DOJ Criminal Probe is investigating UnitedHealth Group for Medicare scams
The Wall Street Journal reported that the Department of Justice is investigating UnitedHealth Group for possible Medicare fraud.
United Health Group, the giant of healthcare insurance (NYSE: UNH) That inventory has been seen moving from a stable stubborn man to a falling knife. The stock price crashed 22.4% on April 17, in response to first-quarter earnings results and full-year guidance cuts. Then on Tuesday, UnitedHealth fell 17.8% in one session after its CEO resigned and the company removed its full-year guidance.
The sale has pushed UnitedHealth’s shares to a low level in five years. Dividend stocks fell by 38.5% per year. This is the worst company in the S&P 500, down 42%. (snpindex: ^gspc) 2025 (so far).
Here’s why UnitedHealth has gotten worse and why its decline has affected Dow Jones Industry Average: (djindices: ^dji) It’s an S&P 500 that is even better.
Why UnitedHealth is nose diving
UnitedHealth makes money from two important segments: UnitedHealthCare and Optum.
UnitedHealthCare collects premiums for health insurance plans that cover individuals, employers, and Medicare and Medicaid beneficiaries. Optum is the company’s medical services segment.
Both segments showed solid growth year-over-year. As you can see in the following chart, UnitedHealth (and its investors) enjoyed a rather uninterrupted period of stable revenue and revenue growth that encouraged higher stock prices.
Data by YCHARTS. TTM = 12 months behind.
However, UnitedHealth is facing higher costs, and the Department of Justice faces investigations into Medicare Advantage claims practices, as well as other issues.
In a press release on May 13th, UnitedHealth said it plans to return to growth in 2026. However, it suspended its full-year outlook as it accelerates care activities, offers more types of benefits, and health costs for new Medicare Advantage beneficiaries to UnitedHealthCare are higher than expected.
The company’s business model is under pressure, leaving investors with more questions than answers, leading to sudden sell-offs.
S&P-Vs.-Dow Dynamics
UnitedHealth is over 50% of its all-time high, reaching the second half of 2024, but is a large company with a market capitalization of around $282 billion. It is one of the most valuable companies in the healthcare sector, but is small compared to MegaCap tech stocks.
So, by itself, it cannot move the S&P 500 that much, despite UnitedHealth being on a very low rate in 2025. However, the selling had an impact on the Dow.
The Dow only has 30 components compared to the 503 on the S&P 500. Because the Dow is price weighted, the price of the stock price, not the market capitalization, determines the weighting in the Dow.
For example, Nvidia is one of the most valuable companies in the world, with a market capitalization of around $3 trillion. Still, it is the 23rd highest weighted Dow component simply because of so many stocks and low stock prices.
Last April, UnitedHealth was the heaviest ingredient in Dow. But now, the crown belongs to Goldman Sachs. Goldman Sachs shares at just over $600 per share, accounting for 8.6% of the index.
UnitedHealth’s 52-week high is above $630 per share. That is, that drawdown had an impact of about 4% points, or about 3% points, YTD, against the Dow. This is the difference between the Dow’s decline by 1% in 2025 and a 2% increase.
Dissects the movement of the index
Even if you’re not interested in the UnitedHealth Stock or Healthcare sector, it’s important to know which stocks drive the key index.
For example, Apple, Nvidia, Microsoft, Amazon, Alphabet and other large technical names can move the S&P 500 alone, and even more so on Nasdaq composites. Dow components with relatively high nominal stock prices, such as Goldman Sachs, Microsoft, UnitedHealth, Home Depot, Sherwin-Williams, Visa, and Caterpillar, can affect the Blue Chip Dowin index.
Knowing the difference between market-listed and price-weighted indexes can help you eliminate market noise and determine information related to your portfolio.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of the board of directors of Motley Fool. Daniel Fallver has positions in Caterpillar and Nvidia. Motley Fools introduces and recommends Alphabet, Amazon, Apple, Goldman Sachs Group, Home Depot, Microsoft, Nvidia, and Visa. Motley Fool recommends Moderna, Sherwin-Williams, and UnitedHealth Group, with the following options: I’ll make a $395 call with Microsoft in January 2026 and a $405 call with Microsoft in January 2026 short term.
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