What happened

Shares of Alignment Healthcare (ALHC -5.05%) were down 18% as of Wednesday afternoon, a day after the Medicare Advantage insurer reported fourth-quarter and full-year earnings. The stock fell close to its 52-week low of $7.74. Its 52-week high is $19.17. So far this year, Alignment's shares are down more than 32%.

So what

The company had good news and bad news in its fourth-quarter and year-end report. The positive was that the company's fourth-quarter revenue of $362 million was up 21% year over year and the company said it grew health plan membership in the quarter to 98,400, up 14% over the same period last year. For the year, Alignment posted revenue of $1.434 billion, up 23%.

The negatives were that the company's losses grew in the quarter. Alignment reported a fourth-quarter net loss of $56.9 million, down 19%, equating to an earnings-per-share loss of $0.31. The average estimate of six analysts surveyed by Zacks Investment Research was for a loss of $0.30 per share.

The company also issued 2023 full-year and first-quarter guidance and investors were unimpressed. In the quarter, Alignment said it expected revenue to be between $429 million and $434 million, a rise between 18.5% and 19.8%, sequentially. The company predicted full-year revenue to be between $1.705 billion and $1.73 billion, representing growth of between 18.8% to 20.6%. In both cases, the growth would be slower than 2022's. 

Now what

The drop may be a bit of an overreaction, considering that, yesterday, the stock climbed more than 3.4%. The concern for Alignment is that while it is growing its membership base and revenue, it seems to be getting no closer to turning a profit. The market for Medicare Advantage insurers is crowded, with the number of Medicare Advantage plans growing as fast as the customer base. However, the company just had its initial public offering in 2021, so it's too early to bail on the stock.