UnitedHealth Group stock crashes as DOJ opens fraud probe

UnitedHealth Group stock slides hard as DOJ opens investigation.
Government probe involves possible fraudulent overcharging of Medicare Advantage plans.
UNH stock slides as low as 438.50, a 10-month low.
Health insurer calls allegations "false" and "outrageous".

Clay Webster FXStreet

UnitedHealth Group (UNH) stock crashed on Friday morning in light of a new United States (US) Department of Justice (DOJ) probe into possible overcharging of the federal government entity for retiree health services.

UNH stock plunged as much as 12.7% at the open, but shares are now down about 9% closer to lunchtime near $457.

UnitedHealth Group is one of the largest holdings in the Dow Jones Industrial Average (DJIA), which has sunk 0.88% at the time of writing, slightly worse than the NASDAQ. Besides UNH, Alphabet (GOOGL) is dealing with charges from European Union regulators, while Hims & Hers Health (HIMS) and Arbor Realty Trust (ABR) both sink by double digits.

UnitedHealth Group news

The US Department of Justice has opened a civil fraud investigation into the business practices of the country’s largest private health insurer, according to The Wall Street Journal.

At stake is whether UnitedHealth purposely overcharged Medicare Advantage plans by adding false diagnoses to some beneficiaries' medical records. Medicare Advantage plans are government healthcare plans that are managed by private health insurers in the US.

It is somewhat shocking to the market since the probe is coming during the Trump administration, which is viewed as more lax in regulatory oversight and a proponent of deregulation. The Journal also says that the Office of Inspector General at the US Department of Health & Human Services is also involved in the investigation, but none of the government agencies are publicly commenting or confirming the news.

For its part, a UnitedHealth spokesperson called the allegations "outrageous" and "false”.

UnitedHealth has garnered a number of negative headlines over the past year. One year ago, the same DOJ launched an antitrust probe into UnitedHealth. Last November, it sued to stop UnitedHealth’s proposed acquisition of Amedisys (AMED). Then in early December of last year, Luigi Mangione, an individual angered at the company’s unpopular practice of denying coverage, shot and killed a top executive at the health insurer in Manhattan, leading to a manhunt.

UnitedHealth Group stock chart

UnitedHealth Group stock was already in a downtrend, seeing as the 50-day Simple Moving Average (SMA) had drifted below the 200-day SMA by late January. That pattern is often referred to as the Death Cross and is viewed as a bearish long-term signal. The Moving Average Convergence Divergence (MACD) indicator shows a strong bearish crossover, so many will expect the downtrend to continue.

UNH stock found support at $438.50 soon after Friday's open, which is close to the April 12, 2024, low at $446.38. Shareholders will hope the sell-off haults here. A break of that support level would make the November 2021 support in the $380s come into view.

Bulls will take it as a positive sign if UNH trades back above $475, which worked as support as recently as mid-December.

UNH daily stock chart

Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

AUD/USD bulls regain control above 0.6950 amid USD retreat

AUD/USD regains traction and extends the previous day's bounce from the weekly low, aiming for 0.7000 in Asia on Friday. The overnight pullback in US bond yields keeps the US Dollar below an 18-month high, which in turn offers some support to the pair. Meanwhile, hawkish RBA expectations also keep the major underpinned.

USD/JPY holds gains near 158.00 after Japan's weak Household Spending data

USD/JPY clings to gains around 158.00 after data showed on Friday that Japan's Household Spending fell for the ninth straight month, undermining the Japanese Yen. Meanwhile, the US Dollar remains depressed as the overnight fall in US bond yields counters a hawkish Fed and geopolitical uncertainties, could cap any downside in the pair.

Gold remains range-bound below $4,200

Gold has given up some ground after an initial bullish attempt to reach weekly highs, returning to below the $4,200 mark per troy ounce on Friday. The US Dollar’s strong upside momentum, combined with rising US Treasury yields across the curve, seems to keep further gains in the yellow metal under scrutiny.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?

The Euro is not the sick man of Europe. France's bond market is

EUR/USD remains under pressure, near the 17-month low of 1.1161 reached on Monday. The pair has lost more than 7% since its yearly peak, as concerns over France's public finances increasingly weigh on the single currency. But behind the weakness of the Euro (EUR), the problem does not necessarily lie with the European economy as a whole.