Alignment Healthcare Maintains High Medicare Advantage Star Ratings, Revises 2025 Revenue Guidance Upward

Consistent High Ratings Across Medicare Advantage Portfolio

Alignment Healthcare (NASDAQ: ALHC) announced on October 10, 2025, that 100% of its Medicare Advantage (MA) members are enrolled in plans rated 4 stars or higher by the Centers for Medicare & Medicaid Services (CMS) for the second consecutive year. This consistent performance is based on the 2026 Star Ratings.

The company's California HMO, which constitutes 81% of its membership, has maintained a 4-star or higher rating for nine consecutive years.

Further demonstrating quality expansion, Alignment Healthcare added a second 5-star HMO in Nevada. Its existing Nevada/North Carolina HMO also retained a 5-star rating for the fourth consecutive year.

Notably, a first-year eligible Texas HMO achieved a 4.5-star rating, underscoring the company's ability to establish high-quality plans in new markets.

As of September 2025, the company serves members across 56 counties in five states, offering competitive 2026 MA options.

Financial Projections Bolstered by Operational Excellence

The sustained high star ratings have directly contributed to Alignment Healthcare's positive financial outlook. The company has revised its full-year 2025 revenue guidance to a range of US$3,885 million to US$3,910 million, reflecting strong operational performance.

This revision follows a robust Q2 2025, where the company significantly exceeded its guidance across key metrics. Health plan membership expanded by 28% year-over-year to 223,700, driving a 49% increase in revenue to US$1 billion.

Adjusted gross profit surged by 76% to US$135 million, and the medical benefit ratio (MBR) improved by 200 basis points year-over-year to 86.7%.

Operating efficiency also saw improvement, with the adjusted selling, general, and administrative (SG&A) ratio declining by 160 basis points to 8.8%. This operational strength culminated in an adjusted EBITDA of US$46 million, well above guidance, representing a 4.5% EBITDA margin and a 360 basis point year-over-year expansion.

Looking further ahead, Alignment Healthcare anticipates generating US$6.8 billion in revenue and US$118.7 million in earnings by 2028, projecting a robust 26.7% annual revenue growth rate.

Market Reaction and Broader Context

The consistently high CMS Star Ratings are a critical factor for Medicare Advantage plans, directly impacting quality bonus payments and market attractiveness. Maintaining a 4-star or higher rating positions Alignment Healthcare favorably to attract and retain members, particularly during the annual enrollment period (October 15 to December 7).

This achievement is particularly noteworthy given industry-wide headwinds such as the V28 risk model transition and general declines in Star ratings across the sector. Alignment Healthcare's leadership has emphasized sustained outperformance despite these challenges.

The company's focus on differentiated clinical models, technology-enabled care, and financial transparency is cited as a key driver for its appeal to both providers and seniors. Management has expressed confidence in achieving over 20% membership growth in 2026 and continuous profitability improvements.

Despite the positive news, the company faces inherent risks. A significant concentration of membership in its California HMO (81%) introduces geographic concentration risk. Furthermore, the business remains sensitive to changes in CMS metrics and methodology updates.

Analyst Perspectives and Future Outlook

Analyst sentiment regarding Alignment Healthcare (ALHC) remains generally positive. Based on one-year price targets from 8 analysts, the average target price for ALHC is $18.38, with a high estimate of $22.00 and a low of $9.00. This average implies an upside of 19.86% from the current price of $15.33.

The consensus recommendation from 11 brokerage firms is currently 2.0, indicating an "Outperform" status for the stock.

However, analysts also highlight potential challenges. JPMorgan noted that CMS's recent expansion of risk adjustment data validation audits for Medicare Advantage plans could present industry-wide challenges, requiring companies like Alignment Healthcare to adapt to evolving regulatory landscapes. While the full impact remains unclear, this is a factor for monitoring.

Investors will closely monitor enrollment trends through the upcoming annual enrollment period, further CMS methodology updates, and next year's star outcomes to assess the long-term conversion of high ratings into sustained membership and revenue effects. Alignment Healthcare's ongoing investments in administrative automation and care navigation are also key factors for scalable growth and competitive advantage.