Shares of UnitedHealth Group sank Friday following a report on a fresh federal probe into the U.S.’ largest health insurer, the latest development in a turbulent stretch on Wall Street for the company as its business practices come under scrutiny.
UnitedHealth Group subsidiary UnitedHealthcare's Minnesota headquarters.
The Wall Street Journal reported the Department of Justice is conducting a civil fraud probe into UnitedHealth’s billing practices for Medicare, the federal government-subsidized health insurance program.
The investigation is focused on UnitedHealth’s alleged tendency to encourage medical diagnoses, which lead to extra payments for its Medicare Advantage patients, according to the Journal.
UnitedHealth stock plummeted as much as 12.7%, or $64, to as low as $438.50 per share shortly after market open, knocking off roughly $40 billion in market capitalization for the company now valued at about $420 billion.
Even after losses trimmed to about 9%, Friday is on pace to be UnitedHealth stock’s worst percentage loss since March 2020, when the global stock market crashed amid COVID-19 lockdown orders, and the fourth-worst day of the last 10 years.
UnitedHealth Group declined to comment on the report, and the Justice Department did not immediately respond to Forbes’ inquiry.
$139.5 billion. That’s how much revenue UnitedHealth’s health insurance subsidiary, UnitedHealthcare, generated from Medicare and retirement plans in 2024. That accounted for more than a third of the parent company’s $400 billion in sales last year.
Friday’s “share decline looks like an overreaction relative to the potential risks for UnitedHealth,” Morningstar analyst Julie Utterback wrote in emailed comments to Forbes. Utterback noted UnitedHealth’s health insurance unit only accounts for slightly less than half of the company’s profits (the remainder come from its Optum healthcare provider), and only about 15% of its health insurance members are on Medicare Advantage plans. But “one reason why shares are reacting so much is that in this post-shooting and DOGE-era, regulators may be emboldened to make more changes than they otherwise would have on insurers that are seen to be fleecing the system,” Utterback explained.
Utterback referenced the Dec. 4 killing of UnitedHealthcare CEO Brian Thompson at UnitedHealth’s annual investor conference and the Elon Musk-led Department of Government Efficiency (DOGE), which has targeted Medicare in its cost-cutting initiatives. Thompson’s killing, which was allegedly triggered by his accused murderer’s disdain for the U.S. healthcare system, led to a sharp selloff in UnitedHealth stock, which fell 18% in the two weeks following Thompson’s death. Shares of the insurer are down 25% since Dec. 4 following Friday’s dive.