve cost management. However, continued regulatory scrutiny on pricing practices, the potential for government-led reforms such as expanded public healthcare options, and inflation in medical costs could add volatility to margins. One big debate among investors is the long-term impact of AI and whether it will help underwriting, fraud detection, and claims processing or whether it may wade into ethical grey areas like reinforcing biases and widening disparities in medical care. The 12 health insurance providers stocks we track reported a strong Q2. As a group, revenues beat analysts' consensus estimates by 2.8% while next quarter's revenue guidance was 1.7% below. Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 12.4% since the latest earnings results. Founded in 2013 with a mission to transform healthcare for seniors, Alignment Healthcare (NASDAQ:ALHC) provides Medicare Advantage health plans for seniors with features like concierge services, transportation benefits, and technology-driven care coordination. Alignment Healthcare reported revenues of $1.34 billion, up 31.6% year on year. This print exceeded analysts' expectations by 2%. Overall, it was a satisfactory quarter for the company with a beat of analysts' EPS estimates but EBITDA guidance for next quarter missing analysts' expectations significantly. Alignment Healthcare achieved the highest guidance raise of the whole group. The company added 9,300 customers to reach a total of 294,100. Even though it had a relatively good quarter, the market seems discontent with the results. The stock is down 58.5% since reporting and currently trades at $7.73. Is now the time to buy Alignment Healthcare? Access our full analysis of the earnings results here, it's free. With over 9,000 retail pharmacy locations serving as neighborhood health destinations across America, CVS Health (NYSE:CVS) operates retail pharmacies, provides pharmacy benefit management services, and offers health insurance through its Aetna subsidiary. CVS Health reported revenues of $106.1 billion, up 7.3% year on year, outperforming analysts' expectations by 6.7%. The business had an incredible quarter with a beat of analysts' EPS estimates and an impressive beat of analysts' full-year EPS guidance estimates. Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 18.1% since reporting. It currently trades at $85.51. Is now the time to buy CVS Health? Access our full analysis of the earnings results here, it's free. Pioneering a data-driven approach to family building that has achieved an industry-leading patient satisfaction score of +80, Progyny (NASDAQ:PGNY) provides comprehensive fertility and family building benefits solutions to employers, helping employees access quality fertility treatments and support services. Progyny reported revenues of $350.5 million, up 5.3% year on year, exceeding analysts' expectations by 0.6%. Still, it was a slower quarter as it posted EBITDA guidance for next quarter missing analysts' expectations significantly and full-year revenue guidance slightly missing analysts' expectations. Progyny delivered the weakest guidance update among its peers. As expected, the stock is down 17.8% since the results and currently trades at $24.84. Read our full analysis of Progyny's results here. Founded in 2014 to improve healthcare for America's seniors through technology, Clover Health (NASDAQ:CLOV) provides Medicare Advantage plans for seniors with a focus on affordable care and uses its proprietary Clover Assistant software to help physicians manage patient care. Clover Health reported revenues of $743.2 million, up 55.6% year on year. This result beat analysts' expectations by 2%. Overall, it was an exceptional quarter as it also produced a beat of analysts' EPS estimates and full-year EBITDA guidance exceeding analysts' expectations. The company added 1,536 customers to reach a total of 157,309. The stock is up 2.2% since reporting and currently trades at $4.23. Read our full, actionable report on Clover Health here, it's free. Founded in 1980 as a provider for underserved communities in Southern California, Molina Healthcare (NYSE:MOH) provides managed healthcare services primarily to low-income individuals through Medicaid, Medicare, and Marketplace insurance programs across 21 states. Molina Healthcare reported revenues of $10.87 billion, down 4.8% year on year. This print met analysts' expectations. Taking a step back, it was a slower quarter as it recorded full-year revenue guidance missing analysts' expectations significantly. Molina Healthcare had the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update in the group. The company lost 108,000 customers and ended up with a total of 4.93 million. The stock is down 17.6% since reporting and currently trades at $182.75. Read our full, actionable report on Molina Healthcare here, it's free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market's biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market's primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market's dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Alignment Healthcare’s stock price has taken a beating over the past six months, shedding 27.6% of its value and falling to $13.68 per share. This may have investors wondering how to approach the situation. Given the weaker price action, is now a good time to buy ALHC? Find out in our full research report, it’s free. Founded in 2013 with a mission to transform healthcare for seniors, Alignment Healthcare (NASDAQ:ALHC) provides Medicare Advantage health plans for seniors with features like concierge services, transportation benefits, and technology-driven care coordination. Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Alignment Healthcare’s sales grew at an incredible 33.8% compounded annual growth rate over the last five years. Its growth beat the average healthcare company and shows its offerings resonate with customers. Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions. Alignment Healthcare’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point. If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills. As you can see below, Alignment Healthcare’s margin expanded by 6.8 percentage points over the last five years. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. Alignment Healthcare’s free cash flow margin for the trailing 12 months was 3.9%. These are just a few reasons why Alignment Healthcare ranks highly on our list. After the recent drawdown, the stock trades at 21.9× forward P/E (or $13.68 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free. ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time. Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Thursday, July 30, 2026 at 5:00 p.m. ET Executive Chairman and Chief Executive Officer - John E. Kao Chief Financial Officer - James Head Operator: Good afternoon, and welcome to Alignment Healthcare Second Quarter 2026 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question during the session, you will need to press 11 on your telephone. You would then hear a automated message advising your hand is raised. To withdraw your question, please press 11 again. We ask that you limit yourself to 1 question only. Please note that this event is being recorded. Leading today's call are John E. Kao, Chairman and CEO; and Jim Head, Chief Financial Officer. Before we begin, we would like to remind you that certain statements made during this call will be forward looking statements as defined by the Private Securities Litigation Reform Act. These forward looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions, and information currently available to us. Descriptions of some of the factors that could cause actual results to differ materially from these forward looking statements are discussed in more detail in our filings with the SEC including the risk factors sections of our annual report on Form 10 k for the fiscal year ended 12/31/2025. Although we believe our expectations are reasonable, we undertake no obligation to revise any statements to reflect changes that occur after this call. In addition, please note that the company will be discussing certain non GAAP financial measures that they believe are important in evaluating performance. Details on the relationship between these non GAAP measures to the most comparable GAAP measures are reconciliation of historical non GAAP financial measures can be found in the press release that is posted on the company's website and our Form 10 Q for the fiscal quarter ended 06/30/2026. I would now like to hand the conference over to John E. Kao, Executive Chairman and CEO Sir, you may begin. John E. Kao: Hello, and thank you for joining us on our second quarter earnings conference call. For second quarter 2026, health plan membership of 294 thousand represented year over year membership growth of approximately 31%. This drove total revenue of $1.3 billion which increased 32% year over year. Adjusted gross profit of $183 million represented an adjusted MBR of 86.3% which improved by 40 basis points year over year. Meanwhile, adjusted SG&A of $115 million improved as a percentage of revenue by 20 basis points year over year to 8.6%. Taken together, Q2 adjusted EBITDA of $68 million produced an adjusted EBITDA margin of 5.1% and represents 60 basis points of margin expansion year over year. This quarter marks our lowest MBR as a public company and culminated in first half adjusted EBITDA of $106 million