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UnitedHealth ($UNH) in Crisis: Returning CEO Hemsley and Executives Buy $30 Million in Shares Amid Stock Plunge

05/16/2025 22:18

UnitedHealth Group ($UNH) insiders have stepped in with massive share purchases following the stock's recent plunge. Most notably, returning CEO Stephen Hemsley acquired approximately $25 million worth of shares, sending a powerful signal of confidence to the market. According to SEC filings submitted on May 16, 2025, Hemsley purchased 86,700 shares at an average price of $288.57 per share. Simultaneously, President John Rex acquired 17,175 shares worth nearly $5 million, while three directors—Kristen Gil, Timothy Flynn, and John Noseworthy—purchased 3,700, 1,533, and 300 shares respectively. This cluster buying comes after UnitedHealth's stock has fallen more than 53% over the past several months, suggesting strong conviction from management about the company's value. The insider purchases occurred amid serious turmoil at UnitedHealth. On May 13, 2025, Andrew Witty abruptly resigned as CEO, with Stephen Hemsley returning to the position, and the company suspended its financial guidance for 2025. This news sent shares plummeting nearly 18% in a single day, with the stock ultimately falling to $274.35 by May 15. Hemsley is a veteran executive who previously served as UnitedHealth's CEO from 2006 to 2017. During his earlier tenure, UnitedHealth grew revenues from $70 billion to $200 billion, and the stock price increased by more than 630%. This successful track record has given markets some reassurance amid the current turbulence. $UNH is America's largest health insurer, operating two core businesses: UnitedHealthcare and Optum. UnitedHealthcare provides medical insurance to individual and corporate clients, while Optum delivers healthcare services, pharmacy benefits management, and healthcare data analytics. The company generated total revenue of $410 billion in 2024. However, UnitedHealth has recently faced several significant challenges. The most pressing issue is higher-than-expected medical costs. In its first-quarter results announced on April 17, 2025, UnitedHealth revealed that medical costs had risen sharply beyond projections, forcing a downward revision of its annual profit forecast. This triggered an immediate stock decline, which was further exacerbated by the May 13 announcement of the CEO change and guidance suspension. Additionally, UnitedHealth suffered a cyber attack on its Change Healthcare subsidiary in early 2024 that compromised the personal information of approximately 190 million people. In December 2024, UnitedHealthcare CEO Brian Thompson was tragically killed in New York City, adding further organizational trauma. Regarding the rising medical costs, Hemsley issued a statement shortly after his share purchase, emphasizing that "the current challenges are temporary, and the company's long-term outlook remains strong." He projected that the company would return to a growth trajectory beginning in 2026. Industry experts remain divided about UnitedHealth's current situation. John Dobson, a healthcare insurance analyst at Raymond James, commented, "The elevated medical costs are likely temporary, and given UnitedHealth's diversified business model and market dominance, recovery is probable." Conversely, Matt Boris of BMO Capital Markets noted, "The trend of increasing medical costs may not resolve quickly, and ongoing government scrutiny of the Medicare Advantage program remains a persistent risk factor." As of May 16, 2025, $UNH shares closed at $274.35, down approximately 56% from their 52-week high of $621.21. The current share price represents the lowest level since 2021, with a P/E ratio of 11.48, significantly below both historical and industry averages. Cluster buying by insiders typically occurs when management believes a company is undervalued or has a positive outlook. The CEO personally committing $25 million represents a particularly strong vote of confidence. However, investors should weigh this against the near-term challenges and uncertainties facing UnitedHealth.

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