MW UnitedHealth's stock sinks after CEO steps down, outlook suspended as costs rise
By Tomi Kilgore
UnitedHealth sees care activity accelerate and Medicare Advantage costs remain higher than expected
Shares of UnitedHealth Group Inc. were sinking toward a four-year low in early Tuesday trading, after the health insurer said its chief executive was leaving, but also pulled its financial outlook as medical costs continued to rise more than expected.
The withdrawal of the 2025 outlook comes less than a month after the company slashed its outlook, saying costs rose as Medicare Advantage care activity had increased at twice the expected rate. That sent the stock tumbling to its biggest one-day loss since 1998.
In Tuesday's premarket, the stock $(UNH)$ dropped 8.9% toward a sixth straight loss, which put it on track to open at the lowest price seen since March 2021.
The stock's implied price decline would shave more than 200 points off the Dow Jones Industrial Average DJIA, while Dow futures (YM00) were recently down 222 points.
"The company suspended its 2025 outlook as care activity continued to accelerate while also broadening to more types of benefit offerings than seen in the first quarter, and the medical costs of many Medicare Advantage beneficiaries new to UnitedHealthcare remained higher than expected," the company said in a statement.
Last month, the company indicated that a lot more seniors sought treatment than expected. It had also seen changes in its Medicare business, which added new patients who had been under plans that were exited by other providers.
That problem has gotten worse.
The company previously said it expected 2025 adjusted earnings per share to fall to between $26 and $26.50 from between $27.66 and 2024, the first annual decline since the financial crisis in 2008.
On Tuesday, the company said it expects to return to growth in 2026.
Separately, the company said Chief Executive Andrew Witty is stepping down "for personal reasons" after four years in the role.
Current Chairman Stephen Hemsley, who was CEO from 2006 to 2017, will succeed Witty effective immediately. Hemsley, who joined UnitedHealth in 1997, will also remain chairman.
From 2006 through 2017, UnitedHealth's stock soared 255%, while the Health Care Select Sector SPDR ETF XLV climbed 161% and the S&P 500 index SPX ran up 114%.
-Tomi Kilgore
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May 13, 2025 07:32 ET (11:32 GMT)
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