UnitedHealth Group, one of America’s biggest corporations and a member of the exclusive Dow Jones Industrial Average, is suddenly unraveling.
The crisis engulfing UnitedHealth hit a crescendo this week when CEO Andrew Witty stepped down abruptly for “personal reasons.”
UnitedHealth also swiftly abandoned its financial guidance, blaming skyrocketing medical costs.
And then The Wall Street Journal dropped the hammer, revealing that UnitedHealth is under federal criminal investigation for possible Medicare fraud.
The developments have stunned investors, triggering a dramatic loss of confidence. UnitedHealth’s (UNH) stock has lost half its value – a staggering $288 billion – in the span of a month. Its share price plunged on Thursday to its lowest level since April 2020, during the height of the pandemic.
It’s a spectacular reversal of fortunes for one of America’s most powerful companies and the nation’s largest health insurer.
The trouble at UnitedHealth comes almost exactly six months after the murder of Brian Thompson, one of its top executives. The brazen shooting of Thompson, in Midtown Manhattan, captured international attention and surfaced deep public resentment toward the healthcare industry.
The UnitedHealth selloff gathered steam on Thursday, with the Journal report of a federal criminal investigation driving UnitedHealth shares down another 13%, leaving them on track for their worst week since 1998, according to FactSet data.
The DOJ’s healthcare-fraud unit is overseeing an investigation into possible Medicare fraud at UnitedHealth, the Journal reported.
UnitedHealth responded to the report by posting a statement online that described the Journal’s reporting as “deeply irresponsible” because the paper acknowledged the precise nature of the potential criminal allegations is unclear.
“We have not been notified by the Department of Justice of the supposed criminal investigation reported, without official attribution, in the Wall Street Journal today,” UnitedHealth said in the statement. “We stand by the integrity of our Medicare Advantage program.”
The DOJ declined to comment.
Jeffrey Sonnenfeld, founder of the Yale Chief Executive Leadership Institute, said the abrupt nature of the CEO transition at UnitedHealth is quite telling.
“The fact the board moved with this much speed means they obviously lost confidence in the CEO. It’s got to be pretty bad if they moved this fast,” Sonnenfeld said. “It’s astounding.”
UnitedHealth described the CEO switch as a decision Witty made “for personal reasons” and the company said he has agreed to serve as a senior adviser. But Sonnenfeld suspects Witty was forced out.
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