Deep Dive
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In the United States, health care is big business, and one company has spent years on top. UnitedHealth is really a health care giant. That's my colleague, Anna Wildey-Matthews.
They have about $400 billion in annual revenue. They own the biggest U.S. health insurer, which is called UnitedHealthcare. But they're also one of the biggest providers of healthcare. They own a sprawling network of doctor groups. They own a large pharmacy benefit manager. And they own a bunch of just sort of data and technology units. Pretty much any corner of the U.S. healthcare industry that you can think of.
UnitedHealth probably has some kind of element of it. Ana and another colleague, Chris Weaver, have been reporting on UnitedHealth. And over the last year and a half, they've seen the company experience an onslaught of trouble and setbacks. UnitedHealth groups had one of the most challenging years that any business could possibly imagine. They're facing multiple investigations by the Department of Justice. The Justice Department is investigating UnitedHealthcare's billing practices for Medicare, which
They had a huge hack that crippled portions of the U.S. health system. A cyber hack on the nation's largest health care platform, United Health Group, continues to cripple critical services. One of their executives was shot in midtown Manhattan. The CEO of United Health Care has just been shot to death. And their investors are in a revolt. United Health shares are tumbling today. They're down more than 20 percent. Take a look at that.
So what happened? How did the country's most powerful health insurer end up here? And can they come out of it? Welcome to The Journal, our show about money, business, and power. I'm Annie Minoff. It's Wednesday, June 11th. Coming up on the show, inside the dramatic faltering at UnitedHealth. This episode is brought to you by U.S. Bank. They don't just cheer you on. They help every move count.
With U.S. Bank's smartly checking and savings account to help track your spending and grow your savings, your finances can go further. Because when you have the right partner on your side, there's no limit to what you can achieve. That's the power of us. Visit usbank.com today to learn more. Copyright 2025, U.S. Bank. UnitedHealth got its start in the 1970s in Minnesota, but it didn't establish itself as a healthcare juggernaut until the last few decades.
How did UnitedHealth become the behemoth it is now? Going back, Rowe, about 15 years, they started branching out into other parts of the healthcare system.
Doctors groups, pharmacy benefit managers, things like that. And it kind of set off this vertical expansion where they were growing not just in health insurance, but across industries. Vertical meaning like in the sense of vertical integration, they control everything, soup to nuts. Well, I mean, in fairness, like they don't always control everything, but the dynamic you're looking at is...
People are paying the insurance company, and then the insurance company is using that money to pay other parts of UnitedHealth to take care of patients. So it's really like one hand feeding the other.
So not only are they the insurer, but they might also be the doctor group that's treating the patient. Exactly right. They're taking a premium. They're taking money from maybe the federal government or maybe an employer or maybe an individual consumer. And they're using that money to cover the care of the enrollees by
But to cover the care, that money is flowing through to elements of UnitedHealth, like doctors or a pharmacy benefit manager that's owned by UnitedHealth. UnitedHealth grew to own almost every aspect of the health system, including insurance, doctors, pharmacy benefits, and technology like bill processing. Some parts it built out and some parts it acquired.
For example, back in 2011, it bought Monarch Healthcare, one of the largest physicians associations in California, with over 2,000 doctors. While the company was growing in all directions, it was also strengthening its core business, insurance. It did this by tapping into a growing Medicare program known as Medicare Advantage.
They're the biggest in Medicare Advantage. They're not just big. They are the largest Medicare Advantage plan. What is Medicare Advantage and why was it great for UnitedHealth? Yeah, Medicare Advantage is the part of the Medicare system where private insurers oversee benefits for seniors and disabled people. And it's been a huge engine of growth for UnitedHealth and for other insurers. The program's expanded rapidly over the last bunch of years now. Medicare Advantage is growing for various reasons. One is simply that
Medicare is growing, right? I mean, you know, baby boomers are aging into Medicare. So there's a growing population covered by Medicare. And then within Medicare, Medicare Advantage is taking a larger and larger share of enrollees. That reliable Medicare Advantage money, which is taxpayer-funded, coupled with the company's expansive health care portfolio, helped UnitedHealth grow quickly. It became a reliable blue-chip stock.
They've had the reputation on Wall Street with investors as really just kind of a sure thing. Their earnings always go up. Their revenue always goes up. They always make the projections that they've promised to Wall Street. They've really been seen as just kind of a gold standard maybe in the industry for investors in terms of their performance. How much money do they make?
UnitedHealth's revenue last year was $400 billion. So they're really a huge, huge company. You know, their revenue is bigger than some countries' economies. You know, 15 years ago, they were at about $100 billion, and it's essentially quadrupled since then. The company's CEO at the time got a lot of credit for that success. His name is Stephen Hemsley. Here he is speaking at a conference in 2012. I will start out with a couple of minutes about UnitedHealth Group.
