(Bloomberg) -- Cigna Corp. shares fell the most in more than a year after the company said Covid-19’s drag on its earnings this year would be double what it had previously projected.

Covid will cut profit by about $2.50 a share this year, executives said, up from $1.25 in the company’s previous forecast. Cigna shares fell as much as 13%, the most since March 2020 and surrendering all their gains for the year.

“Both direct Covid-19 costs and broader utilization levels were above our expectations,” Chief Financial Officer Brian Evanko said on a call with analysts. Still, the company maintained its previous earnings-per-share outlook for 2021.

The successive waves of virus cases since the start of 2020 have re-shaped how Americans use medical care, creating new variables for the normally predictable business of health insurance. Most insurers benefited last year, particularly in the spring, as shutdowns caused people to delay routine care and shun hospital visits. Those deferrals usually more than offset the additional costs of Covid testing and treatment in 2020.

But insurers cautioned that more typical care volumes would rebound as vaccinations spread this year, even as Covid continued to drive testing and hospitalizations. That appears to be happening in Cigna’s population, and faster than the company had modeled.

Even with the rising medical expenses, the health-care giant affirmed its prior guidance, saying adjusted income from operations would be at least $20.20 a share for the year. Higher medical costs will be offset by growth in its Evernorth segment, which includes pharmacy benefits, and lower operating expenses, executives said.

Cigna declined 12% to $202.66 as of 10 a.m. in New York.

Covid’s Drag

Non-Covid care accelerated in Cigna’s medical insurance businesses, returning to baseline in its commercial segment and nearing typical levels in its Medicare plans. Covid costs declined over the course of the second quarter but were above the company’s expectations.

The Covid impact for the year will manifest mostly in higher medical costs, though the pandemic’s drag on employment and health plan enrollment is a factor as well.

The company reported adjusted income from operations of $5.24 a share for the second quarter, topping the $4.96 average of analyst estimates compiled by Bloomberg.

Cigna’s medical-loss ratio, the measure of how much premium revenue is paid out in claims, was 85.4%, worse than analysts predicted. The company increased its forecast for the metric to a range of 83% to 84% for 2021, a jump of 200 basis points at the midpoint.

Second quarter revenue of $43.1 billion beat Wall Street forecasts. The company raised its revenue projection for the year while slightly trimming the outlook for income from operations.

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