UnitedHealth recorded revenue totaling $99.80 billion, marking an increase from $91.9 billion in the corresponding period of the previous year. Excluding the effects of the cyberattack, the adjusted revenue figure stands at $100.08 billion.
According to a statement released on Tuesday, UnitedHealth disclosed incurring a charge of approximately $7 billion in the quarter due to the sale of its Brazil operations. The sale, coupled with currency effects and negative impacts stemming from a cyberattack, contributed to a net loss for the period. UnitedHealth reported a net loss of $1.41 billion, or $1.53 per share, in contrast to a net income of $5.61 billion, or $5.95 per share, from the previous year.
Adjusted earnings for the quarter were reported at $6.91 per share. UnitedHealth clarified that the adjusted figure excludes the Brazil sale but only partially factors in the impact of the cyberattack. The effects of the cyberattack were categorized into “direct response” and “business disruption” costs.
UnitedHealth’s response efforts, such as the restoration of Change Healthcare platforms, had a positive impact of 49 cents per share in the quarter, while business disruption costs, including lost Change Healthcare revenue, amounted to 25 cents per share. UnitedHealth clarified that its adjusted earnings figure accounted for the business disruption impacts but excluded the direct response costs. The adjusted EPS figure of $7.16 does not factor in the entire impact from the cyberattack.
The company revealed that the total impact from the cyberattack in the first quarter equated to 74 cents per share, with an expected full-year impact between $1.15 and $1.35 per share.
UnitedHealth disclosed a medical cost ratio (MCR) of 84.3% for the first quarter, which included a 40 basis point impact from the cyberattack. Analysts had anticipated an MCR of 83.8%, according to StreetAccount. A lower ratio typically suggests higher profitability.
Tuesday morning saw a surge of over 5% in UnitedHealth shares. Despite being down approximately 15% for the year as of Monday’s close, the company experienced notable growth. Comprising two key segments, Optum and UnitedHealthcare, the former caters to around 103 million consumers by offering various services, including pharmacy and consulting, as well as medical care.
During the first quarter, Optum witnessed a revenue increase from $54.1 billion to $61.1 billion compared to the same period last year. UnitedHealth attributed this growth to the expansion of patient care and pharmacy services, resulting in a significant rise in the number of individuals served.
In 2022, Optum finalized a $13 billion merger with Change Healthcare, a company specializing in payment and revenue cycle management tools. Change Healthcare processes more than 15 billion billing transactions annually, with one in every three patient records flowing through its systems.
In February, UnitedHealth disclosed a cyberthreat breach in part of Change Healthcare’s IT network, leading to immediate disconnection of affected systems. The repercussions extended widely in the healthcare sector, leaving many doctors unable to process prescriptions or receive payments for their services.
Over recent weeks, efforts have been underway to restore systems, with UnitedHealth announcing the advancement of over $6 billion to assist healthcare providers. The company reported ongoing significant progress in reinstating Change Healthcare’s services. UnitedHealth CEO Andrew Witty expressed immense gratitude towards colleagues working tirelessly day and night to restore services, facilitate funding for providers, and safeguard the broader health system during the company’s quarterly call with investors.
UnitedHealthcare, a business unit of UnitedHealth, offers insurance coverage and benefit services to millions of Americans, as stated on its website. During the first quarter, UnitedHealthcare reported revenue of $75.4 billion, marking an increase from $70.5 billion the previous year. This growth was fueled by a rise in the number of individuals served by UnitedHealthcare in the U.S., with a total increase of 2 million domestic consumers during the quarter.
The company has revised its full-year net earnings forecast, anticipating earnings between $17.60 and $18.20 per share. This adjustment is primarily attributed to factors including a cyberattack and the sale of assets in Brazil.
During the earnings call, UnitedHealth CFO John Rex noted that UnitedHealthcare has largely recovered from the cyberattack, with claim submission activity returning to normal levels. Claims are now being processed as expected.
In late February, according to a report from the Wall Street Journal, the U.S. Department of Justice initiated an antitrust investigation into UnitedHealth. The company refrained from commenting on the issue during its investor call.
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