(Reuters) -Elevance Health Inc forecast full-year profit above estimates on Wednesday after beating quarterly earnings target on lower-than-expected medical costs in its health insurance business.
Health insurers had been expecting a significant jump in medical costs this year after noting a spurt in demand for elective surgeries such as hip and knee replacements, which older patients at higher risk of COVID had delayed.
Larger rival UnitedHealth Group in June raised alarms about higher costs from rising surgeries, but beat quarterly profit estimates last week, helped by a smaller-than-expected rise in medical costs that allayed fears that a resumption in long-delayed procedures would hit profit growth.
Elevance’s medical loss ratio, the percentage of claims paid to premiums collected, was 86.4% in the second quarter, compared with 87% a year earlier, and analysts’ estimate of 86.95%, according to Refinitiv.
During the second quarter of 2023, memberships for Elevance fell 135,000, hurt by a decline in Medicaid memberships following the withdrawal of pandemic-related relief measures, as many who had signed up for the government-aided plans were deemed ineligible, beginning April 1.
The growth in Elevance’s commercial business was expected to keep concerns over attrition in Medicaid membership at bay, the company said earlier this year.
Excluding items, the health insurer earned $9.04 per share in the second quarter, above Refinitiv IBES estimates of $8.8 per share.
It now expects annual profit of more than $32.85 per share on an adjusted basis, compared with its previous forecast of over $32.70 per share. Analysts were expecting a profit of $32.80 per share, according to Refinitiv data.
(Reporting by Mariam Sunny and Khushi Mandowara in Bengaluru; Editing by Shinjini Ganguli)
