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Reuters
14-05-2025
- Business
- Reuters
UnitedHealth faces a long and painful recovery
NEW YORK, May 13 (Reuters Breakingviews) - Even UnitedHealth (UNH.N), opens new tab will struggle to overcome parasitic medical costs that Warren Buffett once called a tapeworm eating away at U.S. economic competitiveness. The $300 billion healthcare conglomerate reinstalled, opens new tab Chairman Stephen Hemsley as CEO and yanked its financial guidance. After abruptly losing about half its market value, however, any potential recovery will be long and painful. UnitedHealth stayed hardy for decades. From 2010 to 2020, its shares returned about 10 percentage points more per year than web search giant Alphabet. It capitalized on market power in insurance, growth in Medicare, the U.S. government program that covers medical costs for the elderly, and expansion into adjacent areas. Such outperformance screeched to a halt, months after a senior UnitedHealth executive was assassinated, allegedly by a man outraged by insurer practices. The company's first-quarter profit fell considerably short of what analysts were expecting, sending the stock price reeling in April. It tumbled another 15% on Tuesday after the news that boss Andrew Witty was departing for personal reasons. Hemsley, who served as CEO from 2006 to 2017, will be contending with new ailments. Although UnitedHealth is astoundingly profitable, evidenced by a 27% return on equity during the first three months of the year, both the company and the industry are in a much harsher spotlight. Intense public scrutiny makes it harder, opens new tab for insurers to restrain costs by, say, denying claims for care. Medical expenditures also have returned to trend, growing faster than the U.S. economy. They increased 7.5% in 2023, according to official data. Proposed assistance from the Trump administration to double the increase in reimbursement rates, to 5%, for Medicare Advantage, the privately administered version of the government program, will go only so far. It's also getting tougher to estimate costs for new Medicare Advantage patients. Part of the problem is that more than half of all Medicare participants have already enrolled. Insurers receive higher payments for sicker patients, but that incentivizes administrators to either select healthier customers or claim that they are ailing worse than they really are. The most profitable patients probably have been picked over. Moreover, government largesse for private health insurers looks increasingly ripe for targeting. If Medicare Advantage reimbursements were cut to better reflect their risk, it would save the government more than $1 trillion, opens new tab by 2035, the Congressional Budget Office estimated. Helmsley may be forced to opt for radical surgery, which is always dangerous. Follow @rob_cyran, opens new tab on X CONTEXT NEWS UnitedHealth said on May 13 that Chairman Stephen Hemsley would return as CEO, effective immediately, to replace Andrew Witty, who stepped down for personal reasons. Hemsley was previously in the role from 2006 to 2017. The insurance company also suspended its 2025 guidance, blaming accelerating medical spending by patients and costs. UnitedHealth shares were down 16%, to $318.93, at 1057 EDT.
Reuters
25-04-2025
- Health
- Reuters
Luigi Mangione due in court for arraignment as prosecutors seek death penalty
NEW YORK, April 25 (Reuters) - Luigi Mangione was due in Manhattan federal court on Friday to be asked for his plea to charges of gunning down health insurance executive Brian Thompson, a day after prosecutors formally stated their intent to seek the death penalty. Mangione, 26, has pleaded not guilty to a separate set of New York state charges over the December 4 killing of Thompson, the former CEO of UnitedHealth Group's (UNH.N), opens new tab insurance unit UnitedHealthcare. He is due to appear before U.S. District Judge Margaret Garnett for an arraignment at 1 p.m. EDT (1700 GMT). The brazen shooting of Thompson outside a midtown Manhattan hotel, where the company had gathered for an investor conference, and the ensuing five-day manhunt, captivated Americans. Authorities say the words "deny," "delay," and "depose" - a phrase that echoes tactics some accuse health insurers of using to avoid paying out claims - were found written on shell casings at the crime scene. While public officials condemned the killing, some Americans have cheered Mangione, saying he drew attention to steep U.S. healthcare costs and the power of health insurers to refuse payment for some treatments. In justifying their decision to seek the death penalty, prosecutors wrote in a Thursday night court filing that Mangione "presents a future danger because he expressed an intent to target an entire industry, and rally political and social opposition to that industry, by engaging in an act of lethal violence." U.S. Attorney General Pam Bondi earlier this month announced that the Justice Department would seek the death penalty for Mangione. Thursday's court filing by the Manhattan U.S. Attorney's office formalized prosecutors' intent. Mangione's lawyers have said Bondi's April 1 announcement was " unapologetically political" and breached government protocols for death penalty decisions. If Mangione is convicted in the federal case, the jury would determine in a separate phase of the trial whether to recommend the death penalty. Any such recommendation must be unanimous, and the judge would be required to impose it. Mangione is currently being held in federal lockup in Brooklyn.
