- UnitedHealth Group stock slides hard as DOJ opens investigation.
- Government probe involves possible fraudulent overcharging of Medicare Advantage plans.
- UNH stock slides as low as 438.50, a 10-month low.
- Health insurer calls allegations “false” and “outrageous”.
UnitedHealth Group (UNH) stock crashed on Friday morning in light of a new United States (US) Department of Justice (DOJ) probe into possible overcharging of the federal government entity for retiree health services.
UNH stock plunged as much as 12.7% at the open, but shares are now down about 9% closer to lunchtime near $457.
UnitedHealth Group is one of the largest holdings in the Dow Jones Industrial Average (DJIA), which has sunk 0.88% at the time of writing, slightly worse than the NASDAQ. Besides UNH, Alphabet (GOOGL) is dealing with charges from European Union regulators, while Hims & Hers Health (HIMS) and Arbor Realty Trust (ABR) both sink by double digits.
UnitedHealth Group news
The US Department of Justice has opened a civil fraud investigation into the business practices of the country’s largest private health insurer, according to The Wall Street Journal.
At stake is whether UnitedHealth purposely overcharged Medicare Advantage plans by adding false diagnoses to some beneficiaries’ medical records. Medicare Advantage plans are government healthcare plans that are managed by private health insurers in the US.
It is somewhat shocking to the market since the probe is coming during the Trump administration, which is viewed as more lax in regulatory oversight and a proponent of deregulation. The Journal also says that the Office of Inspector General at the US Department of Health & Human Services is also involved in the investigation, but none of the government agencies are publicly commenting or confirming the news.
For its part, a UnitedHealth spokesperson called the allegations “outrageous” and “false”.
UnitedHealth has garnered a number of negative headlines over the past year. One year ago, the same DOJ launched an antitrust probe into UnitedHealth. Last November, it sued to stop UnitedHealth’s proposed acquisition of Amedisys (AMED). Then in early December of last year, Luigi Mangione, an individual angered at the company’s unpopular practice of denying coverage, shot and killed a top executive at the health insurer in Manhattan, leading to a manhunt.
UnitedHealth Group stock chart
UnitedHealth Group stock was already in a downtrend, seeing as the 50-day Simple Moving Average (SMA) had drifted below the 200-day SMA by late January. That pattern is often referred to as the Death Cross and is viewed as a bearish long-term signal. The Moving Average Convergence Divergence (MACD) indicator shows a strong bearish crossover, so many will expect the downtrend to continue.
UNH stock found support at $438.50 soon after Friday’s open, which is close to the April 12, 2024, low at $446.38. Shareholders will hope the sell-off haults here. A break of that support level would make the November 2021 support in the $380s come into view.
Bulls will take it as a positive sign if UNH trades back above $475, which worked as support as recently as mid-December.
UNH daily stock chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