putting us well on track to achieve our full year guidance of $154 million at the midpoint. Importantly, we accomplished this while continuing to invest in our business. Our year-to-date performance reflects our unique ability to balance both growth and margin objectives by actively managing our members through our AVA Care Anywhere clinical teams. With 6 months of experience into the year, we have strong visibility into the acuity profile of our members, and remain focused on engaging our polychronic population who are most at risk. Strong second quarter performance is supported by the deployment of the newest version of our AVA AI powered stratification model, This advancement improved our ability to predict which members are going to be hospitalized. Our model now accurately and dynamically predicts the 10% of members who account for nearly 70% of hospital admissions over the next 30 days. Innovation such as this and the deployment of our disease state registries support the proactive engagement activities of our AVA Care Anywhere teams. While we continue to demonstrate strong year over year improvement across each of our key financial indicators, an even greater opportunity remains ahead of us. Given our rapid growth in recent years, approximately 50% of our members are still in a year-1 or year-2 cohort. This results in significant embedded earnings potential within our existing membership. Which we expect to realize as we engage members through our clinical programs over time. When we first shared the embedded gross profit potential within our membership in early 2025, we indicated a total opportunity of approximately $600 million of adjusted gross profit. Today, the midpoint of our 2026 full year guidance already indicates expectations for $640 million of adjusted gross profit. Meanwhile, the embedded gross profit potential of today's membership grown to approximately $880 million. This positions us well to deliver further earnings growth from the existing members we serve today. While future membership growth further expands our embedded earnings potential. Equally important are the investments we have made in our core systems, cross functional workflows, and talent. Each of which are strengthening the durability and scalability of our MA platform. These investments are translating into better clinical outcomes. Reinforcing the confidence we have in our operations, and highlighting a core principle of our business, creating alignment among providers, members, and shareholders which enables us to do well by doing good. While we invest thoughtfully for the future, our near term SG&A leverage demonstrates the efficiency of our operating model and improving unit economics. First half adjusted SG&A as a percentage of revenue of 8.7% improved 40 basis points year over year, and more than 300 basis points over the past 3 years. All of this was achieved while making investments like implementing a more scalable human resources platform. Clinical EHR capabilities, and enhanced claims processing systems. Looking ahead, we continue to see opportunities to invest in the second half of the year to drive further operating leverage in the future through automation of back office processes and greater economies of scale. As we capture these efficiencies, we expect to reinvest a portion of our savings in areas with tangible, measurable returns. This includes new market expansions, branding initiatives, and deepening our AI capabilities. Beyond its potential to unlock efficiencies in our cost structure, AI represents a meaningful opportunity to further enhance our care model, and support providers. Most importantly, our approach to AI is grounded in decades of clinical expertise and reinforces our commitment to high quality care. This is further supported by a governance framework to ensure responsible use, human accountability, and equitable treatment of our members. In closing, our strategy of balancing rapid growth disciplined margin expansion, and continuous investment to scale our operations, remain unchanged and continues to underpin our story. We achieved this by putting seniors first and supporting our providers. Our second quarter results underscore the strength of our model. As we move forward, we will maintain our disciplined approach to strike the right balance between growth and profitability. With that, I will turn the call over to Jim to discuss our financial results and outlook. Jim? James Head: Thanks, John. I will dive into our second quarter results. For the quarter ended June 2026, health plan membership of 294 thousand increased 31% year over year. Supported by strong new member additions and high retention among our existing members. This drove revenue of $1.3 billion in the quarter representing 32% growth year over year. Second quarter adjusted gross profit of $183 million represented an adjusted MBR of 86.3%. Which reflects an improvement of approximately 40 basis points year over year. Adjusted MBR, excluding the final sweep pickup, related to our new members was 86.7%. Which was favorable to the midpoint of our guidance range. Overall, medical cost trends continue to track closely to our expectations. Consistent with typical seasonal patterns in our outlook for the year, inpatient admissions per thousand, declined sequentially and core medical utilization was in line with our assumptions. Meanwhile, Part D and supplemental benefits expense ran modestly favorable to our expectations year-to-date. We believe each of these factors are supportive of our full year guidance. Turning to operating expenses. Our adjusted SG&A was $115 million, an increase of 29% year over year. Adjusted SG&A as a percentage of revenue was 8.6% which improved 20 basis points year over year, and outperformed the midpoint of our implied guidance range by 40 basis points, even as we continue to invest in our automation and scalability initiatives as John highlighted earlier. Finally, second quarter adjusted EBITDA of $68 million grew by 48% year over year and produced an adjusted EBITDA margin of 5.1%. Which represents approximately 60 basis points of margin expansion year over year. In addition, first half adjusted EBITDA of $106 million represents an increase of 60% versus the prior year. Moving on to cash flow and the balance sheet. Generated $111 million in operating cash flow during the first half of the year, and our liquidity profile remains strong. We concluded the quarter with $702 million in cash, cash equivalents and short term investments. Lastly, our funded leverage ratio at the end of Q2 improved to 2.2 times our trailing 12 months EBITDA. Moving to our guidance. For the full year 2026, we expect health plan membership to be between 298 thousand and 1 members. Revenue to be in the range of $5.20 billion to $5.23 billion, adjusted gross profit to be between $630 million and $650 million and adjusted EBITDA to be in the range of $145 million to $163 million. For the third quarter, we expect health plan membership to be between 296 thousand and 298 thousand members, revenue to be in the range of $1.30 billion to $1.32 billion, adjusted gross profit to be between $148 million and $158 million and adjusted EBITDA to be in the range of $20 million to $30 million. With respect to our full year guidance, we are increasing our membership growth expectations given continued strength of our sales execution. In conjunction with the increase in our membership outlook, we are also raising our full year revenue guidance to approximately $5.2 billion at the midpoint, which reflects 32% growth year over year. Turning to our profitability metrics. We are raising the low end of our adjusted gross profit range by $10 million and increasing the low end of our adjusted EBITDA guidance range by $7 million to reflect increased confidence in our full year objectives following a strong first half of the year. Spending a moment on seasonality, the midpoint of our full year guidance and year to date results indicate that we expect approximately 30% of our full year adjusted EBITDA to be generated in the second half. This compares to approximately 40% of full year EBITDA in the second half of the prior year. The change in our seasonality expectation is partially driven by a flatter slope to our Part D MBR along with investments we are making in our clinical operations during the third quarter. Meanwhile, we continue to take a prudent approach to our utilization assumptions across each of our major cost categories for the remaining 6 months of the year. As we move into the back half of the year, given our strong performance, we will continue to make further investments in clinical innovation, AI, and talent. In the third quarter, we anticipate additional investments in AVA Care Anywhere, and an earlier ramp of our clinical hiring in preparation for new market growth and expansion. Which will result in a seasonally higher MBR when compared to the prior year. Likewise, we expect a greater portion of our full year SG&A expenses to be incurred in the third quarter compared to prior years due to the timing of our investments. In closing, we are very pleased with our performance throughout first half of the year. Which reflects our continued disciplined focus on our care model and our members. And consistent execution against our operating plans. The progress we are making on the transformational progress we have discussed today further strengthens our competitive advantages