UnitedHealth Group Stock Plunges 11% on DOJ Investigation Reports

UnitedHealth Group (UNH), the nation's largest health insurer, saw its stock price plummet more than 11% in early trading on Friday, February 21, 2025, following reports that the U.S. Department of Justice (DOJ) has launched an investigation into the company's Medicare billing practices. The Wall Street Journal reported that the DOJ is probing whether UnitedHealth tends to over-diagnose conditions to earn larger Medicare Advantage payouts.

The investigation, which focuses on billing practices in recent months, has sent shockwaves through the healthcare sector, with shares of other prominent Medicare Advantage insurers like Humana (HUM) also down. UnitedHealth's stock has been volatile in recent weeks, with the company's UnitedHealthcare business facing pressure due to rising care use and rate cuts.

UnitedHealth has criticized The Wall Street Journal's previous reporting on its Medicare Advantage program, stating that the newspaper "does not understand the Medicare Advantage program." However, the company has not yet commented on the latest investigation. The DOJ has not immediately responded to requests for comment.



The investigation is the latest driver of attention for UnitedHealth Group, which has faced other challenges in recent months. In December 2024, a gunman killed Brian Thompson, then-CEO of UnitedHealth's insurance unit, in New York City during the company's investor day. The shooting sparked a flood of online complaints about U.S. healthcare.

Analysts have mixed views on the impact of the investigation on UnitedHealth's stock price. Mizuho analyst Ann Hynes believes that the pullback offers investors a chance to buy the dip, stating that the company is still an "attractive" investment over the long term. However, other analysts may have a more cautious stance, given the potential financial and reputational risks associated with the investigation.

In conclusion, the DOJ investigation into UnitedHealth Group's Medicare billing practices has had a significant impact on the company's stock price, with shares plummeting more than 11% in early trading on Friday. The investigation has also weighed on other health insurer stocks, indicating a broader market sentiment shift regarding Medicare Advantage insurers. As the investigation unfolds, investors will be closely watching UnitedHealth Group's response and the potential financial and reputational implications for the company.