UnitedHealth sticks to 2024 outlook despite strong quarter with costs from massive cyberattack high

UnitedHealth topped second-quarter forecasts but remains cautious about the year as it continues to eat costs from a massive cyberattack and deals with rising medical expenses.

The health care giant on Tuesday said it was sticking with an earnings forecast for 2024 it first laid out last fall that includes some costs from the attack earlier this year on its Change Healthcare business.

Hackers gained access in February to Change's system and unleashed a ransomware attack that encrypted and froze large parts of it. Change provides technology used to submit insurance claims, and the attack disrupted payments and claims processing around country.

UnitedHealth booked $1.1 billion in total costs from the cyberattack in the second quarter.

The company said it has restored most of the Change services affected by the attack. Estimated direct costs for its response to the attack have climbed as it started notifying customers who were affected and continued to provide financial support to care providers.

The company says it has provided more than $9 billion in advance funding and no-interest loans.

UnitedHealth provides health insurance for more than 49 million people in the United States. Its Optum segment also provides care, runs one of the nation’s largest pharmacy benefits management businesses and offers technology services.

In the second quarter, UnitedHealth’s net income slumped 23% to $4.22 billion. It reported adjusted earnings of $6.80 per share on $98.85 billion in total revenue.

Analysts expected earnings of $6.66 per share on $98.73 billion in revenue, according to FactSet.

Medical costs, the company's largest expense, climbed more than 8% to $65.46 billion in the quarter.

UnitedHealth’s U.S. medical enrollment climbed 3% in the quarter even as it lost nearly a million customers with Medicaid coverage over the past year. Enrollment in the government-funded program for people with low incomes has fallen nationally as states redetermine eligibility after a pause during the COVID-19 pandemic.

Company executives told analysts on Tuesday that they expect Medicaid enrollment to stabilize in the year's second half.

For the full year, UnitedHealth said it still projects adjusted earnings between $27.50 and $28 per share. UnitedHealth typically raises its initial forecast at least once this far into the year.

That outlook includes estimated business disruption costs like lost revenue of between 60 cents and 70 cents per share from the cyberattack.

UnitedHealth Group Inc. stock climbed more than 5% to $543.49 Tuesday while the Dow Jones Industrial Average climbed about 1%. UnitedHealth is a Dow component.

Shares of the Minnetonka, Minnesota, company had slipped 2% so far this year as of Monday. The Dow had climbed nearly 7%.