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More modest results expected for US managed care insurers in Q3

U.S. managed care insurers are unlikely to report blockbuster earnings results in the third quarter as healthcare utilization rebounded from a pandemic-induced low.

Sell-side analysts expect publicly traded health insurance companies to see EPS decline on a sequential basis, though most are projected to record higher revenues.

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The pandemic forcing many Americans to defer care in the spring boosted managed care providers' earnings in the second quarter. Cantor Fitzgerald analyst Steven Halper in a research note said medical utilization levels may have returned to within 5% to 10% of pre-pandemic levels. That rebound leads him to anticipate sequentially weaker bottom-line performance from most managed care companies.

Halper said health insurers will be reluctant to significantly raise guidance to avoid scrutiny by state regulators or members of Congress.

Centene Corp. CEO Michael Neidorff in a September presentation said he is being "very cautious, more cautious than normal," because there could still be more peaks in COVID-19 cases this year, which would impact returns.

He confirmed that healthcare utilization for non-COVID issues increased in July and August. While it did not increase to historic levels, "the COVID expenses are in there," Neidorff added.

"So kind of on a combined basis, the two of them are delivering the level of utilization one would expect. So it's a combination of the two, which is important," he said.

UnitedHealth Group Inc. is scheduled to begin the third-quarter earnings season when it releases its results before market open on Oct. 14.

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