Alignment Healthcare Rebounds as Analysts Defend Stock After Lawsuit-Driven Selloff

Alignment Healthcare Inc. (NASDAQ:ALHC) shares rebounded sharply Thursday, recovering a portion of the steep losses incurred a day earlier. The rally came as Wall Street analysts defended the company against allegations in a whistleblower lawsuit, suggesting the prior session's selloff was excessive.

The stock closed up 6.2% on Thursday. This followed an approximate 17% plunge on Wednesday, which was triggered by reports of a wrongful termination lawsuit filed by a former company executive.

The Allegations

The lawsuit, filed by former Alignment executive Hakan Kardes, alleges that the company improperly classified operating expenses as capital expenditures. According to the suit, this practice may have inflated the company's Adjusted EBITDA by $8 million to $10 million.

Analysts at Raymond James noted the company's position is that Kardes resigned voluntarily in April 2025 and first raised the accounting concerns about a month later. According to the firm, Alignment's board initiated an investigation with outside lawyers and accountants, which found no evidence to support the claims. However, Raymond James also pointed to a contradiction, stating that court filings allege Kardes raised the issue internally before his resignation.

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Wall Street's Take

Multiple analysts suggested the market's reaction was overdone and maintained positive ratings on the stock.

• KeyBanc analyst Matthew Gillmor maintained an Overweight rating and a $28.00 price target. Gillmor called the core allegation "dubious," noting that Alignment's capital expenditure classifications are reviewed by its external accountant and that a 2025 board investigation found the claims to be unsupported.
• Raymond James analyst John Ransom reiterated a Strong Buy rating. He stated that the alleged EBITDA impact is "manageable in the broader context" and does not harm the company's core earnings engine. Ransom did caution, however, that the lawsuit could remain a "modest overhang" on the stock until the dispute is resolved.