What Happened?

A number of stocks jumped in the afternoon session after the government announced a surprise increase in payment rates for Medicare Advantage plans. 

This change raises the revenue that insurance companies receive per patient from federal funds without increasing their costs. This is projected to improve profit margins for major providers like UnitedHealth and Humana.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Healthcare Technology for Providers company Astrana Health (NASDAQ: ASTH) jumped 7%. Is now the time to buy Astrana Health? Access our full analysis report here, it’s free.
• Healthcare Technology for Providers company Evolent Health (NYSE: EVH) jumped 12.4%. Is now the time to buy Evolent Health? Access our full analysis report here, it’s free.
• Medical Devices & Supplies - Diversified company Neogen (NASDAQ: NEOG) jumped 4.8%. Is now the time to buy Neogen? Access our full analysis report here, it’s free.
• Outpatient & Specialty Care company agilon health (NYSE: AGL) jumped 13.6%. Is now the time to buy agilon health? Access our full analysis report here, it’s free.
• Drug Development Inputs & Services company Fortrea (NASDAQ: FTRE) jumped 3.6%. Is now the time to buy Fortrea? Access our full analysis report here, it’s free.

Zooming In On agilon health (AGL)

agilon health’s shares are extremely volatile and have had 87 moves greater than 5% over the last year. But moves this big are rare even for agilon health and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 26 days ago when the stock dropped 7.6% as the company provided its financial outlook at the Barclays 28th Annual Global Healthcare Conference, which included a forecast for rising costs in 2026. 

During the presentation, agilon health stated that its cost trends were forecasted to grow 7.5% in 2026, with a net growth of 7%. This projection likely raised concerns among investors about the company's future profitability. While the company also shared some positive long-term goals, such as aiming for free cash flow break-even by 2027 and expecting a $125 million benefit from contracting improvements, the more immediate news of rising costs appeared to weigh on investor sentiment.

agilon health is down 1.9% since the beginning of the year, and at $16.52 per share, it is trading 88.4% below its 52-week high of $142 from April 2025. Investors who bought $1,000 worth of agilon health’s shares 5 years ago would now be looking at only $21.32.

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