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UnitedHealth Group (UNH) CEO Andrew Witty stepped down from his role for "personal reasons" Tuesday, and the company is suspending its 2025 guidance. Former CEO Stephen Hemsley is taking the helm.
UnitedHealth stock sank more than 14% in trading Tuesday, marking the company's latest negative day in the past two years.
UnitedHealth has been hammered in a number of ways: increased costs, political pressure over its size, and scrutiny by the Federal Trade Commission and Department of Justice. Congress has also put the spotlight on its market power as a large pharmacy benefits manager (PBM). Furthermore, the company has faced questions about its use of artificial intelligence in claims processing and a large cybersecurity attack on its Change Healthcare subsidiary.
The company also suffered significant public backlash following the killing of former executive Brian Thompson in December, and investors are suing the company for downplaying the impact from that tragedy. Questions about claim denials and fury about overall insurance industry practices were directed at UnitedHealth in the aftermath of the killing.
Hemsley indicated he will focus on fixing the company's increased cost pressures and the negative environment in which the company finds itself.
"I'm deeply disappointed in, and apologize for, the performance setbacks we have encountered, from both external and internal challenges. Many of the issues standing in the way of achieving our goals, as well as our opportunities, are largely within our control," he said on a call with investors early Tuesday.
CFO John Rex, who has been in his role since 2024, said the company is currently looking at cost pressures from Medicare Advantage, new members to UnitedHealthcare, and the potential of increasing costs outside those buckets of covered individuals. That includes the commercial space and Medicaid and is a result of increased utilization in health services across the board.
Still, the company reiterated its goal of returning to profitability in 2026. Long-term, that would be 13% to 16% growth, according to Hemsley in a statement Tuesday. UnitedHealth reported $400 billion in revenue for 2024.
UnitedHealth is one the largest Medicare Advantage player, with 29% of the market in 2024. The company was once favored as potentially the first trillion-dollar healthcare company by market cap, before losing steam in the wake of the cyberattack.
Experts and insiders had mixed reactions to the news. Some felt it was the right move for the company, and others wondered if a breakup of the healthcare giant is in the cards.
