Aetna Revenue and Profit Rises
October 27 2016 - 7:30AM
Dow Jones News
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 austen.hufford@wsj.com
(END) Dow Jones Newswires
October 27, 2016 07:15 ET (11:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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