UnitedHealth CEO leaves abruptly, company pulls forecast as shares sink

By Sriparna Roy and Sneha S K

(Reuters) - UnitedHealth Group Chief Executive Andrew Witty stepped down suddenly on Tuesday, the company said, as it suspended its 2025 forecast due to surging medical costs, sending its shares plunging more than 11% in morning trading.

Former CEO Stephen Hemsley, who has been with the healthcare conglomerate for 28 years, is returning to the top role after stepping down in 2017. Witty chose to leave for personal reasons, the company said, without elaborating.

UnitedHealth has grappled with a series of challenges over 12 months, including a cyberattack at its tech unit that affected some 190 million people, a report of an investigation into its Medicare billing practices, and an unexpected surge in medical costs.

UnitedHealth also made global headlines last December when Brian Thompson, the CEO of its insurance unit, was killed in New York just before the company's investor conference.

Witty was at the helm in April, when the company reported its first earnings miss since the 2008 financial crisis and lowered its annual outlook because of higher-than-expected medical costs, and "unanticipated changes" in its Optum subsidiary that has been the company's growth engine.

UnitedHealth said during Tuesday's investor call that it was seeing more demand for medical care from new members and from people with complex conditions, which was increasing costs.

But it also said it expected to return to growth in 2026.

"Many of the issues standing in the way of achieving our goals as well as our opportunities are largely within our control," Hemsley told investors.

Over the past 12 months, the stock has lost more than 25% of its value.

"The abruptness (of Witty's exit) certainly is a surprise but no one should be surprised given the unique struggles of UNH," said Kevin Gade, chief operating officer at Bahl & Gaynor, which owns UnitedHealth's stock. "At a certain point, leadership must be held accountable," he said.

The U.S. health insurance industry has faced increased costs since mid-2023 due to a surge in demand for healthcare services under government-backed Medicare plans for older adults or individuals with disabilities. 

Tuesday's announcement also hit shares of other health insurers such as Humana, CVS and Elevance, which were down over 3%.

"It seems a sort of very sudden move for Witty to leave, it just doesn't seem like they have a plan. I think putting in Hemsley just seems like a stopgap," said James Harlow, senior vice president at Novare Capital Management.

(Reporting by Sriparna Roy and Sneha S K in Bengaluru; Editing by Tasim Zahid, Devika Syamnath and Tomasz Janowski)