(Bloomberg) -- UnitedHealth Group Inc. shares jumped after the company beat Wall Street’s profit expectations and affirmed its outlook for the year, despite the costs associated with a cyberattack on one of its subsidiaries that has roiled the health-care industry.

Adjusted earnings of $6.91 a share exceeded analysts’ average estimate of $6.59 a share, the health-care giant said in a statement Tuesday. UnitedHealth affirmed its outlook for adjusted net earnings of $27.50 to $28.00 a share in 2024. Revenue of $99.8 billion also topped analyst estimates.

The company’s shares rose 6.2% at 9:44 a.m. in New York, the most intraday since July. Rival health insurers Humana Inc. and CVS Health Corp.’s stocks gained too, as investors read UnitedHealth’s comments on medical costs as a good sign for the sector. UnitedHealth’s shares had dropped 15% so far this year through Monday, compared to a 6% rise in the S&P 500.

Analysts had cautioned previously that the results could be unpredictable in the wake of the February cyberattack that’s impeded the flow of data and payments across the health-care industry. The incident left investors wondering whether insurers would have a clear view of their medical expenses at a time when care costs appear to be rising. 

Yet UnitedHealth said medical expenses were as expected, a relief to investors. While the cyberattack reduced earnings by $872 million in the quarter, more than two-thirds of that was excluded from adjusted results. 

A favorable tax rate also boosted earnings. Jefferies analyst David Windley said the tax benefit added 46 cents a share to the company’s earnings, calling it a “sizable benefit.” 

Despite the stock surge, some 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.

UnitedHealth also repurchased more than $3 billion of its own shares during the first quarter, the largest value on record, according to data compiled by Bloomberg.

Hack Fallout

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.

Earlier: Health Hack Will Burden US With Hundreds of Millions in Costs

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. 

UnitedHealth also excluded the impact of a previously disclosed $7 billion charge on the sale of its Brazil unit.

The company said the cyberattack would have a small effect on its adjusted profit. While it will reduce earnings by $1.15 to $1.35 a share in 2024, much of the costs of directly responding to the incident will be excluded from its adjusted results. In the first quarter, the adjusted results included just a 25 cent per share disruption from the hack, according to the statement. 

A closely watched gauge of medical expenses was higher than analysts were looking for in the first quarter, as the company’s response to the hack drove up costs. UnitedHealth reported a medical-loss ratio — a key measure of medical expenses as a proportion of premiums — of 84.3% in the first quarter, worse than the 83.9% average analyst estimate. 

The metric was 40 basis points higher due to “accommodations to support care providers,” according to the statement. The company said it waived some restrictions on care while systems to process requests for treatment approvals were down because of the hack.

The patterns of people getting medical care in the quarter were as expected, the company said. Wall Street analysts had been concerned about the risk of rising care expenses after they came in higher than anticipated at the end of 2023.

(Updates with share moves, additional analyst comment starting in second paragraph.)

©2024 Bloomberg L.P.