Stephen Hemsley hasn’t been CEO at UnitedHealth Group in almost a decade but he’s by no means actually left.
Hemsley, 72, has remained chairman and a serious shareholder within the well being care behemoth — and now could be again within the CEO suite and is predicted to reinstate his model of operational and monetary self-discipline that turbocharged the corporate’s development.
His return follows uncharacteristic monetary missteps and months of tumult for the corporate, together with the deadly ambush of a high UnitedHealth govt on Dec. 4.
Since that day, the corporate’s inventory has fallen from $610 a share to $308 on Tuesday, an unprecedented decline for the corporate that culminated on this week’s CEO transition.
With chief govt Andrew Witty’s abrupt exit from the function Tuesday, Hemsley is predicted to mud off the playbook that handsomely rewarded UnitedHealth shareholders throughout his reign from 2006 to 2017.
The Eden Prairie-based firm’s revenue soared and revenues almost tripled as Hemsley led United by a interval of enlargement. Fortune journal hailed him because the “most successful CEO of his generation” when he stepped down in September 2017.
“Hemsley built modern UNH; he is tasked with returning it to what it can be,” JP Morgan inventory analyst Lisa Gill stated in a analysis be aware.
UnitedHealth, lengthy seen by Wall Avenue as a dependable revenue machine, surprised traders Tuesday by suspending its earnings steering for 2025 and predicting a return to worthwhile development subsequent yr. That motion, together with Witty’s shock exit, despatched the corporate’s inventory tumbling 18%.
This was the proverbial different shoe dropping.
The primary being on April 17 when United chopped its 2025 earnings outlook, tanking its inventory by 22%, a file one-day drop.
Whereas the corporate cited private causes for Witty’s departure, former firm executives say he dedicated the cardinal sin as CEO at UnitedHealth: The corporate below his management fell wanting monetary steering to shareholders.
The miss in April was dangerous sufficient, they are saying, because it pressured a major downward revision in projected earnings. Worse nonetheless was the suspension of economic steering introduced Tuesday, because it suggests numbers for the second quarter had been nonetheless dangerous and even worse.
“It’s one thing at United if you miss once,” one former govt stated. “It’s another thing if you miss twice.”
The corporate’s worth decline has hit Hemsley personally: He owns 1.2 million shares of UnitedHealth inventory.
United’s monetary challenges alone are difficult. Its well being plans that handle take care of Medicare and Medicaid beneficiaries, specifically, could possibly be going through huge funding cuts as a consequence of Trump Administration modifications, stated Jonathan Weiner, a well being coverage and administration professor on the Johns Hopkins Bloomberg College of Public Well being.
“This is not an easy time,” Weiner stated.
The killing of Brian Thompson, who ran the huge UnitedHealthcare medical insurance enterprise nested inside the guardian firm, unleashed a wave of public anger on the medical insurance trade. The ire has centered on United for 2 key causes: it’s standing because the nation’s largest well being insurer and the restricted availability of information about claims denials, leaving it open to interpretation.
Hemsley faces vital challenges, together with the corporate’s inner tradition within the wake of this hostility and its status amongst sufferers and well being care suppliers, stated Dr. Archelle Georgiou, UnitedHealth’s former chief medical officer who labored with Hemsley from the Nineteen Nineties by 2007.
“I think that they have been tone deaf in the response to the marketplace’s anger at how challenging it is to work with United,” Georgiou stated.
The corporate has used its energy to get what it needs out there, thereby changing into exhausting to work with for sufferers and well being care suppliers, she added. Destructive perceptions have grown as “strength has turned into arrogance, and I think that gets in the way of innovation and collaboration.”
As a shareholder, Georgiou stated she’s thrilled Hemsley has returned to the highest spot. Hemsley’s understanding of well being care and his firm are phenomenal, she stated, whereas his focus and self-discipline are unmatched.
She known as Hemsley the toughest working particular person she’s ever met: Sundays are his solely day without work and perhaps for less than half the day. And Hemsley expects the identical from different high executives, she added.
