UnitedHealth Group reported better than expected revenue first quarter results on Tuesday, although the company is still dealing with the fallout from the cyberattack on its Change Healthcare subsidiary.
Here’s how the company did it:
- Profits: $7.16 per share adjusted, compared to $6.61 expected by analysts, according to LSEG.
- Income: Adjusted $100.08 billion, versus $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 revenue figure of $100.08 billion excludes the impact from the cyber attack.
The company said it took a charge of about $7 billion during the quarter from the sale of its Brazil business, according to a liberation Tuesday. Currency effects from the sale in Brazil as well as adverse effects from the cyber attack contributed to a net loss during the period, UnitedHealth said. The company reported a net loss of $1.41 billion, or $1.53 per share, compared with net income of $5.61 billion, or $5.95 per share, a year earlier.
UnitedHealth reported adjusted earnings of $6.91 per share for the quarter. The company said the adjusted figure excludes the sale in Brazil, but only part of the impact from the cyberattack. It breaks down the impact of a cyber attack into two categories: “immediate response” and “business interruption” costs.
Immediate response efforts, such as UnitedHealth’s effort to bring back Change Healthcare platforms, amounted to an impact of 49 cents per share in the quarter. Business interruption costs, such as Change Healthcare’s lost revenue, came to 25 cents per share. UnitedHealth said its adjusted earnings included the impact of the business interruption but excluded immediate response costs. Adjusted EPS of $7.16 excludes the entire impact from the cyber attack.
The company said the total impact from the cyber attack in the first quarter was 74 cents per share and expects the impact for the full year to be between $1.15 and $1.35 per share.
UnitedHealth reported a medical cost ratio, which is the amount of each premium dollar that goes to medical costs, of 84.3% for the first quarter. That included 40 basis points of the impact from the cyberattack, the company said. Analysts had expected an MCR of 83.8%, according to StreetAccount. A lower ratio usually indicates higher profitability.
Shares of UnitedHealth rose more than 5% on Tuesday morning. As of Monday’s close, the stock is down about 15% for the year.
UnitedHealth consists of two major business units: Optum and UnitedHealthcare. Optum offers a range of pharmacy services, consulting services and provides medical care to about 103 million consumers, according to company figures Website.
Optum reported revenue of $61.1 billion for the first quarter, up from $54.1 billion in the same period last year. UnitedHealth said Optum’s revenue growth led to patient care and pharmacy due to “strong expansion” in the number of people served.
In 2022, Optum completed a $13 billion merger with Change Healthcare, which offers tools to manage the payment and revenue cycle. Change Healthcare processes more than 15 billion billing transactions annually, and one in three patients pass through its systems, according to the company.
UnitedHealth revealed in February that a cyber threat actor breached part of Change Healthcare’s information technology network, prompting the company to immediately take the affected systems offline. The effects were far-reaching throughout the health care sector, as many doctors were left with no 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 awarded more than $6 billion to health care providers in need.
UnitedHealth said it continues to make “significant progress” in restoring Change Healthcare services.
“I am extremely 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’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 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 UnitedHealthcare serves in the U.S. The unit’s total number of residential consumers served increased by 2 million in the first quarter.
UnitedHealth said it updated its full-year net profit outlook and expects to report between $17.60 and $18.20 a share, largely due to the cyber attack and the sale in Brazil.
During the company’s earnings call, UnitedHealth Chief Financial Officer John Rex said UnitedHealthcare has returned “fairly to normal in terms of claims activity” in the wake of the cyberattack. He said claims are flowing as expected.
In late February, the US 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.