US UnitedHealth Group shares tanking again

It is the group whose CEO of the health insurance subsidiary (UnitedHealthcare) was assassinated last December in New York

by Gabriele Bonafede

Equities of UnitedHealth Group, the largest group in the healthcare sector in the United States, fell by almost 50% since the peak of last December.

On April 17, UnitedHealth shares fell by 22.4% and did not recover even with the recent Wall Street bullish mood. Today, shares are tanking again by another 15%, dragging down the entire DJ average to slightly negative levels.

For those who do not remember, the UnitedHealth is the group whose CEO of the health insurance subsidiary (UnitedHealthcare) was assassinated last December 4 in New York.

UnitedHealth Group in trouble. Why?

Trade journals reported in April that the loss in value was due to disappointing earnings projections. However, projection data reeled off by the group in mid-April seemed at odd with the extent of decline registered in Wall Street. Maybe something different had happened, and we are seeing it today.

In fact, the gigantic drop since December appears to have more complex and structural explanations.

“UnitedHealth Group said CEO Andrew Witty is stepping down for “personal reasons” and suspended its 2025 forecast” CNBC reported today.

“Witty will act as a senior advisor to his successor, Stephen Hemsley, who served as UnitedHealth Group’s CEO from 2006 to 2017 – continues CNBC’s report.

“Witty oversaw a tumultuous last year for the company, which grappled with government investigations, a historic cyberattack, higher-than-expected medical costs and the torrent of public blowback after the murder of UnitedHealthcare’s CEO Brian Thompson.” 

Yet, last December Witty himself publicly acknowledged that the US health system is “flawed” and needs reform.

UnitedHealth Group, Dow Jones and tariffs

UnitedHealth Group is one of the 30 components of the Dow Jones index. The weight of UnitedHealth Group in the DJ index is particularly high – over 7%. But it cannot be ignored that the signal is potentially perturbing the whole of stock market beyond the group’s problems.

Trump’s tariffs are in fact particularly damaging for the entire American healthcare system already plagued by structural unbalances – as acknowledged by Witty. There is no doubt that the tariffs already affect many sources of supply in the healthcare sector. Furthermore, the Trump administration threaten tariffs on the pharmaceutical and healthcare sectors too.

Tanking shares of the most important group of US healthcare sector could be the first sign of wider knock-on effects. Considering that UnitedHealth Group deals with both the provision of health services and health-insurance plans, the ongoing dive is particularly worrisome for other health providers and the banking sector too.

Certain uncertainty

At the moment, there are no particularly negative effects of tariffs on the value of healthcare sector equities compared to average. In April, there have been sharp declines in large American healthcare insurance companies, but not systematically more severe than overall markets average. Most health sector companies recovered too in stock markets since US announced “trade deal” with UK and China. However, sharpening difficulties of such a solid group suggests several hypotheses.

In fact, what is certain is only …. uncertainty. And that might affect future earnings projections of other US healthcare & insurance companies. In that case, a systemic risk produced by secondary effects in the financial market would increase significantly.

Uncertainty about tariffs has put the entire US economic system on hold, especially for what concerns trade flows between the two largest world economies, USA and China. The impacts are not yet evident in financial markets, but the signals on real economy – especially in the logistics sector – are already clear. And now on the health sector too. The longer the uncertainty lasts, the more serious the negative impacts will be on businesses, finance, employment and inflation.

Cover, photo by Jouwen Wang on  Unsplash