Humana warns that higher medical costs may affect 2024 forecast By Reuters

(Reuters) -Humana warned on Thursday that a surge in demand for medical services and patient care would lead to higher-than-expected medical costs in the fourth quarter and could impact its 2024 forecast, causing its shares to fall one. 12% before the bell rang.

Health insurers have been pointing to higher medical costs due to an uptick in non-urgent surgeries that would otherwise be delayed during the pandemic.

Humana (NYSE said it was seeing a further increase in outpatient surgeries and that its fourth-quarter results would reflect higher-than-anticipated inpatient procedures and services, primarily for November and December.

His comments also dragged down shares of other health insurers, including UnitedHealth (NYSE ), CVS and Elevance Health, which fell between 2% and 5% in premarket trading.

Last week, its largest peer, UnitedHealth, reported higher-than-expected medical costs for the fourth quarter as older Americans sought respiratory syncytial virus vaccines and received additional medical services toward the end of the year.

UnitedHealth also noted that as COVID-19 cases increased over the holidays, hospitalizations and per-patient spending increased beyond typical rates.

Humana expects the medical benefit ratio in its insurance segment to reach 91.4% in the fourth quarter, up from 89.5% previously forecast. The medical benefit ratio refers to the percentage of premiums spent by an insurer on medical care.

The company expects a full-year adjusted insurance segment profit ratio of around 88.0% compared to its previous guidance of 87.5%.

Humana is one of the largest players in the business of medical benefits, which are government-backed plans for people over age 65 or with certain disabilities.

The company now expects adjusted earnings of $26.09 per share in 2023, compared with its previous expectation of at least $28.25.