Health insurance stocks fell after UnitedHealth Group announced that it anticipated its revenues to be negatively impacted. But, medical device and hospital operators saw gains on Wednesday.
UnitedHealth Group earlier this week stated that it anticipated its revenues to be negatively impacted by a spike in people having non-urgent procedures that they put off during COVID-19. Health insurance companies experienced large reductions in their stock prices on Wednesday after UnitedHealth Group’s announcement.
The price reductions followed statements made by UnitedHealth CEO Tim Noel at the Goldman Sachs Global Healthcare Conference on Tuesday that more Medicare-eligible seniors are now having non-urgent procedures done on their knees and hips.
He said that there has been “pent-up demand” that is now being “satisfied,” which is the trend.
In early Wednesday afternoon intraday trade, UnitedHealth’s shares sank 7%, while Humana, Elevance Health, and CVS Health Corp. all saw declines.
The increase in procedures is anticipated to reduce second quarter profitability for UnitedHealth. It is anticipated that its medical loss ratio, which measures the percentage of premiums spent on medical treatment, would be close to 83.1%, up from the previous quarter’s 82.2%. Noel noted that although management had stated on the call that these problems might only have an impact on profitability in the second quarter, they are “not assuming that those abate right away.”
UnitedHealth prospered during the epidemic, and since February 2020, its stock has increased by about 80%. The business generated about $92 billion in sales during the first quarter of 2023, a 15% rise from the prior year. Because of their social withdrawal during the epidemic, people sought less in-person medical care, which generated enormous revenues for health insurance corporations. According to UnitedHealth CFO John Rex, emergency room visits are still somewhat below historical averages but higher than they were during the outbreak.
UnitedHealth’s remarks had a negative impact for insurers, but overall, medical device and hospital operators saw their stocks rise on Wednesday. Early on Wednesday afternoon, hospital companies Tenet Healthcare and HCA Healthcare both saw gains of approximately 3%, while manufacturers Boston Scientific and Zimmer Biomet had gains of more than 4%.
