Shares of UnitedHealth Group (NYSE:UNH) tumbled nearly 7% in premarket trading Thursday, following a report from The Wall Street Journal that the U.S. Department of Justice is conducting a criminal investigation into the company’s Medicare billing practices.
This development further deepens the challenges facing the health insurance giant, which has already been navigating a turbulent period marked by mounting regulatory scrutiny, leadership instability, and spiraling medical costs that recently led to the withdrawal of its 2025 financial forecast.
While details of the DOJ’s probe remain scarce, the mere suggestion of a criminal investigation has intensified market jitters. “The stock was already under pressure, and this adds yet another layer of uncertainty,” said James Harlow, senior vice president at Novare Capital Management, a shareholder in UnitedHealth.
Despite the report, UnitedHealth stated that it has not received any formal notification from the Justice Department regarding the alleged investigation.
This news comes on the heels of CEO Andrew Witty’s unexpected resignation and Tuesday’s dramatic 18% plunge in UnitedHealth’s stock, which hit its lowest level in four years. The latest downturn threatens to reduce the company’s market capitalization to around $280 billion – down almost 50% from its $530 billion valuation in mid-April.
“UnitedHealth appears trapped in a storm of negative developments, and this potential DOJ action could mean more volatility ahead,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
The healthcare insurer, long regarded as a dominant player in both private insurance and the Medicare Advantage space, is facing broader industry headwinds. Earlier this month, a lawsuit accused three major insurers of offering illegal incentives to brokers in exchange for patient referrals – a practice that may violate federal laws.
Adding to the regulatory scrutiny, The Wall Street Journal in February reported that UnitedHealth was also being investigated in a separate civil Medicare fraud case. Around the same time, Senator Chuck Grassley initiated his own probe into the company’s billing practices, demanding detailed compliance documentation.
The growing legal and regulatory pressure comes less than a year after the tragic killing of a senior UnitedHealth executive, an incident that drew national attention and sparked criticism of insurer practices.
What once seemed like a steady upward trajectory for UnitedHealth – built on its dominance in Medicare and insurance markets – is now clouded by an array of unresolved risks. Analysts suggest the company could face an extended period of volatility until the full scope of these investigations becomes clear.