UnitedHealth (UNH) Evaluates Bids to Exit Latin America

UnitedHealth Group (UNH) is evaluating bids for exiting its Latin American operations. According to Reuters, the health insurer has four nonbinding bids for its Banmédica subsidiary, with the company looking for about $1 billion for the deal. The Latin American subsidiary operates in Colombia and Chile. The news comes as UnitedHealth is in trouble due to several issues, including rising medical costs. UNH stock has declined about 40% so far this year.

UNH Considers Offloading Latin American Business

UnitedHealth’s move to offload its Banmédica subsidiary is reportedly being evaluated with some urgency in recent months as the parent company is facing many headwinds. As such, the company has been trying to exit Latin America since 2022, given that the business has lost more than $8 billion. As of now, UNH has received bids from private equity firm Acon Investments, Sao Paulo-based private equity firm Patria Investments, non-profit health firm Christus Health, and Lima-based healthcare and insurance company Auna.

UNH has been in the news for all the wrong reasons. In May, UNH CEO Andrew Witty stepped down abruptly at a time when the company was already struggling due to higher medical costs, leadership issues, and the murder of Brian Thompson, the CEO of its insurance unit. Along with the CEO’s resignation, the company also announced that it is suspending its 2025 financial guidance due to elevated medical costs. This news dragged down UNH stock by about 18% on a single day.

In mid-May, UNH stock declined further after the Wall Street Journal reported that the U.S. Department of Justice is conducting a criminal investigation into the company for possible Medicare fraud. However, the company later said that it was not notified of any such investigation, and stands by the integrity of its Medicare Advantage program.

The new CEO, Steve Hemsley, who succeeded Witty in May, assured shareholders last week that he is determined to win back their trust after the company reported weak earnings. UNH’s potential exit from Latin America will help it focus more on its U.S. business. UNH reportedly expects to set a deadline for binding proposals as soon as next month.

Is UNH Stock a Buy, Sell, or Hold?

Given the ongoing pressures, Wall Street has a Moderate Buy consensus rating on UnitedHealth stock based on 19 Buys, six Holds, and one Sell recommendation. The average UNH stock price target of $369.73 implies about 22% upside potential from current levels.

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