UnitedHealth saw an elevated medical loss ratio in Q2, and executives pointed to the Change Healthcare cyberattack as a key factor.
UnitedHealthcare had an MLR of 85.1% in the second quarter, compared to 83.2% in the prior year quarter. The insurer called out multiple elements that contributed to the elevated ratio in its earnings call on Tuesday morning. For one, UHC CEO Brian Thompson said there's a clear difference in coding intensity after the insurer ended care waivers offered following the cyberattack.
Amid the cyberattack, UnitedHealth eased prior authorization and utilization management to support cash flow to providers.
"I feel like it's an anomaly tied to what we saw during our waiver," Thompson said. "And we have reinforced our utilization management protocols and believe that these impacts will dampen as we pace through the remainder of the year."
In addition, the insurer pointed to Medicare funding cuts from the feds, member mix and medical reserve development effects, according to its earnings report.
UnitedHealth Group also revealed in its earnings report that the costs related to the attack on Change are expected to rise to reach between $2.3 billion and $2.45 billion. This is reflects between 60 cents and 70 cents in business effects on its earnings.
UHG CEO Andrew Witty said that the company may have been "a little over-optimistic" in its early expectations for recovery from the cyberattack. However, it's confident in the platform that has been rebuilt for Change Healthcare, he said.
"We're in good position and the rest of the year we've got a clear path how this plays out," Witty said. "And I think the platform that we've rebuilt is going to serve people extremely well."
Tuesday, July 16 at 7:30 am E.T.
UnitedHealth Group has bounced back in the second quarter, reaffirming its guidance for the year as it posts a profit of $4.2 billion.
Its earnings for Q2 surpassed Wall Street's expectations, according to Zacks Investment Research, as did its quarterly revenues, which were $98.9 billion. By comparison, UHG reported $5.5 billion in profit and $92.9 billion in revenue in the prior-year quarter.
Through the first half of the year, UnitedHealth brought in $198.7 billion in revenue and $2.8 billion in profit. The company posted a significant loss in Q1 as it navigated the massive cyberattack on Change Healthcare and sold off its Brazilian business.
At the midpoint of the year in 2023, the company had posted $184.8 billion in revenue and $11.1 billion in profit.
“The diversified, durable growth across UnitedHealth Group stems from our colleagues’ commitment to ensuring high-quality, affordable care is available to the people we serve, and positions us well for the near and long term,” said Andrew Witty, chief executive officer of UnitedHealth Group, in the press release.
UnitedHealth did offer a brief update on the cyberattack in the release, where it said that the majority of services at Change that were affected have been restored. It's also paid out $9 billion to date in advanced funding and interest-free loans to providers.
In addition, the company said it plans to build on the sale of its Brazilian business by selling off its remaining businesses in South America.
The quarter's revenue growth was driven in large part by Optum, UnitedHealth said in the release. The segment posted $62.9 billion in revenue, up from $56.3 billion in the prior-year quarter. Revenues at Optum Health were up 13% year-over-year as more patients enter value-based care agreements and its providers expand the types and levels of care they offer, according to the report.
Revenue at Optum Rx, the company's pharmacy benefit manager, was also up 13%, according to the earnings report.
At UnitedHealthcare, revenues were $73.9 billion, up from $70.2 billion in the second quarter of 2023. UnitedHealth said it's added 2.3 million domestic commercial customers to its plans over the course of this year. Its total medical membership, including domestic and global enrollees, is 50.4 million as of Q2, according to the report.
That includes 26.6 million people in its commercial plans, 7.8 million in Medicare Advantage and 7.4 million in Medicaid, according to the report.
UnitedHealth expects to earn between $27.50 and $28 in earnings per share, which is the outlook it shared at its investor conference in November. It expects to absorb the impacts from the Change Healthcare attack, the company said.