UnitedHealth announces surprise CEO exit, pulls annual forecast
(Reuters) - UnitedHealth Group announced the surprise exit of CEO Andrew Witty on Tuesday and suspended its 2025 forecast due to surging medical costs, sending its shares down more than 10% premarket.
Former CEO Stephen Hemsley, who has been with the healthcare conglomerate for 28 years, is returning to the top role. Witty was leaving for personal reasons, the company said, without elaborating.
Under Witty, UnitedHealth has met with a series of challenges in the past year - including the murder of its top health insurance executive, Brian Thompson, last December.
Earlier in 2024, it was the target of a cyberattack at its tech unit that shut the U.S. healthcare processing system for days, affecting 200 million Americans.
Witty was also at the helm in April, when the company posted its first earnings miss since the 2008 financial crisis and lowered its annual outlook citing higher-than-expected medical costs and "unanticipated changes" in its Optum business that impacted planned 2025 reimbursements.
"The abruptness (of Witty's exit) certainly is a surprise but no one should be surprised given the unique struggles of UNH versus peers. At a certain point, leadership must be held accountable," said Kevin Gade, chief operating officer at Bahl and Gaynor.
The U.S. health insurance industry has been grappling with increased costs since mid-2023 due to a surge in demand for healthcare services under government-backed Medicare plans for older adults or individuals with disabilities.
Tuesday's announcement also pulled down shares of other health insurers such as Humana, CVS and Elevance between 4% and 6%.
The guidance suspension wasn't much of a surprise, said Gade.
"As utilization spikes, you can assume improvement, stabilization or worsening on your forward guide. Unfortunately in this environment, UNH expressed a worsening/spike in utilization of benefits which is causing this suspension," Gade said.
The company was also sued earlier this month for allegedly concealing how backlash from Thompson's killing was damaging its business.
UnitedHealth expects to return to growth in 2026, it said on Tuesday.
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