UnitedHealth Group lost $1.4B in Q1 2024 following cyberattack

April 18, 2024 - UnitedHealth Group experienced a $1.4 billion net loss in the first quarter of 2024, but revenues increased by almost $8 billion year-over-year.

The company said the growth and medical care activity were consistent with expectations and the effects of the Change Healthcare cyberattack. UnitedHealth Group has provided over $6 billion in advance funding and interest-free loans to support providers affected by the security incident.

Cyberattack impacts in quarter one totaled $0.74 per share, with the company estimating full-year impacts of $1.15 to $1.35 per share. Direct response efforts, such as Change Healthcare clearinghouse platform restoration and increased medical care spending, totaled $0.49 per share. The direct response cost for the full year is estimated to be $0.85 to $0.95 per share.

Business disruptions from the cyberattack cost the company $0.25 per share in the first quarter and is estimated to be $0.30 to $0.40 per share for the full year. The incident had an impact of $872 million in the first quarter, which is expected to grow to $1.6 billion for the whole year.

UnitedHealth Group’s first-quarter revenues grew by nearly $8 billion year-over-year to $99.8 billion. Adjusted earnings from operations were $8.5 billion, including the cyberattack business disruptions and excluding the direct response costs. This growth was driven by an increase in the number of people served at Optum and UnitedHealthcare.

Care patterns in the first quarter met the company’s expectations, with the medical care ratio at 84.3 percent. The increase from 82.2 percent last year was due to the revenue effects of the Medicare funding reductions and effects of the cyberattack. The operating cost ratio was 14.1 percent, reflecting solid operating cost management.

Cash flows from operations were $1.1 billion and were affected by around $3 billion from the cyberattack response actions. UnitedHealth Group returned $4.8 billion to shareholders in the first quarter through dividends and share repurchases.

The company’s payer arm, UnitedHealthcare, saw a revenue increase of nearly $5 billion year-over-year, rising to $75.4 billion. Operating earnings were $4.4 billion and adjusted operated earnings were $4.6 billion.

The company recorded a $7 billion charge in the first quarter from the sale of its Brazil operations. This sale also contributed to the net loss of $1.53 per share.

The number of domestic consumers increased by nearly 2 million to 29.4 million, led by commercial and senior populations. The number of people served by offerings for seniors and people with complex needs grew to 9.4 million. Services like integrated cards and simplified transportation offerings helped increase member engagement and satisfaction.

The number of people served by the payer’s state-based community offerings was 7.7 million, stabilizing due to changes from the ongoing Medicaid eligibility redetermination process.

Optum’s first-quarter revenues grew by $7 billion to $61 billion, spurred by an increase in Optum Health and Optum Rx users. Operating earnings were $3.5 billion and adjusted earnings were $3.9 billion. These earnings include the $279 million in business disruption impacts at Change Healthcare.

Optum Health revenue increased 16 percent year-over-year as more patients were served under value-based care offerings. Operating earnings were $1.9 billion and adjusted operating earnings were $2 billion.

Optum Insight’s operating earnings were $490 million and adjusted operating earnings were $715 million. Optum Rx’s revenue grew by 12 percent, reflecting customer growth and expanded relationships with existing clients. Adjusted scripts grew to 395 million from 378 million last year.