“Steve does what he has to do,” she stated “He’ll probably look at the financials first, but I have confidence that Steve will recognize the importance of reputation in the market.”
Inventory analysts had been troubled by the earnings mess as a result of it’s not merely a problem of prices rising sooner than anticipated in UnitedHealthcare’s Medicare Benefit enterprise, a key supply of earnings. The corporate is the nation’s largest vendor of well being plans below the government-funded program.
Sufferers new to UnitedHealthcare have had their medical points “coded” in ways in which really fall wanting their true well being care wants, firm officers have stated.
That’s seen as an issue as a result of insurers depend on increased “risk adjustment” funds based mostly on these prognosis codes to finance Medicare Benefit plans.
The problem has impacted monetary ends in Optum Well being, as nicely, which is United’s fast-growing enterprise operating outpatient medical clinics.
Witty and executives stated in April the corporate would treatment the issue by adjusting the codes, however United has confronted appreciable scrutiny over whether or not previous coding practices have wrongly pushed earnings by being overly aggressive.
“Since regulators have been scrutinizing those risk assessments, in particular, that may not be a long-term fix,” Julie Utterback, an analyst with Morningstar, stated by way of e-mail.
UnitedHealth doesn’t look like in an existential disaster: A number of inventory analysts, Tuesday reiterated their “buy” scores on the corporate, together with Deutsche Financial institution’s George Hill.
However Hill, in a report, introduced up the specter of Common Electrical, one other American company colossus whose inventory lengthy commanded a premium earlier than it fell on exhausting occasions and cut up into three corporations.
“Similar to GE, UNH is a company that shareholders regarded as best in class, and could historically … manage earnings like clockwork,” Hill wrote.
“The analogy is not perfect,” he continued, however like GE, United over the previous a number of years has expanded quickly by acquisitions and “moved aggressively up the risk curve,” noting its Medicare Benefit enterprise.
“While we do not yet envision an unwind of UNH (like GE),” Hill wrote, “we fear that UNH’s halo could be severely damaged, and it could take years for (United) to return to its premium valuation.”
UnitedHealth has lengthy sparked controversy, together with questions on its billing practices. The storm across the firm has intensified prior to now yr.
In February 2024, its Change Healthcare division was hit by one of many largest U.S. cyber assaults ever, affecting 1 in 2 Individuals. Witty apologized to a U.S. Senate committee and admitted that hackers had breached a portal missing multi-factor authentication protections.
Dozens of lawsuits over the breach have been filed towards United.
Additionally in February 2024, the Wall Avenue Journal reported that the U.S. Justice Division (DOJ) was investigating relationships between UnitedHealth’s insurance coverage enterprise and its Optum well being care providers division.
Then in February, the Wall Avenue Journal reported that the DOJ had initiated a separate civil fraud inquiry into UnitedHealth’s Medicare billing practices. The corporate pushed again, saying on the time it was not conscious of any such investigation.
Additionally, the DOJ in November sued — on antitrust grounds — to dam UnitedHealth Group’s proposed $3.3 billion proposed acquisition of dwelling well being care and hospice supplier Amedisys.
Hemsley, an accountant by coaching, landed as an govt at UnitedHealth in 1997 after serving as CFO and a managing associate at Arthur Andersen.
He amassed a fortune throughout his tenure at UnitedHealth, beginning his personal funding firm, Cloverfield Capital Group, about 5 years in the past. It manages over $300 million for 60 rich individuals and three charities, in keeping with filings with federal securities regulators.
In a March 2025 brochure for traders, Cloverfield lists below “conflicts of interest” that its “principal” was UnitedHealth’s chairman and has a “vested interest in the overall success of UnitedHealth Group.”
Hemsley and his spouse Barbara have their very own charity known as Cloverfields Basis. It had $55 million in internet belongings in 2023, the final yr for which IRS filings can be found.
Cloverfields gave away $5.7 million in 2023, with many grants going to organizations in Minnesota.
The biggest grant — $1.5 million — was to the Leo C. Byrne Residence Fund. The Byrne residence, owned by the Catholic church, is a house for retired clergymen in St. Paul.