long term. This reinforces our confidence in our ability to deliver continued growth, and capture the substantial opportunity ahead for Align. With that, let's open the call to questions. Operator? Operator: You. Please press 11 on your telephone, then wait for your name to be announced. To withdraw your question, please press 11 again. Please limit yourself to 1 question. Our first question comes from the line of Ryan Daniels with William Blair. Your line is open. Ryan Daniels: Hey, guys. Thanks so much for taking the questions. Appreciate it. Wanted to dive a little bit deeper into the Q3 guide. I think that is probably the focus of investors leaving out of the print. Can you go into a little bit more detail about just the timing of some of the investments you are making and any more color digging deeper into what some of those investments are, how transitory and then what benefits you see in the back half of the year, maybe more importantly, in 2027 and 2028? James Head: Sure. I think there are probably 2 dimensions to this Q3 guidance. it is going to be seasonality aspect and then the investment aspect. So inside that seasonality we will we will dive into the investments. But sequentially, we are going to see a little bit of an uptick in our NBR, and that is from investments, it is a little bit year-over-year new member mix. And it is Part B. So think about those 3 components that are driving that. But as it pertains to the investments, we are just continuing to find areas to invest in the business. And John and the team have been pretty consistent about this throughout the last couple of years in terms of putting ourselves in a position to really take advantage of the opportunity in front of us. So more specifically in the investments, we are going to make it in 2 different areas. 1's going to hit the MBR, and that is in our clinical operations. AVA Care Anywhere, preparing for new market growth and some other investments we are making there. And the other part is going to be in SG&A as we continue to push forward to get ready for market launches in 2027. And put ourselves in a position to get some returns in 2027 on these projects. So think about automation, AI, things of that nature. They are not insignificant. And we think they are really good return and set us up for the long term. It could be in the second half, an additional double digit million across clinical and SG&A categories with the weighting of some of that being a little bit higher in Q3. Okay? But this is all very deliberate, and it is inside the financial commitments we are making for 2026. So to kind of step back for a moment, we had a great 2025, We are signing up for 2026 and delivering against a very good first half, as you know. And still managing to invest in the business to put us in a good position for the future. Because we really feel it is there is a lot of opportunity in front of us. But it will it will impact the second half of the year in terms of our MBR and our SG&A, but we are still going to deliver on our commitment. John E. Kao: Great. Super helpful color. Thank you. Thank you. Operator: Please standby for our next question. Our next question comes from the line of Michael with Baird. Your line is open. Michael: Multi part question. First, I am backing into roughly $6 million free benefit. Is that right? And if so, any reason why it is smaller than last year even though your book is larger this year? Second, noticed in the 10-Q, you had, I think, about $6.5 million of unfavorable prior year development this quarter. I was wondering if you could elaborate on the timing and nature of those costs. And then last, the underlying Q2 MLR excluding both those items, I am getting roughly around 86.2%. Is that about right? And any comments on, like, monthly cadence throughout second quarter? When it comes to? Thank you. James Head: Let's do the 3 parts. The first 1 was the sweep. And this is Michael, you are referring to the new-member final sweep for 2025. And as you are aware, we take a prudent approach on that in the sense that we do not have visibility on that sweep. And so we tend to take a cautious approach and just book to the MMR until we see it. And the thing that can impact that beyond just the number of members, Michael, is the mix I think 1 of the bigger impacts is v 2028. that is the second year of v 2028 rolled into our 2025 dates of service. And then just risk sharing agreements around it. So you are absolutely right. It was a smaller number than last year, and I guess you could call it on a per member basis. It was smaller. I think 1 of the bigger drivers there was v 2028. And so is it you know, you mentioned $6 million. that is circa pretty close to what it means. We talked about 40 basis points on the on the call in terms of impact. So that is point number 1. The second thing is prior period reserve. So just to kind of put in context, we are always looking at our reserve positions, and that is in all states of service. Year-to-date, we are favorable by about $2 million on prior year. In total. and we feel good about where we are at. Like, inside Q2, we had a very solid quarter, as I just mentioned. And within that strong beat, we chose to bolster our reserves by about $6 million. Okay? And this is we looked at the development of the claims in 2025. And, you know, we are always looking at that and saying, can we take a position and increase our reserves And we looked at the quarter and said, this is a good time. This makes sense. And so we feel pretty good about our reserve positioning year-to-date. And then the last 1, I just wanna make sure. I think you had the third part. Yeah. It was the if you were to exclude the unfavorable and the sweep benefit, am I thinking about underlying, like, core Q2 MLR at about 86.2? Yeah. I have not done the math Michael. But if you add if you add back the prior period, and then subtract out 40 basis points, I mean, it is a dollar and a percentage, but I think, you know, it is probably net around the same level on MBR. Okay. Thank you. John E. Kao: Thank you. Operator: Our next question comes from the line of Justin Lake with Wolfe Research. Justin Lake: Thanks. Can you talk a little bit about Q3 seasonality in terms of Part D and why it is different? And then also in terms of in terms of the new member mix and why that is driving a difference there? Next. James Head: Yeah. So, Justin, it sounds like you are asking to amplify on those 3 components or 2 of the 3 components. So the part d is just a little different versus last year. it is a flatter slope between the first half and the second half. And that is just kind of the behavior the, you know, in the second year post IRA and the behavior of our experience. And then the new member mix year over year, we just have a more acuity in the new member mix, which is adding a little bit more to the MBR across the board. And so if you compare it to Q2 last year, it is a little bit heavier. But that investment that we talk about is a big piece of that. The investments in the clinical infrastructure. John E. Kao: Thank you. Operator: Please stand by for our next question. Our next question comes from the line of Matthew Dale Gillmor with KeyBanc. Your line is open. Matthew Gillmor: Hey, thanks for the question. I wanted to see if you would be willing to share the 80 ks metric for the quarter or just year-to-date. And then more broadly for John, was curious if you would offer any perspective on just 2027 bids. I know you may be limited on what you can say in terms of your approach, but just be curious in terms of the perspective you would offer and how you think the industry will approach 2027 bidding. Thanks. James Head: Yeah. Matthew, thanks for that. So as we mentioned on the call, 80 ks did improve sequentially. And, to be more specific, it was in the mid-150s and in line with our expectations. You know, given our membership mix and how we are tracking this year. So pretty much in line. I would say Matthew, that on an, you know, on an ongoing disclosure perspective, I think we are going to move away from digitally disclosing it every quarter. And I will give you the rationale. While it is really important internally how we manage the business, our clinical operations, etcetera, externally, it seems to create a little bit of noise. And I think does not necessarily reflect the overall health of our operation. So Q1 or last quarter was a perfect example of talking about ADK and kind of creating probably more static than signal. But having said that, we will we will find a balance because we want to continue to provide the right context around our performance and the trends going forward. So I know you are I know you are mindful of this, and we will be respectful of it, but it is just I do not know if we are gonna get into the digital precision that we have had in the past because it is it is not the story per se. John E. Kao: Yeah, Matthew. John here. With respect to 2027, I mean, I am going to give you the standard, you know, it is too early to talk about the bids. With respect to our strategy. Obviously, competitive reasons. I will say I feel about as comfortable as I have ever felt about a overall product strategy. And the amount of work that went into it this year. I feel very, very strong about it, and you know, a lot of these investments we have been talking about are designed to realize scale and portability. that is what we think we need to prove, and that you are