Its mission is to help people live healthier lives. And that really is a mission that is deeply felt. And the role of our business is to make the health care system work for everyone. Stephen Hemsley was known as a detail-oriented CEO who ran a tight ship. So one thing that Steve Hemsley was known for in his time leading the company were something called the monthly business reviews, which were in-person reviews.
And these meetings were very intense. They were so intense that I'm told some executives referred to them as colonoscopies because you really, there was nothing left on the table after you got through one of these, apparently. Hemsley stepped down as CEO in 2017. At the time, UnitedHealth was at the top of its game. Its stock price had more than tripled during Hemsley's tenure.
In 2021, a man named Andrew Witte became the company's CEO. He'd been a board member and then ran the company's health care services arms, including those doctor groups that UnitedHealth owned. Witte brought a different, less formal vibe to UnitedHealth. So Witte brought a really different style to the leadership of UnitedHealth, right?
Andrew wore sort of zip-up tops. They look kind of like, you know, maybe a tracksuit top. He was known for his brightly colored sneakers. He was doing sort of fireside chats with employees, interviewing them sort of like talk show style. He definitely brought a different vibe to the company.
He also was, based on our reporting, really not as in the weeds on the operational details as, say, Steve Hemsley had been. Before joining UnitedHealth, Witte had run the British pharmaceutical company GlaxoSmithKline for almost a decade. He didn't have extensive experience with the American health insurance industry, which is a very complicated and heavily regulated business.
And under Witte, how did UnitedHealthcare do at first? UnitedHealth continued to do well financially under Witte. Again, he started in 2021 and, you know, they kept growing. They kept making their numbers that they had projected for Wall Street. They did well for several years. And then its winning streak was tested. That's after the break. ♪
At the beginning of last year, 2024, UnitedHealth was riding high. Its market cap was almost $500 billion. But it was bad to experience more than a year of trials and tribulations that would test the company from seemingly every direction. It's certainly been like an accumulating series of events that have kind of built up over time. So over time, really challenging things have happened.
In February of 2024, there was news from the Justice Department. Ana broke the story last year that there's an antitrust investigation looking at United's practices that appears broadly to be examining the way that they operate with these many acquisitions that they've brought in over the years between the insurance arm and the health services arm.
According to Ana's reporting, the Justice Department was looking into the relationship between the insurance side of the business and the health care services side, which includes the physicians groups and the pharmacy benefit management. The very thing that made the company successful, its soup-to-nuts vertical integration of health care, was being probed as anti-competitive. So what used to be strengths now are seeming like potential liabilities.
Certainly what has been strengths are now getting greater scrutiny. Spokespeople for the Justice Department declined to comment at the time. UnitedHealth executives have said that Optum and UnitedHealthcare don't favor one another and routinely work with competitors. A UnitedHealth spokesperson says the company's vertical integration helped deliver better health outcomes and helped transition away from a fragmented U.S. healthcare system.
And the same month that the Justice Department probe was revealed, UnitedHealth got hit with another problem, a hack.
One of UnitedHealth's subsidiaries, Change Healthcare, had to shut down its system after hackers infiltrated it. Change Healthcare, which is a unit of UnitedHealth that really is, it's kind of, it's at the guts of sort of the American healthcare finance system. So it moves claims, it handles billing stuff. It's one of these companies that, you know, patients have never heard of, but yet it's
When it seized up because of this hack, money just stopped flowing through large segments of the American healthcare system. So it was a huge, huge thing. UnitedHealth said they were improving their cybersecurity in response to the attack. And CEO Andrew Witte, testifying before Congress, apologized. As a result of this malicious cyberattack, patients and providers have experienced disruptions and people are worried about their private health data. To all those impacted, let me be very clear.
I'm deeply, deeply sorry. — The hack eventually cost the company about $3 billion. And 190 million people— over half of the U.S. population— had private data stolen in that one attack. Then, just a few months later in the summer, Chris and Ana started publishing a series of investigative articles examining Medicare Advantage. It was a broader look at how health insurance companies in general were taking advantage of Medicare,
But UnitedHealth was a big player.
Well, we found across the industry that giant insurance companies were basically using all these different tactics to generate more and more revenue from the Medicare system. And a lot of it involved doing things like adding extra diagnoses to patients' Medicare records through things like sending nurse practitioners to patients' houses to record diagnoses, perhaps that they weren't getting any treatment for, or incentivizing doctors to basically...
add more diagnoses in a system where diagnoses trigger additional payments. What we discovered was that UnitedHealth was doing these things, you know, more per person than any other major insurer. It was kind of the industry leader of doing these kind of sometimes questionable tactics that generated additional revenue.
A spokesperson for the Medicare agency told us that, quote, "beneficiaries deserve a system that delivers high-quality, transparent, accountable care." It also said that the agency is expanding its auditing of Medicare Advantage plans. A UnitedHealth spokesman has said that the journal's analysis is, quote, "inaccurate and biased," and that Medicare Advantage provides better health outcomes and more affordable health care compared to traditional Medicare.
