UnitedHealth falls on warning of higher medical costs, drags down rivals
UnitedHealth also expects its full-year medical loss ratio at the upper end of its forecast
Shares of UnitedHealth Group UNH.N fell 5% before the bell on Wednesday after the health insurer warned of a spike in medical costs in the second quarter as more older adults undergo non-urgent procedures they had delayed during the pandemic.
The warning also dragged down shares of rival health insurers that largely benefited from delayed non-urgent surgeries such as hip and knee replacements and hospital staffing shortages that had further led to fewer procedures.
UnitedHealth, at a Goldman Sachs healthcare conference, highlighted elevated demand for outpatient medical procedures, particularly related to knees and hips, from patients in Medicare health plans meant for those aged 65 and above.
UnitedHealth also expects its full-year medical loss ratio at the upper end of its forecast.
Weak demand for procedures during the pandemic was largely a boon for health insurers and a "bust" for providers like hospitals, Morningstar analyst Julie Utterback said in a research note.
UnitedHealth's 18.51 forward 12-month price-to-earnings ratio - a common benchmark for valuing stocks - is higher than rival Cigna Corp's CI.N 10.29 and CVS Health Corp CVS.N 8.26.
Shares of Humana Inc HUM.N fell 7%, while Elevance Health ELEV.N and CVS Health Corp's CVS.N fell more than 3% each in premarket trading.
