UnitedHealth Group has refined its overarching earnings forecast for the year, revealing that the impact from recent business disruptions due to a cybersecurity incident earlier this year was higher than anticipated. The health insurer has reported solid third-quarter results that surpassed market estimations. The newly adjusted earnings are projected to fall between $27.50 and $27.75 per share for 2024, reflecting a lower top end compared to the company's prior guidance of $28.
Market consensus on Capital IQ indicates an expectation of normalized earnings per share (EPS) of $27.69. In premarket trading, UnitedHealth's stock saw a decline of 3.5% following the update. The revised guidance takes into consideration an expected per-share impact of $0.75 due to disruptions resulting from a cyberattack on the company’s Change Healthcare unit, which occurred in February.
This is approximately a $0.10 increase from earlier estimates, as disclosed in the statement from UnitedHealth. Chief Financial Officer John Rex commented during an earnings call with analysts that the company continues to engage with customers to restore transaction volumes to pre-event levels and to attract new business with their now enhanced, more secure offerings.
He expressed optimism about rebuilding the business to previous levels by 2025, predicting that next year's total impact will be about half that of 2024. For the third quarter ending September 30, UnitedHealth reported adjusted EPS of $7.15. This figure includes a $0.12 impact from business disruptions but excludes $0.28 in direct response costs related to the cyberattack.
This EPS reflects an increase from the $6.56 reported during the same period last year, exceeding the market's estimate of $7.03. Revenue surged to $100.82 billion, a significant rise from $92.36 billion in the previous year, and surpassed analysts' expectations of $99.28 billion. The UnitedHealthcare segment, which is responsible for providing health care benefits to individuals, including those enrolled in Medicare and Medicaid programs, generated $74.85 billion in revenue, marking an increase from $69.85 billion a year ago.
The number of individuals served domestically by this division has grown by 2.4 million year-to-date, according to statements from the company. In the Optum segment, which caters to the global health care market, revenue advanced to $63.93 billion, up from $56.74 billion last year. This segment saw revenue growth within Optum Health and Optum Rx, although revenue for Optum Insight decreased slightly to $4.93 billion from $4.98 billion in the previous year. Net margin for the company showed a decline to 6% from 6.3% in the previous year’s quarter.
Additionally, UnitedHealth's medical care ratio, a measure of medical costs relative to premium revenue, rose to 85.2% from 82.3% in the prior year. Total operating costs also increased, rising to $92.11 billion from $83.84 billion in the same timeframe..