looking for us to focus on. And everything is designed around that. it is it is scale and portability. I am really happy like, really, really happy about our progress along that front. And so that gives me confidence with our ability to support the growth we expect in 27. With respect to the industry, I think you are gonna have more of a mixed bag You know? I think you have got people still that are gonna be more margin focused than others. But I think they are gonna be more, or 2, maybe 3 players that come out of the woodwork that have not been aggressive over the last few years, and it would be a little bit more aggressive. Just given some of the market chatter that we are hearing. Thanks, guys. James Head: Thank you. Operator: Our next question comes from the line of John Stansel with JPMorgan. Your line is open. John Stansel: It seems like the MA technical rule has arrived at OMB somewhat sooner than some industry observers expected, and I think some have concluded that might mean a larger, more substantive rule. In your discussions, do you have a view or an expectation of what we might see from CMS when they roll out the new technical rule? Thanks. James Head: I yeah. John E. Kao: it is John. You got something new you can share? it? Because we are not privy to it, frankly. I yeah. I do not know. I am I am not I am not sure. We are all looking at each other going, did we miss something? John, are you there? It was no. it is just at the it is under review at OMB already, the 2028 technical rule. Oh. Oh. Oh, yeah. No. We have heard that. We do not have visibility to it. Yeah. If there is any if there is anything that would have caused it to get there this early, it probably would be around SARS would be my guess. But I do not know. We have heard the same thing, that the ruling is in there now. But we do not know what it is. Technically. Thank you. Operator: Please stand by for our next question. Our next question comes from the line of Kevin Fischbeck with Bank of America. Your line is open. Kevin Fischbeck: I guess, last quarter, there was a bit of focus on MLR performance within California versus outside of California. Wonder if you could provide a little bit of disclosure about how those 2 sets of businesses performed? Thanks. James Head: Yeah. Yeah, there is been some focus on the statutory filings in California as a signal to broader performance. I just would remind you that these are statutory financials. They are not linked necessarily to our GAAP consolidated parent company financials. But I would say the following that we have got a mature California market. that is performing quite well, and you have got pretty substantial growth over the last 2 years in our non California markets. And the right way to think about it is cohort maturation. If you got a more mature portfolio, in our with our care model and our model that we employ, we actually see MLRs improving And so if the average kind of member is in 3, 4 years, we are versus 1, 2, you are gonna see a better MLR. And so there is there is a lot of embedded value in the ex California states. But we feel very pleased with how they are performing right now year to date. And so guess you will see some of that in the in the in the filings, but we generally do not operationally focus on those statutory filings as a proxy for our business. We run our business differently. But I know investors have been focused on it. And we just feel like the we are we are tracking to our expectations across both of those arenas. Alright. Thanks. John E. Kao: Thank you. Operator: Our next question comes from the line of Jessica Elizabeth Tassan with Piper Sandler. Your line is open. Jessica Tassan: So in terms of your long term MBR, I think in your 2025 JPMorgan deck, you all implied 93% year 1 and 82.1% year-5 MBR. That was based on 2024. And is that framework still valid after 3 years of V28, or should we assume some degradation And then just in light of the MBR opportunity on tenured members, should we kind of expect stable benefits in existing markets? And existing products in 2027? John, you mentioned 2 to 3 competitors could be more aggressive next year. So just interested if you could talk about how alignment is positioning for that change or for that expected change. Thank you. John E. Kao: Just leave that cohort tracking and trending is directionally consistent with what we shared last year. there is really no change. The positioning around the embedded earnings potential that I spoke about is predicated on that. And so the way we are interpreting the this kind of notion of portability is to realize the same kind of earnings power that we have been able to generate in California is to plant those seeds in these new markets. And so when you are doing that, you are inherently gonna have a higher MLR because you have got so much growth proportion. Of your base. So the more we are gonna grow ex California, the stronger the earnings potential there is going to be. And then a lot of the work that we are focusing on the investments is, again, designed to really scale this thing. Really scale. And again, I am really, really happy about the operational work we have done. The workflow processes, the technology, the addition of new teammates, all of which is terrific. So I am very, very happy And I think we have mentioned we are going to be entering new markets in 2027. Not new states necessarily. But really gearing up for that for 2028. Again, all of that is in the kind of the longer term strategy to get to 1 million lives. And we are, you know, we are doing it. I am really happy with our progress. Operator: Please stand by for our next question. Our next question comes from the line of Scott Fidel with Goldman Sachs. Your line is open. Scott Fidel: Wanted to just ask about the, you know, the activities that you were implementing earlier this year around centralizing some of those sort of critical functions around some of the clinical and medical management exercises and sort of moving away from some of the delegated, sort of capitation that you had around that. How that is going, and then also just around the clinical investments that you are making in the third quarter. And maybe in the fourth quarter do some of those relate also to sort of completing or continuing you know, some of those centralization functions that relate into you know, some of the inpatient. Sort of management, particularly in the non California markets? John E. Kao: Hey, Scott. John here. Yeah. it is a actually a very, very good question. it is a very strategic question. That we have paid a lot of attention to. And we are building out the end to end operational business model that incorporates different types of contracting strategies. And so in other words, whether we are globally capping with the provider, or we are doing a shared-risk kind of arrangement that is delegated. Or it is a shared risk arrangement that is de-delegated where we will do a lot of the administrative work. And as we are growing our number of directly contracted providers that we are fully at risk with both the professional and the institutional side We are literally building out the end-to-end competency to take that risk, to manage that risk, such that we can really take advantage of the efficacy of AVA Care Anywhere. Without diluting any of the hard work on lowering overall admissions. That result from the AVA Care Anywhere rollout. And so we are we are we are we are we are we are a lot of the way through that process right now. And it will enable us to expand ex California irrespective of the type of contracts we enter into. This gives us a huge amount of strategic flexibility to engage providers at their comfort level. And the whole idea is to create alignment with that provider with that health system, I think that gives us a big differential advantage over everybody else. And then you layer on top of that. And so the investments that we are making are just continuations of that theme. And it is and I alluded to it in script. You know, we are making investments in the stratification model to have that become more precise. We are making investments in you know, I will call it chart prep, you know, automation to make workflows easier for our nurses. We are making investments in AI around all the back end administrative functions like MRA, like SARS reconciliation. All of that is starting to pay off And, you know, we have a lot of good people that worked for a long time that had a lot of value. We are adding to that great team of people now with some leaders that have abilities and experience at scale. it is all about getting to scale is the way I am looking at this. Hey, John. Scott Fidel: Can I just ask a quick just follow-up question relating to this, just around the vendor issue, at least, you know, sort of the activities you are taking to address those issues earlier in the year? Just curious, of the $6 million in negative PYV, was that just sort of flow through from the same dynamics that you had talked about earlier in this year, or is that unrelated to that? Thanks. James Head: Unrelated. Unrelated. We just took a look at prior year 2025 and wanted to bolster our reserves. The what we talked about in the last quarter was really just a January 2026 issue that we resolved. And I would just say as a footnote to that, it is performance has been outstanding year to date. it is it is Okay. Thank you. John E. Kao: Strategy is working. And the reason it