(Adds company comment, details and analyst comment)
By Dania Nadeem and Trisha Roy
Feb 9 (Reuters) – Centene Corp expects higher
coronavirus-related costs during the early part of the year to
offset benefits from deferred procedures, the U.S. health
insurer said on Tuesday, after the company posted a
lower-than-expected quarterly profit.
The company, which incurred higher costs related to
COVID-19 treatment and testing in the fourth quarter, said COVID
expenses are highly dependent on the trajectory of the pandemic
and vaccination rates.
For much of 2020, health insurers incurred higher
pandemic-related costs as they try to support their customers to
get tested and treated for the virus. This, in turn, offset
benefits from people putting out elective medical procedures and
“COVID utilization is expected to be elevated during the
early part of the year, particularly offsetting the impact of
lower traditional utilization,” said Chief Financial Officer
“The higher cost is not necessarily surprising given the
COVID spike at year-end and commentary from peers,” said Citi
analyst Ralph Giacobbe.
Bigger rival UnitedHealth Group Inc also saw
COVID-19 treatment costs eclipsing benefits from such lower
Centene’s health benefits ratio, the amount it spends on
medical claims compared with its income from premiums, came in
at 88.4% in the fourth quarter, in line with a year ago.
Analysts on average had expected a ratio of 88%, according to
Refinitiv IBES data.
The company, which agreed to buy Magellan Health Inc
in a $2.2 billion deal last month, said it will cut
about 3,000 positions that overlapped with those from
acquisitions. The company had said in December it will eliminate
1,500 open positions.
The St. Louis, Missouri-based company maintained its
full-year adjusted profit of between $5.00 and $5.30 per share.
Analysts on average were expecting $5.24.
Centene reported adjusted earnings per share of 46 cents,
below analysts’ estimates of 47 cents.
Shares of the company were trading 3.3% higher at $60.
(Reporting by Dania Nadeem and Trisha Roy in Bengaluru; Editing
by Maju Samuel and Sherry Jacob-Phillips)