UnitedHealth Names Witty CEO as Wichmann Retires Abruptly

(Bloomberg) -- UnitedHealth Group Inc. appointed Andrew Witty, the former head of one of the world's biggest drugmakers, to succeed Dave Wichmann as CEO after he served fewer than four years in the role.

Witty, the former CEO of British drugmaker GlaxoSmithKline Plc, has led UnitedHealth's Optum division since 2018. The sprawling health-services business includes pharmacy benefits, medical clinics, surgery centers, technology and consulting.

Witty was on an unpaid leave of absence from April to December last year to assist the World Health Organization on its Covid-19 response. He also advised the U.K. government's task force on vaccines. Witty wasn't on UnitedHealth's earnings call on Jan. 20.

The announcement surprised some Wall Street analysts who watch the company.

“Investors are likely to respond negatively if just on uncertainty alone,” absent an explanation for what triggered the change, Matthew Borsch, an analyst at BMO Capital Markets, wrote in a research note. He added that Wichmann's term appeared “cut short.”

A company spokesman said the pandemic re-affirmed the importance of family to Wichmann, triggering his decision to retire.

UnitedHealth shares were down 1.4% at 11:12 a.m. in New York.

The company said Witty will rejoin UnitedHealth's board and become CEO immediately, with Wichmann staying on for a transition through March 2021. The company declined to make the executives available for interviews.

“I am deeply honored to help guide one of the most consequential organizations in health care,” Witty said in a statement.

Witty, 56, was knighted by the British crown in 2012 for his services to the U.K. economy. As a former public company CEO who led GSK for a decade, Witty was an obvious choice to succeed Wichmann.

Key Division

Promoting the leader of Optum is another sign of the division's growing importance within the UnitedHealth enterprise, which includes UnitedHealthcare, the largest U.S. health insurer. Optum's revenue doubled between 2015 and 2020 to $136 billion, and its contribution to the company's bottom line grew even faster.

Through Optum, UnitedHealth has made a bigger bet on owning pieces of the health-care delivery system than other major U.S. insurers, a strategy that accelerated under Wichmann's tenure.

Wichmann joined UnitedHealth in 1998. Among other roles, he served as chief financial officer and president before becoming CEO in September 2017. Shares of UnitedHealth have gained 69% since Wichmann took over, according to data compiled by Bloomberg.

“Dave helped build an unmatched set of distinctive capabilities, market positions and capacities that will continue to contribute to a high-performing and more equitable health system for everyone,” Stephen J. Hemsley, chairman of UnitedHealth's board of directors, said in the news release.

Chief Financial Officer John Rex will remain in his role. Dirk McMahon, who most recently led the insurance division, will become president and chief operating officer.

UnitedHealth reiterated its outlook for adjusted earnings of $17.75 to $18.25 per share in 2021 and a long-term target to increase earnings by 13% to 16% annually.

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