UnitedHealth Stock Slips on DOJ Probe, Merger Uncertainty

UnitedHealth Group (UNH) shares took a tumble on Monday, February 21, 2025, as investors reacted to two significant developments: an ongoing investigation by the U.S. Department of Justice (DOJ) into the company's Medicare billing practices and uncertainty surrounding its proposed merger with Amedisys. The stock fell 4.6% to $447.00, shedding over $52 in pre-market trading.

The DOJ investigation, first reported by the Wall Street Journal, focuses on UnitedHealth's practices for recording diagnoses that trigger extra payments to its Medicare Advantage plans. The probe is examining whether the company has been inflating its patient rolls by improperly diagnosing beneficiaries with more severe conditions, which would result in higher reimbursement rates from the government. UnitedHealth has not yet commented on the investigation.



The second factor contributing to UnitedHealth's stock decline is the uncertainty surrounding its proposed acquisition of Amedisys. The Federal Trade Commission (FTC) has announced that it will maintain Biden-era merger rules, which could complicate the deal. The DOJ has also expressed reluctance to consider Amedisys's motion for a stay of the Section 7A claim without a full briefing, suggesting a meticulous review process that could delay the merger. This uncertainty has led investors to question the likelihood of the deal's completion and its potential impact on UnitedHealth's long-term growth prospects.

Despite the recent declines, UnitedHealth's stock has shown strong long-term performance, with a 5-year change of 97.87% and a change since IPO of 158,689.66%. The company's earnings performance has been mixed, with analysts forecasting an increase of 8.02% in revenue for 2025 and an average EPS growth of 93.7% for the same year. However, the company's profit margins have decreased from 6% in the previous year to 3.6% in the current year.

UnitedHealth's dividend has remained reliable, with a payout of $2.10 per share in the third quarter of 2024 and a yield of 1.67%. The company has consistently increased its dividend over time, making it an attractive option for income-oriented investors.

In conclusion, UnitedHealth's stock decline today can be attributed to the ongoing DOJ investigation into its Medicare billing practices and the uncertainty surrounding its proposed merger with Amedisys. While the company's long-term performance has been strong, investors are concerned about the potential financial and reputational risks associated with the investigation and the potential delays or complications in the merger process. UnitedHealth's dividend has remained reliable, offering an attractive option for income-oriented investors. As the situation unfolds, investors should closely monitor the developments and consider the potential implications for the company's long-term growth prospects.