Jim Cramer on UnitedHealth: “Suddenly Very Troubled Managed Care Company”

UnitedHealth Group Incorporated (NYSE:UNH) is one of the stocks listed in our article, Jim Cramer recently discussed these 10 S&P 500 stocks. Coming to UNH on his list of the worst performers of the S&P in the first six months of the year, Cramer said:

“The third worst performer was, wow, UnitedHealth Group, suddenly very troubled managed care company that used to be the ultimate darling in the group. It’s down 38% in the first half. UnitedHealth’s troubles are very well documented. I’m not even talking about the assassination last December, as terrible as that was. The real trouble started in April when the company reported a weak quarter, dragged down by high utilization rates, meaning people are getting much more healthcare than UNH… needs to pay for.

What’s starting to become clear is that the company made some major missteps with its underwriting, especially with Medicare Advantage plans for seniors. They’re far from the only one in the industry with this problem, but UNH might be the hardest hit. This is the largest player in the Medicare Advantage space with the most extensive data, and they really should have been able to avoid these mistakes. They almost always have, but clearly, they didn’t.

The company made a change in the top mid-May with CEO Andrew Witty stepping down for personal reasons. Turning around UNH is now the job of Stephen Hemsley, whom I really like. He was previously CEO from 2006 to 2017. And there’s some nascent optimism that he can get this business back on track, but I don’t necessarily think this will happen quickly. If you’re inclined to bet on a UNH comeback, I suggest that you take it slowly because you got all the time in the world. You actually might even want to wait to see the next quarter, which could be what we call a clearing event for the negatives.”

A senior healthcare professional giving advice to a patient in a clinic.

UnitedHealth Group (NYSE:UNH) operates as a diversified healthcare company providing a wide range of health benefit plans. The company delivers care services, pharmacy programs, and data-driven healthcare solutions.

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