UnitedHealth Group has announced a significant leadership change, with CEO Andrew Witty stepping down due to personal reasons. The announcement coincides with the decision to suspend the companyโs full-year financial outlook following higher-than-anticipated medical costs. The Minnesota-based health insurance giant named Stephen Hemsley, former CEO from 2006 to 2017, as the new CEO. Hemsley will also continue in his role as chairman of UnitedHealthโs board. Witty will transition to a senior advisory role to assist Hemsley during this period.
These developments arrive amidst challenging times for the company, which have been ongoing since December. This period has been marked by a tragic incident involving UnitedHealth executive Brian Thompson, who was fatally attacked outside a New York City hotel. Although this incident was separate from the companyโs financial activities amounting to $340 billion, its stocks have nosedived dramatically since.
During a conference call on Tuesday, Hemsley expressed his disappointment, acknowledging both external and internal obstacles that have hindered performance. He stated, โIโm deeply disappointed in and apologize for the performance setbacks we have encountered from both external and internal challenges,โ and also remarked on his optimism, asserting that, โMany of the issues standing in the way of achieving our goals as well as our opportunities are largely within our control. I am optimistic about our future as these issues are within our capacity to resolve. We will approach them with humility, rigor and urgency.โ Hemsley aims to counter these issues with a renewed focus and urgent strategies.
Witty, who came on board with UnitedHealth in 2018 after leading British pharmaceutical company GlaxoSmithKline for nearly a decade, was appointed CEO in February 2021, succeeding Dave Wichmann. Under Wittyโs leadership, UnitedHealth expanded significantly, with revenues reaching over $400 billion last year, a substantial increase of 55% from when he initially became CEO. During his tenure, UnitedHealthโs stock price also soared by 60.5%.
However, recent months have seen UnitedHealth grappling with challenges, including heightened scrutiny following the indictment of Luigi Mangione on federal murder charges related to Thompsonโs death. The case has stirred national interest, contributing to a wave of negative sentiment towards U.S. health insurers and unsettling corporate leaders about safety concerns. This has affected the companyโs stability, leading to a downward revision of its 2025 forecast after reporting its first quarterly earnings shortfall in over ten years. On Tuesday, the company took the step of withdrawing this financial forecast entirely, citing unexpectedly high medical costs linked to new Medicare Advantage members.
As a result, the companyโs shares, which have plunged 38% since the fatal December 4 attack, experienced a further decline of over 16% on Tuesday, reverting to values not seen in nearly five years. The impact extended beyond UnitedHealth, affecting other major insurers such as Elevance, Humana, and Cigna, which saw stock drops ranging from 4% to 7%.
UnitedHealth Group Inc. plays a crucial role in the health insurance landscape, providing coverage to over 50 million people. It also operates a substantial pharmacy benefit manager responsible for handling prescription drug plans and has rapidly developed its Optum segment focused on delivering healthcare and technical support. As the leading provider of Medicare Advantage plans in the nation, UnitedHealthcare serves more than 8 million customers, catering primarily to individuals aged 65 and older through this private version of federal health coverage.