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UnitedHealth Group announced on Tuesday that its CEO, Andrew Witty, would be stepping down for “personal reasons,” as the nation’s largest health insurer suspended its full-year financial outlook due to surging medical costs.
Chairman Stephen Hemsley, who served as CEO from 2006 to 2017, will be returning to the role, effective immediately, the company added.
Witty led the company during a difficult period that resulted in an earnings shortfall last month that caused shares to drop by more than a third, costing nearly $190 billion in market capitalization, the Wall Street Journal reported.
UnitedHealth said it was suspending the reduced 2025 earnings outlook that it issued last month, as the medical costs of new enrollees in the company’s Medicare plans were higher than anticipated. The announcement sent its shares down more than 10 percent premarket.
The company says it expects to return to growth next year.
While stepping into the role of CEO, Hemsley will remain chairman. Meanwhile, Witty will take on the role of a senior adviser to Hemsley.
Wall Street investors will likely welcome the ex-CEO’s reinstatement. Hemsley previously presided over the company during a transformative period as it grew into a $400 billion conglomerate.
The move will also soothe worried investors who have been skeptical ever since the company announced earnings that fell short of Wall Street expectations last month. The company cut its guidance for the full year to between $26 to $26.50 a share in adjusted earnings, while earlier projections had been adjusted for earnings of $29.50 to $30 a share, per the Journal.
The company then suspended the outlook for the year without offering a new one.
Following the lower performance forecast, UnitedHealth’s stock price sank last month by about $130 in its worst one-day performance in over 25 years, according to CBS News.
In announcing the move, Hemsley said he was “grateful for Andrew’s stewardship of UnitedHealth Group, especially during some of the most challenging times any company has ever faced.”
The healthcare conglomerate has been inundated with troubles over the past year.
Last week, investors filed a lawsuit against the company, claiming information was withheld about how UnitedHealth was handling backlash to their response to the December killing of former UnitedHealthcare CEO Brian Thompson.
Thompson, 50, was shot dead on December 4 outside a New York City hotel. Luigi Mangione, 26, has been charged with his murder. Mangione is currently being held in a federal detention in New York City where he faces more than a dozen counts in state and federal courts, including murder charges.
He has pleaded not guilty to all counts.
Additional reporting by the Associated Press
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