UnitedHealth topped second-quarter forecasts but remains cautious about the year as it continues to eat costs from a massive cyberattack and deal with rising medical expenses.
The health care giant on Tuesday said it was sticking with an adjusted earnings forecast for 2024 that it first laid out last fall partly due to growing costs from the attack earlier this year on its Change Healthcare business.
Hackers gained access in February to Change’s system and unleashed a ransomware attack that encrypted and froze large parts of it. Change provides technology used to submit insurance claims, and the attack disrupted payments and claims processing around country.
UnitedHealth booked $1.1 billion in total costs from the cyberattack in the second quarter.
The company said it has restored most of the Change services affected by the attack. Estimated direct costs for its response to the attack have climbed as it started notifying customers who were affected and provided financial support to care providers.
UnitedHealth provides health insurance for more than 49 million people in the United States. Its Optum segment also provides care, runs one of the nation’s largest pharmacy benefits management businesses and offers technology services.
In the second quarter, UnitedHealth’s net income slumped 23% to $4.22 billion. It reported adjusted earnings of $6.80 per share on $98.85 billion in total revenue.
Analysts expected earnings of $6.66 per share on $98.73 billion in revenue.
Medical costs, the company’s largest expense, climbed more than 8% to $65.46 billion in the quarter.
The company’s U.S. medical enrollment climbed 3% in the quarter even as it lost nearly a million customers with Medicaid coverage. Enrollment in the government-funded program for people with low incomes has fallen nationally as states redetermine eligibility after a pause during the COVID-19 pandemic.
For the full year, UnitedHealth said it still projects adjusted earnings between $27.50 and $28 per share. UnitedHealth typically raises its initial forecast at least once this far into the year.
UnitedHealth said that outlook included business disruption costs of between 60 cents and 70 cents per share tied to the cyberattack.
Analysts expect earnings of $27.70 per share, according to FactSet.
UnitedHealth Group Inc. stock edged up less than 1% to $518.56 in premarket trading Tuesday.
Shares of the Minnetonka, Minnesota-based company have slipped 2% so far this year. The Dow Jones Industrial Average, of which UnitedHealth is a component, has climbed nearly 7%.
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