Alignment Healthcare, Inc. (ALHC) Q2 2026 Earnings: Revenue $1.3B (+31.6%)
ALHC — Q2 2026 Financial Report Analysis
Q2 · Fiscal year 2026 · Published by Pham Hop
Alignment Healthcare grew revenue 31.6% to $1.34 billion on 31.5% membership growth, and net income more than doubled to $36.6 million as its medical benefits ratio improved to 86.3%; full-year guidance was raised, though by less than the Q2 beat.
Revenue
$1.3B
+31.6% YoY
Net income
$37M
+133.6% YoY
Diluted EPS
$0.17
+142.9% YoY
Operating margin
3.2%
This period vs a year ago
Same period last year
This period
Revenue▲+31.6%
≈$1.0B
$1.3B
Net income▲+133.6%
≈$16M
$37M
Diluted EPS▲+142.9%
≈$0.07
$0.17
Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.
Overview
Alignment Healthcare runs Medicare Advantage plans — private health plans that the federal government (through CMS, the Centers for Medicare & Medicaid Services) pays a fixed monthly amount per senior to cover that person's care. In the second quarter of 2026 it grew revenue 31.6% to $1,335.6 million, almost entirely because it had 31.5% more members (about 294,100 versus 223,700 a year earlier). What turned that growth into a doubling of profit was cost control on two fronts: medical costs took a slightly smaller share of revenue, and overhead grew more slowly than sales. Net income rose to $36.6 million from $15.7 million, and the quarter beat the top of every range management had given for it.
At a glance
Revenue $1,335.6M, +31.6%: growth came from adding members, not from collecting more per member — premiums per period-end member were roughly $1,500 a month in both years.
Medical benefits ratio 86.3%, down from 86.7%: of every premium dollar, 86.3 cents went to members' care; the 0.4-point improvement is what lets a thin-margin insurer's profit grow faster than its sales.
Net income $36.6M, +133.6%: still only a 2.7% net margin — on $1.3 billion of revenue, small swings in medical costs move profit a lot.
Q2 2026 results
Metric
Q2 2026
Q2 2025
YoY Change
Total revenue
$1,335.6M
$1,015.3M
+31.6%
Earned premiums
$1,326.6M
$1,006.2M
+31.8%
Health plan members (period end)
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~294,100
~223,700
+31.5%
Medical benefits ratio (MBR)
86.3%
86.7%
-0.4 pts
SG&A as % of revenue
9.8%
10.2%
-0.4 pts
Income from operations
$42.1M
$22.7M
+85.1%
Operating margin
3.2%
2.2%
+1.0 pts
Net income
$36.6M
$15.7M
+133.6%
Diluted EPS
$0.17
$0.07
+142.9%
Adjusted EBITDA (non-GAAP)
$68.1M
$45.9M
+48.4%
Operating margin is income from operations divided by total revenue. EPS change is computed from the reported per-share figures, which are rounded to the cent.
What drove the quarter
Membership. The 10-Q attributes the $320.4 million rise in earned premiums "primarily" to the 31.5% growth in health plan membership. Most of that growth arrives on January 1, when seniors' choices from the autumn enrollment window take effect, but membership kept rising through the year — from about 284,800 at the end of March to 294,100 at the end of June. The company also left Medicare's ACO REACH program (a separate arrangement where it shared savings on traditional-Medicare patients) on January 1, 2026, which is why "other" revenue slipped 0.8% to $9.0 million even as interest income on its larger cash pile rose to $8.1 million from $6.7 million.
Medical costs. The medical benefits ratio (MBR) is the company's version of what the industry calls the medical loss ratio: medical expenses (excluding depreciation and stock-based pay booked there) divided by revenue. It is the single most important number for a health plan, because the 13-14 cents left over from each premium dollar must cover all overhead and profit. Medical expenses rose 31.0% to $1,154.7 million — slightly slower than revenue — which the filing attributes to membership growth, "higher benefits for members in certain plans and an increase in unit costs" (higher prices per doctor visit or hospital stay). The net result was an MBR of 86.3%, 0.4 points better than a year ago. For the first half, MBR was 87.2% versus 87.5%.
Overhead. Selling, general and administrative expenses (SG&A — sales, marketing, technology, staff) rose 26.2% to $131.0 million, five points slower than revenue, which the filing puts down to "economies of scale gained from Alignment's membership growth." That took SG&A from 10.2% to 9.8% of revenue. Combined with the MBR gain, operating income rose 85.1% to $42.1 million.
Quality ratings. The 10-Q states that 100% of the company's health plan members are in plans rated 4 stars or above under CMS's Star Ratings — the government's quality scores, which pay higher-rated plans bonus money. The ratings announced in the second half of 2025 feed into 2027 payments, so this is a 2027 revenue support rather than a 2026 one.
Takeaway: Alignment grew its membership by almost a third without losing control of medical costs — the usual failure mode for fast-growing Medicare Advantage plans, because new members tend to cost more than revenue covers in their first year. Profit doubled on less than half a point of improvement in both the medical-cost ratio and overhead ratio, which shows how thin the margin is: an equally small move the other way would erase much of it.
