Aetna Profit Rises, Lifts Full-year Earnings Outlook

(RTTNews) - Diversified healthcare benefits company Aetna, Inc. (AET) Tuesday reported higher third-quarter profit, helped by membership gains in health care and improved underwriting margins. Operating revenues grew 13 percent from last year, and the firm lifted its operating earnings per share guidance for full year 2014.

The health insurer said it saw excellent performance in its Government business, which represented more than 40 percent of its health premiums.

For the quarter, net income attributable to the company increased to $594.5 million or $1.67 per share from $518.6 million or $1.38 per share in the previous year.

Operating earnings totaled $1.79 per share, while the firm posted $1.61 per share a year ago.

On average, 20 analysts polled by Thomson-Reuters were looking for earnings of $1.58. Analysts' estimates typically exclude one-time items.

Then increase in operating earnings was mainly due to higher underwriting margins in Aetna's Health Care and Group Insurance businesses, partially offset by increased investment spend to support growth, primarily in Aetna's Government business.

Operating revenues for the quarter grew 13 percent to $14.73 billion from $13.04 billion a year ago, and came above analysts' estimate of $14.63 billion.

The increase in revenue mainly reflected membership growth in Aetna's Health Care businesses and effects of pricing actions to recover fees and taxes mandated by health care reform, the firm said.

Health care premiums totaled $12.59 billion, up from $11.03 billion in the preceding year. Fees and other revenue increased to $1.34 billion from $1.23 billion last year.

As at September 30, 2014, medical membership totaled about 23.6 million, a sequential increase of 470,000 members.

Mark Bertolini, chairman, CEO and president said, "These results are a testament to the power of our strategy and the strength of our diversified business portfolio. We remain confident in our ability to execute our business strategy and in our ability to produce strong overall business performance."

For full year 2014, Aetna now projects operating earnings per share of $6.60 to $6.70, up from the earlier outlook of $6.45 to $6.60 per share. Analysts are looking for earnings of $6.59 per share for the year.

AET closed Monday's trading at $79.18, up 0.62 percent.