(Reuters) -Health insurer Elevance Health Inc on Wednesday raised its annual profit forecast after beating estimates for quarterly earnings on lower-than-expected medical costs and strong performance of its Medicaid business.
Last week, larger rival UnitedHealth Group Inc raised its annual profit forecast for the third straight quarter and said the direct impact of COVID-19 was expected to ease next year.
However, the company said the recovery in non-urgent procedures could slow due to inflation and labor shortages.
Health insurers have been able to soften the blow from costs related to COVID-19 testing and treatment, as elective procedures recover slowly and coronavirus cases decline.
In the third quarter, Elevance’s benefit-expense ratio – an insurer’s spending on claims against the premiums it earns – was 87.2%, compared with expectations of 87.78%, according to five analysts polled by Refinitiv.
The lower the ratio, the better it is for a health insurer as it indicates a tight rein on costs.
The company also saw a robust rise in membership and premiums in its insurance business.
Elevance, which was previously known as Anthem, now expects annual adjusted earnings to be higher than $28.95 per share, compared with its prior forecast of more than $28.70 per share.
Excluding items, the company reported earnings of $7.53 per share, above analysts’ estimates of $7.15, according to IBES estimates from Refinitiv.
(Reporting by Mrinalika Roy and Raghav Mahobe in Bengaluru; Editing by Subhranshu Sahu)
