Andrew Witty, CEO of UnitedHealth Group, testifies during the Senate Finance Committee hearing titled “Hacking America’s Health Care: Assessing the Change Healthcare Cyber Attack and What’s Next,” in the Dirksen Building in Washington, D.C., on May 1, 2024.
Tom Williams | Cq-roll Call, Inc. | Getty Images
UnitedHealth Group on Tuesday announced the surprise exit of CEO Andrew Witty and suspended its 2025 forecast, sending shares of the healthcare giant tumbling nearly 10% in premarket trading.
Witty is stepping down immediately for “personal reasons,” the company said. He will act as a senior advisor to his successor, Stephen Hemsley, who served as UnitedHealth Group’s CEO from 2006 to 2017 after first joining the company in 1997.
“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 in a release.
The company said its decision to pull its guidance was partly due to higher medical costs, which dragged down other insurance stocks. Shares of both CVS Health dropped nearly 3% and shares of Elevance Health fell more than 3%, while Humana‘s stock slid more than 2% and shares of Cigna lost more than 1%.
Witty became CEO of UnitedHealth in 2021 after previously running British pharmaceutical giant GlaxoSmithKline for nearly a decade. He oversaw a tumultuous last year for the company, which grappled with government investigations, a historic cyberattack, higher-than-expected medical costs and the torrent of public blowback after the murder of Brian Thompson, the CEO of the company’s insurance unit UnitedHealthcare.
Witty in December publicly acknowledged that the U.S. health system is “flawed” and needs reform, but also defended UnitedHealthcare.
UnitedHealth Group on Tuesday said it partly suspended the outlook because the medical costs for new enrollees in the company’s private Medicare plans remained higher than expected. The company also said “care activity continued to accelerate while also broadening to more types of benefit offerings than seen in the first quarter.”
It comes just weeks after UnitedHealth Group slashed its annual profit forecast, warning of elevated medical costs in so-called Medicare Advantage plans. Those higher expenses have dogged the entire insurance industry over the past year as more seniors return to hospitals to undergo procedures they had delayed during the Covid-19 pandemic, such as joint and hip replacements.
The company in April also posted its first earnings miss since 2008, and the ensuing stock decline erased nearly $190 billion in market capitalization at the time.
But investors may welcome the return of Hemsley, who oversaw the company’s transformation into a $400 billion healthcare conglomerate that controls everything from the nation’s largest private insurer to one of the biggest pharmacy benefit managers, along with physician groups and sensitive health-care data of millions of Americans.
“UnitedHealth Group has tremendous opportunities to grow as we continue to help improve health care and to perform to our potential — and, in so doing, return to our long-term growth objective of 13 to 16 percent,” Hemsley said.
The company expects to return to growth in 2026, according to the release.
