United Healthcare Shares Can’t Catch a Break as Troubles Mount

Speaker: Well, shares of UnitedHealth Group, they’re sinking today, and that’s after a report from the Wall Street Journal saying that the company is under criminal investigation for possible Medicare fraud. For more, we’ve got our Yahoo Finance senior health reporter, Anjali Khemlani. So Anjali, what’s the story here?

Anjali Khemlani: Yeah, well, on that note from the Wall Street Journal story, UnitedHealth Group has already denied that report, saying in the statement today that they have not been notified by the Department of Justice of the supposed criminal investigation reported in, they called the Wall Street Journal for without attribution in that story yesterday. And this is just the latest development in what has been a really rough past one and a half years for the healthcare giant. If you rewind all the way back to December 2023, it was riding high. The company was boasting having 10% of the country’s physicians or almost 90,000 physicians as part of its Optum health business, and analysts were speculating about it becoming the first trillion-dollar healthcare company. But since then, almost like the Titanic hitting the iceberg, there’s been one hit after another, and this company has really been taking on water. First, the cyber attack in February 2024, Change Healthcare subsidiary, it got massively attacked. The company initially underestimated the impact of that, and it just appeared to be on the path of recovery soon after that. Uh, and then they just suffered another setback, the tragic killing of insurance CEO Brian Thompson. And that really unleashed unprecedented backlash, making UnitedHealth basically the face of the frustrations against the health insurance industry from the general public. The company was actually recently sued by investors for allegedly concealing how much of an impact that has even had on the company. Then you pile onto that the company’s first quarter earnings miss, uh, in large due to increased Medicare costs, and then there was the surprise CEO shake up earlier this week. So all of this put together begs the question, is this vertically integrated giant suffering a culmination of management failures or has this been a series of unfortunate events? And that’s something that Wall Street is looking at. They seem to be losing faith in the stock. You saw on your screen, just down about 12%, it’s been teetering between 12 and 13 all day. It’s lost more than five years worth of gains in the past one month alone and is responsible for actually dragging down the Dow. Since November 2024, when UnitedHealth traded at an all-time high, its stock has declined and accounted for 80% of the Dow’s decline since that date, which is down more than 2,500 points. It’s also a heavily weighted stock in the S&P, contributing to the healthcare subsector, and that has become the worst performing subsector in the S&P year to date, down more than 5 and a half percent. It’s why Jared Holz, Mr. Jared Holz, sent a note to clients today that this could kick UnitedHealth out of the Dow. And he said that there’s some risk in the name being removed from the Dow at some point, especially because they lost market cap from 600 billion down to 300 billion in the last month. And until there’s, you know, evidence of greater consistency, there’s just a question of what this company is going to be doing. So how is this newly appointed legendary CEO, Stephen Hemsley, who was credited with building United into the behemoth that it is today, going to right-size this ship? That’s something the street has to contend with, and we’ll all be waiting to find out. But clearly, the street is sending a signal today that they are not happy with some of these changes and maybe aren’t going to be waiting around to find out.

Speaker: All right. Thank you, Anj. Appreciate it.