Latest news with #Hemsley
Time of India
18 hours ago
- Business
- Time of India
UnitedHealth eyes $1 billion deal to exit Latin America as insurer refocuses on US, sources say
New York: UnitedHealth Group is weighing multiple bids for its Latin American operations, according to two people with direct knowledge of the matter, as the insurer buckles down after a series of unprecedented missteps that include the ouster of its CEO and a reported criminal accounting probe. The largest U.S. health insurer has been trying to exit Latin America since 2022, but the sale of Banmedica has taken on increasing urgency in recent months as the insurer took hits on multiple fronts, according to one of the people. New CEO Steve Hemsley told shareholders last week that he was determined to earn back their trust after an earnings miss and a Wall Street Journal report that the company was under criminal investigation for alleged Medicare fraud. UnitedHealth has said it was not notified by the Department of Justice and that it stands by the integrity of its operations. Hemsley replaced Andrew Witty just a few months after the murder of the executive Brian Thompson, the CEO of UnitedHealthcare, in New York in December while on his way to a meeting with investors. Witty had been UnitedHealth Group CEO since 2021. The company has four non-binding bids for its Banmedica subsidiary, which operates in Colombia and Chile, for about $1 billion, according to both people, who asked not to be identified because the talks are private. UnitedHealth's shares tumbled 25.5% in May alone and year-to-date are down 40%. UnitedHealth left Brazil in 2023 and Peru in March. It's aiming to get around $1 billion for Banmedica's operations in Colombia and Chile, the people said. The two people said the company expects to set a deadline for binding proposals as soon as July. UnitedHealth received bids from Washington, D.C.-based private equity firm Acon Investments; Sao Paulo-based private equity firm Patria Investments; Texas non-profit health firm Christus Health; and Lima-based healthcare and insurance provider Auna, the people said. Auna is in talks with a financial partner, one of the sources added. Banmedica's annual earnings before income taxes, depreciation and amortization, or EBITDA, are more than $200 million a year. Patria, UnitedHealth Group and Christus Health declined to comment. Acon and Auna did not respond to requests for comment. FAILED EXPANSION PLANS UnitedHealth bought Banmedica in 2018, with CEO David Wichmann saying he was "establishing a foundation for growth in South America for the next decades." At the time, UnitedHealth paid around 12 times Banmedica's EBITDA, according to one of the people. Three years later, the insurer decided to leave Latin America as it grappled with losses in its largest operation in the region, Brazil's Amil, which had been acquired a decade earlier. It divested from its Brazilian operations in late 2023. Banmedica is currently profitable, but is considered too small by UnitedHealth. It serves over 2.1 million consumers through its health insurance programs and has around 4 million patient visits annually across its network of 13 hospitals and 143 medical centers. UnitedHealth booked an $8.3 billion loss last year related to the sale of its South American operations - $7.1 billion stemming from the Brazil exit and $1.2 billion from Banmedica. "These losses relate to our strategic exit of South American markets and include significant losses related to foreign currency translation effects," the company said in a February filing. Brazilian investment bank BTG Pactual is advising UnitedHealth on the sale.
&w=3840&q=100)
Business Standard
a day ago
- Business
- Business Standard
UnitedHealth may sell Latin America arm for $1bn to refocus on US: Report
UnitedHealth Group is weighing multiple bids for its Latin American operations, according to two people with direct knowledge of the matter, as the insurer buckles down after a series of unprecedented missteps that include the ouster of its CEO and a reported criminal accounting probe. The largest US health insurer has been trying to exit Latin America since 2022, but the sale of Banmedica has taken on increasing urgency in recent months as the insurer took hits on multiple fronts, according to one of the people. New CEO Steve Hemsley told shareholders last week that he was determined to earn back their trust after an earnings miss and a Wall Street Journal report that the company was under criminal investigation for alleged Medicare fraud. UnitedHealth has said it was not notified by the Department of Justice and that it stands by the integrity of its operations. Hemsley replaced Andrew Witty just a few months after the murder of the executive Brian Thompson, the CEO of UnitedHealthcare, in New York in December while on his way to a meeting with investors. Witty had been UnitedHealth Group CEO since 2021. The company has four non-binding bids for its Banmedica subsidiary, which operates in Colombia and Chile, for about $1 billion, according to both people, who asked not to be identified because the talks are private. UnitedHealth's shares tumbled 25.5 per cent in May alone, and year-to-date are down 40 per cent. UnitedHealth left Brazil in 2023 and Peru in March. It's aiming to get around $1 billion for Banmedica's operations in Colombia and Chile, the people said. The two people said the company expects to set a deadline for binding proposals as soon as July. UnitedHealth received bids from: Acon Investments (Washington, D.C.-based private equity firm) Patria Investments (São Paulo-based private equity firm) Christus Health (Texas non-profit health firm) Auna (Lima-based healthcare and insurance provider, in talks with a financial partner) Banmedica's annual earnings before income taxes, depreciation and amortisation (EBITDA) is more than $200 million a year. Patria and Christus Health declined to comment. UnitedHealth, Acon, and Auna did not respond to requests for comment. UnitedHealth bought Banmedica in 2018, with then-CEO David Wichmann saying he was 'establishing a foundation for growth in South America for the next decades.' At the time, UnitedHealth paid around 12 times Banmedica's EBITDA, according to one of the people. Three years later, the insurer decided to leave Latin America as it grappled with losses in its largest operation in the region, Brazil's Amil, which had been acquired a decade earlier. It divested from its Brazilian operations in late 2023. Banmedica is currently profitable but is considered too small by UnitedHealth. It serves over 2.1 million consumers through its health insurance programs and handles around 4 million patient visits annually across its network of 13 hospitals and 143 medical centres. UnitedHealth booked an $8.3 billion loss last year related to the sale of its South American operations — $7.1 billion stemming from the Brazil exit and $1.2 billion from Banmedica. 'These losses relate to our strategic exit of South American markets and include significant losses related to foreign currency translation effects,' the company said in a February filing. Brazilian investment bank BTG Pactual is advising UnitedHealth on the sale.
