Andrew Witty, CEO of UnitedHealth Group, testifies throughout the Senate Finance Committee listening to titled “Hacking America’s Well being Care: Assessing the Change Healthcare Cyber Assault and What’s Subsequent,” within the Dirksen Constructing in Washington, D.C., on Might 1, 2024.
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UnitedHealth Group on Tuesday introduced the surprise exit of CEO Andrew Witty and suspended its 2025 forecast, sending shares of the healthcare large tumbling practically 10% in premarket buying and selling.
Witty is stepping down instantly for “private causes,” the corporate stated. He’ll act as a senior advisor to his successor, Stephen Hemsley, who served as UnitedHealth Group’s CEO from 2006 to 2017 after first becoming a member of the corporate in 1997.
“We’re grateful for Andrew’s stewardship of UnitedHealth Group, particularly throughout among the most difficult occasions any firm has ever confronted,” Hemsley stated in a launch.
The corporate stated its choice to drag its steering was partly as a result of increased medical prices, which dragged down different insurance coverage shares. Shares of each CVS Health dropped practically 3% and shares of Elevance Health fell greater than 3%, whereas Humana‘s inventory slid greater than 2% and shares of Cigna misplaced greater than 1%.
Witty grew to become CEO of UnitedHealth in 2021 after beforehand operating British pharmaceutical large GlaxoSmithKline for practically a decade. He oversaw a tumultuous last year for the corporate, which grappled with authorities investigations, a historic cyberattack, higher-than-expected medical prices and the torrent of public blowback after the homicide of Brian Thompson, the CEO of the corporate’s insurance coverage unit UnitedHealthcare.
Witty in December publicly acknowledged that the U.S. well being system is “flawed” and wishes reform, but additionally defended UnitedHealthcare.
UnitedHealth Group on Tuesday stated it partly suspended the outlook as a result of the medical prices for brand spanking new enrollees within the firm’s non-public Medicare plans remained increased than anticipated. The corporate additionally stated “care exercise continued to speed up whereas additionally broadening to extra varieties of profit choices than seen within the first quarter.”
It comes simply weeks after UnitedHealth Group slashed its annual revenue forecast, warning of elevated medical prices in so-called Medicare Benefit plans. These increased bills have dogged the whole insurance coverage business over the previous yr as extra seniors return to hospitals to endure procedures they’d delayed throughout the Covid-19 pandemic, akin to joint and hip replacements.
The corporate in April additionally posted its first earnings miss since 2008, and the following inventory decline erased practically $190 billion in market capitalization on the time.
However buyers might welcome the return of Hemsley, who oversaw the corporate’s transformation right into a $400 billion healthcare conglomerate that controls every thing from the nation’s largest non-public insurer to one of many largest pharmacy profit managers, together with doctor teams and delicate health-care knowledge of thousands and thousands of Individuals.
“UnitedHealth Group has great alternatives to develop as we proceed to assist enhance well being care and to carry out to our potential — and, in so doing, return to our long-term progress goal of 13 to 16 p.c,” Hemsley stated.
The corporate expects to return to progress in 2026, in response to the discharge.