UnitedHealth Group announced the immediate resignation of CEO Andrew Witty for personal reasons on Tuesday and withdrew its already-slashed full-year earnings outlook, citing a continued acceleration in medical cost trends. UNH stock, which had already been the worst Dow Jones performer this year, dived to its lowest level in more than four years.
UnitedHealth held an investor call at 8 a.m. ET to discuss company developments, but UNH stock losses deepened following the call. In a statement, incoming CEO Stephen Helmsley, who has been chairman of the board of directors, expressed gratitude for Witty's stewardship and wished his family the best.
UnitedHealth Earnings Outlook Scrapped
UnitedHealth noted that "care activity continued to accelerate while also broadening to more types of benefit offerings than seen in the first quarter."
The company already slashed its full-year earnings outlook when it reported Q1 results on April 17, targeting an adjusted EPS range of $26 to $26.50 a share. That was down from the January outlook of $29.50 to $30 a share.
On Tuesday, UnitedHealth said the medical costs of many Medicare Advantage beneficiaries new to UNH plans remained higher than expected.
In an April 21 note following the lowered earnings outlook, Jefferies analyst David Windley wrote that Medicare Advantage "operating missteps drove a hole in '25 EPS." While the issues are fixable, he wrote that "investors expect UNH to be sophisticated enough to anticipate those changes."
UnitedHealth also faces challenges related to its OptumRx prescription benefit management unit. President Donald Trump on Monday renewed his pledge to go after drug industry middlemen, sending Cigna, CVS Health and UNH lower.
UNH Stock
UNH stock tumbled 14.7% to 323.30 early Tuesday, the lowest level since February 2021,. UnitedHealth was already down 24.75% for the year, making it the worst performer among Dow Jones stocks.
CVS and Humana, both big Medicare Advantage players, are down about 5% and 7%, respectively.
