Latest news with #UHG
Mint
12 hours ago
- Business
- Mint
Cognizant wins $1 billion deal from US-based healthcare company
Bengaluru: Cognizant Technology Solutions Corp. recently bagged a big-ticket deal from a US-based healthcare company, at a time when clients are renegotiating their engagements with information technology (IT) service providers due to artificial intelligence (AI) tools and macroeconomic uncertainty. In the early hours of Tuesday, Surya Gummadi, Cognizant's president for the Americas region, said the company had won a mega deal worth 'approximately a billion dollars" during a fireside chat with Jason Kupferberg, a senior analyst with Bank of America Merrill Lynch. To be sure, Gummadi did not announce the client's name. Mint has learnt from people with knowledge of the matter, including at least two analysts, that Cognizant might have renewed its partnership with UnitedHealth Group (UHG). 'This (deal) has an element of renewal, an element of expansion and a new (component) as well. It has all three components," said Gummadi, adding that the deal was a transformation deal with an average span of five years. The Cognizant veteran said the deal also has an AI component, where the IT services company is passing productivity gains to the client. Also read | Cognizant eyes a place amongst world's four largest IT services firms Should the client be UnitedHealth, a $1 billion contract translates to roughly $200 million in annual revenue for Cognizant, which counts UnitedHealth amongst its largest clients in the health sciences space. Cognizant has had a two-decade partnership with UnitedHealth. The health sciences vertical made up almost a third of its full-year revenue of $19.74 billion at the end of 2024 and is its biggest vertical. Cognizant, based in Teaneck, New Jersey, is an Indian-heritage IT firm, as more than three-fourths of its employees are based in India. UHG is among the largest healthcare companies in the US, providing healthcare plans to people. The company ended 2024 with $400 billion in revenue, almost 20 times the size of Cognizant. Close ties Notably, one of UnitedHealth's subsidiaries was hit by a ransomware attack last year that impacted more than 100,000 people. The company had to pay out $22 million to hackers to protect valuable patient data, said chief executive officer (CEO) Andrew Witty. Incidentally, Cognizant CEO S. Ravi Kumar and UnitedHealth chief digital and technology officer Sandeep Dadlani were former colleagues at Infosys Ltd. Kumar took over as Cognizant CEO in January 2023, whereas Dadlani joined as UnitedHealth's chief digital and technology officer in September 2022. Both worked together at Infosys between 2002 and 2017. Kumar and Dadlani both served as the Bengaluru-based company's presidents. At least one analyst said the win was a step in the right direction. 'It's a sign of strong forward momentum for the firm," said Phil Fersht, CEO of HFS Research. Also read | Captive concerns: Why Cognizant has called out the risk from GCCs This renewal deal comes as a shot in the arm for Cognizant, which has struggled to grow, discounting its recent acquisitions of Belcan and Thirdera, in the last two years. Acquisitions made up almost half of its full-year revenue growth of 8.2% in constant currency terms. For Cognizant, this is the second mega deal that the company signed in the last two months. Gummadi, in his chat with Bank of America, said the company had announced another deal fetching upwards of $500 million two weeks back. This is an unnamed client in the company's communication, media and telecommunications division, which makes up about 16.6% of the company's revenue. Gummadi said Cognizant is saving money for clients by using AI tools, and this is being shared with those clients, who are in turn putting these savings and some of their own investments into new IT-related work, which is helping create more volume of business for Cognizant. Cognizant declined to comment while an email sent to UHG went unanswered. Scarce deals 'And by the way, both the mega deals that I spoke about, they were originated by us. They did not come from an RFP (request for proposal). They (the mega deals) originated from a solution with this construct," he said. Cognizant's recent deal win comes amid a drought for the country's largest IT outsourcers, which have struggled to bag such large deals. Coforge Ltd was the only listed Indian IT outsourcer to win a deal greater than $1 billion in total contract value over the last year. Also read | Cognizant fared better than peers, but concerns linger In March, the country's seventh-largest IT services company signed a 13-year deal worth $1.56 billion with Sabre Corp., a Southlake, Texas-based travel technology company. As part of the deal, Coforge will handle Sabre's software product delivery and execute artificial intelligence-led tasks for it. Mumbai-based Tata Consultancy Services Ltd was the last of the country's top five software service providers to land a mega deal. Last year, it signed a 15-year deal worth $2.5 billion with Aviva, a British insurance company.
