UnitedHealth Group trounced first-quarter expectations even as costs from a cyberattack to its Change Healthcare business ate into the company's performance.
The health care giant also said Tuesday that care patterns in the year's first quarter met its expectations after soaring medical costs at the end of last year surprised Wall Street.
Company shares rose $23.37, or 5.4%, to close Tuesday at $469. The Dow Jones Industrial Average, of which UnitedHealth is a member, rose slightly.
Overall the company lost $1.41 billion in the first quarter. Total revenue grew more than 8% to $99.8 billion. Analysts expected earnings of $6.61 per share on $99.23 billion in revenue.
UnitedHealth said earlier this year that a ransomware group had gained access to some of the systems of its Change Healthcare business, which provides technology used to submit and process insurance claims. The attack disrupted payment and claims processing around the country, stressing doctor's offices and health care systems.
Federal civil rights investigators are looking into whether protected health information was exposed in the attack.
UnitedHealth is still restoring several services from the February attack. It took an $872 million hit from it in the first quarter, but CEO Andrew Witty told analysts on Tuesday that the company expected to bring Change Healthcare back "much stronger than it was before."
UnitedHealth also booked a roughly $7 billion charge in the quarter for selling a Brazilian health benefits and care provider it bought more than a decade ago.
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.
Total costs tied to the cyberattack and recovery amounted to 74 cents per share in the quarter. About two-thirds of that, or 49 cents, was direct response costs that the company excluded from adjusted earnings.
That includes increased medical expenses the company incurred from suspending its pre-approval or prior authorization requirements for some care.
UnitedHealth expects the cyberattack will amount to a hit of between $1.15 to $1.35 per share to earnings this year.
The Minnetonka, Minn., company on Tuesday also reaffirmed a 2024 earnings forecast it first laid out last fall for adjusted earnings of $27.50 to $28 per share.
Analysts expect earnings of $27.50 per share.
Jefferies analyst David Windley said in a research note that the positive share reaction was not surprising because the stock had been down partially in anticipation of a guidance cut.
Despite the immediate stock surge, some analysts warned the results should be taken with caution. The disruption from the hack "clouds an already murky utilization backdrop" and it will take until next quarter's results to get a "clean" view of underlying medical costs, RBC Capital Markets' Ben Hendrix wrote in a note to clients.
The cyberattack on the company's Change Healthcare unit knocked out crucial networks for payments and data used by entities across the health-care system, hindering the ability of patients to get prescriptions and medical offices to get paid. The repair is still underway, and UnitedHealth says it has sent $6 billion in advanced payments and loans to providers affected.
UnitedHealth "continues to make significant progress in restoring the affected Change Healthcare services while providing financial support to impacted health care providers," the company said in the statement.
Information for this article was contributed by John Tozzi of Bloomberg News.