UnitedHealth Takes $872 Million Hit From Ransomware Attack
The recent cyberattack on UnitedHealth Group’s Change Healthcare unit cost the company $872 million.
Speaking during an earnings call Tuesday (April 16), CEO Andrew Witty said a bulk of that figure — around $595 million — were direct costs due to “the clearinghouse platform restoration and other response efforts,” such as medical expenses relating to the temporary suspension of certain care management activities.
“For the full year… it’s important to note these direct costs are included in net earnings, but are excluded from adjusted earnings per share,” Whitty said. “The other component affecting our results relates to the disruption of ongoing Change Healthcare business. This is driven by the need to keep these capabilities fully ready to return to service.”
These effects, he added, are not excluded from adjusted earnings, with the impact in the first quarter coming to about $280,000,000 or $0.25 per share.
The ransomware attack on Change Healthcare happened Feb. 21, hindering operations at pharmacies and hospitals around the country. The company has said the breach was caused by a ransomware gang known as ALPHV or BlackCat.
A second ransomware group said this week it too had broken Change Healthcare’s defenses, though a company spokesperson told PYMNTS it had no evidence of the breach.
The company said Tuesday it is still working on restoring the impacted Change Healthcare services, and has provided more than $6 billion in funding and interest-free loans to support care providers.
On the call, Whitty said the response to the attack was an “extraordinary example” of his company’s resources.
“And frankly, the support of many of the biggest companies across America in the tech environment coming in to help recover from this particular attack, which was straight out an attack on the U. S. Health system and designed to create maximum damage,” he said. “I think we’ve got through that very well in terms of the remediation and the build back to functionality.”
Meanwhile management was asked during the question-and-answer portion of the call about recent reports of a Department of Justice (DOJ) antitrust investigation into the company. Witty declined to comment.
“Listen, I think you’d probably expect we don’t comment on these sorts of matters,” said Witty. “And, you know, I don’t think it would be appropriate to do so today and certainly we never have done in the past.”
As noted here in February, the DOJ is probing various parts of the company’s business among them its UnitedHealthcare insurance unit and its Optum health services arm, which owns physician groups and other assets.
A report by The Wall Street Journal said investigators have been questioning healthcare industry representatives to gauge the impact of UnitedHealth’s doctor-group acquisitions on competitors and consumers. UnitedHealth executives have denied any favoritism between UnitedHealthcare and Optum, stating that they routinely work with rivals.
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