is working is we are we are surplusing and gain sharing more with the providers. I mean, so you develop that kind of operational muscle to consistently surplus with providers. We are not only there where I wanna be with all providers. Yet, but we are making huge progress. To create alignment. it is the whole point of alignment. To create alignment with the providers in each market with full transparency for the benefit of vaccine. that is what we are trying to do. And we are starting to make that work outside of California where my confidence level is. We are gonna start to place some capital heading into 2027 and then more in 2028 K. Thank you. it is kinda consistent with what we have been saying all along. there is nothing really new there. We are just actually executing. James Head: Thank you. Operator: Our next question comes from the line of Andreas Mock with Barclays. Your line is open. Andrew Mok: Hi. We have seen a meaningful upward drift in stars cut points in recent years as we shift focus to bonus year 2028 STARS what are your expectations for further movement in those thresholds, and how confident are you in your ability to perform against those benchmarks? Thanks. John E. Kao: Yeah. Hey, Andreas. We are not sure. We are not sure about what you just said. We are we are very comfortable. You know, we are going through all the caps data. We just got the caps data. We are going through that. We expect to get other visibility to HOS data, etcetera, down the line. I think it is a little early to start speculating. About it. I will say that I think the regulatory and kind of legal footing surrounding stars is a little shaky right now. And you know, a lot of outcomes could be different based on how some of these regulatory changes are actually implemented. You know, it is all related to a lot of the litigation that 1 of our competitors--we are going to compete with that--you know, another MA plan won that suit, and that has pretty significant implications for the rest of the industry. You know? And all we want really is a consistent and fair regulatory landscape. So I do not know is the answer to your question. But I feel good about our position. Great. Appreciate the color. Thank you. Operator: Our next question comes from the line of Whit Mayo with Leerink Partners. Your line is open. Whit Mayo: Hey, Tim. Sorry. I wanted to go back just to PYD. I know we are just gonna get the question. The queue says the PYD was due to deteriorating collections and higher costs. So I am just trying to reconcile your comments on proactive strengthening. I know these are not big numbers, but just wanted to flesh that out. James Head: Yeah, it is consistent. You got 2 things going on in prior year, your payment integrity activity, collections, and then you have got your just how you are looking at the paid claims coming through. And that is you know, we look at all of our dates of service. it is across all the triangles and just make sure we are positioned well. And I think I think our MD&A is pretty accurate on that, but it you know, we feel good about our reserve positioning. When you have a prior year adjustment, you have to call it out in your financials, but we do this all it is just normal course of business across all our triangles. K. that is helpful. Whit Mayo: And just John, I do not know if you are going to share what new markets you plan to enter, but maybe what are some of the underlying characteristics of those markets? John E. Kao: Yeah. In 2020 and you are right. We are not gonna share where until the bids are out. I mean, the final product bids are out. Public in October. But you know, we thought it would be prudent for us to still have that balance growth and margin profile in 2027. With pretty meaningful market expansions within the existing state footprint that we have. And then the expectation is to expand the number of states in 2028. And as we get closer to that, we will give you a little bit more visibility on how many. But, again, all the work we are doing at, you know, 2025, 2026, part of 2027 We got to file service area expansions in February of 2027 28. So really a lot of the operational preparedness is in anticipation of scaling the business. And then, again, coming back to you with proof points on getting the same kind of the embedded earnings leverage in some of these new states. Okay. Thanks. Yep. Operator: Please stand by for our next question. Our next question comes from the line of Jonathan Young with UBS. Your line is open. Jonathan Young: Hey, thanks for taking the question. I just want to go back to the cost that is coming in Q3 and Q4. I guess, are any of these 1 time in nature or should we view these as ongoing costs? And then kind of similarly, as we think about how 2027 will shape up in relation to your growth strategy for 2028. Will we see these kind of investments where there may be a bolus, kinda leading up into the 2028 period? Thanks. James Head: Yeah, it is a really good question. And I think in the near term, the second half of this year, we saw some opportunity to make some investment but it I think, you know, the cardinal rule is it is always inside our commitments. On our guidance, but also on our commitments to continue to take our SG&A level down. So 1 of the themes that you will hear from us consistently is we wanna make investments in the business to lower cost and then we wanna take some of that savings and reinvest it back in the business. And I think you are seeing that in action in the in the in the second half of this year. On the SG&A front, investing back into new markets and branding, On the on the clinical side, we think we make those investments, and we are gonna get return in terms of 2 really important things. Our members benefit because we are we are helping to make them healthier. And we are avoiding cost. And so we think that, you know, that is a that is a win across the board. So all these investments we are making have returns We wanna keep it inside the guardrails of what we are committing to. Thanks. John E. Kao: Thank you. Operator: Our next question comes from the line of Parker Schmoore with Raymond James. Your line is open. Parker Schmoore: Hey, good afternoon. I was just wondering if you could talk about your performance in your SNP members versus non SNP members and how those are tracking relative to expectations? And just a follow on that, you are adding a fair amount of C SNP members this year, and you mentioned some higher acuity in your new member mix. Just curious if those 2 dynamics are related? James Head: Related and intentional. This year, we added 50% of our new members were in you know, C SNP eligible, D SNP eligible, and dual eligible. So, like, kind of the more acute categories. And what it what it the implications are, at least in the early part, that the MLR is a little bit elevated compared to a typical new member. But we are making that investment very intentionally because we think we can do very well with this cohort. it is You know, we our care model is really tailor made to help these populations and make them healthier and reduce costs. So when we when we positioned ourselves in 26, we intentionally understood that there is going to be a little bit of a burden on our MLR in the beginning. And we think we can make these members you know, create an MLR that is very favorable over time. And so that was the investment we made. Again, this is back to this balancing act between staying in line with our commitments but also investing for the future. Thank you. Thank you. Operator: Our next question comes from the line of Ryan Langston with TD Cowen. Ryan Langston: Great. Thanks. Maybe on the 2027 bids, just putting aside the particular makeup, could we still expect that you are targeting a 20% enrollment growth in 2027? James Head: I think that is fair. John E. Kao: Yeah. No. I think that is fair. Right. Yep. Okay. Ryan Langston: And then just I just wanna make sure. Maybe I missed this. I am sorry if I did. But, like, taking into account the suites benefit that was not guided for the $5 million EBITDA guidance raise at the midpoint and the investments you called out I think you said potentially double digit millions of EBITDA. Is it fair to say you could have raised the guide by that double digit million of EBITDA? Or were some of those investments already planned when you originally set the full year guide? James Head: Yeah. I understand the point. Could, you know, could you just say pass on the know, pass on the sweep, so to speak? In and of itself. And I do think we did make some we are consciously making some incremental investments in the second half that are a little bit above and beyond what we originally had planned for in our guidance. So inside the year, we are we are sticking to our commitments, but we are seeing some opportunity to make some further investments. Yeah. John E. Kao: Let's I will answer it this way. You know, if you guys look at the 10 k, you will see management is highly incentivized to get to at least $55 a share. Was just and so the way we are thinking about this is how do we do that? And part of that is in fact making these investments now in a year in which we are meeting high end expectations. I mean, it is like, why would not we do that? And so passing along, to you in a raise, may not have been in the best interest for long term ability to get through that target number. This is all about long term And the guys are going in and out, you know, sorry. You know? But everything we are doing here is going to be I am pretty sure everything we said we would do, we have done. Consistently. And the 1 thing we are very focused on is this portability and scale machine. Okay. Thanks. Thank you. Operator: Ladies and gentlemen, I am showing no further questions in the queue. That concludes today's conference call. Thank you for your participation. