UnitedHealth Group Profits Eclipse $6 Billion As Cyberattack Costs Subside

UnitedHealth Group reported $6 billion in third quarter earnings thanks to its diversified portfolio of health insurance and medical care provider services that helped overcome costs of a cyberattack on its businesses earlier this year.

The underlying businesses, which generated more than $100 billion in revenue in the quarter, helped overcome $475 million in total cyberattack impacts in the quarter. Net income was $6.06 billion, or $6.51 per share, compared to $5.84 billion, or $6.24 in the year-ago quarter, according to the company’s earnings report released Tuesday.

A cyberattack in February on Change Healthcare triggered chaos for physicians and medical care providers across the country, paralyzing Change Healthcare’s massive billing and payment system. The attack triggered a shutdown of parts of Change Healthcare’s electronic system, leaving doctors and other providers of medical care without the ability to get insurance approval of patient services.

The cyberattack impacts to UnitedHealth were far less than quarters earlier this year.

“Third quarter earnings from operations were $8.7 billion, including $0.3 billion in unfavorable cyberattack effects,” UnitedHealth said in its earnings report. “Adjusted earnings from operations of $9.0 billion include the Change Healthcare business disruption impacts and exclude the cyberattack direct response costs.”

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The company, which said the number of people served by its UnitedHealthcare commercial health insurance offerings have grown 2.4 million so far this year, has maintained its financial projections. “The company’s adjusted net earnings outlook of $27.50 to $27.75 continues within the $27.50 to $28.00 range established nearly a year ago, even as it absorbs an estimated $0.75 per share of business disruption impacts for the affected Change Healthcare services, which have increased ~$0.10 per share from the estimate provided last quarter,” UnitedHealth said.

“Our continued growth, which positions us well for the coming years, is rooted in the innovative products and responsive service of our people that are embraced each day across the full range of health care participants,” UnitedHealth chief executive Andrew Witty said in a statement accompanying the earnings report.

Like the health insurance industry more broadly and insurers like UnitedHealth that have Medicare Advantage businesses, medical care costs are up. In the quarter, the company’s medical loss ratio, which is the percentage of premiums spent on medical care, was 85.2%. That was higher than the 82.3% ratio reported a year ago.

UnitedHealthcare has more than 50 million medical care plan customers including 7.8 million people in its Medicare Advantage, which is privatized insurance coverage for seniors that has seen in uptick in costs this year.

“UnitedHealthcare third quarter revenues of $74.9 billion increased $5 billion over the prior year, reflecting growth in the number of people served domestically,” the company said. “Operating earnings were $4.2 billion. Year to date, the number of consumers served domestically with the company’s commercial offerings grew by 2.4 million to 29.7 million, as UnitedHealthcare’s innovative and consumer focused product portfolio continues to resonate with consumers and employers.”

Meanwhile, the company’s Optum healthcare services revenues also performed well as revenues grew more than $7 billion in the quarter compared to the prior year to $63.9 billion, led by Optum Health and Optum Rx, the company’s pharmacy benefit management business.

“Operating earnings were $4.5 billion and adjusted operating earnings were $4.8 billion,” the company said about Optum businesses. “Adjusted operating earnings exclude costs to support the direct Change Healthcare response efforts. Operating earnings and adjusted operating earnings include $135 million in business disruption impacts at Change Healthcare.”