(Reuters) -Humana Inc on Wednesday cautiously stuck to its full-year adjusted earnings target after beating first-quarter profit estimates, taking into account the possibility of seniors reusing healthcare services deferred due to the pandemic.
Shares fell about 2% as the company became the latest U.S. health insurer to flag a likely jump in medical costs with vaccinations encouraging more Americans to begin revisiting hospitals for non-urgent care.
“We expect utilization to continue to rebound at par as we move through the second quarter and to slightly exceed baseline towards the end of the year,” Chief Financial Officer Brian Kane said.
Humana reiterated its 2021 adjusted earnings target and membership growth expectation for its individual Medicare Advantage business, which caters to people older than 65 or with disabilities.
The company’s guidance despite a strong first-quarter is likely related to early-year conservatism, Oppenheimer analyst Michael Wiederhorn said in a client note.
Humana has been betting on its main business of selling government-backed Medicare Advantage health plans to buoy profits amid challenges related to the pandemic.
First-quarter sales in the retail unit rose 11% to $18.65 billion, as it added more members to the Medicare Advantage plans as well as Medicaid health plans for low-income Americans due to the economic downturn caused by the heath crisis.
Kane said there is uncertainty around how seniors, who have not used the healthcare system for a long time last year, could respond later this year.
“We think it’s appropriate to be cautious about how they might use the system in the back half of the year.”
Excluding items, Humana earned $7.67 per share in the quarter, beating the average analyst estimate of $7.06.
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