This week, UnitedHealth Group’s share price dropped by the largest amount in 18 years. In answer, many company executives took advantage of the moment and repurchased stock. On Thursday, UnitedHealth Group’s stock plunged by almost 11%, closing at $274.35. The drop followed a negative article in The Wall Street Journal. It showed that the company is under investigation by the US Department of Justice for possible Medicare fraud.
The announcement of the DOJ probe struck panic across the healthcare market, resulting in mass liquidation of UnitedHealth shares in a matter of hours. Investors couldn’t help but react to the implications of that investigation, which is expected to have dire repercussions for the company. Yet, the stock value of UnitedHealth Group has tanked. This fall coincides with an increased scrutiny on the company’s labor practices and their non-compliance with various federal regulations.
Put all that bad reality aside, because it looks like those in the know at UnitedHealth Group are betting on just the opposite. For one, Kristen Gil, a director at the company, bought 3,700 shares worth about $1 million Thursday. Either way, this shift would seem to signal robust confidence inside the organization. Insiders tend to be more aware of their new company’s opportunities and threats.
In retrospect, Gil’s decision to invest during a time of great uncertainty was a pretty courageous move. It’s a sign of his confidence in the company’s long-term recovery. It’s because insiders typically have access to exclusive information not visible to the general public. Their moves can provide serious hints as to where a corporation plans to go on the road ahead.
The purpose of the DOJ’s investigation into UnitedHealth adds a new wrinkle to UnitedHealth’s present woes. As one of the largest health insurance providers in the United States, any findings related to Medicare fraud could significantly impact its operations and reputation. The company has yet to issue a public statement addressing the still-ongoing investigation and what it means for the future of their business practices.