UnitedHealth Group reported better-than-expected revenue in its first-quarter results on Tuesday, although the company is still dealing with the fallout from the cyberattack on its subsidiary Change Healthcare.
Here's how the company fared:
- Profits: adjusted $6.91 per share, which may not compare to the $6.61 expected by analysts, according to LSEG.
- Revenue: $99.8 billion dollars, compared to the $99.3 billion dollars expected by LSEG.
UnitedHealth reported revenue growth of nearly 9% from $91.9 billion in the same period last year.
The company said it incurred a charge of about $7 billion during the quarter for the sale of its operations in Brazil, according to a statement Tuesday. Currency effects from the Brazil sale as well as adverse impacts from the cyberattack contributed to a net loss of $1.53 per share during the period, UnitedHealth said.
UnitedHealth reported adjusted earnings of $6.91 per share for the quarter. The company said the adjusted figure excludes sales in Brazil, but only part of the impact of the cyberattack. It broke down the effects of the cyberattack into two categories: “direct response” and “business interruption” costs.
Direct response efforts, such as UnitedHealth's effort to restore Change Healthcare platforms, had a 49 cents per share impact in the quarter. Business interruption costs, such as lost revenue from Change Healthcare, amounted to 25 cents per share. UnitedHealth said its adjusted profit figure included impacts from the business disruption but excluded direct response costs.
The company said the total impact of 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 (MCR), which is the amount of each 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 usually indicates higher profitability.
UnitedHealth shares rose more than 6% in premarket trading Tuesday. As of Monday's close, the stock was down about 15% for the year.
UnitedHealth is comprised of two primary business units: Optum and UnitedHealthcare. Optum offers a range of pharmacy services, consulting services and provides healthcare to about 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 pharmacy and patient care 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 revenue and payment cycle management. 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 disclosed 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 consequences have been far-reaching across the healthcare sector, as many doctors were left with no way to fill prescriptions or receive payment for their services.
The company has been working to get systems back online in recent weeks, and UnitedHealth said Tuesday 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 services.
“The core story at UnitedHealth Group remains for our colleagues to deliver improved experiences for the people we serve and drive balanced growth even as they quickly and effectively address the attack on Change Healthcare,” said UnitedHealth CEO Andrew Witty, in the statement.
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 UnitedHealthcare serves in the U.S. The total number of domestic consumers served by the unit grew by 2 million during the first quarter.
UnitedHealth said it updated its full-year net profit outlook and expects to report between $17.60 and $18.20 per share, largely due to the cyberattack and the Brazil sale. The company maintained an adjusted net earnings outlook of $27.50 to $28 per share.
UnitedHealth will hold its quarterly conference call with investors on Tuesday at 8:45 a.m. ET.