Yahoo
6 days ago
- Business
- Yahoo
UnitedHealth to Curtail Medicare Advantage Costs: Margin Boost Ahead?
UnitedHealth Group Incorporated's UNH new CEO, Steve Hemsley, began his return to leadership by issuing a rare apology to investors following the company's first earnings miss in almost two decades. The shortfall in the first quarter of 2025, driven largely by unexpectedly high medical costs in the Medicare Advantage segment, led the company to suspend its full-year guidance. In response, Hemsley pledged to rebuild shareholder trust and tackle escalating care expenses head-on. The medical care ratio rose to 84.8% in the first quarter of 2025, up from 84.3% in the prior year. For the full year, we expect the metric to climb to 87.8%, a sharp increase from 85.5% in 2024. Medical costs surged 11.7% in the first quarter alone, following a 9.2% rise in 2024. We anticipate that medical expenses will grow by more than 16% in 2025. Adding to the pressure, the Wall Street Journal reported that the DOJ is investigating billing practices at UNH's Optum tied to services under its Medicare Advantage business. Hemsley has committed to including higher care-cost assumptions into future plan pricing and emphasized that transparency and effective cost controls will be key to restoring market confidence. Having previously led UnitedHealth (2006-2017), Hemsley brings deep institutional knowledge. He has already launched a broad review of the company's operations, including policies around Medicare Advantage risk adjustment and PBM. This process will involve external experts and is expected to lead to meaningful reforms. Despite the headwinds, Medicare Advantage membership grew 6.3% in the first quarter, and we expect it to grow 9.2% in 2025. Humana Inc. HUM and Elevance Health, Inc. ELV, two major competitors in the healthcare plan provider space, are also navigating similar challenges related to growing benefit expenses. Humana's benefits expenses rose 13.9% year over year in 2024 and 5.6% in the first quarter of 2025. Meanwhile, Elevance's benefits expenses grew 2.6% in 2024 and then a massive 15.6% jump in the first quarter of 2025. Moreover, Humana's Medicare Advantage memberships witnessed a 6% decline in the first quarter and are expected to continue falling for the rest of the year. On the other hand, Elevance's Medicare Advantage membership has increased 11.8% in the first quarter, and we expect it to rise 8.8% for the full year. Shares of UNH have declined 39.8% in the year-to-date period compared with the industry's fall of 29.1%. Image Source: Zacks Investment Research From a valuation standpoint, UnitedHealth trades at a forward price-to-earnings ratio of 12.42, above the industry average. But it is still lower than its five-year median of 19.20. UNH carries a Value Score of B. Image Source: Zacks Investment Research The Zacks Consensus Estimate for UnitedHealth's 2025 earnings implies a 17.3% drop from the year-ago period. Image Source: Zacks Investment Research The stock currently carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report Humana Inc. (HUM) : Free Stock Analysis Report Elevance Health, Inc. (ELV) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
American Military News
6 days ago
- Business
- American Military News
In first speech back, UnitedHealth's new CEO pledges to review hot-button issues
Newly back in the CEO chair at UnitedHealth Group, Stephen Hemsley on Monday vowed to address a series of lightning-rod issues that have heightened public scrutiny of the company. That includes fresh reviews of the Eden Prairie company's pharmacy business, the way it scores Medicare patients' health risks and its care management practices. But Hemsley, the longtime executive who resumed his role as CEO last month, kept his cards close to the vest during the company's annual meeting Monday, offering almost no specifics about the new reviews. He also apologized for recent financial missteps that have shocked investors and prompted an unprecedented decline in UnitedHealth Group's share price. 'Importantly, I'm returning to the company with a fresh perspective on some of the most publicly discussed matters,' Hemsley said. 'I'm introducing new initiatives to include a comprehensive review of all our policies, our practices, and the associated processes and performance measures for risk assessment coding, for managed care practices and for pharmacy services. We will use authoritative independent experts to evaluate and assess these reviews, and we'll modify our approaches where appropriate.' A former top physician executive with UnitedHealth told the Minnesota Star Tribune last month that addressing reputational hits likely would be a top priority for Hemsley, who is replacing previous CEO Andrew Witty. Witty remains with the company as senior advisor after stepping down for personal reasons following uncharacteristic financial missteps. The company's share price has plummeted in recent months. UnitedHealth Group is parent company to UnitedHealthcare, the nation's largest health insurer, and a large pharmacy benefit manager (PBM) called Optum Rx. A federal watchdog report last year found UnitedHealth Group stood out from its peers in using questionable diagnosis data to boost payments in Medicare Advantage, a privatized version of the federal government health insurance program for seniors. And Optum Rx has been caught up in Federal Trade Commission scrutiny of the PBM industry. Since the Dec. 4 killing of company executive Brian Thompson, UnitedHealth has been at the center of public discussion over health insurance denials, although Hemsley did not directly address that issue in his remarks Monday. The company did not specify what he meant by 'managed care practices.' In a Q&A period during Monday's event, one shareholder asked UnitedHealth to provide specific data on the factors used by the company's artificial intelligence technology to override decisions from physicians and health care providers. That premise was immediately rejected by Dr. Wyatt Decker, a former Mayo Clinic executive who is the chief physician for value-based care at UnitedHealth Group. 