UnitedHealth saw its medical loss ratio rise in the second quarter, but executives pointed to the cyberattack on Change Healthcare as the main factor.
UnitedHealthcare’s MLR for the second quarter was 85.1%, up from 83.2% in the same period last year. The insurer cited several factors for the increase in the ratio during its earnings call on Tuesday morning. For one, UnitedHealthcare CEO Brian Thompson said there was a noticeable difference in coding rigor after the company ended a medical fee waiver it had offered following the cyberattack.
During the cyberattack, UnitedHealth relaxed pre-authorization and utilization controls to support cash flow to providers.
“We feel like this is tied to the unusual circumstances we saw during the waiver period,” Thompson said. “We have enhanced utilization management protocols and believe these impacts will moderate through the remainder of the year.”
Additionally, the insurer noted in its earnings report the impacts of federal Medicare funding cuts, enrollment mix and medical reserve fund accumulation.
UnitedHealth Group also said in its earnings report that it expects costs related to the Change attack to increase to $2.3 billion to $2.45 billion, reflecting a business effect of 60 cents to 70 cents on the company’s revenue.
UHG CEO Andrew Whitty said his company’s initial expectations for recovery from the cyberattack may have been “a little too optimistic,” but he said he was confident in its rebuilt platform for Change Healthcare.
“We’re in a good position and there’s a clear path forward for how this will play out over the rest of the year,” Whitty said, “and I think the platform that we’ve rebuilt is going to serve people very well.”
Tuesday, July 16th at 7:30am ET
UnitedHealth Group rebounded in the second quarter. Recheck The company forecast a profit of $4.2 billion for the current fiscal year.
The company’s second-quarter profit beat Wall Street expectations, and it also reported quarterly revenue of $98.9 billion, according to Zacks Investment Research. By comparison, UHG reported profit of $5.5 billion and revenue of $92.9 billion in the same period last year.
UnitedHealth made $198.7 billion in revenue and $2.8 billion in profits through the first half of the year. The company posted a big loss in the first quarter as it weathered a massive cyberattack on Change Healthcare and sold its Brazilian business.
The company had forecast revenue of $184.8 billion and profit of $11.1 billion as of mid-2023.
“The diverse and sustained growth across UnitedHealth Group, born out of the efforts of our colleagues committed to providing high-quality, affordable health care to the people we serve, positions us well in both the near and long term,” UnitedHealth Group CEO Andrew Whitty said in a press release.
UnitedHealth provided a brief update on the cyberattack in a press release, saying most of the affected Change services have been restored and that it has paid out $9 billion to providers in upfront funds and interest-free loans.
The company also said it plans to use the sale of its Brazilian operations to sell the rest of its South American operations.
UnitedHealth said in a statement that OptumHealth was a major driver of revenue growth in the quarter. The division’s revenue was $62.9 billion, up from $56.3 billion in the same period last year. OptumHealth’s revenue increased 13% from a year ago as more patients signed up for value-based care contracts and its providers expanded the types and levels of care they offered, according to the report.
Revenue at the company’s pharmacy benefit management company, OptumRx, also increased 13%, according to the earnings report.
UnitedHealthcare’s revenue was $73.9 billion, up from $70.2 billion in the second quarter of 2023. UnitedHealth said it added 2.3 million domestic corporate customers to its plans during the year. Total medical membership, including domestic and international enrollments, was 50.4 million as of the second quarter, according to the report.
That includes 26.6 million people with private insurance, 7.8 million people on Medicare Advantage and 7.4 million people on Medicaid, according to the report.
UnitedHealth now expects earnings per share to be between $27.50 and $28, the same outlook it gave at its investor conference in November, and said it expects to be able to absorb the impact of the Change Healthcare attack.
