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

Christopher Snowbeck, Star Tribune on

Published in Business News

UnitedHealth Group spent about $872 million during the first quarter responding to the cyberattack at its Change Healthcare division and expects full-year costs could reach $1.6 billion.

The numbers, released Tuesday in the health care giant's first quarter financial results, provide the fullest accounting so far of financial impacts from the hack, which forced UnitedHealth Group to shut down a widely used claims processing system to contain the threat.

The majority of cyberattack expenses were excluded from the company's calculation of first quarter adjusted earnings, which came in significantly better than expected. Following the earnings release, the Minnetonka-based company's stock price rose more than 5% in early trading.

"This was an unprecedented attack, by a malicious actor, on the U.S. health system," chief executive Andrew Witty said during a call with investors. "The attack disrupted the ability of care providers to file claims and be paid for their work. We've moved quickly to fill this gap."

UnitedHealth Group says it has now provided more than $6 billion in advance funding and interest-free loans to health care providers that have struggled to bill for their services due to the system outage. Health care providers are among those who have filed about two dozen lawsuits against UnitedHealth Group over effects from the cyberattack.

During the first quarter, UnitedHealth Group incurred about $593 million in direct-response costs, including spending to start restoring the Change Healthcare system as well as temporary suspension of some care management rules, such as prior authorizations, to provide financial relief for health care providers.


The company also posted about $279 million in expenses from business disruptions, meaning lost revenue plus the expense of maintaining operations at Change Healthcare so they eventually can be re-launched, said John Rex, the company's chief financial officer.

Expenses for the direct response as well as the disruption to ongoing business are extending beyond the first quarter, as UnitedHealth Group continues to report progress on restoring IT systems.

Witty told investors he thought it was "important for the country" that UnitedHealth Group acquired Change Healthcare in 2022.

"Without UnitedHealth Group owning Change Healthcare, this attack would likely still have happened and it would have left Change Healthcare, I think, extremely challenged to come back," Witty said. "Because it was part of UnitedHealth Group, we've been able to bring it back — we're going to bring it back much stronger than it was before."


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