UnitedHealth Group CEO Andrew Witty steps down

UnitedHealth Group on Tuesday announced the surprise exit of CEO Andrew Witty and suspended its 2025 forecast, sending shares of the health-care giant tumbling greater than 10% in morning trading. 

Witty is stepping down immediately for “personal reasons,” the corporate said. He’ll act as a senior advisor to his successor, Stephen Hemsley, who served as UnitedHealth Group’s CEO from 2006 to 2017 after first joining the corporate in 1997. 

“We’re grateful for Andrew’s stewardship of UnitedHealth Group, especially during among the most difficult times any company has ever faced,” Hemsley said in a release.

The corporate said its decision to tug its guidance was partly attributable to higher medical costs, which dragged down other insurance stocks. Shares of CVS Health dropped greater than 4% and Elevance Health fell over 6%, while Humana also slid greater than 6% and Cigna lost over 2%.

Witty became CEO of UnitedHealth in 2021 after previously running British pharmaceutical giant GlaxoSmithKline for nearly a decade. He oversaw a tumultuous last yr for the corporate, which grappled with government investigations, a historic cyberattack, higher-than-expected medical costs and the torrent of public blowback after the murder of Brian Thompson, the CEO of the corporate’s insurance unit UnitedHealthcare.

Witty in December publicly acknowledged that the U.S. health system is “flawed” and wishes reform, but additionally defended UnitedHealthcare.

UnitedHealth Group on Tuesday said it partly suspended the outlook since the medical costs for brand spanking new enrollees in the corporate’s private Medicare plans remained higher than expected. The corporate also said “care activity continued to speed up while also broadening to more kinds of profit offerings than seen in the primary quarter.”

It comes just weeks after UnitedHealth Group slashed its annual profit forecast, warning of elevated medical costs in so-called Medicare Advantage plans. Those higher expenses have dogged all the insurance industry over the past yr as more seniors return to hospitals to undergo procedures they’d delayed through the Covid-19 pandemic, comparable to joint and hip replacements. 

The corporate in April also posted its first earnings miss since 2008, and the following stock decline erased nearly $190 billion in market capitalization on the time. 

But investors may welcome the return of Hemsley, who oversaw the corporate’s transformation right into a $400 billion health-care conglomerate that controls every little thing from the nation’s largest private insurer to one in every of the largest pharmacy profit managers, together with physician groups and sensitive health-care data of tens of millions of Americans. 

“UnitedHealth Group has tremendous opportunities to grow as we proceed to assist improve health care and to perform to our potential — and, in so doing, return to our long-term growth objective of 13 to 16 percent,” Hemsley said.

The corporate expects to return to growth in 2026, in line with the discharge.