UnitedHealth Group CEO Andrew Witty resigned due to personal reasons, and the company suspended its 2025 guidance, with former CEO Stephen Hemsley taking over. These sudden developments were enough for the stock price of the healthcare company, UnitedHealth (NYSE: UNH) to slump nearly 18% on Tuesday.
A prominent constituent of the Dow-30 index, with a market capitalization of $284 billion, UnitedHealth is down by 38% YTD and by a similar margin over the last 1-year. UnitedHealth, once the potentially first trillion-dollar healthcare company, lost momentum following a cyberattack, and held 29% of the Medicare Advantage market in 2024.
Ademi & Fruchter LLP is examining potential securities fraud allegations against UnitedHealth. The probe stems from UnitedHealth’s misleading claims about its business operations and prospects.
The probe focuses on UnitedHealth’s recent changes to its 2025 financial forecast, the resignation of CEO Andrew Witty, and the suspension of full-year guidance. UnitedHealth has already recognized that its recent performance has been “unusual and unacceptable,” and analysts have described the changes as “really surprising” and the result of “executional errors.”
Former CEO Stephen Hemsley will succeed Witty, and he stated on a teleconference today, “I’m deeply disappointed and apologize for the performance setbacks we’ve experienced.” Many of the issues that prevent us from reaching our goals and seizing chances are mainly under our control. This includes pricing for Medicare plans and other areas.”
UnitedHealth has received unwanted attention for a variety of reasons. UnitedHealth faces increased costs, political pressure, scrutiny by the Federal Trade Commission and Department of Justice, market power as a large pharmacy benefits manager, questions about artificial intelligence in claims processing, and a cybersecurity attack on its Change Healthcare subsidiary.
After Brian Thompson, the CEO of UnitedHealthcare, the company’s insurance division, was killed in 2024, UnitedHealth Group became the focus of the worst data breach in the history of the health sector.
Later, the company reported a data breach in February 2024, resulting in the theft of records of around 190 million people, a figure nearly double the previous estimate of 100 million.
In February, when the Wall Street Journal revealed that the U.S. Justice Department was looking into UnitedHealth’s Medicare billing methods, the company’s stock likewise fell. According to the WSJ, which cited people familiar with the situation, the civil fraud probe is investigating the company’s procedures for documenting diagnoses that result in additional payments to its Medicare Advantage plans.
The health care provider pointed to the detrimental effects of recently joined members as well as the continuous high utilization pressure in the Medicare Advantage (MA) segment.
UnitedHealth aims for profitability return in 2026, with long-term growth of 13% to 16%, despite reporting $400 billion in revenue in 2024.
Currently, the stock price of UnitedHealth is around $311. Morgan Stanley reaffirmed its Overweight rating with a $563 target, citing suspension of 2025 guidance due to increased care activity and Medicare Advantage member mix challenges. Truist Securities has maintained a Buy rating on UnitedHealth Group (NYSE:UNH) with a price target of $580.00.