(CTN News) – On Thursday, Humana warned that high demand for medical services will result in higher-than-expected medical costs in the fourth quarter, causing its shares to drop 12% before the market opened.
The health insurance industry has reported a rise in medical costs due to a rebound in non-urgent surgical procedures that were otherwise postponed during the pandemic.
Humana reported an increase in outpatient surgeries, and its fourth-quarter results would reflect higher-than-anticipated inpatient procedures and services, particularly in November and December.
The company’s comments also dragged down the shares of other health insurers, including UnitedHealth, CVS, and Elevance Health, which fell between 2% and 5% before the opening bell.
According to UnitedHealth, the company reported higher-than-expected medical costs for the fourth quarter as older Americans sought respiratory syncytial virus vaccines and received additional medical services.
Moreover, as COVID-19 cases increased around the holidays, hospitalizations and spending on each patient exceeded typical levels.
According to Humana, the medical benefit ratio in its insurance segment will be 91.4% in the fourth quarter, compared to the previous forecast of 89.5%.
According to Humana,
The medical benefit ratio is the percentage of premiums that are spent on medical expenses.
In comparison with its previous projection of 87.5%, the company expects its adjusted insurance segment benefit ratio for the full year to be approximately 88.0%.
There are a number of government-backed plans for people over 65 or with disabilities, and Humana is one of the world’s largest providers.
As opposed to the previous expectation of at least $28.25 per share, the company now expects an adjusted profit of $26.09 per share in 2023.