UnitedHealth Group appoints new CFO in wake of top leadership change
Wayne DeVeydt will take over as CFO of UnitedHealth effective Sept. 2, according to securities filings. He replaces John Rex, who has been in the role since 2016.
Shares of UnitedHealth dropped around .60% early Friday.
The move, announced Thursday night, follows UnitedHealth founder and executive chairman Stephen Hemsley taking back the reins following CEO Andrew Witty's sudden departure in May.
Rex will transition from CFO to strategic adviser to the CEO, a move that UnitedHealth said in filings was arranged in Rex's 2016 employment contract.
"Given the downward revisions to estimates in the past six months, the return of CEO Stephen Hemsley, and the extensive management changes made across UNH, we appreciate the desire to make a change at CFO," JPMorgan analyst Lisa Gill wrote in a note.
Read more: What is a healthcare FSA and how can it help you save on medical costs?
DeVeydt is joining an insurance giant under pressure. In its earnings release this week, UnitedHealth reported its highest-ever medical loss ratio (MLR), at 89.4%, highlighting the company's cost pressures. MLR is the ratio of claims paid versus revenue from premiums received; the Affordable Care Act defines good management as a window between 80% and 85%.
The company reported higher revenues than Wall Street expectations, $111.6 billion compared to estimates of $111.53 billion. UnitedHealth missed on earnings per share, reporting $4.08 compared to Street expectations of $4.59.
The company had previously slashed its annual forecast in April after its medical care costs came in higher than expected, sending shares down by 22% in UnitedHealth's biggest drop in a single day since 1998. In May, UnitedHealth had contributed to 88% of the Dow's decline in the past year.
UnitedHealth is also currently facing a criminal and civil investigation by the Department of Justice over potential fraudulent billing practices in its Medicare Advantage program.
DeVeydt was most recently an operating partner at private equity giant Bain Capital and was previously executive chair of surgical operator Surgery Partners.
CEO Hemsley said on an earnings call this week that over the past two months, the company has "made extensive management and operational changes" to align with its agenda of reform and performance.
"Other such changes — to our leadership, to our businesses, our culture, approaches, and practices, and to our board, governance, and succession oversight, as appropriate, will continue to be made as we proceed through this period," he said.
Jake Conley is a breaking news reporter covering US equities for Yahoo Finance. Follow him on X at @byjakeconley or email him at jake.conley@yahooinc.com.
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