UnitedHealth Group will be suspending its 2025 outlook and said CEO Andrew Witty will be stepping down from the company’s top post, citing personal reasons.
Witty will be replaced by Stephen J. Hemsley, who served as company CEO from 2006-2017. Hemsley will remain chairman of the company’s board of directors and Witty will serve as a senior adviser to Hemsley.
“We are grateful for Andrew’s stewardship of UnitedHealth Group, especially during some of the most challenging times any company has ever faced,” Hemsley said. “The Board and I have greatly valued his leadership and compassion as chief executive and as a director and wish him and his family the best.”
WHAT’S THE IMPACT
Hemsley joined UnitedHealth Group as chief operating officer in 1997 and became president in 1999. He became board chair in 2017.
“Steve Hemsley brings a combination of strategic vision and deep operational focus that are highly valuable to our company,” said Michele Hooper, lead independent director of UnitedHealth Group.
UHG said it’s suspending its outlook due to care activity continuing to accelerate, and broadening to more types of benefit offerings. The company also said the medical costs of many Medicare Advantage beneficiaries new to UnitedHealthcare remained higher than expected.
The company expects to return to growth in 2026, it said.
“Leading the people of UnitedHealth Group has been a tremendous honor as they work every day to improve the health system, and they will continue to inspire me,” said Witty.
THE LARGER TREND
In April UHG cut its earnings guidance due to unexpectedly higher care costs in its Medicare Advantage business. "Heightened care activity indications" in its Medicare Advantage business cropped up, particularly in physician and outpatient services, leading the company to cut its outlook to net earnings of $24.65 to $25.15 per share for the year, and adjusted earnings of $26 to $26.50 per share (down from $28.15 to $28.65 and $29.50 to $30, respectively).
UHG also attributed the mixed performance to unexpected changes in Optum Health members' profiles, which will affect reimbursement this year "due to unexpectedly minimal 2024 beneficiary engagement by plans exiting markets."
A lawsuit filed last week against UnitedHealth Group claims the healthcare company misled investors about its financial outlook following the murder of then-CEO Brian Thompson, who in December was killed by a gunman while attending the company's annual investor day in New York.
The suit accuses UHG of allegedly hiding a corporate strategy to deny medical care and downplaying the impact of Thompson's murder on the business. That harmed shareholders, according to the lawsuit, which was filed by a group of shareholders and is now seeking class action status.
Plaintiffs argued that UHG's financial guidance, released prior to Thompson's death, became obsolete once Thompson had died, and yet the insurer reiterated that financial guidance at the start of this year.
