Aetna Revenue and Profit Rises

By Austen Hufford 

Aetna Inc. said revenue and profit rose in its latest quarter as some expenses were reduced but said it is still dealing with pressure in its Affordable Care Act business.

Chief Financial Officer Shawn Guertin said solid performance for Aetna's core businesses and managing expenses "offset pressures" in the company's ACA business. In August Aetna said it would withdraw from 11 of the 15 states where it currently offers plans through the Affordable Care Act exchanges.

Revenue grew on higher health care premium yields and membership growth in Aetna's Government business, which was partially offset by a membership declines in Aetna's commercial insured products. Profit rose on higher fees and other revenue in Aetna's health care segment and lower general and administrative costs.

Aetna's total medical membership fell 1.6% to 23.12 million in the quarter. Medicaid membership grew 9.3% to 2.4 million, while Medicare Advantage membership grew 9.5% to 1.4 million.

Aetna's medical-benefit ratio, a key measure of the amount of premiums used to pay patient medical costs, rose to 82% from 81.1%. The ratio rose for its commercial members but fell for its government-based business.

In all for the quarter, Aetna reported earnings of $603.9 million, or $1.70 a share, up from $560.1 million, or $1.59 a share, a year prior. When excluding transaction costs and other items, adjusted earnings rose to $2.07 a share from $1.90 a share.

Revenue rose 5.5% to $15.78 billion as operating revenue, which excludes net realized capital gains and losses, grew 5.2% to $15.05 billion. Analysts polled by Thomson Reuters had forecast $2.03 a share in earnings on $15.71 billion in revenue.

Aetna in early July agreed to buy Humana Inc. in a move to boost Aetna's Medicare business and give it scale to thrive as the industry consolidates.

In July, the Justice Department filed a pair of lawsuits in a Washington, D.C., federal court challenging Anthem Inc.'s proposed acquisition of Cigna Corp. and Aetna's planned combination with Humana, alleging the mergers would harm consumers, employers and health-care providers with an unacceptable reduction in competition. Trial proceedings in the Aetna-Humana case will begin on Dec. 5.

Shares of Aetna, inactive premarket, have declined 4.2% in the last three months.

Write to Austen Hufford at [e-mail]

(END) Dow Jones Newswires

October 27, 2016 07:15 ET (11:15 GMT)

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