UnitedHealth Group revealed on Tuesday that its CEO Andrew Witty is stepping down due to personal reasons. Witty would remain a senior advisor as he is replaced by former CEO and longtime company leader Stephen Hemsley, who has been board chair since 2017.
This shakeup comes six months after the former CEO of its insurance unit, Brian Thompson was assassinated on a New York City sidewalk. UnitedHealth Group also suspended its annual forecast due to surging medical costs, sending shares plunging nearly 18% to a four-year low.
“Many of the issues standing in the way of achieving our goals as well as our opportunities are largely within our control,” Hemsley said on a call with investors.
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Kevin Gade, chief operating officer at UnitedHealth investor Bahl & Gaynor, said the abruptness of Witty’s exit “certainly is a surprise,” but noted that UnitedHealth had faced unique struggles in recent months. “We’re not likely to hear more on Andrew’s departure but it’s fair to suggest the recent killing of his co-worker, the constant fear of his family’s and his safety and the operational pressures of recent likely led in part to this decision,” said Gade.
Shares of UnitedHealth fell 20% on April 17 when it cut its forecast. With Tuesday’s losses, the stock is now down more than 38% for the year. Stocks of other health insurers were also hurt after UnitedHealth’s financial hit prompted concerns that high costs could spill over to other companies, but those shares have managed to rebound.
Rivals Humana and Elevance Care have said they have not seen unusually high demand in their insurance and caregiving operations in recent weeks, and that medical costs have remained in line with their expectations. Due to this, analysts believe UnitedHealth’s issues are company specific. 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.