Health insurance company Alignment Healthcare (NASDAQ:ALHC) reported Q2 CY2026 results topping the market's revenue expectations , with sales up 31.6% year on year to $1.34 billion. The company expects next quarter's revenue to be around $1.31 billion, close to analysts' estimates. Its GAAP profit of $0.17 per share was 29.8% above analysts' consensus estimates.
Revenue: $1.34 billion vs analyst estimates of $1.31 billion (31.6% year-on-year growth, 2% beat)
EPS (GAAP): $0.17 vs analyst estimates of $0.13 (29.8% beat)
Adjusted EBITDA: $68.15 million vs analyst estimates of $57.47 million (5.1% margin, 18.6% beat)
The company slightly lifted its revenue guidance for the full year to $5.21 billion at the midpoint from $5.18 billion
EBITDA guidance for the full year is $154 million at the midpoint, in line with analyst expectations
Operating Margin: 3.2%, in line with the same quarter last year
Free Cash Flow was -$27.46 million, down from $21.13 million in the same quarter last year
Customers: 294,100, up from 284,800 in the previous quarter
Market Capitalization: $3.78 billion
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 sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, Alignment Healthcare's 33.8% annualized revenue growth over the last five years was incredible. Its growth surpassed the average healthcare company and shows its offerings resonate with customers, a great starting point for our analysis.
Alignment Healthcare Quarterly Revenue
Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Alignment Healthcare's annualized revenue growth of 43.2% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.
Alignment Healthcare Year-On-Year Revenue Growth
This quarter, Alignment Healthcare reported wonderful year-on-year revenue growth of 31.6%, and its $1.34 billion of revenue exceeded Wall Street's estimates by 2%. Company management is currently guiding for a 31.8% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 27.4% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is healthy and implies the market is baking in success for its products and services.
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Adjusted Operating Margin
Alignment Healthcare was roughly breakeven when averaging the last five years of quarterly operating profits, lousy for a healthcare business.
On the plus side, Alignment Healthcare's adjusted operating margin rose by 4.4 percentage points over the last five years, as its sales growth gave it operating leverage. The company's two-year trajectory shows its performance was mostly driven by its recent improvements. These data points are very encouraging and show momentum is on its side.
In Q2, Alignment Healthcare generated an adjusted operating margin profit margin of 4.5%, in line with the same quarter last year. This indicates the company's overall cost structure has been relatively stable.
Earnings Per Share
Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales 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.
Alignment Healthcare Trailing 12-Month EPS (GAAP)
In Q2, Alignment Healthcare reported EPS of $0.17, up from $0.07 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 expects Alignment Healthcare's full-year EPS to grow 68.2% from $0.19 to $0.31.
Key Takeaways from Alignment Healthcare's Q2 Results
It was good to see Alignment Healthcare beat analysts' EPS expectations this quarter. We were also happy its revenue outperformed Wall Street's estimates. On the other hand, its EBITDA guidance for next quarter missed and its revenue guidance for next quarter was in line with Wall Street's estimates. Overall, this print was mixed but still had some key positives. The market seemed to be hoping for more, and the stock traded down 9.6% to $16.79 immediately after reporting.
