UnitedHealth Group Faces Investigations and Challenges, Leading to Stock Decline
UnitedHealth Group (UNH) experienced a significant drop in stock value on Friday, losing over 8% in early trading. The decline is attributed to reports of a Department of Justice (DOJ) investigation into the company's Medicare Advantage insurance practices.
The investigation focuses on allegations that UnitedHealth Group overstated diagnoses to increase payments from the Centers for Medicare and Medicaid Services (CMS). CMS provides lump sums to private insurers for alternate Medicare coverage.
This marks the sixth decline this year and the second within a week. Earlier, the company reportedly considered buyouts and layoffs within its UnitedHealthcare subsidiary.
UnitedHealth has also faced scrutiny from the DOJ for a potential breakup and the Federal Trade Commission (FTC) for blocking an acquisition. In December, the shooting death of top insurance executive Brian Thompson added to the company's challenges.
As a result of these pressures, the company's market cap has decreased significantly, shifting from its previous growth trajectory.