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Alignment Healthcare (ALHC) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Health Plan Membership: 294,100 members, up 31% year-over-year. Revenue: $1.3 billion, up 32% year-over-year. Adjusted Gross Profit: $183 million, with an adjusted MBR of 86.3%, improving 40 basis points year-over-year. Adjusted SG&A: $115 million, improving 20 basis points as a percentage of revenue to 8.6%. Adjusted EBITDA: $68 million, with a margin of 5.1%, representing 60 basis points of margin expansion year-over-year. First Half Adjusted EBITDA: $106 million, up 60% versus the prior year. Operating Cash Flow: $111 million generated during the first half of the year. Cash and Investments: $702 million in cash equivalents and short-term investments at quarter end. Funded Leverage Ratio: Improved to 2.2 times trailing 12-month EBITDA. Full-Year 2026 Guidance: Revenue of $5.20 billion-$5.23 billion; adjusted gross profit of $630 million-$650 million; adjusted EBITDA of $145 million-$163 million. Warning! GuruFocus has detected 2 Warning Sign with ALHC. Is ALHC fairly valued? Test your thesis with our free DCF calculator. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Alignment Healthcare Inc (NASDAQ:ALHC) reported strong second-quarter 2026 results with health plan membership growing 31% year-over-year to 294,100 and total revenue increasing 32% to $1.3 billion. The company achieved its lowest medical benefit ratio (MBR) as a public company at 86.3%, a 40-basis-point improvement year-over-year, driven by its Care Anywhere clinical model and the deployment of its new AVA AI-powered stratification model. Adjusted EBITDA for Q2 2026 grew 48% year-over-year to $68 million, with a margin of 5.1%, representing 60 basis points of margin expansion, and first-half adjusted EBITDA of $106 million was up 60% versus the prior year. The embedded gross profit potential of the current membership has grown to approximately $880 million, up from a $600 million opportunity identified in early 2025, indicating significant future earnings growth from existing members. The company raised its full-year 2026 guidance for membership, revenue, and the low end of adjusted gross profit and adjusted EBITDA ranges, reflecting increased confidence in its full-year objectives. Adjusted SG&A as a percentage of revenue improved to 8.6% in Q2, a 20-basis-point improvement year-over-year, demonstrating operating leverage and efficiency in the business model. The company generated $111 million in operating cash flow in the first half of 2026 and ended the quarter with a strong liquidity position of $702 million in cash and short-term investments, with funded leverage improving to 2.2 times. Management expressed high confidence in its 2027 product strategy and the progress of its investments in scalability and portability, positioning the company for continued growth and expansion into new markets. The company guided for a seasonally higher MBR in the third quarter of 2026 due to planned investments in clinical operations (Care Anywhere), an earlier ramp of clinical hiring, and a flatter Part D expense slope, which will impact second-half profitability. The company expects only approximately 30% of its full-year adjusted EBITDA to be generated in the second half of 2026, a decrease from approximately 40% in the prior year, due to the timing of investments and a flatter Part D MBR. The company reported a $6.5 million unfavorable prior-year development in Q2 2026, which it chose to address by bolstering its reserves, indicating some pressure on prior-period claims costs. The final sweep pickup related to new members was smaller than the prior year on a per-member basis, partly due to the impact of the V28 risk adjustment model, which negatively affected the reported MBR. The company is making significant incremental investments in the second half of 2026, potentially in the double-digit millions, which will temper near-term earnings growth despite strong first-half performance. Management noted that approximately 50% of its members are still in their first or second year, which carries a higher MBR and represents a drag on current profitability until these cohorts mature. The company is facing a more competitive 2027 bidding environment, with management expecting one to three players to become more aggressive, which could pressure growth or margins. The company decided to stop providing detailed quarterly disclosure of its ADK (Acuity, Demographics, and Kronos) metric, citing that it creates noise and does not reflect the overall health of the operation, potentially reducing transparency for investors. Q: Can you provide more detail on the timing and nature of the investments driving the Q3 guidance, how transitory they are, and what benefits you see in the back half of the year and into 2027-2028? A: Jim Head (CFO) explained that the Q3 guide is driven by seasonality and investment aspects. The investments are being made in two areas: clinical operations (Care Anywhere) to prepare for new market growth, which will impact the MBR, and SG&A for automation and AI initiatives to prepare for 2027 market launches. These are deliberate, double-digit million investments in the second half, weighted slightly higher in Q3, designed to position the company for long-term returns while still delivering on 2026 commitments. Q: I am backing into roughly $6 million fleet benefit. Is that right? Any reason why it is smaller than last year? Also, can you elaborate on the $6.5 million unfavorable prior year development and the underlying Q2 MLR excluding both items? A: Jim Head (CFO) confirmed the sweep benefit was smaller on a per-member basis due to the mix impact of V28 rolling into 2025 dates of service. Regarding prior period reserves, the company chose to bolster reserves by about $6 million in Q2 after a strong quarter, and year-to-date prior year development is favorable by about $2 million. He noted that excluding the sweep and adding back the prior period, the underlying MBR would be roughly the same level. Q: Can you talk about the Q3 seasonality in terms of Part D and new member mix, and why it's different? A: Jim Head (CFO) stated that the Part D slope is flatter between the first and second half of the year compared to last year, due to behavior in the second year post-IRA. The new member mix has more acuity, adding a bit more to the MBR across the board, which is heavier compared to Q2 last year. The investments in clinical infrastructure are also a big piece of the Q3 uptick. Q: Can you share the ADK metric for the quarter or year-to-date, and offer perspective on 2027 bids and how the industry will approach them? A: Jim Head (CFO) noted ADK improved sequentially to the mid-150s, in line with expectations, but stated the company will move away from digitally disclosing it every quarter as it creates noise and doesn't affect the overall health of the operation. John Kao (CEO) said it's too early to talk about 2027 bids, but he feels very strong about the product strategy and the focus on scale and portability. He expects a mixed bag in the industry, with one to three players that have not been aggressive recently potentially becoming more aggressive. Q: In your discussions, do you have a view or expectation of what we might see from CMS when they roll out the new technical rule? A: John Kao (CEO) stated the company is not privy to the rule and doesn't have visibility into it. He speculated that if anything caused it to arrive at OMB early, it would likely be related to Stars, but he doesn't know the technical details. Q: Can you provide a little bit of disclosure about how the California versus non-California businesses performed? A: Jim Head (CFO) clarified that statutory filings in California are not necessarily linked to GAAP consolidated financials. The mature California market is performing quite well, while non-California markets have seen substantial growth. The right way to think about it is cohort maturationmore mature portfolios see improving MLRs. There is a lot of embedded value in ex-California states, and the company is tracking to expectations across both arenas. Q: Is the long-term MBR framework (93% year one and 82.1% year five) still valid after three years of V28, and how is Alignment positioning for potentially more aggressive competitors in 2027? A: John Kao (CEO) confirmed the cohort tracking and trending is directionally consistent with what was shared last year. The positioning around embedded earnings potential is predicated on that. The focus on portability is to realize the same earnings power in new markets as in California, which inherently means a higher MLR due to growth. The company is making investments to scale the business and is preparing for new market expansions in 2027 and 2028. Q: How are the activities around centralizing critical clinical and medical management functions going, and do the clinical investments in Q3 relate to completing those centralization functions? A: John Kao (CEO) explained the