UnitedHealth Group Stock Plunges 6.21% Amid CEO Exit, DOJ Probe

On May 15, 2025, UnitedHealth Group's stock experienced a significant drop of 6.21% in pre-market trading, reflecting a tumultuous period for the healthcare giant.

The recent turmoil at UnitedHealth Group can be attributed to several key factors. The company's stock has been under pressure following the sudden resignation of its CEO, Andrew Witty, and the subsequent withdrawal of its 2025 financial guidance. This move was justified by the company as a response to the rapidly changing medical needs and operational environment. The abrupt departure of Witty, who had been at the helm for many years, has raised concerns about the company's strategic direction and operational stability.

Adding to the uncertainty, the U.S. Department of Justice has initiated a criminal investigation into UnitedHealth Group, focusing on potential Medicare fraud. This investigation, which has been ongoing since at least last summer, has further eroded investor confidence and contributed to the stock's decline. The company has not yet issued a formal statement regarding the investigation, leaving many questions unanswered.

Analysts have also weighed in on the situation, with some downgrading the company's stock rating and lowering their price targets. For instance, American Bank's analyst Joanna Gajuk reduced the stock rating from "buy" to "neutral" and slashed the target price from $560 to $350. Gajuk's report highlighted the potential for a 10-20% reduction in earnings per share for 2025, as well as the need for a new CEO to redefine the company's strategy.

Despite these challenges, UnitedHealth Group continues to face operational hurdles, including increased medical care costs and the complexities of transitioning to a new CMS risk model. The company's Medicare Advantage business is also grappling with higher utilization rates and lower reimbursement levels, further straining its financial performance. As the healthcare sector braces for the upcoming Medicare bidding season, UnitedHealth Group's ability to navigate these challenges will be closely watched by investors and industry observers alike.