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UnitedHealth said seniors have been catching up on procedures delayed during the pandemic.
Andrew Harrer/Bloomberg
Shares of
UnitedHealth Group
declined Wednesday after the health insurance company said that seniors have been catching up on procedures delayed during the pandemic, leading to rising costs for insureres.
At a Goldman Sachs Global Healthcare Conference on Tuesday, Tim Noel,
UnitedHealth’s
(ticker: UNH) chief executive for Medicare and retirement, said that as mask mandates are dropped at medical offices and pandemic fears subside “more seniors are just more comfortable accessing services for things that they might have pushed off a bit like knees and hips.”
“We’re just seeing more services which, again, we’re really happy to see that our seniors are accessing the care that they need,” Noel added.
But increased surgeries mean increased costs for health insurers.
UnitedHealth
management said that it anticipates the company’s second-quarter medical cost ratio, or medical costs divided by premium revenue, to be at the high-end or slightly above its full-year outlook.
Shares of UnitedHealth were falling 5.5% in premarket trading to $464.97. Coming into Wednesday trading, the stock has fallen 7.3% this year.
Other health insurer stocks also declined Wednesday.
Humana
(HUM) was tumbling 7.1%,
Cigna
(CI) was down 3%, and
CVS Health
dropped 3.5%.
Truist Securities analyst David MacDonald wrote in a research note that he expects management’s commentary to create some “chop” on Wednesday. He cut his price target on UnitedHealth to $580 from $610 and lowered his full-year earnings estimates to $24.80 a share from $24.90.
However, MacDonald maintained his Buy rating on UnitedHealth and wrote that “we remain bullish on UNH tied to its highly complementary platforms, significant scale/diversification, broad/expanding suite of service capabilities, the ongoing move towards value-based care and sizable balance sheet/significant free cash flow.”
Write to Angela Palumbo at [email protected]
Source: https://www.barrons.com/articles/unitedhealth-stock-rising-costs-9479070b?siteid=yhoof2&yptr=yahoo