UnitedHealth Group not only missed revenue, but did much worse
UnitedHealth GroupAmerica’s largest healthcare company shocked by reporting unexpectedly awful financial performance to investors on Tuesday. This is the two quarter quarter in which the company committed the offence. As a result, UHG is no longer a company that just missed that number. It’s much more unusual. It’s a large company. 3 With the Fortune 500, reinforces underlying, long-standing issues across the organization, it could take years to improve.
The crisis first manifested in April. The UHG had emerged from the famous murder trauma of Executive Brian Thompson in December. Stocks plummeted, exceeding $100 billion from market value within hours. A month later, CEO Andrew Witty suddenly resigned for unspecified personal reasons, and former CEO Stephen Hemsley returned to work. Stocks fell sharply again. the next day, Wall Street Journal The Department of Justice reported that it is investigating UHG for possible criminal job fraud. The company said it had not been notified of such an investigation. The stock has been sniffed again.
Within a month, the company giant lost more than half its value. “This is a stock that has been owned by all growth-oriented portfolio managers around the world for 10 years and made money like clockwork,” said Whit Mayo, an analyst at Leerink Healthcare Investment Bank. luck at that time. “That’s spectacular. I can’t think of it.”
On July 24th, five days before UHG’s second quarter revenue release, the company acknowledged that the Department of Justice was conducting a criminal and civil investigation of the company over Medicare claims practices. You can guess what the stocks did.
And then came the second quarter revenue report.
Now, after months of disruption by investors, regulators and media, Hemsley acknowledges that UHG needs comprehensive, stem-to-neck rehabilitation, a very bold goal for an organization of around 400,000 employees. This is a harsh perception of a deep and broad problem. How deep and wide is it? Hemsley says UHG will change “overseeing leadership, our business, our culture, our approach and practice, board of directors, governance and succession.”
Executives are now seeking patience from shareholders. It resolved the changes that had occurred since before the $300 billion market capitalization evaporated four months ago. Dr. Patrick Conway, CEO andone of UHG’s two major divisions told investors that “we know that Optum’s performance doesn’t meet expectations.” “We’re approaching business with humility,” says Tim Noel, CEO of other divisions.
Hemsley appears to have set expectations low. He says that profits have not increased at all this year. Next year, he is seeing “solid but moderate” revenue growth. Until 2027, he does not believe that our revenue growth outlook will be strengthened quickly.
Even that schedule may not allow enough time. When Hemsley returned to CEO in June, the board gave him a one-off $60 million stock options award that would grant him the rights three years later. The term seemed long for a 73-year-old who intended to turn the ship to the right. Now, after the latest quarter and the highly ambitious and extensive transformations he is trying, investors may wonder if three years will be enough.