UnitedHealth Faces Stock Decline Following Report of Secret Payments to Nursing Homes
May 21, 2025 – By Sriparna Roy
UnitedHealth Group Inc. saw its shares tumble by more than 6% on Wednesday amid disturbing allegations reported by the UK’s Guardian newspaper. According to the report, the healthcare giant engaged in covert payments to nursing homes aimed at minimizing hospital transfers—a practice that purportedly saved the company millions but may have jeopardized resident health.
Allegations Spark Concern
The Guardian’s investigation suggests that the initiatives undertaken by UnitedHealth form part of a broader strategy of cost-cutting measures within the company. Such strategies have not only raised ethical concerns but have also compounded the numerous challenges facing the conglomerate in recent months. UnitedHealth has recently contended with a cyberattack affecting its Change Healthcare unit, ongoing criminal and civil investigations into its business practices, and the unexpected resignation of CEO Andrew Witty.
As of this year, UnitedHealth’s shares have lost more than 39% of their value, a stark contrast to the Dow Jones Industrial Average, which has only seen a minor decline of 0.6% during the same period.
Company Response
In its response to the allegations, UnitedHealth stated that the U.S. Department of Justice (DoJ) conducted a thorough investigation of the claims, interviewing numerous witnesses and reviewing thousands of documents. The company emphasized that the DoJ found significant inaccuracies in the allegations and consequently declined to pursue any legal action related to the claims.
"The news is only seemingly getting worse for UnitedHealth," commented Sahak Manuelian, managing director of global equity trading at Wedbush. "This is kind of a tough situation for investors to come in and have any confidence in putting money to work, so we’ll have to wait and see how this plays itself out, unfortunately."
Analysts Weigh In
In light of the current situation, HSBC downgraded UnitedHealth’s stock from "hold" to "reduce," assigning a price target of $270—the lowest on the street. Analysts point to factors such as rising medical costs, potential cuts in Medicaid funding, and pressures on drug pricing through its pharmacy benefit management unit, OptumRx, as significant challenges that could hinder the company’s recovery.
To navigate this crisis, Stephen Hemsley has resumed the role of CEO, with many stakeholders looking to his leadership to restore confidence in the company. "Hemsley has the experience and leadership attributes that the company needs to restore credibility and right the ship," asserted James Harlow, senior vice president at Novare Capital Management.
As the situation develops, investors and analysts alike will be keeping a close watch on UnitedHealth’s next steps and any further implications arising from the ongoing challenges it faces.
Reporting by Sriparna Roy in Bengaluru; additional reporting by Twesha Dikshit and Christy Santhosh in Bengaluru. Editing by Anil D’Silva
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