(Reuters) -Humana Inc on Wednesday warned of a hit to annual earnings if demand for non-COVID healthcare services or coronavirus-related costs rise beyond the health insurer’s expectations in the second half of the year. The company’s shares fell 6.5% to $437 after it stuck to its full-year adjusted profit target, which brokerage Jefferies termed as conservative. Health insurer spending on medical claims fell during the height of the pandemic as patients and hospitals postponed non-urgent surgeries to soften the impact on the healthcare system, but benefits from deferred care were offset by higher spending on COVID-19 testing and treatment. With nearly half of all Americans fully vaccinated according to latest government data, these trends are expected to change. “We do expect, given that the country has been largely open, our population is largely vaccinated, that we will see non-COVID utilization start to normalize,” Chief Financial Officer Susan Diamond said. Humana said it has seen COVID-19 testing and treatment costs come down faster than initially expected in the first half of the year, but non-coronavirus outpatient costs were rebounding faster than anticipated. This trend is expected to extend into the third quarter before it levels off, Diamond said. The company said it expects use of non-COVID medical services to run 2.5% below normal levels in the back half of the year, with an assumption of minimum COVID-19 testing and related treatment costs for the rest of the year. On an adjusted basis, the company earned $6.89 per share in the second quarter, slightly above Refinitiv IBES estimates of $6.82. However, Humana said it was seeing an increase in the utilization of coronavirus-related services in recent weeks. Some parts of the U.S. with lower vaccination rates saw an uptick in COVID-19 cases in recent weeks as the Delta variant becomes the dominant strain in the country. Reporting by Manojna Maddipatla in Bengaluru; Editing by Shailesh Kuber and Shounak Dasgupta Our Standards: The Thomson Reuters Trust Principles.