Cyberattack could cost UnitedHealth Group up to $1.6B this year

Adjusted earnings for the first quarter came in at $6.91 per share, better than the $6.62 per share analysts expected. The company maintained its adjusted net earnings outlook for the year of $27.50 to $28 per share.

Adjusted earnings exclude the cost of direct-response measures related to the cyberattack, but the figures include business disruption expenses.

The cost of direct responses for the full year could range from $1 billion to $1.15 billion, the company said, while business disruption costs could range from $350 million to $450 million.

For the three-month period between January and March, UnitedHealth Group posted a loss of $1.4 billion on $99.8 billion of revenue, due primarily to the previously announced divestiture of its large hospital and clinic business in Brazil. The company said in December it expected to lose about $7 billion on the sale due in part to foreign currency translation losses.

At the outset of Tuesday's call with investors, Witty said the company now employs about 400,000 people — a figure that's down roughly 10% from the 440,000 listed as the 2023 year-end headcount in a recent regulatory filing. A company spokesman said the Brazil divestiture was part of the decline, but not the only factor.

UnitedHealth Group runs UnitedHealthcare, which is one of the nation's largest health insurers. At the end of March, just over 49 million people in the U.S. had coverage through the insurance division.

Across the country, there have been signs this year of an uptick in health care costs for insurers due to higher medical service use by patients. In November, UnitedHealthcare projected higher medical costs this year and the first quarter numbers on care spending fell within those expectations, the company said.

Seasonal costs related to respiratory illnesses at the end of last year subsided in the first quarter, Kevin Fischbeck, an analyst with BofA Securities, wrote in a note to investors.

"(UnitedHealth Group) expects to continue to be prudent on this for the next few quarters but largely believes that it is back to close to normal on claims submission and payment," Fischbeck wrote. "Finally, in response to the increase in trend last year, (UnitedHealth) has heightened its vigilance on any indications that utilization is starting to change, so it has confidence in its current view on trend."