UnitedHealth Group has unveiled the financial toll of the cyberattack on its Change Healthcare unit, estimating a potential impact of up to $1.6 billion for the year.
The disclosure marks UnitedHealth’s first comprehensive acknowledgment of the financial repercussions stemming from the February cyberattack, which disrupted operations across various healthcare facilities in the United States, including pharmacies, hospitals, and doctors’ offices.
UnitedHealth has already recorded costs amounting to $872 million related to the data breach in the first quarter, predominantly categorized as one-time expenses. The breach compelled the health insurer to ease or eliminate prior authorization processes for certain claims, fueling concerns about potential cost escalations. Moreover, delays in claim submissions ensued as medical providers grappled with administrative challenges.
The impact of the cyberattack is evident in UnitedHealth’s rise in the medical care ratio, climbing to 84.3 percent from 82.2 percent compared to the previous year. The company anticipates a profit impact of up to $1.35 per share for the year due to the disruptions caused by the breach, as outlined in a statement.
Although facing operational hurdles, UnitedHealth reported an unexpected increase in operating profit, excluding restructuring charges, reaching approximately $394 million, despite a 15 percent decline in sales.
For the first quarter, UnitedHealth posted an adjusted profit of $7.16 per share, excluding a 25-cent impact from business interruptions stemming from the data breach.
However, the healthcare giant also reported a net loss of $1.53 per share, attributed in part to a $7 billion charge linked to the divestiture of its Brazil unit, Amil.
UnitedHealth has yet to disclose the extent of personal data compromised in the cyberattack, a detail mandated by federal law within 60 days of the incident.
