“Since pulling guidance after [the first quarter], investor sentiment has deteriorated significantly amid a series of negative headlines spanning both company-specific and broader industry headwinds,” analysts at Deutsche Bank wrote in a note to investors earlier this week. “These include ongoing investigation into medical coding practices.”
Utterback at Morningstar said investors should be aware of elevated uncertainty and share volatility, while noting that, “UnitedHealth has been facing investigations into its MA practices, like risk-related upcoding, for about a decade, and it has yet to face significant financial consequences.”
Terri Cancelarich, an analyst with Gimme Credit, said she thought it was “likely” the company would end up paying a financial penalty that could total billions.
Investors would like a speedy resolution, but that may not be possible.
“We think publicly acknowledging the investigation is a step in the right direction as it removes some confusion for the investing community,” Paige Meyer, an analyst with CFRA, said in a statement. “However, the outcome of the investigations could go either way and are unlikely to be decided soon.”