'We do not use AI to deny care or tell our doctors or nurse practitioners how to practice,' Decker said. 'We believe that there's a terrific future for health care when providers are supported by smart systems that can put pressing needs and suggestions in front of them — frankly at their fingertips — and we are on the front edge of that technology with decision support for our physicians.' A patient lawsuit is moving forward in the U.S. District Court of Minnesota where plaintiffs allege UnitedHealthcare has used a faulty artificial intelligence program to deny coverage for post-acute care needed by Medicare patients. UnitedHealth says the lawsuit is based on unfounded allegations and mischaracterizes the work of its clinicians. Hemsley opened his annual meeting remarks by apologizing for the company's recent financial performance and pledging to shareholders that UnitedHealth would 'earn back your trust and your confidence.' The company had a stellar reputation on Wall Street for growth and profitability during Hemsley's first stint as CEO, from 2006 through 2017. At that point, he graduated to the position of board chairman, a job he still holds today. Going forward, the most immediate area of focus is 'pricing discipline,' Hemsley said. 'Clearly we have gotten things wrong,' he said. 'We underestimated care activity and cost trends and generated outsized growth. We are intensively examining our approaches and have already begun to make improvements, including, most notably, a significant retooling of our efforts to ensure more precise and more accurate forecasting of both care and financial activity.' Last month, UnitedHealth Group suspended financial guidance for the year due in part to unexpected costs in Medicare Advantage as well as the company's Optum Health clinics that care for seniors. Hemsley said the company would issue new guidance with the release of second quarter results on July 29. 'Across the enterprise, our pricing decisions and benefit designs for the next year are being fully shaped with an abundance of respect for the trend factors we noted in May and the environment we find ourselves in today and see going forward,' Hemsley said. In recent weeks, the company has been making changes in management teams and processes to ensure it has the right leadership in place going forward, Hemsley said. He added that UnitedHealth this week is submitting bids to the federal government for 2026 work that reflects 'our elevated care activity experience' in Medicare Advantage. 'It has never been more evident to me that we need to reinvigorate the performance culture and disciplines that have long been the hallmark of this company to more effectively navigate through this dynamic period.' ___ © 2025 The Minnesota Star Tribune. Distributed by Tribune Content Agency, LLC.
Yahoo
7 days ago
- Business
- Yahoo
UnitedHealth (UNH) Faces Sell Call Amid Margin Squeeze, Regulatory Risks
UnitedHealth (UNH, Financials) shares gained 1% Monday after newly reinstated CEO Steve Hemsley apologized for the company's first earnings miss since 2008 and vowed to restore shareholder trust at the annual meeting. Warning! GuruFocus has detected 4 Warning Sign with UNH. Hemsley replaced Andrew Witty last month amid fallout from the earnings shortfall and the suspension of full-year guidance due to soaring medical costs in the Medicare Advantage segment. The company also faces pressure from federal investigations and regulatory scrutiny over billing and drug pricing practices. We are well aware we have not fulfilled your expectations or our own, Hemsley told shareholders. We apologize for that performance, and we're humbly determined to earn back your trust and your confidence. Hemsley previously served as CEO from 2006 to 2013. Shareholders approved his new three-year pay package, which includes equity awards valued at $60 million. Proxy firms were split on the vote, with ISS opposing and Glass Lewis supporting the plan. UnitedHealth is reviewing operations across all units, including Optum Rx and UnitedHealthcare. The U.S. Department of Justice is reportedly examining billing practices tied to its integrated Medicare Advantage services, though the company says it has not received a criminal notification. The company's private insurance and 2026 Medicare Advantage plans will be adjusted to account for higher care costs, Hemsley said. The CEO transition follows the December killing of UnitedHealthcare CEO Brian Thompson in New York, which added further disruption to the company's leadership stability. Investors are now watching for updates on regulatory probes, Medicare audits, and Q2 cost trends that could shape UnitedHealth's revised guidance trajectory. This article first appeared on GuruFocus.
