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UnitedHealth Group The first-quarter earnings call will mark the healthcare giant’s first major public comments since a cyberattack on its billing and payment subsidiary Change Healthcare in February led to the largest disruption to healthcare in the United States. United since the Covid pandemic.
“Everyone looks at United as the barometer of all health care. It will be different,” said Lisa Gill, a managing director and health care analyst at JPMorgan.
The data breach at the Change Healthcare unit forced the company to scrap its massive billing and payment processing service. Even though the company restored services to pharmacies, the outage continued to disrupt operations for healthcare providers across the country.
Change Healthcare is a subsidiary of UnitedHealth’s sprawling Optum division, which includes 90,000 physicians under the Optum Care unit and one of the nation’s largest pharmacy benefit managers, OptumRx.
Analysts will examine how the company explains the costs associated with the cyberattack as well as the impact of the outage on other operations within Optum’s business.
“We’ll be very interested in what costs they’re going to incur … in terms of how they estimate either lost revenue or additional expenses,” said Scott Fidel, managing director and health care analyst at Stephens .
UnitedHealth says it has issued $4.7 billion in interest-free loans to providers, although the American Medical Association says more than half of physician groups surveyed in early April said they had to resort to personal loans to maintain operations .
One of those doctors, Nashville dermatologist James Allred, said he had to take out loans to keep his practice, Wellskin Dermatology & Aesthetics, afloat because he was unable to treat and pay claims by private health insurers. The last six weeks have forced him to abandon his plans to expand his practice this year.
“Having a single hack disrupt the entire U.S. healthcare industry…raises many questions about how healthy, from a system perspective, is such massive consolidation?” Allred said.
Larger providers, such as a home infusion service company Health Care Optionalso warned that the outage could impact their quarterly results.
Medicare Advantage Uncertainty
On the health insurance side, the timing of the Change hack has increased uncertainty for UnitedHealthcare and its competitors like Human, CVS Health Etna and Elevancewhich publishes its quarterly results on Thursday.
All Medicare Advantage insurers reported higher-than-expected medical utilization rates among seniors during the fourth quarter.
With Change’s outage occurring in the middle of the first quarter, it is likely more difficult for insurers to track medical usage costs in real time. JPMorgan’s Gill expects most to release adjusted or estimated figures.
“We’ll have to wait until the second quarter to get a better idea of where medical costs are going for United and quite possibly the industry,” Gill said.
The delayed outlook on medical costs will also raise the stakes for health insurers as they prepare bids for the Medicare 2025 plan, expected in early June. This follows disappointing increases in government payment rates for 2025, announced earlier this month, which are expected to act as a drag on profits.
“We have high cost trends. We still have…a pretty competitive market,” Gill said. “So they have to overcome that.”
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