UnitedHealth Group Exceeds First-Quarter Expectations Despite Cyberattack Costs

UnitedHealth Group has demonstrated remarkable resilience in the first quarter of 2022, surpassing expectations despite facing significant challenges. The company reported that costs incurred from a cyberattack on its Change Healthcare business had impacted its performance. However, UnitedHealth managed to exceed projections, showcasing its ability to navigate obstacles.

Meeting Care Expectations

The health care giant revealed that the care patterns observed in the first quarter aligned with its forecasts, despite the surge in medical costs experienced towards the end of the previous year, which had caught Wall Street off guard. This reaffirms the company's capacity to adapt to evolving circumstances and maintain stability in its operations.

Financial Performance and Strategic Moves

UnitedHealth faced a substantial financial impact, with an $872 million hit from the cyberattack, in addition to a $7 billion charge related to the divestiture of a Brazilian health benefits and care provider business. Nevertheless, the company's total revenue grew by over 8% to reach $99.8 billion, far surpassing market expectations. Adjusted earnings per share stood at $6.91, excluding the expenses associated with the cyberattack and the divestiture.

Outlook and Projections

Despite the challenges, UnitedHealth remains forward-looking, reiterating its 2024 earnings forecast laid out in the previous year. The company aims for adjusted earnings of $27.50 to $28 per share, demonstrating a strong commitment to its long-term goals. Analysts, in turn, anticipate earnings of $27.50 per share, aligning with the company's outlook.

Impact of Cyberattack

UnitedHealth disclosed that the full impact of the cyberattack is projected to result in an earnings reduction of between $1.15 to $1.35 per share for the year, with the majority of the impact being absorbed in the first quarter. The company continues to work towards fully restoring its services following the attack.

Market Response

Following the earnings report, UnitedHealth's shares surged by over 7% to reach $480.23 in premarket trading on Tuesday. Analyst David Windley noted that the positive market response was not unexpected, considering the stock's previous downturns, emphasizing the market's confidence in the company's ability to overcome challenges.