Photo courtesy of UnitedHealth
A new lawsuit filed against UnitedHealth Group claims the healthcare company misled investors about its financial outlook following the murder of then-CEO Brian Thompson, who in December was killed by a gunman while attending the company’s annual investor day in New York.
The suit accuses UHG of allegedly hiding a corporate strategy to deny medical care, and downplaying the impact of Thompson’s murder on the business. That harmed shareholders, according to the lawsuit, which was filed by a group of shareholders and is now seeking class action status.
Plaintiffs argued that UHG’s financial guidance, released prior to Thompson’s death, became obsolete once Thompson had died, and yet the insurer reiterated that financial guidance at the start of this year.
UHG, the plaintiffs alleged, experienced heightened scrutiny as well as public hostility following the incident, and as a result, the company eased up on the “aggressive, anti-consumer tactics that it would need to achieve $28.15-$28.65 in earnings per share, or $29.50 to $20.00 in adjusted net earnings per share,” investors wrote. Plaintiffs said doubling down on its previous guidance was “deliberately reckless.”
The lawsuit seeks damages due to the “precipitous decline in the market value of the company’s securities.”
WHAT’S THE IMPACT
While UnitedHealth Group’s profits were strong during Q1 of this year, stock in the company dropped 23% when it released its financial results in April, due to what CEO Andrew Witty called “performance that was frankly unusual and unacceptable.”
UHG pinned much of the mixed financial performance on unexpectedly higher care costs in its Medicare Advantage business, as well as unexpected changes in Optum Health members’ profiles, which will affect reimbursement this year “due to unexpectedly minimal 2024 beneficiary engagement by plans exiting markets.”
Medicare funding reductions under the Biden administration also played a role, executives said.
THE LARGER TREND
In an op-ed published in The New York Times in December, Witty addressed the backlash against the insurer following Thompson’s death.
“We know the health system does not work as well as it should, and we understand people’s frustrations with it,” he wrote. “No one would design a system like the one we have. And no one did. It’s a patchwork built over decades. Our mission is to help make it work better.”
The alleged gunman, Luigi Mangione, has been indicted on a count of murder through the use of a firearm, which makes him eligible for the death penalty.
Jeff Lagasse is editor of Healthcare Finance News.
Email: [email protected]
Healthcare Finance News is a HIMSS Media publication.
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