- UnitedHealth (UNH) shares dropped 12.66% to $439 after a Wall Street Journal report revealed a Justice Department investigation into its Medicare Advantage billing practices, focusing on diagnosis protocols that boost payments.
- Billionaire Bill Ackman warned on X that the probe, separate from an antitrust investigation and a lawsuit against its Amedisys (AMED) acquisition, signals potential fraud, predicting more whistleblowers and advising against the stock amid a 4% weekly decline.
- The insurer’s $463 billion market cap and negative year-to-date performance in 2025, following a 5% loss in 2024, face heightened pressure as regulatory scrutiny and Ackman’s critique cast doubt on its stability and valuation.
UnitedHealth Group Inc. (UNH) shares took a steep dive, falling $63.59 or 12.66% to $439 in early trading on Friday, jolted by a Wall Street Journal report exposing a Justice Department investigation into the insurer’s Medicare billing practices. This civil probe zeroes in on how UnitedHealth logs diagnoses for its Medicare Advantage plans, a mechanism that can inflate payments—a practice under intense scrutiny given the company’s dominant role in managing healthcare for millions of seniors. Adding fuel to the fire, billionaire investor Bill Ackman took to X, framing the investigation as a red flag, suggesting that UnitedHealth’s defensive posture toward critics hints at deeper issues, potentially fraud or criminal activity, and advising investors to steer clear of the stock.
The Journal notes that the investigation stands apart from an ongoing Justice Department antitrust probe and a lawsuit aiming to halt UnitedHealth’s acquisition of Amedisys Inc. (AMED), piling regulatory pressure on a company already reeling from a tough year. Shares have slipped about 4% this week, dragging year-to-date performance into negative territory after a nearly 5% decline in 2024, reflecting investor unease with the $463 billion market cap giant. Ackman’s pointed critique amplifies this sentiment, questioning the plausibility of such a valuation for a health insurer and speculating about a swarm of whistleblowers feeding the government’s case—predictions that could further erode confidence if substantiated.
UnitedHealth’s Medicare Advantage operations, a linchpin of its business, rely heavily on risk adjustment payments tied to patient health data, a system ripe for exploitation yet vital for covering complex care needs. The Justice Department’s move, as Ackman notes, isn’t taken lightly, suggesting substantial evidence behind this probe, distinct from the antitrust concerns threatening its growth strategy. With its stock now reflecting a bruising week, UnitedHealth faces a multifaceted challenge—navigating legal battles, public perception shaped by high-profile commentary, and the inherent volatility of a healthcare sector where regulatory oversight can swiftly alter fortunes.
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