Humana raised its profit estimates for the full year after reporting lower than expected medical costs during the second quarter.

“The lower utilization trends and lack of COVID headwinds seen to date, give us confidence in raising our full year adjusted [earnings per share] guide,” Humana CFO Susan Diamond said Wednesday on a call with investors.

Humana’s net income increased 18% to $696 million for the second quarter as the Louisville-based insurer recorded increased revenues of $23.6 billion amid enrollment growth in both Medicare and Medicaid.

The insurer noted lower inpatient utilization among Medicare members for Q2.

But the lower-than-anticipated inpatient utilization has been partially offset by higher unit costs, Diamond said.

On the other hand, non-inpatient costs increased as more Medicare Advantage members had surgical procedures in the quarter, potentially signaling a pent up demand for care following the omicron surge, according to Diamond.

One reason for the lower inpatient utilization is the shift to outpatient care, which is primarily driven by orthopedic care, Diamond said.

In recent weeks, Humana executives said they’ve seen an uptick in COVID-19 cases but hospitalization rates remain lower than previous surges.

The company’s total medical membership of 17.1 million was up 0.8% year over year.

As the company continues on its value creation plan to trim $1 billion in costs, Humana said it will restructure its organization into two distinct units as it looks to simplify the company’s overall organization.