Yahoo
30-05-2025
- Business
- Yahoo
UnitedHealth Group has an unusual new CEO pay package
In today's CEO Daily: Geoff Colvin on UnitedHealth Group's controversial CEO pay package. The big story: U.S.-China trade talks stall. The markets: Mixed in the face of tariff uncertainty. Analyst notes from UBS, Deutsche Bank, and Macquarie. Plus: All the news and watercooler chat from Fortune. Good morning. Geoff Colvin writing today. It has been quite a year for UnitedHealth Group (UHG)—and now in addition to myriad other troubles, UHG is adding a controversial CEO pay package to its plate. The giant healthcare concern has seen an unprecedented loss of value recently. UHG is America's largest healthcare company, No. 3 on the Fortune 500, but in April it reported a surprisingly terrible first-quarter performance. The stock price plunged, then kept plunging for weeks. CEO Andrew Witty resigned abruptly for unspecified personal reasons, and the board chairman, Stephen Hemsley, took over as CEO. Hemsley, who turns 73 in June, will be trying to rescue the colossus he helped build as CEO from 2006 to 2017. While investors might have expected he would hold the job only until a new CEO is found, Hemsley and the board have other ideas. The highly unusual pay package they created for him shows how. He will get a base salary of $1 million a year—big money but actually below the usual salary for CEOs of such large companies. More importantly, he would get a one-time $60 million grant of stock options, with a twist: He would get the payoff only if he remains CEO for three years. He would get no other stock-based awards in that period. Shareholders will get to vote on that unconventional pay plan at UHG's June 2 annual meeting. Institutional Shareholder Services (ISS), the largest firm that advises major shareholders on how to vote, advises they vote No. They cite a lack of performance criteria and the fact that the stock is so beaten down he might get a windfall for a mere share price rebound. UHG struck back, sending shareholders an explanation of what ISS allegedly missed and why they should vote for Hemsley's pay package. Bottom line, Hemsley and UHG will probably get the pay package they negotiated. ISS's recommendations are taken seriously, but shareholders usually vote in favor of management. Even if UHG loses the vote, which companies must hold by law, the result is non-binding and advisory only; the board of directors could simply ignore the shareholders' wishes. In addition, UHG notes that ISS's main competitor, Glass Lewis, is recommending shareholders vote in favor of Hemsley's pay package. Regardless of the outcome, the contested vote will be significant. It will raise the already high stakes for UHG, its directors, and for Hemsley. More news CEO Daily via Diane Brady at This story was originally featured on 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
Yahoo
30-05-2025
- Business
- Yahoo
At troubled UnitedHealth Group, a highly unusual pay package—potentially worth $60 million to its boomerang CEO—heads to a June vote
Will UnitedHealth Group's new CEO get the hefty pay package the board wants to give him? That eight-figure question rises amid UHG's unprecedented loss of value in the past several weeks. UHG is America's largest health care company, No. 3 on the Fortune 500, but in April it reported surprisingly terrible first-quarter performance. The stock price plunged, then kept plunging for weeks. CEO Andrew Witty resigned abruptly for unspecified personal reasons, and the board chairman, Stephen Hemsley, took over as CEO. Hemsley, who turns 73 in June, will be trying to rescue the colossus he helped build as CEO from 2006 to 2017. While investors might have expected he would hold the job only until the board of directors finds a new CEO, Hemsley and the board have other ideas. The highly unusual pay package they created for Hemsley shows how. He will get a base salary of $1 million a year—big money but actually below the usual salary for CEOs of such large companies. More important, he would get a one-time $60 million grant of stock options, with a twist: He would get the payoff only if he remains CEO for three years. He would get no other stock-based awards in that period. Shareholders will get to vote on that unconventional pay plan at UHG's June 2 annual meeting. Institutional Shareholder Services, the largest firm that advises major shareholders on how to vote, advises they vote no. ISS sees multiple problems with Hemsley's pay package. Such big, front-loaded, multiyear awards 'limit the board's ability to meaningfully adjust future pay opportunities,' ISS says. In addition, Hemsley didn't need to meet any performance criteria to earn the mammoth stock option award; he got the whole thing on day one. Hemsley also got the award just as bad news was pounding the share price down to its lowest in nearly five years, meaning he might get 'a windfall' for a mere 'rebound in the share price.' Combine those factors, says ISS, and a no vote 'is now warranted.' UHG struck back, sending shareholders an explanation of what ISS allegedly missed and why they should vote for Hemsley's pay package. The company's central point: 'The award only has value if and to the extent shareholder value is created.' As for ISS's 'windfall' argument, UHG stated that 'in reality all [underlined and bold in the UHG document] shareholders would gain from increases in the company's stock price relative to current levels.' Who's likely to win this vote? Bottom line, Hemsley and UHG will probably get the pay package they negotiated. ISS's recommendations are taken seriously, but shareholders usually vote in favor of management. Even if UHG loses the shareholder vote on pay, which companies must hold by law, the result is nonbinding and advisory only; the board of directors could simply ignore the shareholders' wishes. In addition, UHG notes that ISS's main competitor, Glass Lewis, is recommending shareholders vote in favor of Hemsley's pay package. 