UnitedHealth Group said for the first time the total impact of the cyberattack on its Change ... [+]
UnitedHealth Group reported Tuesday for the first time the total impact of the cyberattack on its Change Healthcare unit will cost the company between $1.35 billion and $1.6 billion in 2024.
UnitedHealth, which churns out multi-billion-dollar profits every quarter from its diversified portfolio of health insurance and medical care services businesses, reported a $1.4 billion quarterly loss on Tuesday due largely to the sale of its Brazilian business. UnitedHealth incurred a $7 billion charge in the first quarter from the sale of that business, known as Amil, while the cyberattack cost the company $872 million in the first quarter across several of UnitedHealth’s businesses, including the UnitedHealthcare insurance company and several Optum health services units.
Still, UnitedHealth Group chief executive Andrew Witty said the company’s “broad-based growth” will help the company meet its financial goals for the year, including adjusted earnings growth. UnitedHealth’s earnings from operations in the first quarter were nearly $8 billion.
“The core story at UnitedHealth Group remains our colleagues delivering improved experiences for the people we serve and driving balanced growth even while swiftly and effectively addressing the attack on Change Healthcare,” Witty said in a statement accompanying its first quarter earnings report.
UnitedHealth’s revenues remain strong despite the attack, rising nearly 9% to $99.8 billion compared to $91.9 billion in the the first quarter of last year on strong growth across UnitedHealthcare insurance plans and Optum’s businesses. Meanwhile, a $7 billion charge in the quarter related to the sale of the company’s Brazil operations and costs from the cyberattack contributed to a net loss in the quarter of $1.4 billion, or $1.53 per share, compared to net income of $5.6 billion, or $5.95 per share in the first quarter of 2023.
A cyberattack in February on Change Healthcare has triggered chaos for physicians and medical care providers across the country, paralyzing Change Healthcare’s massive billing and payment system. The attack triggered a shutdown of parts of Change Healthcare’s electronic system, leaving doctors and other providers of medical care without the ability to get insurance approval of patient services.
For UnitedHealth, that has meant company spending large amounts of time and money “restoring the affected Change Healthcare services while providing financial support to impacted health care providers,” the company said Tuesday. “To date, the company has provided over $6 billion in advance funding and interest-free loans to support care providers in need.”
For the first time, UnitedHealth on Tuesday reported the total impact of the cyberattack, including cyberattack direct response costs and the business disruption impacts, which the company said was $872 million, or 74 cents per share, in the first quarter. For the entire year, 2024, UnitedHealth expects the cyberattack to cost $1.35 billion to $1.6 billion, or $1.15 to $1.35 per share.
UnitedHealth updated its full-year net earnings outlook to $17.60 to $18.20 per share “to reflect the Brazil sale and the estimated direct response costs of the cyberattack.”
Meanwhile, UnitedHealth maintained its adjusted net earnings outlook of $27.50 to $28.00 per share. “This adjusted earnings per share outlook excludes the impacts of the direct response costs and Brazil sale, while including the estimated $0.30 to $0.40 per share of business disruption impacts for the affected Change Healthcare services,” UnitedHealth said.
The fallout from the February cyberattack against Change Healthcare, the largest billing and payment system in the U.S., has left thousands of doctor practices financially hurting, with 80% of physicians reporting “lost revenue from unpaid claims,” according to a survey published last week by the American Medical Association.
The AMA, which is the nation’s largest doctor group, said the attack has threatened the viability of physician practices across the country with more than half of survey respondents having “had to use personal funds to cover practice expenses.”
