Due in large part to the death of one of its senior executives, UnitedHealth Group is causing the Dow Jones Industrial Average to plummet.
The 267 Dowfell pointsTuesday, ending the longest losing streak since 1978 with a 0.6% decrease after nine days of decreases. Since CEO Brian Thompson was shot and died in New York City on December 4, the parent company of UnitedHealthcare has seen a sharp decline in share prices. Since then, the stock of UnitedHealth Group has fallen by about 20%, and the index has decreased by 3.4%.
The stock values of the biggest health insurance companies in America, such as Humana, Cigna, and CVS Health, which owns Aetna, have also fallen recently. UnitedHealth Group was responsible for 804 of the 1,564 points that the Dow had dropped since December 4 as of Tuesday’s closing bell.
With losses more than double those of Goldman Sachs, the second-worst performance in the 30-stock index this month, UnitedHealth Group is also the worst performer. The decline in the index has also been attributed to other significant companies whose stock is included on the Dow, including Nvidia, Sherwin-Williams, and Travelers.
In contrast, the Nasdaq Composite has risen by over 4.5% in December, while the S&P 500 is circling break-even for the month. Near-all-time highs for both.
As the sole health insurer, UnitedHealth Group has been more affected by the decline because the Dow is a price-per-share weighted average, while the S&P and Nasdaq are weighted by market value. At $485 per share, the stock is the second most expensive on the index, but it is just the 17th largest stock in the S&P 500 in terms of market value.
Since Thompson was attacked, UnitedHealth Group’s market worth has dropped by more than $110 billion. Its competitors have also suffered significant losses. CVS has lost almost 25% of its value, wiping away over $19 billion; Cigna has lost 20% of its value, wiping out almost $20 billion; and Humana has lost 19% of its value, wiping out nearly $7 billion.
Since December 4, the largest exchange-traded fund that follows the health care industry as a whole, including non-insurer companies, has down more than 5%. Once more, with double-digit losses ranging from 18% to 25%, CVS, UnitedHealth Group, Cigna, and Humana are the worst performers. Other health stocks in the Dow are comparatively holding up, with shares of drugmakers Johnson & Johnson and Amgen each falling more than 5% and Merck falling 1.5% this month.
Investor reactions to public outrage at the health care system following the killing, which some industry officials have attempted to address, are mostly responsible for the downturns.
Andrew Witty, the CEO of UnitedHealth Group, acknowledged that the health system is not functioning as well as it should and that we understand people’s frustrations with it, but he also condemned the hate speech directed at our colleagues who have been subjected to threats in a New York Times opinion piece last week.
He went on to explain that no one would create a system similar to the one we currently have, describing it as a patchwork constructed over many years and stating that the insurance behemoth is committed to helping to improve it.
Since the early 1980s, health insurers have gotten bigger as the expense of medical care has increased more quickly than the rate of inflation.UnitedHealth Group outperformed its competitors with revenue of almost $371 billion in just the previous year. Humana made $106 billion last year, while another insurer Cigna earned $195 billion.
Meanwhile, President-elect Donald Trumpis vowing to knock outpharmacy benefit managers, the third parties that run drug programs on behalf of major insurers. Those businesses have drawn widespread criticism in part because many of the biggest insurance providers, including UnitedHealth Group, Cigna and CVS, also own some of the largest such companies.
Without giving specifics, Trump told reporters on Monday that he intends to reduce expenses to levels that have never been seen before. I don t know who these middlemen are, but they are rich, he said.
Note: Every piece of content is rigorously reviewed by our team of experienced writers and editors to ensure its accuracy. Our writers use credible sources and adhere to strict fact-checking protocols to verify all claims and data before publication. If an error is identified, we promptly correct it and strive for transparency in all updates, feel free to reach out to us via email. We appreciate your trust and support!