Alignment Healthcare Inc. shares tumbled 16% after top executives acknowledged the health insurer is working through rising hospital and skilled nursing costs.
Executives said at the Baird 2026 Global Healthcare Conference, held Sept. 15 in New York City, that a recent claims system transition contributed to lagging hospital bills from 2025, while longer skilled-nursing stays also added to higher costs to a lesser extent.
“Whenever you go through a claims application implementation, those are messy and noisy,” Chief Executive John Kao said. “We are pretty much through the end of that, and there is a lot of data points that would suggest … all that noise is starting to settle down.”
Alignment’s stock hit a 52-week low of $8.97
Alignment’s stock hit a 52-week low of $8.97 the day following the conference, the lowest they’ve been since 2024. Shares have fallen more than 47% in the past year.
The Orange-based provider of Medicare Advantage plans for seniors is currently valued at $1.8 billion (Nasdaq: ALHC).
Despite these headwinds, the company maintained its $5.2 billion to $5.23 billion revenue guidance.
Analyst firm TD Cowen reiterated a Buy rating for Alignment with a $21 price target, noting that the cost pressures discussed at the conference aren’t expected to extend into 2027.
CMS Ratings Due in October Kao said Alignment
CMS Ratings Due in October
Kao said Alignment has spent the past two years overhauling its claims systems, medical management, data architecture and the insurer’s proprietary AI-based care-management platform.
In response to rising costs, Alignment has been tightening claims reviews and adding clinical re
The claims system overhaul is part of Alignment’s long-term strategy to increase its membership from nearly 300,000 to 1 million.
We actually started looking at ourselves, making changes
“We actually started looking at ourselves, making changes at every functional area of the company in order to make ourselves not just a big small company, but we needed to be a small big company,” Kao said.
During the conference, officials also declined to comment on the company’s expected star ratings — the annual grading system used by the Centers for Medicare & Medicaid Services (CMS) to evaluate health plans.
“You have heard me say we were not happy about the (Health Equity Index) decisioning, particularly that that decision was after the actual implementation period,” Kao said. “But other than that, I just cannot comment on it.”
Official CMS ratings are expected to be released in early October.
Projected Third Quarter Earnings Miss Prior
Projected Third Quarter Earnings Miss
Prior to the latest medical cost concerns, Alignment’s shares fell more than 20% following lower-than-expected second quarter results.
While the company reported a 32% increase in revenue to $1.34 billion and raised the midpoint of its full-year guidance, shares fell after its third-quarter revenue outlook of $1.3 billion to $1.32 billion landed at the lower end of Wall Street expectations. Membership grew by 32% year over year to more than 294,000.
“I would not confuse the integrity of the business model with the short-term noise resulting from a very, very aggressive change management agenda,” Kao said, referring to the company’s plans to overhaul Alignment’s claims system and increase membership.
Hoag Partnership Expands Alignment’s Local Network Alignment Health
Hoag Partnership Expands Alignment’s Local Network
Alignment Health Plan, the company’s Medicare Advantage product line, is expanding its Orange County network through an expanded partnership with Hoag Memorial Hospital Presbyterian, the county’s second largest hospital.
Beginning Jan. 1, Alignment members enrolled in select HMO Medicare Advantage plans will gain in-network access to Hoag hospitals in Newport Beach and Irvine, beginning Jan. 1.
Members will also gain access to Hoag’s broader regional network, which includes 17 urgent care centers and 13 health and wellness centers, as well as specialized programs in cardiovascular health, diabetes and other chronic health conditions affecting Medicare-age adults.
Orange County seniors shouldn’t have to choose between
“Orange County seniors shouldn’t have to choose between affordability and their preferred, trusted healthcare providers,” said Dawn Maroney, CEO of Alignment Health Plan and president of Alignment Health.
“Expanding our partnership with Hoag reinforces Alignment’s commitment to delivering best-in-class clinical care exactly where and when seniors need it.”
Alignment first added Hoag to its PPO network in 2022.
The latest announcement expands the partnership to include select HMO plans, which typically have lower monthly premiums in exchange for a more redistricted provider network.
