Health insurance company Alignment Healthcare (NASDAQ:ALHC) reported Q3 2026 results beating Wall Street's revenue expectations , with revenue up 36.7% year on year to $1.36 billion. Revenue guidance for the full year exceeded analysts' consensus estimates, but next quarter's guidance of $1.32 billion was less impressive, coming in 1.3% below expectations. Its GAAP loss of $0.04 per share was in line with analysts' consensus estimates.
For more on Alignment Healthcare, read our full research report .
Alignment Healthcare (ALHC) Q3 2026 highlights:
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Revenue$1.36 billion vs S&P analysts' consensus estimates of $1.31 billion (36.7% year-on-year growth, 3.4% beat)
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EPS (GAAP)-$0.04 vs analysts' consensus estimates of -$0.04 (in line)
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Adjusted EBITDA$21.81 million vs analysts' consensus estimates of $22.25 million (1.6% margin, 2% miss)
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Revenue guidance$1.32 billion at the midpoint for Q4 2026, below analysts' consensus estimates of $1.33 billion
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EBITDA guidance$100 million at the midpoint for the full year, below analysts' consensus estimates of $147.8 million
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Operating margin-0.3%, down from 0.8% in the same quarter last year
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Free cash flow margin2.8%, down from 14% in the same quarter last year
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Customers301,200, up from 294,100 in the previous quarter
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Market capitalization$1.7 billion
"Our third-quarter membership and revenue growth demonstrate continued demand for Alignment's products and services, while medical trends ran higher than expected," said John Kao, chairman and CEO. "We are taking a prudent approach to the fourth quarter and lowering our outlook based on current headwinds. Our revised guidance does not assume any benefit from the actions underway. We are confident we can deliver against these expectations. Our focus now is on execution and taking the steps necessary to drive more consistent performance as we scale and deliver profitable growth over the long term."
Revenue growth
Examining a company's long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Alignment Healthcare's revenue grew at a rapid 34.8% compounded annual growth rate over the last five years. Its growth surpassed the average healthcare company and shows its offerings resonate with customers.
Long-term growth matters the most, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Alignment Healthcare's annualized revenue growth of 41.5% over the last two years is above its five-year trend, suggesting demand was strong and recently accelerated.
The company's customer count, which reached 301,200 in the latest quarter, provides insight into its revenue dynamics. Over the last two years, Alignment Healthcare's customer base averaged 28.9% year-on-year growth. Revenue growth outpaced customer growth, indicating that the average customer spent more each year on the company's products and services.
This quarter, Alignment Healthcare reported year-on-year revenue growth of 36.7%, and its $1.36 billion of revenue exceeded Wall Street's consensus estimates by 3.4%. Management is currently guiding for a 29.9% year-on-year increase in revenue next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 25.1% over the next 12 months, according to S&P, a deceleration versus the last two years. Despite the slowdown, this projection is strong and indicates the market expects success for its products and services.
Adjusted operating margin
Alignment Healthcare was roughly breakeven when averaging the last five years of quarterly operating profits, a poor result for a healthcare business.
On the positive side, Alignment Healthcare's adjusted operating margin rose by 4.3 percentage points over the last five years, as its revenue growth provided operating leverage. The company's two-year trajectory shows its performance was mostly driven by its recent improvements. Together, these data points indicate positive momentum.
In Q3, Alignment Healthcare reported an adjusted operating margin of 1%, down 1.5 percentage points year on year. This small decline indicates the company's overall cost structure has been relatively stable.
Earnings per share
Long-term changes in earnings per share (EPS) matter 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 full-year EPS turned positive over the last five years. This is a positive sign and shows it's at an inflection point.
In Q3, Alignment Healthcare reported EPS of negative $0.04, down from $0.02 in the same quarter last year. This result slightly missed analysts' consensus estimates, but long-term EPS growth matters more than short-term movements. Over the next 12 months, Wall Street expects Alignment Healthcare's full-year EPS to grow 118% from $0.13 to $0.28, according to S&P.
Key takeaways from Alignment Healthcare's Q3 results
Alignment Healthcare's outlook was uneven: full-year revenue guidance came in slightly above Wall Street's consensus, but full-year EBITDA guidance missed and next-quarter EBITDA guidance also fell short of consensus estimates. Revenue beat analysts' consensus estimates this quarter, but the overall results could have been better. Shares tumbled 8.9% to $7.30 immediately after the release.
Alignment Healthcare's latest earnings report disappointed. One quarter doesn't define a company's quality, so let's explore whether the stock is a buy at the current price. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation when deciding if the stock is a buy. Read the full research report here (it's free) .
