By Manas Mishra
(Reuters) -UnitedHealth Group Inc expects to meet Wall Street's loftier expectations for 2023 profit after the health insurer raised its annual profit forecast for the third time on Friday, helped by lower COVID costs.
An industry bellwether and the first health insurer to report third-quarter earnings set a positive tone with its 2022 forecast raise and quarterly profit beat, sending its shares up nearly 3% and lifted rivals including Humana Inc (NYSE:HUM) and Cigna Corp (NYSE:CI).
UnitedHealth (NYSE:UNH) says the direct impact of COVID-19 - which has led to fluctuations in health insurers' medical costs - is expected to ease next year, while recovery in non-urgent procedures could slow due to inflation and labor shortages.
"I think it's become much less about COVID. There's now I think a blend of possibly a little bit of COVID effect in the system, and cost of living effects," Chief Executive Officer Andrew Witty said.
The company says it has not yet seen any recessionary impact on its commercial business that provides employer-backed insurance plans, and expects strength in the business this year as well as in government-backed health plans.
Analysts' estimates for 2023 profit are currently at the higher end of the forecast that UnitedHealth expects to issue in the coming weeks, Witty said. They are expecting adjusted earnings of $24.85 per share, according to Refinitiv IBES data.
The company expects adjusted 2022 profit between $21.85 and $22.05 per share compared with $21.40 to $21.90 forecast earlier.
In the third quarter ended Sept. 30, a lower-than-expected medical care ratio helped the company report profit above expectations.
The ratio - a percentage of premiums versus payouts on claims - improved to 81% from 83% last year. Analysts had expected 82.4%.
Excluding items, UnitedHealth earned $5.79 per share, beating estimates of $5.42.