What Happened?
Shares of health insurance company Alignment Healthcare (NASDAQ:ALHC) fell 13.9% in the afternoon session after a preliminary payment proposal for Medicare Advantage from the Centers for Medicare & Medicaid Services (CMS) fell significantly short of expectations.
The agency proposed a mere 0.09% increase in payment rates for 2027. This figure was a shock to the industry, as analysts had projected growth between 4% and 6%. The news hit the entire health insurance sector hard, and other major insurers such as UnitedHealth, Humana, and CVS Health also saw their shares tumble. The much lower-than-anticipated payment update raised concerns among investors about future profitability for companies that rely on Medicare Advantage plans.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Alignment Healthcare? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Alignment Healthcare’s shares are very volatile and have had 22 moves greater than 5% over the last year. But moves this big are rare even for Alignment Healthcare and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 11 months ago when the stock gained 17.5% on the news that the company reported strong fourth-quarter 2024 results and provided optimistic full-year revenue and EBITDA guidance, exceeding analysts' expectations.
Sales jumped 50.7% from last year, fueled by a 58.6% rise in health plan members, reaching 189,100 by year-end. Profitability improved as the company logged its first full year of positive adjusted EBITDA. Zooming out, this quarter underscored the company's ability to scale efficiently while positioning itself for sustained growth.
Alignment Healthcare is up 2.5% since the beginning of the year, but at $20.74 per share, it is still trading 12.9% below its 52-week high of $23.81 from January 2026. Investors who bought $1,000 worth of Alignment Healthcare’s shares at the IPO in March 2021 would now be looking at an investment worth $1,198.
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