So UnitedHealth (UNH) is having what you might call a “very bad, no good” week. Just as they’re gearing up to drop their Q2 earnings on July 29th, the Department of Justice decided to crash the party with a federal investigation. Talk about terrible timing.
Here’s the tea: The DOJ is basically asking UnitedHealth, “Hey, what’s up with your Medicare billing practices?” Specifically, they’re side-eyeing something called the HouseCalls program, where UNH sends nurses to patients’ homes to document diagnoses. Sounds nice and caring, right? Well, here’s where it gets spicy.
The feds think UnitedHealth might be gaming the system. Every time these home visits result in a new diagnosis, UNH gets bigger Medicare payments from Uncle Sam. It’s like finding extra coins in your couch cushions, except the couch belongs to taxpayers and the coins are worth billions.
But wait, there’s more! According to The Guardian, UnitedHealth allegedly paid nursing homes under-the-table bonuses to keep sick residents from going to hospitals. Why? So their nurses could swoop in for more home visits and rack up those sweet, sweet Medicare dollars. Critics say this might have actually delayed necessary care for patients. Yikes.
UnitedHealth is basically doing the corporate equivalent of “I didn’t do it, and if I did, it was actually good for everyone.” They’re calling the hospital transfer allegations “verifiably false” and insisting their approach improved health outcomes while reducing unnecessary hospitalizations. Sure, Jan.
The stock market isn’t buying it though. UNH shares took a 4.8% nosedive on July 24th when this news broke, and they’re down a whopping 44.3% year-to-date. That’s like watching your portfolio do a very expensive belly flop.
Wall Street expects Q2 earnings per share to come in at $4.48, which is significantly lower than last year’s $6.80. Meanwhile, revenue is expected to jump 13% to $111.56 billion. So they’re making more money but earning less per share – it’s giving “growing pains” energy.
Despite all this drama, analysts are still cautiously optimistic. The consensus rating is “Moderate Buy” with an average price target of $353.43, suggesting 26.9% upside potential. That’s either impressive confidence or impressive denial – you decide.
The bigger picture here is that UnitedHealth has been dealing with multiple controversies lately, including leadership changes and other legal probes. It’s like they’re playing corporate whack-a-mole, but the moles are federal investigations.
For investors, this is a classic “high risk, high reward” situation. UnitedHealth is still a massive player in healthcare, but they’re clearly in the penalty box right now. Whether they can clean up their act and restore investor confidence remains to be seen.
Bottom line: When the DOJ comes knocking about your billing practices, it’s probably time to review your compliance manual. And maybe hire a really good PR team.