By Reuters
May 15, 2025 – 7:20 AM PDT
(Reuters) – UnitedHealth Group (UNH.N) shares plunged 16% to hit a five-year low on Thursday, after the Wall Street Journal reported that the U.S. Department of Justice was investigating the company for potential Medicare fraud.
The latest news adds to the health insurer’s litany of woes, including multiple government inquiries, a sudden change in top leadership and a pulled outlook in the face of soaring medical costs.
Investors and analysts noted that while details on the investigation were limited, they did heighten investor concerns.
“The stock is already in the doghouse with investors, and additional uncertainty will only pile on,” said James Harlow, senior vice president at Novare Capital Management, which owns shares in UnitedHealth.
The company, however, said that it had not been notified by the DOJ regarding this criminal investigation.
The news of the probe follows CEO Andrew Witty’s abrupt departure and the withdrawal of its 2025 forecast, which triggered an 18% drop in shares to a four-year low on Tuesday.
“UnitedHealth Group is mired in a crisis seemingly without end. Investors are bracing for another big bout of turbulence given reports of the DOJ investigation,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
If losses hold, UnitedHealth will be the worst-performing stock on the S&P 500 index (.SPX) in two of the last three days.
The past month’s selloff has wiped out nearly $300 billion from UnitedHealth’s market capitalization, or more than half of its value since its shares hit a record high in November.
The insurance bellwether’s troubles also dragged down shares of rivals CVS Health (CVS.N), Centene (CNC.N), Elevance (ELV.N), and Humana (HUM.N) by about 2% to 6%.
The health insurance industry has come under government scrutiny after a lawsuit this month accused three major U.S. insurers of paying kickbacks to brokers to steer patients into their plans.
In February, the WSJ revealed a civil fraud investigation into UnitedHealth’s Medicare practices, while U.S. Senator Chuck Grassley launched an inquiry into the company’s billing methods, demanding detailed compliance records.
For decades, the company has flourished by leveraging its dominance in insurance and growth in the Medicare market, the U.S. government program that covers medical costs for the elderly.
Oppenheimer analyst Michael Wiederhorn said despite recent challenges, the company’s fundamentals remain sound, but he noted that “it may take time to win back the marketplace’s confidence.”
Reporting by Sneha S K, Joel Jose and Siddarth S in Bengaluru; Editing by Anil D’Silva