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We don't need to dwell on the lack of detail behind Andrew Witty stepping down as CEO of UnitedHealth (UNH) for "personal reasons." There are plenty of public reasons to change course at a business that has become a political lightning rod and Wall Street letdown.
The announcement of the leadership changeup came with yet another one: The company pulled its 2025 financial guidance, citing higher-than-expected costs tied to Medicare Advantage. Growth won't return to UnitedHealth, the company said, until 2026.
As our colleague Anjalee Khemlani reported, the company was hammered by increased costs in its first quarter release last month. What once was confidence in reassessing its expenses for the rest of the year suddenly collapsed into a hard reset and a change at the very top.
The company has suffered through a grueling stretch, from a major cyberattack, to the killing of an executive, to a subsequent public backlash against healthcare industry practices. In April, the company cut back its guidance for the full year, shocking Wall Street and sending shares plummeting. The stock for the year is down nearly 40%.
"There's a trust and sentiment issue here that has to be resolved, and I think that's the primary reason why they made the CEO change," said Whit Mayo, a senior research analyst at Leerink Partners, in an interview with Yahoo Finance Tuesday.
And just who that replacement is remains key to perhaps where the company went wrong and where it ought to go.
Witty, 60, was replaced by his predecessor, 72-year-old Stephen Hemsley, who was credited with building UnitedHealth into a vertically integrated giant — a massive health insurer with a network of doctor groups and a pharmacy benefit manager. He ran the company for more than a decade from 2006 to 2017.
Corporate America provides us with more than a few examples of trusted entities returning to right the wayward ship. Think Bob Iger, Steve Jobs, Howard Schultz — who returned twice — or even the resurrection of HBO Max.
Executive turnover can coincide with new phases of the economic cycle. In the first quarter of the year, 646 CEOs left their posts, up 4% from the same period last year and upping the previous record, according to an April report by Global outplacement firm Challenger, Gray & Christmas.
The change at UnitedHealth comes amid heightened government scrutiny. Earlier this week, Trump issued an executive order aimed at slashing notoriously high prescription drug prices paid by US consumers, a move that unnerved pharmaceutical companies and sent shares of UnitedHealth, CVS, and Cigna lower. (The companies operate their own pharmacy benefit managers: Optum Rx, Caremark, and Express Scripts, respectively.)
