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UnitedHealth hit by antitrust probe and ransomware hacker report

UnitedHealth UNH shares moved firmly lower in early Wednesday trading following a report that the health insurance giant is facing a U.S. antitrust probe.

The shares were also pressured by a separate report from Reuters that suggested hackers working for a ransomware gang known as Blackcat are responsible for an ongoing disruption to the group's prescription deliveries.

The Wall Street Journal reported late Tuesday that antitrust investigators with the Department of Justice have been interviewing representatives in the health insurance sector for a number of weeks, seeking information about ties between UnitedHealth and its Optum services division.

Optum, which UnitedHealth purchased in 2011, is the main driver of the group's overall earnings. It has around 90,000 doctors under its wing and is the nation's largest physician employer.

UnitedHealth is reportedly facing a DoJ probe, ransomware hackers as wells as a documented surge in overall medical costs. <p>Shutterstock</p>
UnitedHealth is reportedly facing a DoJ probe, ransomware hackers as wells as a documented surge in overall medical costs.

Shutterstock

The group sells its services to both UnitedHealth and its competitors, but regulators have grown concerned that Optum could be favoring its parent as the Biden administration targets the broader health-care sector in its efforts to reduce Medicare costs.

The Journal also reported that the DoJ is probing UnitedHealth's planned $3.3 billion takeover of home-health provider Amedisys  (AMED) .

FTC probes pharmacy-benefit managers

The U.S. Federal Trade Commission is also continuing its probe into the three largest pharmacy-benefit managers – CVS's Caremark, Cigna's Express Scripts, and UnitedHealth's OptumRx – and has warned the group of likely changes to the industry's broader regulation.

"As drug prices have soared and independent pharmacies have shuttered, scrutinizing the practices of [pharmacy-benefit managers] is more critical than ever," the FTC said in a statement on July 20.

Related: Humana plunges on major health insurance warning; UnitedHealth, CVS tumble

"The FTC is now pursuing an inquiry into the PBM industry, one that is designed to capture and detail the current realities on the ground in this complex marketplace," the statement added.

UnitedHealth shares were marked 5.1% lower in early Thursday trading and changing hands at $486.88 each, a move that would extend the stock's 2024 decline to around 10%.

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Last month, UnitedHealth Group posted stronger-than-expected fourth-quarter earnings as Optum continued to power its top and bottom lines while offsetting a modest increase in medical costs.

UnitedHealth's medical-cost ratio was pegged 0.2 percentage points higher at 83.2% for the year, suggesting a modestly larger portion of its collected premiums were paid out on insurance claims.

For the fourth quarter, UnitedHealth's medical-cost ratio was 85%, up from 82.8% over the year-earlier period. Overall premiums were up 13.2% to $73.23 billion, while operating costs rose 14.3% to $86.74 billion.

Related: Veteran fund manager picks favorite stocks for 2024

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