By Anna Wilde Mathews
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 17, 2017).
UnitedHealth Group Inc. said David S. Wichmann, its current
president, will next month succeed Stephen J. Hemsley as chief
executive, a widely expected transition at the top of the nation's
largest health insurer.
Mr. Wichmann, 54 years old, will take over the CEO job on Sept.
1, and Mr. Hemsley, 65, who has held the title since 2006, will
become executive chairman. UnitedHealth Group's current board
chairman, Richard Burke, will then take the title of lead
independent director.
Mr. Wichmann, who previously served as chief financial officer
of UnitedHealth Group as well as president of UnitedHealthcare, its
insurance operation, is seen as likely to continue the direction of
his predecessor, who transformed the company by building up
UnitedHealth's rapidly growing Optum health-services arm and
expanding its core insurance business.
UnitedHealth has typically posted steadily growing earnings and
revenue, and its shares have generally outperformed peers', with
analysts frequently lauding the company as the industry leader
based on its financial results, diversity and reach. In its most
recent quarter, the company beat analysts' expectations and raised
its earnings outlook for the year.
Shares of UnitedHealth are up 22% so far this year. In early
trading Wednesday, shares rose 0.2% to $194.97.
Analysts have long eyed Mr. Wichmann as the likely
CEO-in-waiting, particularly after he assumed the president title
in 2014.
"This is the right time for this transition to take place, as
the company is performing strongly and has a positive outlook for
the foreseeable future, and Dave Wichmann is the right choice to
succeed as CEO for that future," Mr. Hemsley said in a
statement.
Also in a statement, Mr. Burke said the succession was "the
culmination of almost four years of discussion, careful planning,
leadership development and execution," noting that Mr. Wichmann was
among Mr. Hemsley's first hires at UnitedHealth and "has been
preparing for the CEO role for many years."
He also said that Mr. Hemsley will still "have substantial
responsibilities, and be fully engaged in the company's ongoing
affairs and long-term direction."
Mr. Wichmann will run a health-care behemoth that this year is
expected to hit $200 billion in revenue. Its health-insurance unit
covers 49.5 million people, diversified across government and
employer plans. Optum's businesses stretch from pharmacy-benefit
management to health-data analysis to a burgeoning national
footprint in doctor practices.
UnitedHealth also has a growing overseas business, including a
big health insurance and hospital operation in Brazil.
"Helping to guide this enterprise, with its extraordinary
people, purpose and capabilities, is a distinct yet humbling
honor," Mr. Wichmann said.
In a June presentation at an investor conference, Mr. Wichmann
emphasized areas of growth for UnitedHealth that he said would play
out over the next decade. They included pharmacy-benefit services,
health-care technology, overseas expansion and health-care delivery
through doctor practices and urgent-care clinics, among other
venues.
UnitedHealth said Mr. Wichmann's roles have included leading
external development and merger-and-acquisition efforts, as well as
integration activities, and that he currently oversees
UnitedHealth's business in Brazil, among other global markets,
which the company said was "experience essential for building out
the 'third leg' of UnitedHealth Group's long-term growth
strategy."
Before joining UnitedHealth in 1998, Mr. Wichmann was a partner
at Arthur Andersen. Mr. Hemsley came to UnitedHealth a year earlier
from the same firm, where he was chief financial officer.
Though Mr. Wichmann's long tenure at the company and close ties
to Mr. Hemsley, as well as the orderly style of the transition, are
likely to soothe investors, he will still face tough comparisons to
Mr. Hemsley.
Mr. Hemsley took over UnitedHealth as his high-profile
predecessor, William McGuire, agreed to leave after an internal
probe concluded stock-option grants that benefited him and other
executives were likely manipulated. In a later settlement with the
Securities and Exchange Commission, Dr. McGuire neither admitted
nor denied wrongdoing.
At the time, investors asked whether UnitedHealth Group would be
the same without Dr. McGuire, who had built it from a regional
health management organization into a national health-insurance
heavyweight. But Mr. Hemsley, by forging Optum through a steady
diet of acquisitions while continuing to expand the core
health-insurance unit with a powerful Medicare franchise, among
other assets, has gone farther than his onetime mentor, who handed
him a far smaller, less diverse company with $71.5 billion in
annual revenue.
UnitedHealth didn't partner up during a 2015 frenzy of
deal-making among managed-care companies -- and retained its market
leadership when two big deals among its rivals blew up in the wake
of courts' negative antitrust decisions.
One of Mr. Hemsley's rare missteps, in the eyes of investors,
was UnitedHealth's aggressive expansion in the insurance exchanges
created under the Affordable Care Act. But Mr. Hemsley, taking
responsibility for unexpected losses on the business, quickly
reversed course, pulling back sharply in 2017, and shares of
UnitedHealth Group have continued their steady rise, powered by
consistently expanding earnings and enrollment.
Write to Anna Wilde Mathews at anna.mathews@wsj.com
(END) Dow Jones Newswires
August 17, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
UnitedHealth (NYSE:UNH)
Historical Stock Chart
From Aug 2024 to Sep 2024
UnitedHealth (NYSE:UNH)
Historical Stock Chart
From Sep 2023 to Sep 2024