Healthcare Stocks Plunge Amid DOJ Investigation into UnitedHealth Group
Healthcare stocks nosedive as the U.S. Department of Justice launches a probe into UnitedHealth Group’s Medicare Advantage practices, sparking investor concerns and market volatility.
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Key Highlights
- Shares of health insurance companies dropped sharply following reports of a DOJ investigation into UnitedHealth Group.
- The Wall Street Journal revealed that the Department of Justice is scrutinizing the company’s Medicare Advantage operations.
- UnitedHealth Group’s stock also plunged earlier this week after the company withdrew its financial guidance and CEO Andrew Witty unexpectedly resigned.
UnitedHealth Group (UNH) shares suffered another steep decline on Thursday, pulling down stocks of peer companies amid mounting concerns over regulatory scrutiny.
The Wall Street Journal reported that the U.S. Department of Justice is conducting a probe into potential Medicare fraud linked to UnitedHealth Group’s Medicare Advantage business segments.
While specific allegations remain unclear, sources indicate the investigation has been ongoing since at least last summer, focusing on the company’s compliance and billing practices within Medicare Advantage plans.
In response, UnitedHealth Group issued a firm statement denying any contact from the DOJ regarding an investigation and labeled the report as "deeply irresponsible." The company reaffirmed its confidence in the integrity of its Medicare Advantage program.
Challenging Times for UnitedHealth Group Investors
The past week has been turbulent for investors in UnitedHealth Group. Shares plummeted by 18% on Tuesday after the company retracted its earnings guidance amid rising expenses and the abrupt resignation of CEO Andrew Witty. Although shares briefly recovered, they ultimately continued downward, culminating in a loss of about one-third of their value since the previous Monday’s close.
On Thursday, UnitedHealth Group was the lowest performing stock in the S&P 500 during late-morning trading. Competitors such as Humana (HUM), Molina Healthcare (MOH), and Elevance Health (ELV) also experienced declines.
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