company is building out an end-to-end operational business model that incorporates different contracting strategies, whether globally capping with a provider or shared risk arrangements. This gives strategic flexibility to engage providers at their comfort level and create alignment. The investments are continuations of this theme, including improvements to the stratification model, chart prep automation, and AI for back-end administrative functions. The strategy is working, with the company surplusing and gain-sharing more with providers. Q: Are any of the costs coming in Q3 and Q4 one-time in nature, or should we consider these ongoing costs? Will we see a bolus of investments leading up to the 2028 period? A: Jim Head (CFO) stated the cardinal rule is to keep investments inside commitments on guidance and to continue taking SG&A levels down. The company wants to make investments to lower costs and reinvest savings back into the business. On the clinical side, investments are expected to return value by making members healthier and avoiding costs. All investments have returns and are kept inside the guardrails of commitments. Q: Can you talk about your performance in SNF members versus non-SNF members, and are the higher acuity new members related to the C-SNP additions? A: Jim Head (CFO) confirmed that 50% of new members were C-SNP eligible, D-SNP eligible, and dual eligible, which is intentional. The MLR is a little elevated compared to a typical new member, but the care model is tailor-made to help these populations and reduce costs over time. This was an intentional investment in 2026, understanding there would be a burden on MLR in the beginning, with the expectation of favorable MLR over time. Q: On the 2027 bids, could we still expect that you're targeting a 20% enrollment growth in 2027 For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Generates $1.3 billion in total revenue, representing 31.6% growth year-over-year Grows Medicare Advantage membership 31.5% year-over-year to approximately 294,100 members Raises the midpoint of all full-year guidance metrics: membership, revenue, adjusted gross profit and adjusted EBITDA ORANGE, Calif., July 30, 2026 (GLOBE NEWSWIRE) -- Alignment Healthcare, Inc. (NASDAQ: ALHC), today reported financial results for its second quarter ended June 30, 2026. “Our second quarter results underscore the strength of our purpose-built Medicare Advantage platform and place us in a strong position to deliver upon our full-year objectives," said John Kao, chairman and CEO. “We are continuing to realize the benefits of ongoing investments we have made across our clinical model, AI-enabled capabilities and operational infrastructure. These financial results are a reflection of how we are delivering for our seniors and demonstrate that better outcomes, stronger member experiences and sustainable profitable growth can all go hand in hand." Second Quarter 2026 Financial HighlightsAll comparisons, unless otherwise noted, are to the three months ended June 30, 2025. Health plan membership at the end of the quarter was approximately 294,100, up 31.5% year-over-year Total revenue was $1,335.6 million, up 31.6% year-over-year Adjusted gross profit* was $182.9 million, up 35.3% year-over-year, and income from operations was $42.1 million Adjusted EBITDA* of $68.1 million represented an adjusted EBITDA margin of 5.1% and grew 48.4% year-over-year, while net income was $36.6 million, compared to $15.7 million the year prior * Please see "Second Quarter 2026 Non-GAAP Reconciliation Tables" below for more information on the non-GAAP financial measures reported here as supplemental information. Outlook for Third Quarter and Fiscal Year 2026 Second Quarter 2026 Non-GAAP Reconciliation Tables Adjusted Gross Profit(1) is reconciled as follows: Adjusted EBITDA(1) is reconciled as follows: Conference Call DetailsThe company will host a conference call at 5 p.m. EDT today to discuss these results and management’s outlook for future financial and operational performance. A live audio webcast will be available online at https://ir.alignmenthealth.com/. At the start of the conference call, participants may access the webcast at the following link: https://edge.media-server.com/mmc/p/wpvyxfni. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web links, and will remain available for approximately 12 months. About Alignment HealthAlignment Health is championing a new path in senior care that empowers members to age well and live their most vibrant lives. A consumer brand name of Alignment Healthcare (NASDAQ: ALHC), Alignment Health’s mission-focused team makes high-quality, low-cost care a reality for its Medicare Advantage members every day. Based in California, the company partners with nationally recognized and trusted local providers to deliver coordinated care, powered by its customized care model, 24/7 concierge care team and purpose-built technology, AVA®. As it expands its offerings and grows its national footprint, Alignment upholds its core values of leading with a serving heart and putting the senior first. For more information, visit www.alignmenthealth.com. Forward-Looking Statements This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements include statements regarding our future growth and our financial outlook for the quarter ending September 30, 2026, and year ending Dec. 31, 2026. Forward-looking statements are subject to risks and uncertainties and are based on assumptions that may prove to be inaccurate, which could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. Important risks and uncertainties that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: our ability to attract new members and enter new markets, including the need for certain governmental approvals; our ability to maintain a high rating for our plans on the Five Star Quality Rating System; our ability to develop and maintain satisfactory relationships with care providers that service our members; risks associated with being a government contractor, including potential federal reductions in MA funding; changes in laws and regulations applicable to our business model; risks related to our indebtedness; changes in market or industry conditions and receptivity to our technology and services; results of litigation or a security incident; and the impact of shortages of qualified personnel and related increases in our labor costs. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our Annual Report on Form 10-K for the year ended Dec. 31, 2025, and the other periodic reports we file with the SEC. All information provided in this release and in the attachments is as of the date hereof, and we undertake no duty to update or revise this information unless required by law. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets to the total above: Non-GAAP Financial Measures Certain of these financial measures are considered “non-GAAP” financial measures within the meaning of Item 10 of Regulation S-K promulgated by the SEC. We believe that non-GAAP financial measures provide an additional way of viewing aspects of our operations that, when viewed with the GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business. These non-GAAP financial measures are also used by our management to evaluate financial results and to plan and forecast future periods. However, non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Non-GAAP financial measures used by us may differ from the non-GAAP measures used by other companies, including our competitors. To supplement our consolidated financial statements presented on a GAAP basis, we disclose the following non-GAAP measures: Medical Benefits Ratio, Adjusted EBITDA and Adjusted Gross Profit as these are performance measures that our management uses to assess our operating performance. Because these measures facilitate internal comparisons of our historical operating performance on a more consistent basis, we use these measures for business planning purposes and in evaluating acquisition opportunities. Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) before interest expense, income taxes, depreciation and amortization expense, certain litigation costs, gains or losses on sale of property and equipment, and equity-based compensation expense. Adjusted EBITDA should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA in lieu of net income (loss), which is the most directly comparable financial measure calculated in accordance with GAAP. Our use of the term Adjusted EBITDA may vary from the use of similar terms by other companies in our industry and accordingly may not be comparable to similarly titled measures used by other companies. Medical Benefits Ratio (MBR) We calculate our MBR by dividing total medical expenses, excluding depreciation, and medical equity-based compensation, by total revenues in a given period. Adjusted Gross Profit Adjusted gross profit is a non-GAAP financial measure that we define as income (loss) from operations before depreciation and amortization, medical equity-based compensation expense, and selling, general, and administrative expenses. Adjusted gross profit should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of adjusted gross profit in lieu of income (loss) from operations, which is the most directly comparable financial measure calculated in accordance with GAAP. Our use of the term adjusted gross profit may vary from the use of similar terms by other companies in our industry and accordingly may not be comparable to similarly titled measures used by other companies. Investor Contact Harrison [email protected] Media Contact Jerry [email protected]

