UnitedHealth investors wary and looking for Medicare strategic change

Amina Niasse

Fri, May 16, 2025, 3:06 AM 3 min read

By Amina Niasse

NEW YORK (Reuters) -UnitedHealth Group investors, stunned by missteps astatine the erstwhile predictable healthcare giant, are warily expecting strategical changes successful its Medicare Advantage wellness security concern implicit the adjacent year.

On Wednesday, the Wall Street Journal reported that UnitedHealth was the taxable of a transgression probe astatine the Justice Department, conscionable 1 time aft the institution withdrew its fiscal outlook and said Group CEO Andrew Witty was leaving.

The blows are eroding the allure the healthcare behemoth erstwhile held for investors.

UnitedHealth shares fell 14% successful day trading connected Thursday to $274.35, adjacent a five-year low. Shares had already plunged 18% connected Tuesday, adjacent arsenic the institution tried to assuage Wall Street concerns successful a league call. They are down 46% this year.

"Given that the capitalist telephone earlier this week was truthful little and had a deficiency of detail, investors are connected the lookout for different footwear to drop," said James Harlow, elder vice president astatine Novare Capital Management. The steadfast owns shares of UnitedHealth.

The DOJ transgression probe concerns the company's billing practices successful its Medicare Advantage portion for older adults and radical with disabilities, the Journal reported. UnitedHealth has said successful regulatory filings that investigations, audits and reviews by a twelve antithetic authorities agencies are underway.

UnitedHealth said successful a Wednesday connection that it had not been notified of a transgression probe. "We basal by the integrity of our Medicare Advantage program," the institution added.

Investors said they expect the institution to crook astir its nett outlook successful 2026, astatine the earliest.

Exiting little profitable markets wherever it sells Medicare Advantage plans for radical aged 65 and older and making wellness security program plan changes to connection entree to lower-cost healthcare providers and a absorption connected cheaper generic drugs, alternatively than pricey branded ones, could beryllium nether information astatine UnitedHealth, said Jeff Jonas, a portfolio manager astatine Gabelli Funds.

Even aft fixing program issues, investors volition apt request to terms successful a ineligible colony that could outgo the institution implicit $1 billion, said Jonas.

And accepted cost-management measures that insurers person historically deployed, specified arsenic the usage of anterior authorizations and assertion denials, person travel nether nationalist and legislative disapproval since the sidesplitting of UnitedHealthcare enforcement Brian Thompson past December, Jonas added.

In a first-quarter net call, the institution noted that specialty attraction visits had generated higher costs aft patients saw providers who are portion of its Optum wellness services unit.