UnitedHealth's Higher Medical Care Costs Send Jitters Across Health Insurers

Luzi Ann Santos wrote a column · Jan 12 09:14

$UnitedHealth(UNH.US)$ reported a higher-than-expected spending on patients' healthcare services in the fourth quarter, sending its stock and that of its peers lower.

UnitedHealth said the company's medical care ratio, which measures medical expenses paid as a percentage of insurance premiums, reached 85% in the fourth quarter. That's higher than the 84.1% expected by analysts surveyed by FactSet, according to a Dow Jones report.

Shares declined 3.1%, making the stock the biggest loser on the $Dow Jones Industrial Average(.DJI.US)$. That dragged the S&P 500 Healthcare index lower to become the only declining sector in the broader gauge.

UnitedHealth's medical costs rose to $62.2 billion in the three months ended Dec. 31, from $59.6 billion a year earlier, the company said in a press release.

The higher medical care ratio overshadowed the healthcare giant's better-than-expected earnings for the quarter. Adjusted earnings rose to $6.16 a share, from $5.34 a year earlier, as revenue expanded, according to the press release. That beat the $5.99 adjusted earnings expected by analysts polled by Capital IQ that was earlier reported by MT Newswires.

UnitedHealth's rising patient medical care spending also sent jitters across the health insurance sector. $Humana(HUM.US)$ shares declined 3.2%, while $Elevance Health(ELV.US)$ fell 1.8%. $Centene(CNC.US)$ slid 0.6%, as $The Cigna Group(CI.US)$ slipped 0.8%.

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Luzi Ann Santos

Moomoo Senior News and Community Manager

Posts and columns do not represent the views of MM. They’re not investment advice.

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