UnitedHealth Group The company reported better-than-expected revenue in its first-quarter results on Tuesday, though the company is still dealing with the fallout from the cyberattack on its Change Healthcare subsidiary.
Here's how the company did:
Earnings: $7.16 per share adjusted, versus $6.61 expected by analysts, according to LSEG. Revenue: $100.08 billion adjusted, versus $99.26 billion expected from LSEG.
UnitedHealth reported revenue of $99.80 billion, up from $91.9 billion in the same period last year. The adjusted revenue figure of $100.08 billion excludes the impact of the cyberattack.
The company said it incurred charges of about $7 billion during the quarter from the sale of its Brazilian operations, according to a statement issued Tuesday. UnitedHealth said currency impacts from the sale in Brazil as well as negative impacts from the cyberattack contributed to a net loss during the period. The company reported that it had a net loss of $1.41 billion, or $1.53 per share, compared to net income of $5.61 billion, or $5.95 per share, in the previous year.
UnitedHealth reported adjusted earnings of $6.91 per share during the quarter. The revised figure does not include sales in Brazil, but only part of the impact of the cyber attack, the company said. The effects of a cyberattack have been divided into two categories: “direct response” costs and “business disruption” costs.
Direct response efforts, such as UnitedHealth's effort to restore Change Healthcare platforms, amounted to an impact of 49 cents per share in the quarter. Business interruption costs, such as Change Healthcare's revenue loss, were 25 cents per share. UnitedHealth said its adjusted earnings figure included the impacts of business disruption, but excluded direct response costs. The adjusted EPS figure of $7.16 excludes the full impact of the cyber attack.
The company said the total impact of the cyber attack in the first quarter was 74 cents per share, and it expects the full-year impact to be between $1.15 and $1.35 per share.
UnitedHealth reported a medical cost ratio, which is how much each premium dollar goes to medical costs, of 84.3% for the first quarter. This includes 40 basis points of cyber attack impact, the company said. Analysts had expected the MCR to reach 83.8%, according to StreetAccount. A lower ratio usually indicates higher profitability.
UnitedHealth shares rose more than 5% Tuesday morning. As of Monday's close, the stock is down about 15% for the year.
UnitedHealth consists of two main business units: Optum and UnitedHealthcare. Optum provides a range of pharmaceutical and consulting services and provides medical care to approximately 103 million consumers, according to the company's website.
Optum reported revenue of $61.1 billion in the first quarter, up from $54.1 billion in the same period last year. Optum's revenue growth was driven by its patient care and pharmacy arms due to “strong expansion” in the number of people served, UnitedHealth said.
In 2022, Optum completed a $13 billion merger with Change Healthcare, which provides payment and revenue cycle management tools. Change Healthcare processes more than 15 billion billing transactions annually, and one in three patient records passes through its systems, according to the company.
UnitedHealth revealed in February that a cyber threat actor compromised part of Change Healthcare's IT network, prompting the company to immediately disconnect affected systems. The repercussions were far-reaching across the health care sector, with many doctors left without a way to fill prescriptions or get paid for their services.
The company has been working to bring systems back online in recent weeks, and UnitedHealth said Tuesday it has provided more than $6 billion to health care providers who need help.
UnitedHealth said it continues to make “significant progress” in restoring Change Healthcare services.
“I am incredibly grateful to our colleagues who continue to work tirelessly — day and night — to restore services, free up money for providers and protect the broader health system,” UnitedHealth CEO Andrew Witty said during the company's quarterly call with investors.
UnitedHealth's other business unit, UnitedHealthcare, provides insurance coverage and benefits services to millions of Americans, according to its website. UnitedHealthcare reported revenue of $75.4 billion in the first quarter, up from $70.5 billion a year ago.
The company said the growth was driven by an increase in the number of people served by UnitedHealthcare in the United States. The total number of domestic consumers served by the unit increased by 2 million during the first quarter.
UnitedHealth said it has updated its full-year net earnings outlook and expects them to be between $17.60 and $18.20 per share, largely due to the cyber attack and sell-off in Brazil.
During the company's earnings call, UnitedHealth CFO John Rex said UnitedHealthcare was “pretty much back to normal in terms of claims filing activity” in the wake of the cyberattack. Claims are flowing in as expected, he said.
In late February, the US Department of Justice reportedly launched an antitrust investigation into UnitedHealth, according to a report by The Wall Street Journal. The company declined to comment on the matter during the investor call.
