UnitedHealth Group 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 subsidiary Change Healthcare.
Here’s how the company did:
- Earnings: $7.16 per share adjusted, vs. $6.61 expected by analysts, according to LSEG.
- Revenue: $100.08 billion adjusted, vs. $99.26 billion expected by LSEG.
UnitedHealth reported revenue of $99.80 billion, up from $91.9 billion in the same period last year. The adjusted $100.08 billion revenue figure excludes the impact from the cyberattack.
The company said it incurred a charge of around $7 billion during the quarter from selling its Brazil operations, according to a release Tuesday. The currency effects from the Brazil sale as well as adverse impacts from the cyberattack contributed to a net loss during the period, UnitedHealth said. The company reported it had a net loss of $1.41 billion, or $1.53 per share, compared with net income of $5.61 billion, or $5.95, a share, a year earlier.
UnitedHealth reported adjusted earnings of $6.91 per share for the quarter. The company said the adjusted figure excludes the Brazil sale, but only part of the impact from the cyberattack. It broke down the effects from the cyberattack into two categories: “direct response” and “business disruption” costs.
Direct response efforts, like UnitedHealth’s effort to restore Change Healthcare platforms, amounted to an impact of 49 cents per share in the quarter. Business disruption costs, like lost Change Healthcare revenue, amounted to 25 cents per share. UnitedHealth said its adjusted earnings figure included the business disruption impacts, but excluded the direct response costs. The $7.16 adjusted EPS figure excludes the entire impact from the cyberattack.
The company said the total impact from the cyberattack 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 the amount of every premium dollar that goes toward medical costs, of 84.3% for the first quarter. That included 40 basis points of impact from the cyberattack, the company said. Analysts were expecting an MCR of 83.8%, according to StreetAccount. A lower ratio typically indicates higher profitability.
Shares of UnitedHealth rose more than 5% Tuesday morning. As of Monday’s close, the stock was down around 15% for the year.
UnitedHealth is made up of two major business units: Optum and UnitedHealthcare. Optum offers a range of pharmacy services, consulting services and provides medical care for around 103 million consumers, according to the company’s website.
Optum reported $61.1 billion in revenue for the first quarter, up from $54.1 billion in the same period last year. UnitedHealth said Optum’s revenue growth was led by its patient care and pharmacy arms due to “strong expansion” in the number of people served.
In 2022, Optum completed a $13 billion merger with Change Healthcare, which offers tools for payment and revenue cycle management. Change Healthcare processes more than 15 billion billing transactions annually, and one in every three patient records passes through its systems, according to the company.
UnitedHealth disclosed in February that a cyberthreat actor breached part of Change Healthcare’s information technology network, prompting the company to immediately disconnect the affected systems. The fallout has been far reaching across the health-care sector, as many doctors were 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 that it has advanced more than $6 billion to health-care providers in need of assistance.
UnitedHealth said it continues to make “significant progress” in restoring Change Healthcare’s services.
“I’m immensely grateful for our colleagues who continue to work tirelessly — day and night — to restore services, free up funds 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 benefit services to millions of Americans, according to its website. UnitedHealthcare reported revenue of $75.4 billion for 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 that UnitedHealthcare serves in the U.S. The unit’s total number of domestic consumers served grew by 2 million during the first quarter.
UnitedHealth said it updated its full-year net earnings outlook and expects to report between $17.60 and $18.20 per share, largely due to the cyberattack and the Brazil sale.
During the company’s earnings call, UnitedHealth CFO John Rex said UnitedHealthcare is “pretty much back to normal in terms of claim submission activity” in the wake of the cyberattack. He said claims are flowing as expected.
In late February, the U.S. Department of Justice reportedly launched an antitrust investigation into UnitedHealth, according to a report from the Wall Street Journal. The company declined to comment on the matter during its investor call.