Alignment Healthcare bounces back 7% after sharp prior-session drop (ALHC:NASDAQ)

Alignment Healthcare sued CMS, alleging unlawful calculation of 2027 Medicare Advantage star ratings, which dropped its 4+ star plans to 25% from 100%. The lawsuit claims CMS violated the Administrative Procedure Act. A TD Cowen analyst estimated potential 2028 revenue loss of over $170 million. CMS has not responded, and the case is pending.

Alignment Healthcare sued CMS over its 2027 Medicare Advantage star ratings, alleging violations of the Administrative Procedure Act. The company claims the ratings were determined improperly, leading to financial and reputational damage. CMS recalculated scores after a similar lawsuit by Clover Health. Alignment seeks a court decision by May 2027.

Alignment Healthcare (ALHC) shares rose 8.6% after its subsidiary announced a new Medicare Advantage plan in Los Angeles and Orange counties. Analyst Ryan Langston lowered his price target to $12 but maintained a Buy rating, citing inpatient utilization pressure. The stock had fallen 13.4% the previous day due to a downgrade and regulatory concerns.

Raymond James cut its price target on Alignment Healthcare (ALHC) to $10 from $19, citing a star rating downgrade for its California plan. The firm estimates a $420M EBITDA headwind in 2028, though some may be mitigated. ALHC's stock is down 61.8% YTD, trading at $7.55. Multiple analysts downgraded the stock, but TD Cowen maintained a Buy rating.

Humana's Medicare Advantage star ratings improved significantly for 2027, with 93% of members in plans rated 4 stars or higher, up from 41% in 2026. This could generate $3B+ in additional revenue in 2028, according to TD Cowen. Alignment Healthcare saw a major decline, potentially losing $170M in revenue. CMS changed its star ratings methodology for 2027.

Alignment Healthcare Inc. (ALHC) stock fell 14.75% on October 9, 2026, amid concerns over Medicare Advantage reimbursement pressures, legal issues, and cost challenges. The company reported $1.34B in revenue and $36.6M in net income for the latest quarter, but negative cash flow raised concerns. CMS's 2027 Star Ratings and a whistleblower's accounting allegations further pressured the stock, with Barclays cutting its price target to $10.