Reuters
17-04-2025
- Reuters
Mangione faces federal charges, death penalty in UnitedHealth executive's killing
April 17 (Reuters) - A federal grand jury has indicted Luigi Mangione, who is accused of murdering a UnitedHealth Group (UNH.N), opens new tab executive in New York last year, allowing prosecutors to seek the death penalty in his case, according to court filings on Thursday. Mangione, 26, is already facing state murder and weapons charges in New York, which does not have the death penalty. The federal indictment does not include new charges but raises the stakes for Mangione, who has pleaded not guilty to the state charges. Mangione's lawyers did not immediately respond to requests for comment. The U.S. Attorney's office in Manhattan declined to comment. The indictment means that a grand jury found probable cause to charge Mangione with murder, stalking and firearms offenses. A hearing in the federal case is scheduled for Friday in Manhattan federal court. Mangione has asked a judge to prevent federal prosecutors from seeking the death penalty. His lawyers in a filing last week said U.S. Attorney General Pam Bondi's April 1 announcement that prosecutors would seek the death penalty was "unapologetically political" and breached government protocols for death penalty decisions. If that bid fails and Mangione is convicted in the federal case, the jury would determine in a separate phase of the trial whether to recommend the death penalty. Any such recommendation must be unanimous, and the judge would be required to impose it. Brian Thompson, the deceased CEO of UnitedHealth's insurance division, was shot dead on December 4 outside a hotel in Midtown Manhattan, where the company was gathering for an investor conference. The brazen killing of Thompson and ensuing five-day manhunt captivated Americans. While public officials condemned the killing, some Americans have cheered Mangione, saying he drew attention to steep U.S. healthcare costs and the power of health insurers to refuse payment for some treatments. Mangione is currently being held in federal lockup in Brooklyn.
Reuters
17-04-2025
- Business
- Reuters
UnitedHealth lowers annual profit forecast on higher costs
April 17 (Reuters) - UnitedHealth Group (UNH.N), opens new tab lowered its annual profit forecast on Thursday as elevated demand for healthcare-related services from patients is expected to keep medical costs high for the remainder of the year. Shares of the company tumbled 5% in premarket trading. The forecast cut also dragged down shares of health insurers Elevance (ELV.N), opens new tab, CVS Health (CVS.N), opens new tab and Humana (HUM.N), opens new tab between 2% and 3% before the bell. Keep up with the latest medical breakthroughs and healthcare trends with the Reuters Health Rounds newsletter. Sign up here. Higher expenses tied to patient claims in government-backed Medicare plans for older individuals and changes in enrollment to Medicaid plans have weighed on the industry for more than a year. Costs related to the company's Medicare Advantage business were far above the planned 2025 increase and were consistent with the elevated levels in 2024, the company said. The company now expects 2025 adjusted profit per share to be between $26 and $26.50 per share, compared with its prior forecast of $29.50 to $30 per share. Analysts were expecting a profit of $29.73 per share for 2025, according to data compiled by LSEG.
Reuters
08-04-2025
- Business
- Reuters
Health insurance stocks rise on 'best case scenario' Medicare payment rates
April 8 (Reuters) - Shares of U.S. health insurers jumped on Tuesday after a bigger-than-expected increase in the government's reimbursement rates for Medicare Advantage plans in 2026, bringing some relief to a sector burdened with elevated medical costs. Industry bellwether UnitedHealth Group's (UNH.N), opens new tab shares rose nearly 6% in premarket trading, while Centene (CNC.N), opens new tab and CVS Health (CVS.N), opens new tab also saw increases of 5% to 6%, further boosting a sector that has largely held firm amid a recent market rout. Keep up with the latest medical breakthroughs and healthcare trends with the Reuters Health Rounds newsletter. Sign up here. The U.S. announced a 5.06% average increase in payments to private insurers that run Medicare Advantage plans for people aged 65 and older. The increase was more than double the amount proposed in January, and contrasts with the 0.2% decline in 2025 reimbursement rates. A best-case scenario 2026 final MA rate notice coupled with rising tariff risk make health insurers a strong relative safe haven, Baird Research analysts wrote in a note to clients. The Centers for Medicare & Medicaid Services said the rate change primarily takes into account additional data on rising costs for insurers, including payment data through the fourth quarter of 2024. Health insurance stocks had a rough 2024 with most companies ending the year in the red due to low government payments, high medical costs and a public backlash against the sector after the murder of a UnitedHealth executive. However, some stocks have survived a recent market rout as worries over a trade war escalate. Centene and Molina Healthcare (MOH.N), opens new tab notched gains in share prices last week, even as broader markets plunged after President Trump's tariff announcement.
