(Reuters) – Shares of UnitedHealth Group fell 4% 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 company, at a Goldman Sachs healthcare conference, said it was seeing elevated demand for outpatient healthcare services, especially related to knees and hips, from patients in its Medicare health plans for 65 year old and above.
“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,” Tim Noel, CEO of UnitedHealth’s Medicare and retirement business, said late on Tuesday.The company expects this pent-up demand to drive up its second-quarter medical loss ratio – a percentage of its spend on claims compared to the premiums it collects – to the high-end or moderately above its full-year outlook of 82.1% to 83.1%.
The healthcare conglomerate’s 18.51 forward 12-month price-to-earnings ratio – a common benchmark for valuing stocks – is higher than rival Cigna Corp’s 10.29 and CVS Health Corp 8.26.
(Reporting by Leroy Leo in Bengaluru; Editing by Shinjini Ganguli)
