UnitedHealth says Omicron-driven cost impact cushioned by healthcare deferrals

© Reuters. FILE PHOTO: The corporate logo of the UnitedHealth Group appears on the side of one of their office buildings in Santa Ana, California, U.S., April 13, 2020. REUTERS/Mike Blake

By Manojna Maddipatla

(Reuters) -UnitedHealth Group Inc on Wednesday said added costs of testing and treatment related to the recent surge in COVID-19 cases are being offset by postponements of non-urgent healthcare procedures, and the health insurer maintained its 2022 profit forecast.

The comments should help allay investor concerns that the steep rise in COVID infections and hospitalizations driven by the Omicron variant of the virus in recent weeks would significantly drive up medical costs for health insurers.

Adding to those concerns was a Biden administration initiative requiring insurers to reimburse Americans for up to eight at-home rapid COVID-19 tests per month, while setting no limit for tests, including at-home tests, that insurers must cover if they are ordered or administered by a healthcare provider.

UnitedHealth (NYSE:UNH), however, said severity in Omicron cases is "seemingly lower" with patients staying in hospitals for shorter periods compared to last year.

The costs are further offset by deferral of non-urgent healthcare procedures at hospitals, the company said. Many hospitals have put off elective procedures while they deal with a surge in Omicron patients.

"Activity over the past several weeks shows primary care visits having declined about 10% and an even higher rate of decline in specialist visits," Chief Financial Officer John Rex said.

Shares of the industry bellwether were up about 1%, lifting those of rivals Anthem Inc, Humana Inc (NYSE:HUM) and Cigna Corp (NYSE:CI).

Company executives reiterated the 2022 enrollment target for Medicare Advantage (MA) health plans during a conference call, easing some concerns that strong competition in the sector would hamper membership growth.

"UNH directly addressed the two primary sources of investor uncertainty going into the call - increased MA competition and impact from Omicron - favorably," Stephens analyst Scott Fidel said.

Humana earlier this month slashed its 2022 growth forecast for Medicare Advantage plans, citing higher-than-expected terminations in a highly competitive market.

UnitedHealth stuck with its 2022 adjusted profit forecast of between $21.10 and $21.60 per share. It also reported adjusted fourth-quarter earnings that topped Wall Street estimates by 17 cents a share.