Alignment Healthcare faces Hagens Berman probe after 13% stock drop

Hagens Berman said in an Oct. 14 press release it is investigating Alignment Healthcare disclosures after ALHC shares fell 13% to $7.55 on Oct. 9 following a CMS Star Rating downgrade.

The Oct. 14 press release said the downgrade made H3815 ineligible for CMS quality bonus payments tied to that rating and would affect Alignment’s fiscal 2028 quality bonus payments; H3815 covers 75% of the company’s combined health-plan membership.

Hagens Berman said Alignment Chief Executive John Kao told a July 30 investor conference, after a question about rising Star cut points and 2028 bonus payments: “I feel good about our position.” The firm said the shares dropped about 20% that day.

At a Sept. 15 Baird Healthcare conference, according to the release, an analyst asked about final cut points, the CMS thresholds used to assess H3815’s rating. Kao responded: “I cannot talk about it at all[.]” Hagens Berman said ALHC fell another 20% that day.

After the market closed on Oct. 8, Hagens Berman said Alignment filed a current report with the SEC disclosing the lower H3815 rating. The release quoted the filing as saying, “[t]he change in Star Ratings performance for rating year 2027 will impact the Company’s quality bonus payments for fiscal 2028[.]”

From July 30 through Oct. 9, Hagens Berman said ALHC declined roughly 59% and lost more than $2.2 billion in market capitalization.

“We are investigating when Alignment management knew it should not feel good about cut points and whether they were sufficiently transparent eligibility for CMS bonus payments,” Reed Kathrein, the Hagens Berman partner leading the inquiry, said in the release.

The release, marked attorney advertising, did not include a response from Alignment. Hagens Berman asked investors with losses and people with non-public information to contact the firm.

Source: press release, Hagens Berman Sobol Shapiro LLP via GlobeNewswire, Oct. 14, 2026.