UnitedHealth (UNH) shares on Wednesday moved firmly lower, dragging rival health insurers into the red, after a company official suggested that medical costs could surge over the coming months.
Speaking on Tuesday as part of a panel discussion at a Goldman Sachs conference in Dana Point, Calif., Tim Noel, who runs UnitedHealth's Medicare and retirement business, said the company was seeing a notable increase in older Americans opting to undergo elective procedures they had delayed during the covid pandemic.
The uptick could pressure the medical-cost ratios -- a key metric of profitability -- for not only UnitedHealth, but rivals such as Humana (HUM) and CVS Health (CVS), which owns Aetna, as larger portions of collected premiums are paid out on insurance claims.
"We're seeing that more seniors are just more comfortable accessing services for things that they might have pushed off a bit, like knees and hips," Noel said in remarks reported by Reuters.
UNH, HUM and CVS Shares Lower
UnitedHealth shares, a Dow component and the Average's largest weight, were marked 6.8% lower in Wednesday afternoon trading to change hands at $457.82 each. Humana shares slumped to a one-year low and were last seen 11.25% lower at $453.54 each while CVS Health was marked 7.25% lower at $67.00 each.
The S&P 500 Managed Health Care subindex, meanwhile, fell 7.4% to a one-year low of 3,650.46 points.
Earlier this spring, UnitedHealth posted a stronger-than-expected first quarter, with record overall revenue of $91.9 billion. The company added some 655,000 new Medicare Advantage members, as well as a further 570,000 Medicaid members over the three months ended in March.
Overall premiums were up 13.6% to $72.79 billion while operating costs rose 19.5% to $13.63 billion.
CVS Health, meanwhile, trimmed its full-year profit forecast in May as it continues to push deeper into health-care services with two recent acquisitions.
CVS is buying Oak Street Health for $10.6 billion and closed its $8 billion purchase of Signify Health earlier this year.
The company estimated profit in the region of $8.50 to $8.70 per share, which reflected a 20-cent reduction from its prior forecast. The company tied the expected drop to acquisition-related transaction and integration costs.
CVS also reiterated its forecast for cash flows from its overall business to come in between $12.5 billion to $13.5 billion.
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