Andrew Witty has led Optum, a UnitedHealth subsidiary, since early 2018.
Simon Dawson/Bloomberg
The health care giant UnitedHealth Group said it has appointed a top executive as its new chief executive officer, as its CEO departs after more than three years.
UnitedHealth (ticker: UNH) shares were down 1.1% as the market opened on Thursday. The S&P 500 was up by 0.3%.
The company said that David Wichmann, the current CEO, will retire after serving in the role since September, 2017. He will be succeeded by Andrew Witty, who has been CEO of UnitedHealth subsidiary Optum since March of 2018, and president of UnitedHealth since November, 2019.
Witty took a leave from the company through much of 2020 to work on the World Health Organization’s Covid-19 response.
In a brief note on Thursday, BMO Capital Markets analyst Matt Borsch said that Wichmann’s departure was unexpected, and that the stock was likely to trade lower in response to the news.
“Absent an explanation or an identifiable ‘catalyst’ investors are likely to respond negatively if just on uncertainty alone because this wasn’t expected,” Borsch wrote.
Still, the news comes not long after a fourth-quarter earnings report that beat Wall Street expectations, and in which the company reaffirmed 2021 financial forecasts it had released a month earlier.
Jefferies healthcare trading desk analyst Jared Holz noted that the rest of the executive team was still in place. “Would not expect stock to move much on the update and still see UNH as a consensus pick for those investing in the health insurance complex,” he wrote.
It has been a busy week for CEO transitions at big American corporations. Amazon (AMZN) CEO Jeff Bezos said Tuesday he would step down, and Merck (MRK) CEO Kenneth Frazier announced his departure on Thursday.
“I am deeply honored to help guide one of the most consequential organizations in health care, where our responsibility is to execute flawlessly and deliver on our potential each day,” Witty said in a statement
Shares of UnitedHealth are down 4.5% so far this year, but up 14.5% over the past twelve months. The stock trades at 18.3 times earnings expected over the next twelve months, above its 5-year average of 17.2 times. Of the 25 analysts tracked by FactSet who cover the stock, 19 rate it a Buy or Overweight, while six rate it a Hold.
Write to Josh Nathan-Kazis at [email protected]
