(Reuters) -UnitedHealth Group reported a quarterly profit above estimates on Friday due to lower-than-feared medical costs, sending its shares up 3% and allaying some concerns that a surge in non-urgent procedures would hit profit growth.
Shares of rivals Humana, Cigna and CVS Health also rose between 1% and 2.5% in premarket trading.
UnitedHealth’s stock has fallen 9% since the healthcare conglomerate said it was recording higher payouts over medical care between April and early June, as older adults became more comfortable visiting doctors’ offices again after COVID risks receded.
Older adults are usually covered by government-backed Medicare insurance plans, which the company offers.
Rival Humana has also warned of a jump in its medical costs for this year after noting a spurt in the demand for outpatient services and elective surgeries such as hip and knee replacements, which patients had delayed due to COVID-related restrictions and a shortage of hospital staff.
UnitedHealth’s medical loss ratio for the quarter – the percentage of spend on claims compared to premiums collected – was 83.2%, compared to analysts’ expectations of 83.4%.
The company posted an adjusted profit of $6.14 per share for the second quarter ended June 30, above analysts’ expectations of $5.99, according to Refinitiv IBES data.
It now expects annual profit between $24.70 and $25 per share, raising the lower end of its previous forecast of $24.50 to $25 per share.
Analysts were expecting a profit of $24.82 per share, according to Refinitiv IBES data.
Health insurers have faced fluctuating medical costs during the pandemic as hospitalizations initially rose due to waves of infections, before declining early last year.
Lower spending on elective surgeries had softened the blow from the higher costs associated with testing and treating COVID.
(Reporting by Bhanvi Satija and Raghav Mahobe in Bengaluru; Editing by Pooja Desai)
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