UnitedHealth brushes off hit from 'tripledemic' of respiratory diseases

[January 14, 2023]  By Leroy Leo and Khushi Mandowara

(Reuters) - UnitedHealth Group Inc said on Friday the so-called "tripledemic" of respiratory diseases in the winter had not substantially driven up medical costs at its health insurance business in the fourth quarter.

Medical costs of the industry bellwether, the first health insurer to report its fourth-quarter earnings, were expected to be under pressure from the "tripledemic" of flu, COVID-19 and respiratory syncytial virus (RSV).

But UnitedHealth said the "tripledemic" did not materialize in force, with demand for healthcare services remaining within the ranges of a typical fourth quarter.

UnitedHealth's shares rose nearly 2% and also lifted rivals after the company beat expectations for profit.

The early elevated flu season had deepened uncertainty among Wall Street analysts over medical costs for health insurers, which have been in flux during the pandemic.

However, UnitedHealth said on Friday that expectations around medical costs, including for the recent flu season, are now becoming more predictable with the world in the third year of the COVID-19 pandemic.

UnitedHealth Group's headquarters building is seen in Minnetonka, Minnesota, U.S. in this handout picture taken in 2019. UnitedHealth Group/Handout via REUTERS

"We're sort of out of that zone of the unknowns ... and (are) really managing a book of business with greater predictability back to sort of the expectations that we had pre-pandemic," said Brian Thompson, chief executive of the company's health insurance unit.

UnitedHealth's medical cost ratio – the percentage of payout on claims compared to its premiums – fell by nearly a percent to 82.8%, marginally lower than analysts' estimates of 82.87%, according to Refinitiv IBES data.

"It appears that this year, flu's impact is going to be much more concentrated on just the fourth quarter and less so on the first quarter," Stephens analyst Scott Fidel told Reuters.

Excluding items, the company's profit of $5.34 per share for the quarter ended Dec. 31 beat analysts' estimates of $5.17, according to Refinitiv IBES data.

(Reporting by Leroy Leo and Khushi Mandowara in Bengaluru; Editing by Shailesh Kuber and Maju Samuel)

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