UnitedHealth Cost Trends Worsen, CEO Steps Down
UnitedHealth Group Inc. on May 13 issued an update with two items of notable news, saying that its medical costs are likely to be higher than expected—higher still than the level executives forecast four weeks ago when they lowered their 2025 outlook—and adding that Andrew Witty has stepped down as CEO.
Witty, 60, had led Minnesota-based United since February 2021, taking the top job after being president of the holding company as well as CEO of its Optum healthcare services group. Before joining United, he was CEO of pharmaceuticals giant GlaxoSmithKline for nearly a decade. Taking over from his is Stephen Hemsley, who was United’s CEO from 2006 to 2017 and has been its board chairman since handing over the reins.
“We are grateful for Andrew’s stewardship of UnitedHealth Group, especially during some of the most challenging times any company has ever faced,” Hemsley said, referencing the December killing in New York City of UnitedHealthcare CEO Brian Thompson. “The board and I have greatly valued his leadership and compassion as chief executive and as a director and wish him and his family the best.”
On the financial side, Hemsley and CFO John Rex said the patient utilization trends United highlighted in April—a spike in activity from Medicare Advantage members and lower-than-expected revenues from new value-based care plan members—have persisted and even accelerated in recent weeks.
In addition, Rex said on a conference call, there are “indications of a broadening of this higher trend to other areas and we are prudently anticipating these trends may go even further.” That has led the United team to withdraw its 2025 financial outlook.
Shares of United (Ticker: UNH) tumbled nearly 18 percent to about $311 on the two-part news. They have now lost nearly half of their value over the past six months, cutting the company’s market capitalization to about $282 billion.
On the conference call, Hemsley and Rex said they’re confident United can return to growth in 2026. The company, Hemsley, has “a whole host of remedial actions” underway to contain costs and reverse some of the utilization trends. Among them are further upward changes to prices in 2026 MA bids and other contracts that the company will submit in the next few weeks.
“We remain committed to providing stable and high-quality medical offerings to the members we are privileged to serve,” Rex said. “But we will also appropriately price and adjust our offerings to return to our long-term target margin range.”
