Warren Buffett’s Berkshire Hathaway has revealed a $1.6 billion bet on the shares of a beleaguered US healthcare giant.
Berkshire Hathaway has acquired 5 million shares in UnitedHealth Group, a health insurer which acknowledged it is under criminal investigation by the Department of Justice last month. The investment gives Berkshire a stake in United valued at $1.6 billion.
Berkshire’s position was revealed in a regulatory filing on Thursday night, sending shares in UnitedHealth up 8.1 per cent in after-hours trading on Wall Street to $293.38.
Buffett owned about 1.18 million shares in UnitedHealth between 2006 and 2009, before selling his entire stake in 2010 as he more broadly distanced his interests from health insurers.
Shares of UnitedHealth have fallen 53 per cent in the last year as the company has faced a jump in medical costs, federal investigations, a cyberattack and the fallout from the fatal shooting of Brian Thompson, chief executive of UnitedHealthcare, outside a hotel in Manhattan in December.
UnitedHealth said in a July regulatory filing that it had proactively approached the Department of Justice after reviewing media reports about its participation in the Medicare programme, and that it is committed to co-operating with federal authorities.
Sir Andrew Witty stepped down as UnitedHealth chief executive in May. The company also suspended its annual forecast that month due to surging medical costs.
Its chairman Stephen Hemsley, who was chief executive before stepping down in 2017, has assumed the position of chief executive again.