By Sneha S K
(Reuters) -Elevance lowered its annual profit forecast and missed Wall Street estimates for quarterly earnings on Thursday, becoming the latest health insurer to be hurt by persistently high medical costs.
The company kicked off quarterly earnings for U.S. health insurers, a spot usually taken by industry bellwether UnitedHealth Group.
Health insurers have come under pressure from tougher regulations and rising costs. Government-focused plans are under strain due to funding pressures, while Medicaid costs are rising without adequate state rate adjustments.
UnitedHealth, which is expected to report earnings on July 29, already cut its annual profit forecast in May, citing higher demand for medical care in government-backed plans.
Forecast cuts from peers Centene and Molina Healthcare followed soon due to a similar trend from members in state and federally-funded Medicaid plans as well as in so-called Obamacare.
Elevance on Wednesday said it sees annual adjusted profit of about $30 per share, compared with $34.15 to $34.85 per share it previously expected.
J.P.Morgan analyst Lisa Gill said the forecast cut was largely in the range that investors were expecting going into the quarter.
Shares of Elevance were down 1% in premarket trading, partially recovering from an initial slump of as much as 9%.
Elevance forecast full-year medical loss ratio, a closely watched metric which tracks medical costs, to be about 90%, reflecting the ongoing industry-wide trend of higher costs on Medicaid and Obamacare plans.
For the quarter, Elevance reported a medical loss ratio, the percentage of premiums spent on medical care, of 88.9% compared to analysts’ estimates of 88.70%.
Elevance banks more on commercial and Medicaid health plans, which cover medical expenses for people with low income with about 19.1% of its members coming from Medicaid as of June 30.
(Reporting by Sneha S K and Sriparna Roy and Bhanvi Satija in Bengaluru; Editing by Sriraj Kalluvila and Leroy Leo)
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