What the headline numbers hide
The MBR improvement absorbed a reserve hit. Each quarter the company re-estimates what it still owes for care delivered in earlier periods. In Q2 it booked $6.5 million of unfavorable prior-year development (excluding its provision for adverse deviation) — prior claims came in higher than estimated, which the filing blames on "worse-than-expected claims recoveries and actual claims expense being more than expected." That equals about 0.5% of the quarter's revenue, so the 86.3% MBR was achieved despite it. For the first half as a whole, development was still a small $1.8 million favorable, meaning Q1 had a release that Q2 partly reversed. One quarter of adverse development is not a trend, but it is the first thing to check in Q3.
Net income grew faster than pre-tax profit because of tax. Pre-tax income doubled (+100.4%, to $37.8 million), while net income rose 133.6%: the tax charge fell to $1.3 million from $3.2 million (a change in state taxes, per the 10-Q). The company carries a full valuation allowance against its tax assets — accumulated past losses (net operating losses) shelter federal income — so its effective tax rate (3.3% this quarter) is far below what a normally taxed company would pay. That will not last indefinitely if profits continue.
The adjusted-to-GAAP gap is mostly stock pay. Adjusted EBITDA of $68.1 million versus net income of $36.6 million: the largest add-back is $18.2 million of equity-based compensation, about half of net income. Stock pay is a real cost to shareholders: diluted share count rose 2.6% to 215.0 million and there are no buybacks, so EPS growth here came entirely from operations, not from a shrinking share count.
Cash conversion is strong, partly on timing. First-half operating cash flow was $111.4 million against net income of $48.0 million. Health plans collect premiums before paying claims, so a growing plan generates cash; the filing also credits "the timing of accounts receivable settlements." Medical expenses payable rose to $612.7 million from $474.6 million at December — cash owed to doctors and hospitals that sits on the balance sheet until paid.
Prepaids and receivables grew. Prepaid expenses and other current assets rose to $161.8 million from $94.1 million at year-end, and accounts receivable to $296.9 million from $253.2 million. Comparing mid-year to year-end balances is imperfect for a business this seasonal, but those two lines are worth watching against revenue growth.
Revenue per member is flat. The filing notes that per-member revenue usually declines through the year, as new members arrive with less complete medical documentation (and therefore lower risk-adjustment scores — CMS pays more for sicker members once their conditions are recorded). Premiums divided by period-end members were essentially unchanged year on year at about $1,500 a month, so the growth story is volume, not pricing.
Balance sheet
Cash, cash equivalents and short-term investments were $701.7 million at June 30 (versus $503.7 million a year earlier), though most of it sits inside state-regulated health plan subsidiaries; the operating parent held $135.4 million. Debt is $330 million of 4.25% convertible notes due November 2029 (convertible at about $16.04 per share). In February 2026 the company added a $200 million revolving credit line from Citibank, undrawn at quarter-end; its covenants require trailing-four-quarter Consolidated EBITDA (as defined in the credit agreement) of at least $60 million from June 2026, a bar the current run-rate clears comfortably. Shareholders' equity rose to $265.1 million from $179.3 million at year-end.
Outlook
Management raised the midpoint of every full-year 2026 guidance metric in its July 30 earnings release:
2026 full-year guidance
After Q1 (Apr 30)
After Q2 (Jul 30)
Health plan membership
294,000–299,000
298,000–301,000
Revenue
$5,160M–$5,205M
$5,195M–$5,225M
Adjusted gross profit (non-GAAP)
$620M–$650M
$630M–$650M
Adjusted EBITDA (non-GAAP)
$138M–$163M
$145M–$163M
Q2 itself landed above the top of its own guidance on every line: revenue $1,335.6 million (guided $1,295–1,315 million), adjusted EBITDA $68.1 million (guided $50–60 million), adjusted gross profit $182.9 million (guided $167–177 million) and membership 294,100 (guided 288,000–290,000).
The raise was smaller than the beat, though. First-half adjusted EBITDA was $106.0 million, so the new full-year range implies $39–57 million for the second half; before Q2, the guidance implied roughly $58 million at the midpoint for the second half. In other words, management kept most of the Q2 outperformance but trimmed what it expects from the rest of the year. Q3 guidance is $1,300–1,320 million of revenue and only $20–30 million of adjusted EBITDA, down sharply from Q2's $68.1 million. Some of that is the business's normal seasonality — the 10-Q says marketing spending concentrates in the second half, ahead of the October 15 – December 7 enrollment window, and medical costs per member run higher in the fourth quarter — but the lower implied second half also leaves room for the cost pressure hinted at by Q2's adverse reserve development.
Our read: The growth and cost discipline are real in the numbers, and the balance sheet is no longer a constraint. What matters for the stock from here is (1) whether Q3 shows any more adverse prior-period claims development, (2) whether MBR holds near the first half's 87.2% as the year's members age into their usual cost pattern, and (3) how many new members the autumn 2026 enrollment season brings for 2027, when the 4-star-plus ratings support revenue. Q3 results are expected around late October, based on the company's roughly 90-day reporting cadence.