By Amruta Khandekar and Manas Mishra
(Reuters) -UnitedHealth Group Inc on Friday raised its annual profit forecast for a second straight quarter, as a slow recovery in non-urgent medical procedures and lower COVID-care costs help it rein in medical expenses.
Shares of the largest U.S. healthcare company by market value rose 4.5% in morning trade, providing the biggest boost to the Dow Jones index.
Health insurers including UnitedHealth (NYSE:UNH) have seen medical costs fluctuate through the pandemic, with lower spending on elective medical procedures softening the blow from higher costs related to COVID-19 testing and treatment.
Defying a trend seen in the last two years of the pandemic, low levels of COVID care was not accompanied by a rapid rise in people going back for deferred procedures or other non-COVID-care services, UnitedHealth Chief Financial Officer John Rex said.
The industry bellweather's comments lifted shares of insurers including Cigna Corp (NYSE:CI), CVS Health (NYSE:CVS) and Elevance Health Inc.
UnitedHealth said it now expects 2022 adjusted profit between $21.40 and $21.90 per share, compared with $21.20 to $21.70 per share forecast earlier.
However, the company cautioned of the impact from a recent uptick in COVID hospitalizations, which had dwindled after the record Omicron-driven surge in January.
"In recent weeks, we are seeing rising COVID-related hospital admissions but with a lower average length of stay compared with earlier periods," Rex said.
UnitedHealth said its outlook accounts for uncertainty related to COVID trends and the possibility of hospitalizations rising again through the year.
The company also said starting from 2023, there would be no copay or out-of-pocket costs for several critical drugs, including insulin for its fully insured members.
The company reported total sales of $80.33 billion, topping estimates of $79.68 billion. Adjusted earnings of $5.57 per share also beat estimates of $5.20 per share.