Interested in Alignment Healthcare, Inc.? Here are five stocks we like better. Strong second-quarter performance: Membership rose 31% year over year to 294,100, while revenue increased 32% to $1.3 billion. Adjusted EBITDA grew to $68 million, with the medical benefit ratio improving to 86.3%. Full-year outlook raised: Alignment increased its membership forecast to 298,000–301,000 and raised the low ends of its adjusted gross profit and adjusted EBITDA ranges to $630 million and $145 million, respectively. Investments will weigh on near-term seasonality: Planned spending on clinical operations, automation, AI and future market launches is expected to reduce the share of EBITDA generated in the second half of 2026, while supporting targeted 2027 enrollment growth of roughly 20%. ALHC Stock Surges 400%—Here’s Why the Bulls Aren’t Done Alignment Healthcare (NASDAQ:ALHC) reported second-quarter growth in membership, revenue and adjusted EBITDA, while raising the low end of its full-year profitability outlook and increasing its membership expectations for 2026. Chairman and CEO John Kao said health plan membership reached 294,100 at the end of the second quarter, up approximately 31% from a year earlier. Revenue rose 32% year-over-year to $1.3 billion. The company reported adjusted gross profit of $183 million and adjusted EBITDA of $68 million, representing year-over-year increases in profitability and margins. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now “This quarter marks our lowest MBR as a public company,” Kao said, referring to the medical benefit ratio. The company’s adjusted MBR was 86.3%, an improvement of roughly 40 basis points from the prior-year period. Adjusted EBITDA margin expanded 60 basis points year-over-year to 5.1%. Alignment generated $106 million in adjusted EBITDA during the first half, up 60% from the prior-year period. Chief Financial Officer Tim Head said the first-half performance put the company on track to achieve its full-year adjusted EBITDA guidance midpoint of $154 million. → 3 Value ETFs to Consider as Growth Stocks Lag Behind The company generated $111 million in operating cash flow during the first half and ended the quarter with $702 million in cash equivalents and short-term investments. Its funded leverage ratio improved to 2.2 times trailing 12-month EBITDA, according to Head. For the full year, Alignment now expects: Health plan membership of 298,000 to 301,000 members; Revenue of $5.20 billion to $5.23 billion; Adjusted gross profit of $630 million to $650 million; and Adjusted EBITDA of $145 million to $163 million. → 5 AI Stocks Are Pulling Back—Which Growth Catalysts Still Look Strongest? The revised guidance raises the company’s membership outlook following what management described as continued strength in sales execution. Alignment also lifted the low end of its adjusted gross profit outlook by $10 million and the low end of its adjusted EBITDA range by $7 million. For the third quarter, the company forecast membership of 295,500 to 297,500, revenue of $1.30 billion to $1.32 billion, adjusted gross profit of $148 million to $158 million, and adjusted EBITDA of $20 million to $30 million. Management said it expects approximately 30% of full-year adjusted EBITDA to be generated in the second half of 2026, compared with about 40% in the second half of the prior year. The shift reflects a flatter expected Part D medical benefit ratio trend as well as planned investments in clinical operations and other capabilities during the third quarter. Head said third-quarter spending will include investments in Care Anywhere clinical operations, earlier hiring for anticipated market growth, automation, artificial intelligence and preparation for market launches in 2027. He said the investments could total an additional double-digit number of millions of dollars across clinical and SG&A categories during the second half, with a greater weighting in the third quarter. Management said those expenditures are included within its 2026 financial commitments and are intended to generate returns in future periods. The company expects a seasonally higher MBR in the third quarter than in the prior year, in part due to clinical investment, new-member mix and Part D trends. “All these investments we’re making have returns, and we want to keep it inside the guardrails of what we’re committing to,” Head said. Kao said the company continues to invest in its Care Anywhere clinical teams and its AVA artificial intelligence-powered member stratification model. He said the newest version of the model can dynamically identify the 10% of members that account for nearly 70% of hospital admissions over the following 30 days. The company is also using disease-state registries and automation tools to support more proactive member engagement. Kao said Alignment’s approach to AI is based on clinical expertise and includes a governance framework focused on responsible use, human accountability and equitable treatment of members. Alignment said about half of its members remain in their first or second year with the company, creating what management views as embedded earnings potential as cohorts mature. Kao said the midpoint of 2026 guidance implies $640 million in adjusted gross profit, while the embedded gross-profit potential of current membership has risen to approximately $880 million. Management said its newer markets outside California carry a higher MBR because of their younger membership cohorts, but it expects margins to improve as those members mature and engage with the company’s care programs. Kao said Alignment’s mature California business is performing well and that the company is pleased with year-to-date results in its non-California markets. Alignment said it plans meaningful market expansions within its existing state footprint in 2027, while broader state expansion is expected in 2028. Kao said the company is building operational capabilities that can support various provider contracting arrangements, including globally capitated, shared-risk and directly contracted models. The company is also increasing its clinical infrastructure and administrative capabilities to support growth. Kao said these efforts are designed to create “scale and portability” across markets and allow Alignment to manage medical risk while supporting providers. Management said it expects to target roughly 20% enrollment growth in 2027. It also noted that 50% of new members added in 2026 were C-SNP eligible, D-SNP eligible or dual eligible, categories that may have higher acuity and initially higher medical costs. The company said it intentionally invested in those populations because it believes its care model can improve health outcomes and reduce costs over time. Alignment Healthcare, Inc (NASDAQ: ALHC) is a health care company specializing in value-based care for Medicare Advantage beneficiaries. The company leverages an integrated care model that combines in-home clinical services, telehealth capabilities and digital health tools to manage chronic conditions, improve outcomes and enhance patient experience. At the core of Alignment Healthcare's approach is a proprietary technology platform that aggregates real-time clinical and claims data to support preventive care, risk stratification and personalized care plans. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Alignment Healthcare Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Alignment Healthcare (ALHC) came out with quarterly earnings of $0.17 per share, beating the Zacks Consensus Estimate of $0.13 per share. This compares to earnings of $0.07 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +30.77%. A quarter ago, it was expected that this Medicare Advantage insurer would post earnings of $0.01 per share when it actually produced earnings of $0.05, delivering a surprise of +400%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Alignment Healthcare, which belongs to the Zacks Medical Services industry, posted revenues of $1.34 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.97%. This compares to year-ago revenues of $1.02 billion. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Alignment Healthcare shares have lost about 7.4% since the beginning of the year versus the S&P 500's gain of 6.9%. While Alignment Healthcare has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Alignment Healthcare was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.06 on $1.32 billion in revenues for the coming quarter and $0.20 on $5.19 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Medical Services is currently in the top 31% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Cencora (COR), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 5. This prescription drug distributor is expected to post quarterly earnings of $4.37 per share in its upcoming report, which represents a year-over-year change of +9.3%. The consensus EPS estimate for the quarter has been revised 1.3% higher over the last 30 days to the current level. Cencora's revenues are expected to be $84.89 billion, up 5.2% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Alignment Healthcare, Inc. (ALHC) : Free Stock Analysis Report Cencora, Inc. (COR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research