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Business

UnitedHealth profit surged 102 percent — but elective-surgery costs loom

By
Reuters
Published July 15, 2020, 1:12 p.m. ET

UnitedHealth Group on Wednesday warned of rising costs later this year as Americans catch up on less urgent surgeries delayed by the coronavirus pandemic but stuck to its full-year forecast after posting a near 102 percent surge in quarterly profit.

Shares of UnitedHealth, the first US health insurer to report second quarter results, were down nearly 2 percent, at $302.40, in early afternoon trading.

UnitedHealth says outpatient and physician services in June were at 90 percent of normal.

Hospitals rescheduled elective surgeries to reduce the burden on the health care system as coronavirus cases surged, while some patients canceled appointments to avoid the potential of contracting the respiratory illness caused by the virus.

As a result, the company’s medical loss ratio — the percentage of premiums paid out for medical services — plunged to 70.2 percent in the quarter ended June 30, compared with Refinitiv IBES estimates of 78.38 percent.

UnitedHealth, however, maintained its full-year adjusted profit forecast, saying demand for health care began to recover in May and approached more typical levels by quarter-end.

Inpatient care, inclusive of COVID-19 related care, recovered to nearly 95 percent in June, the company said, with outpatient and physician services tracking at 90 percent of normal levels toward the end of June.

“These national trends have continued thus far in July, even as certain states are seeing short-term deferral of services where there are elevated levels of infection,” Chief Financial Officer John Rex said during a post-earnings call.

UnitedHealth said results are expected to be weighed by assistance measures already taken, like the $1.5 billion in premium credits and other discounts given to some members.

The company said growth in its core business that sells health insurance plans was hurt by a decline in the number of people who subscribed to its employer-sponsored health plans due to job losses during the pandemic.

The drop, however, is lower than the unemployment data might suggest as many employers continued benefits coverage for furloughed employees, Rex said.