By Sneha S K<\/p>\n
May 13 (Reuters) – U.S. health insurers’ strong first-quarter results signaled more stable medical costs after prolonged pressure, but Wall Street analysts want to see another similar quarter before they are convinced.<\/p>\n
Rising medical costs across government-sponsored \u200chealth plans have weighed on the industry over the past three years, pushing the S&P managed care index down more \u200cthan 12% since July 2023.<\/p>\n
But in recent weeks, major health insurers, including UnitedHealth Group, Cigna, Humana, Elevance Health and Centene, reported first-quarter results above analysts’ expectations and \u200bsaid they have a better grip on managing higher costs.<\/p>\n
It was their best showing since the COVID-19 pandemic, when insurers reaped the benefits of low medical services use, Oppenheimer analyst Michael Wiederhorn said in a note on Tuesday.<\/p>\n
Insurers typically report stronger first-quarter earnings as many members have yet to meet their deductibles, resulting in fewer claims payouts.<\/p>\n
“It is probably a little early to call a victory,” said Morningstar analyst Julie Utterback, \u200cnoting that lower costs in the quarter \u2060may be related to a weak respiratory season this past winter. But, she said, the stock price performance certainly was the best seen in a while.<\/p>\n
EYES ON UPCOMING QUARTER<\/p>\n
Insurers have been strained by elevated demand, \u2060driven in part by a surge in healthcare utilization under Medicare plans for older adults or individuals with disabilities, and by changes in enrollment rules for Medicaid plans for lower-income Americans that have saddled them with sicker, more costly members.<\/p>\n
“Cost trends appear to be stabilizing. It is early in \u200bthe \u200byear, but we believe the outlook for most health insurers is conservative \u200band the possibility exists that we will see further \u200cpositive earnings estimate revisions,” said UBS analyst AJ Rice in an emailed response.<\/p>\n
Even so, the next months remain uncertain.<\/p>\n
“Second quarter is usually the quarter that is the test,” Leerink Partners analyst Whit Mayo told Reuters. Historically, that could be the quarter that can really surprise the health insurers, as claims run out in May, said Mayo.<\/p>\n
UnitedHealth Chief Financial Officer Wayne DeVeydt during the BofA healthcare conference on Tuesday said, “It’s important to see how April and May evolves. We’ll get a lot of the claims from Q1 actually paid in that \u200cwindow and understand with a little more clarity.”<\/p>\n
If the trends in the first \u200bquarter were to continue, this will be a very strong year, he said.<\/p>\n
Analysts \u200balso pointed out some one-off factors such as a \u200bweaker flu season and weather disruption that delayed care as adding to lower costs during the quarter.<\/p>\n
“Investors are \u200cconcerned that core\/fundamental strength is being mistaken for flu\/weather. \u200bWe do not share this concern,” \u200bCantor Fitzgerald analyst Sarah James said in a note.<\/p>\n
Temporary factors largely impacted lower acuity services like eye care and GI procedures, that left insurers handling more serious cases, James said.<\/p>\n
Oppenheimer analyst Wiederhorn echoed the view. While the industry benefited from \u200bsome one-time tailwinds, medical cost trend “may finally be \u200cimproving, as the unsustainable levels reached over the last two years might finally be decelerating.”<\/p>\n
According to Cantor’s James, the “outperformance \u200bon the remaining cases support that there is core\/fundamental strength rather than an artificially strong quarter.”<\/p>\n
(Reporting by Sneha S \u200bK, writing by Sriparna Roy in Bengaluru; Editing by Shilpi Majumdar)<\/p>\n","protected":false},"excerpt":{"rendered":"By Sneha S K May 13 (Reuters) – U.S. health insurers’ strong first-quarter results signaled more stable medical…\n","protected":false},"author":3,"featured_media":794096,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[210,1141,258312,1142,14255,67,132,68,181398],"class_list":{"0":"post-794095","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-health-care","8":"tag-health","9":"tag-health-care","10":"tag-health-insurers","11":"tag-healthcare","12":"tag-medical-costs","13":"tag-united-states","14":"tag-unitedstates","15":"tag-us","16":"tag-wall-street-analysts"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/116568856331883806","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/794095","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=794095"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/794095\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/794096"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=794095"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=794095"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=794095"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}