Health insurance company Alignment Healthcare (NASDAQ: ALHC) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 43.5% year on year to $993.7 million. Guidance for next quarter’s revenue was optimistic at $1.00 billion at the midpoint, 2.4% above analysts’ estimates. Its GAAP profit of $0.02 per share was significantly above analysts’ consensus estimates.

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“Our third quarter results mark the third consecutive quarter in which we surpassed the high end of our guidance across all key metrics,” said John Kao, founder and CEO.

Company Overview

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.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Alignment Healthcare’s sales grew at an incredible 32% compounded annual growth rate over the last five years. Its growth surpassed the average healthcare company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Alignment Healthcare’s annualized revenue growth of 45.4% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

We can better understand the company’s revenue dynamics by analyzing its number of customers, which reached 229,600 in the latest quarter. Over the last two years, Alignment Healthcare’s customer base averaged 41.2% year-on-year growth. Because this number is lower than its revenue growth, we can see the average customer spent more money each year on the company’s products and services.

This quarter, Alignment Healthcare reported magnificent year-on-year revenue growth of 43.5%, and its $993.7 million of revenue beat Wall Street’s estimates by 1.2%. Company management is currently guiding for a 43% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 29.1% over the next 12 months, a deceleration versus the last two years. Still, this projection is commendable and indicates the market is baking in success for its products and services.

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Operating Margin

Although Alignment Healthcare broke even this quarter from an operational perspective, it’s generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 5.2% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out.

On the plus side, Alignment Healthcare’s operating margin rose by 14.7 percentage points over the last five years, as its sales growth gave it operating leverage. Zooming in on its more recent performance, we can see the company’s trajectory is intact as its margin has also increased by 8.1 percentage points on a two-year basis. These data points are very encouraging and show momentum is on its side.

In Q3, Alignment Healthcare’s breakeven margin was up 3.6 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Alignment Healthcare’s earnings losses deepened over the last five years as its EPS dropped 14.8% annually. However, it’s bucked its trend as of late, increasing its EPS over the last three years. We’ll see if it can maintain its growth.

In Q3, Alignment Healthcare reported EPS of $0.02, up from negative $0.14 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street is optimistic. Analysts forecast Alignment Healthcare’s full-year EPS of negative $0.12 will reach break even.

Key Takeaways from Alignment Healthcare’s Q3 Results

It was good to see Alignment Healthcare beat analysts’ revenue and EPS expectations this quarter. We were also glad its full-year EBITDA guidance trumped Wall Street’s estimates. Overall, we think this was a strong quarter with some key metrics above expectations. The stock traded up 8.1% to $18.58 immediately following the results.

Alignment Healthcare put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.