'Upon a cursory glance,' it tells its clients, '[Hemsley's] annualized compensation is not excessive.' Regardless of the outcome, the contested vote will be significant. It will raise the already high stakes for UHG, its directors, and Hemsley. Three years from now, success in the face of opposition would look all the more heroic—and failure would be all the more bitter. This story was originally featured on Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
28-05-2025
- Business
- Yahoo
UnitedHealth Group faces lawsuit claiming it used ex-employees' 401(k) funds to defray its own costs
improperly uses workers' funds to reduce its own 401(k) contributions, according to a lawsuit against the nation's largest health insurer that is seeking class-action status. The company denies the claims. It's just one in a string of lawsuits facing the beleaguered company. Add two more lawsuits to the pile facing UnitedHealth Group. America's largest insurer is facing two purported class-action suits from former employees alleging the company misused their 401(k) contributions. The latest suit, filed Wednesday in federal court in Minnesota, claims that UnitedHealth Group held on to employees' money after they left and used it to improperly lower its own costs, the plaintiffs argue. The move is a breach of UHG's duty to act in the best interests of its retirement plan participants—ie, the current and former workers invested in its 401(k) plan. As the suit describes it, UHG, which took in $400 billion in revenue last year, has a fairly standard corporate 401(k) plan, matching up to 6% of employees' pay under certain conditions. However, employees forfeit the money UHG contributed to their plan if they leave before completing two years with the company. Between 2019 and 2023, UHG used $19 million in forfeited funds to reduce its own matching contributions, instead of using it to reduce administrative fees for the 401(k) accounts. That was a breach of UHG's fiduciary duty to plan participants, the plaintiff argues. A 'prudent fiduciary in like circumstances would have defrayed expenses to the Plan's participants rather than defray costs to the employer,' says the lawsuit, claiming UHG caused 'participants to incur millions in expenses that could otherwise have been covered in whole or in part by forfeited funds.' In not acting in pan participants' best interests, UHG violated the Employee Retirement Income Security Act (ERISA), the suit claims. It is seeking class-action status. UHG's 401(k) plan has $22 billion in assets and counts 267,000 participants, according to Department of Labor documents. 'Our 401(k) plan fiduciaries have always acted in accordance with ERISA and in the best interests of plan participants, and we strongly deny any allegations to the contrary,' a company spokesperson said in a statement. 'We will move to dismiss at the earliest opportunity.' Last year, UHG paid $69 million to settle claims that fund selections in its 401(k) plan underperformed the market. It's also facing a number of lawsuits relating to its provision of health care. CalPERS, the California state retirement system, has sued UHG claiming the insurer illegally 'upcodes' Medicare Advantage treatments, making patients seem sicker than they are, an allegation of massive fraud that is also subject to a federal Department of Justice investigation. Families of patients who died are suing UHG, alleging the company relied on an AI algorithm to deny care, and shareholders have sued in connection with UHG's reaction after the killing of CEO Brian Thompson. This story was originally featured on 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
Yahoo
21-05-2025
- Business
- Yahoo
How sick is UnitedHealth? How a wave of bad news wiped $280 billion off the insurer's stock value
How sick is UnitedHealth Group? After a few decidedly strange weeks this spring, investors, competitors, regulators, and, yes, some patients are wondering what kind of trouble is going on inside the biggest, most powerful, most aggressive, most successful company in the U.S. health care sector. Some severe industry-wide trend? A run of bad luck? Plain poor management? Or, just maybe, some of each? What's certain is that in April, CEO Andrew Witty delivered first-quarter results so alarming that the stock plunged, knocking 22% off the company's share price within hours. Twenty-six days later, on May 13, the company sent out an early morning statement announcing Witty had resigned for unspecified personal reasons, and Stephen Hemsley, the board chairman and a previous CEO, would be CEO once more. The stock plunged again. The next day, the Wall Street Journal reported that the Department of Justice is investigating UHG for possible criminal Medicare fraud. The company said it hadn't been notified of any such investigation, but the stock plunged yet again. UHG, a colossal company had lost more than half its worth in less than a month—vaporizing $280 billion in market value. 