UnitedHealth aims to reassure investors as profits plunge, DOJ investigates its Medicare business

Core Viewpoint - UnitedHealth Group is facing significant challenges, including a sharp decline in share price and ongoing investigations, as it prepares to report earnings, with investors keenly awaiting guidance on future performance and strategies to regain confidence [2][3][15]. Financial Performance - The company's share price has nearly halved since mid-May, marking its worst year in over a decade, primarily due to plummeting earnings in its Medicare program and Optum Health [2]. - Analysts expect UnitedHealth to report adjusted full-year earnings of $21.26 per share, with estimates ranging from $18 to $26.44 per share, indicating that anything below $18 would be viewed negatively by investors [4][5]. Medicare Advantage and Optum Health Outlook - Investors are particularly focused on how UnitedHealth plans to stabilize its Optum Health unit, which has historically contributed to its success in the Medicare Advantage program [7][8]. - A significant decline in profits for Optum Health in the first quarter is attributed to changes in Medicare reimbursement standards (V28), which have made billing for additional services more challenging [9][10][12]. Legal and Regulatory Issues - UnitedHealth is currently under criminal and civil investigations by the Department of Justice regarding its Medicare billing practices, which the company is cooperating with [15]. - Despite concerns over these investigations, some analysts believe the market's reaction is exaggerated, suggesting that the outcome may involve financial penalties rather than severe operational consequences [16][17]. Industry Context - Increased regulatory scrutiny from Congress is noted, with bipartisan interest in addressing high health and drug costs, which may impact large insurers like UnitedHealth [17][18]. - The company has initiated a review of its practices through third-party auditors to enhance transparency and confidence among stakeholders, although details from this audit will not be available until later in the year [19][20].