Centene says COVID-19 costs could rise in coming quarters as Delta poses threat

Centene says COVID-19 costs could rise in coming quarters as Delta poses threat

(Reuters) -Centene Corp on Tuesday became the latest U.S. health insurer to warn of higher COVID-19 costs in the coming quarters due to the impact of the Delta variant, which has become the dominant coronavirus strain globally.
Source: www.reuters.com

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(Reuters) -Centene Corp on Tuesday became the latest U.S. health insurer to warn of higher COVID-19 costs in the coming quarters due to the impact of the Delta variant, which has become the dominant coronavirus strain globally.

The company’s shares were down about 3% at $70.50 after Centene reported a jump in medical costs in the second quarter, as COVID-19 vaccinations led to a recovery in demand for elective medical care that had been postponed during the height of the pandemic.

Continued uncertainty caused by the emergence of coronavirus variants and new infection outbreaks in parts of the United States led rivals, such as UnitedHealth Group Inc and Anthem Inc, to be prudent about their 2021 growth forecasts.

Centene said its COVID-19 costs could reverse course from a decline in June, based on trends related to the Delta variant, which in recent weeks caused new COVID-19 cases to flare up in some parts of the country with low vaccination rates.

The insurer said demand for healthcare services was above normal levels during the second quarter at its Obamacare business, that sells health plans on online marketplaces created by the Affordable Care Act, due to pent-up demand from previously postponed services.

“Although this is impacting our margins in the short term, we continue to view this environment as transitory, driven by the various dynamics of the pandemic,” Chief Executive Officer Michael Neidorff said on a conference call.

Centene raised its 2021 revenue forecast to between $123.3 billion and $125.3 billion, from its previous outlook of $120.1 billion to $122.1 billion.

On an adjusted basis, the company earned $1.25 per share in the quarter ended June 30. Analysts had expected $1.39 per share, according to Refinitiv IBES data.

Reporting by Manojna Maddipatla in Bengaluru; Editing by Shounak Dasgupta