UnitedHealth to take up to $1.6 billion hit this year

UnitedHealth Group said on Tuesday it expects the hack of its Change Healthcare unit to cost the company up to $1.6 billion this year but maintained its 2024 earnings forecast, suggesting a less severe impact of the cyberattack than many on Wall Street had feared.

Despite the massive disruptions, the healthcare conglomerate beat estimates for first-quarter earnings, and its shares were up 7.5% at $478.98 in morning trading. United shares have fallen nearly 15% since it disclosed the ransomware attack on Feb. 21.

The hack at Change, which operates one of the largest financial clearing houses in the U.S., disrupted payments to doctors and healthcare facilities nationwide for a month while taking a harsh toll on community health centers that serve more than 30 million poor and uninsured patients.

The health insurer relaxed, or removed, prior authorization processes for some claims following the hack, stoking concerns of an increase in medical costs. Executives said on Tuesday that these have recently been reinstated.

There were also delays in claim submissions as medical care providers, unable to access the Change system, struggled with paperwork.

“We’ve made substantial progress and we will not rest until care providers’ connectivity needs are met,” UnitedHealth Chief Executive Andrew Witty said on a conference call to discuss results.

The company said it had already booked $872 million in costs related to the data breach in the quarter, most of it as one-time items.