UnitedHealth Group has picked company president David Wichmann to replace CEO Stephen Hemsley in a long-planned transition that quickly played to a positive review on Wall Street.
The nation’s largest health insurer said Wednesday that Wichmann, 54, will replace Hemsley on Sept. 1, and Hemsley will become executive chairman of the board. Current Chairman Richard Burke will become lead independent director.
Company shares edged toward another all-time high price in early-morning trading.
Wichmann joined UnitedHealth in 1998, a year after Hemsley arrived, and also has served as the company’s chief financial officer. He has overseen the company’s largest business, its health benefits segment, since 2014.
A spokesman said the leadership transition had been underway for years and dates back to Wichmann’s appointment as president in 2014.
Hemsley said in a statement that it was the right time for such a transition, “as the company is performing strongly and has a positive outlook for the forseeable future.”
Leerink analyst Ana Gupte said in a research note that the announcement was not surprising, but the timing was sooner than anticipated.
UnitedHealth is coming off a second quarter in which it made $2.28 billion and raised its forecast for 2017.
Health insurance is UnitedHealth’s main business, and the insurer is the largest provider of Medicare Advantage plans, which are privately run versions of the government’s coverage program for people who are over age 65 or disabled. The company also has been plowing more resources into its Optum business, which provides pharmacy benefits management and technology services and also operates clinics and doctor’s offices.
The 65-year-old Hemsley has served as CEO since 2006. He took over after the previous leader, William McGuire, was forced to stepdown over a scandal involving the backdating of company stock options.
UnitedHealth wound up wiping out more than $1.5 billion in past profits when it acknowledged that it backdated stock options, which involves manipulating the timing of options grants so they look as though they were made on days when the stock’s value was lower.
Hemsley led the company past that problem, through the Great Recession and into unprecedented growth. UnitedHealth has gained favor with shareholders as a reliable stock that consistently beats earnings expectations. It also became the first insurer to offer more than a token dividend several years ago.
Company shares advanced $2.39 in premarket trading to reach $196.89, which would represent an all-time high price in regular trading.
The stock has already set several all-time high marks this year, according to FactSet.
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