'This is a stock that every growth-oriented portfolio manager in the world owned for a decade and made money on it like clockwork,' says Whit Mayo, an analyst at Leerink Partners, a health care investment bank. 'It's stunning. It's unthinkable.' Now the great questions are: What on earth happened, and what does it mean? The answers are important because UHG is the biggest company in the biggest sector of the biggest economy in the world, and the U.S. health care system is widely regarded as broken. Indeed, UHG's status as a symbol of that system was made clear in December when the CEO of its insurance arm was murdered, allegedly by a man motivated by a conviction that big insurers put profit ahead of patients' welfare. Is UHG part of the problem or, as it has long declared, part of the solution? And either way, is its meltdown related to its status as hero, villain, or both? Witty's explanation of the awful quarter was not entirely convincing to Wall Street analysts when he spoke to them in April. But UHG's financial statements made clear that there were problems in multiple branches of the empire. Much of its trouble was in the company's huge business selling Medicare Advantage health care insurance. The company assumed that beneficiaries would use health care in 2025 at about the same rate as they did in 2024, Witty said, but instead, their use 'increased at twice that rate.' In the business logic of health insurance, that was bad news, because if patients use considerable health care, an insurance business earns less profit. Witty told analysts he couldn't explain why beneficiaries used so much more health care. The analysts couldn't, either, noting that other major insurers, such as Humana and Aetna, didn't mention a similar spike. 'This is a stock that every growth-oriented portfolio manager in the world made money on like clockwork. It's unthinkable.' Another problem was in UHG's business delivering care to patients, for example at physician practices and ambulatory surgery centers that the company owns; UHG employs or has under contract about 10% of all the doctors in America. Unlike the company's insurance business, this business loses profit when patients get less care than expected from UHG's providers. In the first quarter, patients with non-UHG insurance used the company's doctors less than anticipated; again, Witty couldn't fully explain why. Throughout the earnings session, Witty and other executives promised to do better: 'We must and will work to better anticipate and address these factors.' 'This is very addressable.' 'No question, we need to execute better.' But some analysts think fixing those problems won't be as easy as just trying harder. 'They've been completely incapable of forecasting their own business,' says Jared Holz, a health care analyst at Mizuho Group, who has followed UHG for 10 years. 'All the miscues, not just this week but since 2023, suggests other key members of the management team should probably go.' An important potential factor that could hurt UHG much more than other insurers in the future is a change at Medicare. The company is by far the largest seller of Medicare Advantage insurance policies, which include features that traditional Medicare doesn't offer; for example, they include vision, hearing, and dental coverage, plus out-of-pocket limits. For each insured person, Medicare pays the insurer a lump sum based on how sick the person is, based in turn on the insurer's report of each person's diseases and conditions. –53% Reporting those diseases and conditions to Medicare is called coding, and UHG is the champion coder. It reports more diseases and conditions than other insurers do and hence gets billions of dollars more from Medicare than other insurers do. (These coding practices have reportedly also attracted scrutiny from the DOJ.) Across all participating insurers, Medicare has been spending much more on coding than anticipated, so it's changing the system in ways that will rein in payments overall. The new system, called V28, is being implemented over three years; last year was year two, which means the reductions are roughly two-thirds done. 'To see things unravel this much,' says Mayo, 'the only explanation is V28.' UHG's future is now solidly in the hands of Hemsley, who helped build the company into the behemoth it is today. He turns 73 in June. The announcement of his return included no language about being an interim CEO or serving until the board chose a successor. Far from it. On the day Witty stepped down, the company filed a report with the Securities and Exchange Commission detailing Hemsley's pay as CEO: a $1 million annual base salary and a one-time $60 million award of stock options 'with cliff vesting after three years.' Beyond that, there would be 'no additional annual equity awards during the first three years of Mr. Hemsley's employment.' The first three years? Whatever Hemsley's plans may be, the world is unlikely to hear them much in advance. He is notoriously taciturn; company lore holds that he granted two media interviews in his 11 years as CEO. Maybe it's all for the best. After these past miserable months, 'the core issue all comes down to trust,' says Mayo. The only way Hemsley can win back UHG's trust with investors, customers, and employees is to let performance do the talking. This article appears in the June/July 2025 issue of Fortune with the headline 'UnitedHealth faces a reckoning after $280 billion meltdown.' This story was originally featured on 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
