UnitedHealth Group exceeded first-quarter expectations, despite facing costs from a cyberattack on its Change Healthcare business. The company reported that care patterns in the first quarter aligned with its projections, rebounding from high medical costs at the end of the previous year that surprised investors. As a result, company shares saw a significant increase during midday trading.
Earlier this year, UnitedHealth disclosed that a ransomware group had breached some systems of its Change Healthcare division, causing disruptions in payment and claims processing nationwide. The cyberattack impacted various healthcare facilities and doctor's offices, prompting federal civil rights investigators to probe potential exposure of protected health information.
Despite the setback, UnitedHealth remains optimistic about the recovery of Change Healthcare, with CEO Andrew Witty expressing confidence in restoring the business to a stronger position than before. The company incurred an $872 million expense in the first quarter due to the cyberattack.
In addition to the cyberattack costs, UnitedHealth recorded a charge of approximately $7 billion for divesting a Brazilian health benefits and care provider acquired over a decade ago. The company reported a net loss of $1.41 billion in the first quarter, with total revenue increasing by over 8% to $99.8 billion.
Adjusted earnings per share stood at $6.91, surpassing analysts' expectations of $6.61 per share on revenue of $99.23 billion. The cyberattack-related expenses, excluding the Brazilian business sale costs, were factored into the adjusted earnings.
UnitedHealth anticipates a full-year earnings impact of $1.15 to $1.35 per share due to the cyberattack. The company reaffirmed its 2024 earnings forecast of $27.50 to $28 per share, aligning with analysts' expectations.
Despite the challenges, UnitedHealth's stock surged over 5% to $469.04 during midday trading, outperforming the Dow Jones Industrial Average. Analysts attribute the positive market response to the company's resilience and strategic outlook.
