UnitedHealth shares tumble after report of antitrust investigation

(Reuters) -UnitedHealth Group’s shares dropped about 5% on Wednesday following a report that the U.S. Department of Justice has launched an antitrust investigation into the healthcare conglomerate.

The Wall Street Journal reported, just ahead of market close on Tuesday, that investigators have been interviewing healthcare industry representatives in sectors where UnitedHealth competes to determine the possible impacts of acquisitions made through its health services arm, Optum.

The reported investigation has added to investor jitters as an outage following a cybersecurity attack at its Change Healthcare unit extends into its eighth day.

“It’s been a tough past week of headlines for UnitedHealth,” said Stephens analyst Scott Fidel.

At $485.98, more than $25 billion was set to be wiped out in UnitedHealth’s market value, extending a loss of about $11 billion on Tuesday after the WSJ report.

The shares were the biggest drag on the blue-chip Dow Jones Industrial Average on Wednesday.

Fidel said the reported probe adds another layer of uncertainty for health insurers such as UnitedHealth that have recently warned of high medical costs due to a rise in care among older adults.

Shares of rivals Humana and CVS Health fell nearly 1% and 2.4%, respectively, in morning trading.

Morningstar analyst Julie Utterback said “CVS and Humana also have ambitions in caregiving, so this investigation may have implications for those two … in particular, if the investigation eventually spreads”.

WSJ reported that investigators have asked industry representatives about issues including certain relationships between the company’s UnitedHealthcare insurance unit and its Optum health services arm, which owns physician groups, among other assets.

Separately, Change Healthcare said in an update on its status page on Wednesday that disruptions from the hack incident were expected to last at least through the day.

A number of pharmacy chains, including CVS Health, have said the outage had impacted their businesses.

(Reporting by Christy Santhosh in Bengaluru; Editing by Sriraj Kalluvila and Shinjini Ganguli)

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