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

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

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.

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

Crypto Today: Bitcoin at $60,000, Ethereum at $1,500, and XRP at $1 face a make-or-break test

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

Dollar strength dominates markets, as the hawkish Fed overshadows geopolitics and lower oil prices. NFP week could drive September Fed hike expectations and boost market volatility. The euro lacks fresh bullish catalysts, all eyes on the preliminary inflation report and the ECB Forum.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.