UnitedHealth Group shares have significantly dropped following reports of a Department of Justice investigation into possible Medicare fraud, adding to the challenges faced by the largest US health insurer.
DOJ Investigation
According to the Wall Street Journal report, the Department of Justice is investigating UnitedHealth's Medicare Advantage practices. The exact nature of the potential criminal allegations remains unclear. The probe has reportedly been active since summer 2024, with no public comments from the DOJ yet.
Impact on UnitedHealth Stocks
UnitedHealth shares have fallen nearly 50% in the past month, wiping out billions in market value. As of 10:23 AM EDT, shares were trading at $256.65, down $51.36 (16.68%) for the day, bringing the company's market capitalization to approximately $232.8 billion. The stock's free fall began after the abrupt announcement of CEO Andrew Witty's resignation and the appointment of former CEO Stephen Hemsley.
Potential Consequences for the Company
Criminal healthcare fraud investigations can lead to significant penalties and exclusion from government programs. The DOJ has previously struggled to prove fraud allegations against UnitedHealth in court. Medicare Advantage has become an increasingly important business segment, making disruptions particularly concerning.
The DOJ's investigation into Medicare fraud and the stock drop pose significant risks to UnitedHealth's financial outlook, representing a serious challenge amid growing medical costs.
