Persistent Systems Shares Drop 3% After Major Client UnitedHealth Faces Trouble

Shares of Persistent Systems tumbled 3% on May 15 amid growth concerns as a major client for the company—UnitedHealth got embroiled in trouble.

US-based insurance major UnitedHealth has gone through an unexpected change in its top leadership, with a new CEO at helm. The rejig in UnitedHealthcare’s top brass also coincides with a time when UnitedHealthcare is grappling with other concerns. The company revoked its growth guidance and also faces a criminal probe for a possible medical fraud, as per a report by the Wall Street Journal.

UnitedHealth Group has been under sustained pressure in recent months. On Tuesday, CEO Andrew Witty unexpectedly stepped down, and the company simultaneously withdrew its financial forecast for 2025, blaming the decision on rising medical costs. In response, former CEO Stephen Hemsley, who led the company for over a decade until 2017, returned to helm the business.

His comeback follows a series of challenges, including the high-profile murder of Brian Thompson, head of UnitedHealth’s insurance division, in December, a case that thrust the company into the public spotlight.

Troubles for UnitedHealth are also likely to cost Persistent Systems as the company due to their relationship, worth over $100-mn. In a recent note, Dolat Capital flagged that 60% of Persistent Systems' revenue for FY25 was generated from the healthcare segment. However, with UnitedHealth being a major client in that category, Dolat Capital believes that Persistent may skew its near-term growth towards non-healthcare segments to make up for any risks emerging from UnitedHealth’s troubles.

In addition to that, the brokerage feels the high valuations for Persistent Systems may further pose a significant risk to its upside potential.

As for the March quarter, Persistent Systems reported a consolidated net profit of Rs 395.76 crore, marking a growth of around 6.1% sequentially. Meanwhile, the company’s revenue from operations rose 6% on quarter to Rs 3,242 crore in Q4 FY25. In dollar terms, the topline was up 4.2% sequentially.