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Shares of Medicare Advantage insurer Alignment Healthcare partially recovered on Thursday after a whistleblower suit alleging accounting irregularities sparked a 17% drop on Wednesday.
The stock gained 5% as of Thursday’s close. Stock analysts remained bullish on the company’s prospects. Raymond James analysts said Thursday that while the suit creates an “overhang,” the “fundamental risk appears manageable.” Baird recommended “buying the dip,” saying the initial selloff was “overdone,” in a Wednesday evening note.
Compared with insurance industry giants in the Medicare Advantage market for seniors, Alignment is a relatively smaller player, providing healthcare benefits to nearly 285,000 members in five states. The stock has an average Buy rating and $24.92 target price, according to FactSet.
The lawsuit was brought by former executive Hakan Kardes, who said in the filing he joined Alignment as chief data officer in 2019, and was named to an expanded role of chief transformation officer months before his departure last year.
Kardes alleges the company misclassified approximately $8 million to $10 million worth of operating expenses as capital expenditures for fiscal year 2024. That allowed Alignment to claim its “first full year of positive adjusted Ebitda as a public company,” the suit claims.
Alignment Healthcare, in a statement to Barron’s, said the company “believes these allegations are wholly without merit, intends to defend itself vigorously and is confident...
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