Cyberattack costs growing at UnitedHealth Group, but profit still better than expected
Second quarter earnings beat analyst expectations at UnitedHealth Group, even as the Minnesota-based health care giant said it saw more expenses handling the fallout from a massive cyberattack earlier this year.
The company now expects cyberattack costs could reach $2.45 billion for the year, including more direct expenses for financial support for health care providers and consumer notifications.
The hack forced UnitedHealth Group to shut down a widely used claims processing system at its Change Healthcare subsidiary to contain the threat.
Health care providers have struggled to bill for their services because of the system outage, prompting UnitedHealth Group to provide more than $9 billion so far in advance funding and interest-free loans — a 50% increase since April.
“The company has restored the majority of the affect Change Healthcare services while continuing to provide financial support to the remaining health care providers in need,” UnitedHealth Group said in an earnings release Tuesday.
Lawmakers took company CEO Andrew Witty to task for the company’s handling of the cyberattack during a hearing in May that also raised questions about the size and scope of UnitedHealth Group.
Excluding one-time costs in the second quarter, the company reported an adjusted profit of $4.22 billion, down about 23% from the same period last year. On a per share basis, adjusted earnings of $6.80 exceeded the $6.66 forecast by analysts.
Revenue for the quarter was $98.86 billion.
UnitedHealth Group operates UnitedHealthcare, which is the nation’s largest health insurer, as well as a fast-growing health services business called Optum that runs clinics, manages pharmacy benefits and consults with health care providers on IT and data needs.
Just over 49 million people in the U.S. had coverage through UnitedHealthcare at the end of the second quarter.
The company affirmed its adjusted net earnings outlook of $27.50 to $28 per share for the year, despite the growing cost of the Change Healthcare hack.