TLDR
- UnitedHealth stock dropped 4.7% after confirming DOJ investigation into Medicare billing practices
- Company disclosed it’s responding to formal criminal and civil requests from Justice Department
- Investigation stems from Wall Street Journal reports about potentially improper Medicare Advantage billing
- UnitedHealth launched third-party review of its risk assessment coding and managed care practices
- Stock has fallen 52% since April amid string of controversies and poor earnings performance
UnitedHealth Group stock took a hit Thursday, falling 4.7% to $278.58 after the insurance giant confirmed it’s under federal investigation. The company filed an 8-K form with the SEC acknowledging it’s responding to Justice Department requests about its Medicare billing practices.
The DOJ’s healthcare fraud unit launched the probe following Wall Street Journal reports from December 2024. Those reports detailed how UnitedHealth and other major insurers allegedly received billions in extra Medicare Advantage payments through questionable billing techniques.
The investigation focuses on practices where insurers added diagnoses to patient profiles that weren’t made by treating doctors. This allowed companies to collect higher payments from the federal Medicare program. UnitedHealth said it has “full confidence in its practices” and will work cooperatively with investigators.
The company proactively reached out to the DOJ after reviewing media reports about the investigation. It also launched its own third-party review of policies and practices related to risk assessment coding and managed care.
Stock Performance Woes Continue
UnitedHealth shares have been hammered this year, falling 44% as the company faces mounting challenges. The stock is down 52% since April 16, before disappointing first-quarter earnings sent shares tumbling over 22% in their worst single-day drop since 1998.
The Medicare investigation adds to a string of setbacks for the healthcare giant. In May 2024, executives including founder Stephen Helmsley faced an insider trading lawsuit over stock sales ahead of an antitrust probe disclosure.
The company’s troubles deepened in December when UnitedHealthcare CEO Brian Thompson was shot and killed in Manhattan. The incident sparked widespread criticism of the insurer’s claim denial practices and treatment of patients.
Leadership Changes and Financial Struggles
UnitedHealth’s earnings have consistently missed expectations throughout 2024 and into 2025. The company’s medical care ratio spiked, showing it’s spending more of collected premiums on actual medical care. Revenue has also fallen short of analyst estimates in recent quarters.
CEO Andrew Witty stepped down abruptly earlier this year as the company pulled its annual forecast. Helmsley returned as CEO with a compensation package including $60 million in stock options vesting over three years.
The company suspended its annual forecast entirely, sending shares down another 16%. A leaked internal memo in June revealed talking points about using AI models to deny claims, further damaging the company’s reputation.
Mizuho analyst Ann Hynes maintains an Outperform rating with a $350 price target. She believes the DOJ investigation risk is already reflected in the stock’s beaten-down valuation. Hynes pointed to UnitedHealth’s track record of passing routine audits from Medicare and Medicaid services.
A separate decade-long lawsuit alleging False Claims Act violations through improper risk adjustment continues. A court-appointed special master recommended dismissing the case in March, with the next hearing scheduled for September.
Peer insurers also declined Thursday, with Elevance Health down 4.9%, Cigna falling 3.2%, and Humana dropping 3%. CVS Health, which operates a pharmacy benefits manager, fell 3.3%.
UnitedHealth is scheduled to report second-quarter earnings on July 29.
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