James Myers of OAN
9:38am – Wednesday, April 17, 2024
UnitedHealth Group said Tuesday that it expects the hack into its Change Healthcare unit to cost the company nearly $1.6 billion this year, but has left its 2024 revenue forecast unchanged. This suggests the impact will be smaller than experts expected.
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UnitedHealth said Tuesday that it expects “direct” costs of $1 billion to $1.15 billion in 2024 as a result of the attack. The company also said it expected an additional $350 million to $450 million in “business interruption” hits, including lost revenue.
The announced losses came after ransomware attackers took control of critical systems at the company’s Change Healthcare business earlier this year, restricting access to patient prescriptions and halting payments to healthcare providers. .
Health insurance companies have suspended or revoked pre-approvals for some claims following the hack, raising concerns that medical costs for patients will significantly increase. But executives said Tuesday those were recently reinstated.
In addition, claim submissions were delayed because providers were unable to access the change system, creating a mountain of paperwork.
The cyberattack reduced operating income by $872 million in the first quarter.
“We have made significant progress and we will not rest until the connectivity needs of healthcare providers are met,” UnitedHealth CEO Andrew Whitty said on a conference call to discuss the results.
Meanwhile, UnitedHealth has provided more than $6 billion worth of upfront funding to multiple health care providers.
Roger Connor, CEO of UnitedHealth’s OptumInsight division, which operates Change, said Change’s pharmacy billing and payment management business is 80% functional and the company plans to bring more products online in the coming weeks. That’s what it means.
But Connor said he was confident Change could bring back customers who were forced to go to rival companies because of the cyberattack.
UnitedHealth currently stands by its 2024 adjusted earnings forecast of $27.50 to $28 per share. The company said the disruption is expected to impact its earnings this year by between $1.15 and $1.35 per share.
Gerrit Smit, head of global equity management at investment firm Stonehage Fleming, which owns more than 90,000 shares, said: “The impact of the hack has not been as severe as expected, especially despite the business disruption, which has seen an uptick in this year’s adjustments.” “Considering that we have maintained our post-event profit outlook.” UnitedHealth stock as of the end of last year.
UnitedHealth acquired Change in 2022 for about $8 billion, but the company doesn’t expect to return to “baseline performance” until 2025, Connor said.
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