Needless to say, the past year has been an easy task for UnitedHealth Group.
As one of the largest healthcare companies in the United States, it has long been a reliable investing in stocks. But its stock has fallen nearly 50% over the past few months, It has converted the CEO and seems to be on the hind feet, which is a surprising development of one of the most well-known people in healthcare. How does this unfold, and more importantly, can it be dug out of it?
First, let’s start with the reasons why the stock is down.
The first major decline came in April as UnitedHealth Group reported disappointing first-quarter earnings. The healthcare giant also revised its adjusted 2025 adjusted earnings per share outlook to $26 to $26.50, compared with a previous forecast of $29.50 to $30. Leerink Partners analysts said it was a “non-feature miss” from the UnitedHealth Group.
Then, UnitedHealth Group announced this month that CEO Andrew Witty will resign for “personal reasons” and will be replaced by Stephen J. Hemsley, who served as the company’s CEO from 2006 to 2017. The company’s 2025 perspective also suspended its 2025 perspective. “As nursing activities continue to accelerate, and also have a higher range of advantages in many medicines and many medicines than many health services, and a higher range of advantages in many medicines and a higher range of advantages in many medicines and is a higher range of advantages in many medicines and is expected.” This led to a plunge in stocks again.
Worse, the Wall Street Journal reported this month that UnitedHealth Group is undergoing a criminal investigation by the Justice Department to achieve Medicare fraud. The investigation is related to UnitedHealth’s Medicare Advantage business, although the exact nature of the allegations is unclear. The Justice Department has not notified the investigation, saying the journal’s report is “deeply irresponsible.”
Another publication is also targeting the country’s insurance giant and the largest physician employers.
The Guardian reported in late May that UN Health is secretly paying thousands of dollars in bonuses to nursing homes, so they have not transferred patients to hospitals, which will lead to more expensive care. These patients are part of UnitedHealth’s Medicare Advantage program, whose members are long-term nursing home residents and have received taxpayer funds for their Care UnitedHealth.
Additionally, UnitedHealth Group was sued by its shareholders this month, which accused UnitedHealthCare CEO Brian Thompson of misleading them after killing UnitedHealthCare CEO in December. UnitedHealth Group underestimated the impact of Thompson’s murder on the company, the lawsuit said. A spokesman for the company said the UnitedHealth Group “denied any allegations of wrongdoing and intended to vigorously defend the matter.”
Then why do you need a company Have suffered so much question?
CFO John Rex said on a May 13 conference call after announcing Witty’s departure that its challenges can be divided into three categories:
“The impact on joint health status from the new member’s health status is greater than expected,” he said. “Two, further accelerated utilization in Medicare Advantage. Third, this suggests that this higher trend has expanded to other areas and we are cautiously expecting that these trends may develop further.”
Hemsley said on the same call that he was “very disappointed with the performance setbacks we encountered from both external and internal challenges and apologized. Many of the issues are largely in our control in the way we achieve our goals and our opportunities.”
One industry expert said the UN Health Group’s challenge is notable that other public insurers such as Elevated, Etna or Sain have not suffered the same fate.
“Historically, they are seen as the most managed health plans,” Ari Gottlieb, head of consulting group A2 Strategy Corp, said in an interview. “So you could have expected that if United were stumbling around, so would everyone else be, but that seems to be a problem, currently mostly limited to Manchester United. We certainly haven’t seen any other health insurance company come out and say, ‘We’re seeing the same thing.’ … Others say, “Things are as trending as we expected.” ”
He added that they were too radical on Medicare Advantage this year, which could explain part of the UnitedHealth challenge. He said the health benefits the company offers are “greater than market and reimbursement support.” In other words, the planning design is too generous, which leads to increased utilization, and the associated welfare costs are not fully covered by the compensation rate.
Another expert believes that the healthcare industry has evolved and things that have not been noticed in the past are catching up, such as denying claims.
“[Witty’s] The strategy is really one of the old scripts, and that’s how you succeed is by increasing the rate of medical loss, I mean you lower the value, which means you’re investing less in actual delivery of care. He does this with many prior authorizations, which is a huge denial.
“The scripts that work in different times, in different Congresses, in different ways of economic thinking have changed,” he continued. “The people who are about to succeed will be those who can not only respond, but can also be expected and move forward.
Although UnitedHealth Group noted that Medicare Advantage is one of the main drivers of their struggle, it is a broader issue in its role.
The healthcare giant has partnered with insurance tentacles of optum RX’s Optum and Pharmacy Butys Provider Services. People are beginning to question whether this vertical integration has exceeded its limits.
“I don’t think it’s just a situation in the stock market,” Brown said. “I do believe that over the past few years, united unification has built an empire of Medicare Advantage and vertical integration. Remember, remember, Medicare Advantage is the dollar for taxpayers. … I think regulators, politicians – we think it’s a bipartisan way – of course, so are patients, and we’ve been in close proximity.
What is the future of UnitedHealth Group?
Although Brown doesn’t think it’s just a “situation” for UnitedHealth, Gottlieb seems to disagree. He believes the company’s problems will be resolved within about a year. He took CVS Health as an example, and the role model reportedly explored the breakup in October.
“They managed to turn everything around at least when it comes to insurance,” he said. “I think they’re still struggling with the Oak Street Clinic and some other assets. So, these things are going to be resolved. It’s going to take some time.”
He noted that bringing back Hemsley might also provide some stability for UnitedHealth. Gottlieb said that to address their financial problems, they may reduce their earnings from the MA plan that starts with supplemental benefits.
He added that the Justice Department investigation may have at least attention to the company.
“Usually, you don’t see the federal government really following big corporations and taking any major action. To me, it’s likely to be a lot of noise,” he said. He noted that they might have to pay some fines, but nothing.
Pearl agrees UnitedHealth may appear from it.
“They won’t fail. They also have a lot of reserves, so they won’t go bankrupt.” “They won’t run out of cash, but they will have to put their feet on the ground and figure out what they’re going to do in the next 10 years.”
Brown believes that from a profitability perspective, the company may not be at risk of failure. However, due to the scrutiny of the Justice Department, the FTC, the HHS and Congress, it may be at risk from a regulatory perspective. Additionally, as stocks fall, the public may view companies in different ways.
“I think if all these different verticals are talking and controlling more, that might give us more signals about where we are with the company and other similar companies,” he said.
Photo: Tero Vesalainen, Getty Images