Regarding the nurse visits, UnitedHealth told us that they asked their clinicians to use their medical judgment in diagnosing. The company also said that it complies with guidance from the Department of Health and Human Services. Since these findings were published, the Wall Street Journal's reported that there are at least two more Justice Department probes into UnitedHealth's Medicare Advantage practice, including one criminal probe.
After the first investigation was reported, UnitedHealth published a statement on its website that said any, quote, suggestion that our practices are fraudulent is outrageous and false. After the criminal investigation was reported, UnitedHealth said that they have not been notified of the investigation, but that they stand by, quote, the integrity of our Medicare Advantage program. The Justice Department declined to comment. And then, at the end of last year...
It was just a stunning, stunning, awful thing. In December, a top executive was shot in Manhattan, a shocking and tragic event. Brian Thompson, the CEO in charge of UnitedHealthcare, UnitedHealth's insurance arm, was shot to death outside the company's annual investor meeting. So it was an incredibly, incredibly difficult moment.
For the company, I think it was, the moment was very difficult and the reaction afterward was also incredibly difficult. Executives at United and even just frontline employees at United felt personally fearful about their safety. And they, I think many of them felt that they were under attack for doing their jobs every day.
Some people online and elsewhere used the shooting to criticize UnitedHealth and other insurance companies. A lot of us aren't that sympathetic. If that isn't a loud, clear message to all these CEOs across the board of these health insurance companies, I don't know what is. Nobody deserves to get on their way to work. Nobody deserves to get their health care claims denied either.
And so there has been a sort of backlash that has maybe complicated the perception of the UnitedHealth brand. The CEO, Andrew Witte, sent a video to the staff shortly after the shooting. Colleagues, I'm deeply saddened to tell you that earlier this morning, our friend and colleague Brian Thompson was killed just outside our investor conference hotel in New York.
As UnitedHealth entered 2025, it still had a massive market cap of over $460 billion. And by April of this year, UnitedHealth stock was actually climbing as the company recovered from its string of challenges. Overall, investors still really believed the UnitedHealth story. The shares didn't really reflect a lot of the bad news that was accumulating.
But then, on April 17th, the stock price did take a plunge. It wasn't a horrific shooting or a hack or a DOJ investigation that plummeted UnitedHealth's stock price. It was an earnings call.
Here was CEO Andrew Witte in that call. It was an overall performance that was frankly unusual and unacceptable. As you saw in our release, we're revising our adjusted earnings per share outlook for the year. The company's first quarter results were far below expectations. Its revenue was $2 billion shy of Wall Street estimates. Witte cut the company's projected earnings for the rest of 2025. Then weeks later, the company withdrew its financial guidance altogether.
Shares fell to about half of what they were before the earnings call, wiping out more than $250 billion in value. A big reason? Medical costs, specifically in the Medicare Advantage business, were up and accelerating.
Starting with care activity, in UnitedHealthcare's Medicare Advantage business, we had planned for 2025 care activity to increase at a rate consistent with the utilization trend we saw in 2024. Instead, though, first quarter 2025 indications suggest care activity increased at twice that rate. UnitedHealth had struggled to adapt to changes in Medicare rules.
Several diagnoses that the government had paid more for previously had become less lucrative. The factors that they attributed the unexpectedly poor results to were, from the investors' point of view, largely predictable ones. And it was not clear how they could have, like, not accounted for that. All this culminated in Andrew Witte leaving his job as CEO. And the former CEO, Stephen Hemsley, was brought back in.
A UnitedHealth spokesman said that Witte's departure was for personal reasons, and he is a company advisor. The spokesman said Witte, quote, led UnitedHealth Group with compassion and dignity through some of the most challenging times any company has ever faced, end quote. After Hemsley took the reins, he apologized for UnitedHealth's recent performance and said it was working to recast many of its processes. The big question is whether Hemsley can bring United out of this moment of crisis.
If you look at their growth over the last 10 or 15 years, just in terms of earnings, the share price, they've grown in a way that looks more like almost like a tech company than an insurance company. And I think the big question here is like, are they going to be able to continue delivering that kind of growth?
For all of the extreme events UnitedHealth has experienced over the last few years, the thing that impacted the company's business, Chris says, is really pretty simple. The business lapses here is that they're just, I mean, they're just very fundamental. You know, UnitedHealth is,
appears to have somewhat lost track of the money coming in and the money going out in this sort of really basic way. So I think it's, I mean, it just strikes me as a, it's just sort of such a fundamental situation from a business point of view. Doesn't get much more basic than profit and loss. That's right. That's all for today, Wednesday, June 11th. The Journal is a co-production of Spotify and The Wall Street Journal.
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