UnitedHealth Group (UNH) shares plummeted 8.07% on Wednesday, extending recent losses amid a series of setbacks for the healthcare giant. The latest decline comes as the company faces a criminal investigation, abruptly changed its CEO, and suspended its financial outlook for 2025.
According to The Wall Street Journal, the U.S. Justice Department is investigating UnitedHealth for possible criminal Medicare fraud. The healthcare-fraud unit of the Justice Department's criminal division is overseeing the investigation, which has reportedly been active since at least last summer. While the exact nature of the potential criminal allegations remains unclear, sources indicate that the federal probe is focusing on the company's Medicare Advantage business practices.
Adding to investor concerns, UnitedHealth announced the sudden departure of CEO Andrew Witty, who will be replaced by Stephen Hemsley, the company's former CEO from 2006 to 2017. This leadership shakeup comes as UnitedHealth grapples with significant challenges, including a recent cyberattack and rising medical costs in its Medicare Advantage business.
Furthermore, UnitedHealth suspended its financial guidance for 2025, citing accelerating care activity and higher-than-expected medical costs among Medicare Advantage beneficiaries. This move, coming just a month after the company had already significantly reduced its outlook, has prompted analysts to downgrade the stock and slash price targets.
The confluence of these negative factors has eroded investor confidence, leading to a steep sell-off in UnitedHealth shares. As the company faces mounting pressures and uncertainties, market participants will be closely watching for further developments and the potential impact on UnitedHealth's long-term financial performance.
