UnitedHealth Stock Plunges Over 8% In After-Hours Trading As DOJ Criminal Probe Adds To Turmoil After CEO Shake-Up

The crisis at UnitedHealth Group Inc. UNH continues to deepen, with a new criminal investigation by federal authorities, following the abrupt departure of its CEO, and a steep decline in stock prices.

What Happened: UnitedHealth is reportedly under criminal investigation by the U.S. Department of Justice for possible Medicare fraud, according to a Wall Street Journal report, which cited people familiar with the matter.

The probe, overseen by the DOJ’s criminal healthcare fraud division, has reportedly been active since at least last summer and is focused on UnitedHealth’s Medicare Advantage business practices. It marks the latest in a string of challenges facing the health insurance giant in recent months.

This comes just a day after the sudden exit of CEO Andrew Witty, who has since been replaced by the company’s Chairman and former CEO, Stephen Hemsley.

While the DOJ has struggled to secure convictions in past Medicare fraud claims against UnitedHealth, the criminal nature of the current probe raises the stakes significantly as the company contends with mounting regulatory scrutiny and a declining stock price.

The company, however, has since responded to Benzinga in a press release stating that it has not been notified of any supposed criminal investigation by the DOJ. It further adds that WSJ’s reporting is deeply irresponsible, and that the company stands by the integrity of its Medicare Advantage program.

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Why It Matters: The company has been caught in a perfect storm in recent months, with the stock down nearly 50% since April, owing to a string of negative catalysts.

UnitedHealth decided to suspend its outlook for 2025 early this week, citing the continuing acceleration in care activity, adding to the stock’s woes.

This comes amid a fresh shareholder lawsuit, which claims that the company hid the potential impact of its former CEO, Brian Thompson’s murder in December 2024, and the resulting backlash and regulatory scrutiny.

In February, investor Bill Ackman said in a post on X that when a company attacks its critics, the probability of it having committed fraud or being guilty of a crime “increases substantially.”

“When you find two cockroaches, it is almost a certainty that there are many more. And a half a trillion market cap for a health insurer makes no sense,” he said.