Aetna Boosts Profit Outlook

By Chelsey Dulaney 

Aetna Inc. boosted its profit outlook for the year again on Tuesday as the health insurer posted better-than-expected earnings during the first three months of the year.

Aetna said it now expects $7.20 to $7.40 a share in earnings for 2015, up from its previous call for at least $7 a share in earnings.

Aetna, like its rival health insurers, has benefited from higher enrollments driven by requirements under the federal Affordable Care Act. However, the industry has maintained concerns over rising care costs, particularly for expensive new drugs to treat hepatitis C.

The insurer said earlier this year that it expects to benefit from a deal to receive better pricing from Gilead Sciences Inc., maker of the hepatitis C drugs Harvoni and Sovaldi.

In the latest quarter, results were driven by membership growth and higher underwriting margins, especially in its government business.

The company said its overall medical membership stood at 23.7 million at the end of the quarter, up from 22.7 million a year ago.

The company said its total medical benefit ratio, which is the amount of premiums used to pay medical costs, was 79.1%, down from 80.4% a year ago. For Aetna's government business, the ratio fell to 81.3% from 84.7% a year ago, and for its commercial business it was 77.4%, up from 77.2% a year ago.

Health-care costs rose 6.9% to $10.2 billion.

Overall, for the quarter ended March 31, Aetna reported earnings of $777.5 million, or $2.20 a share, up from $665.5 million, or $1.82 a share, a year ago.

Operating earnings were $2.39 a share, topping analysts forecast for $1.95 a share in earnings.

Operating revenue, which excludes net realized capital gains and losses, grew 8% to $15.1 billion. Analysts had expected $15.5 billion in revenue.

Write to Chelsey Dulaney at [e-mail]

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