Healthcare benefits company Aetna Inc. (AET) Tuesday said first-quarter profit declined from the prior year, as higher expenses offset a rise in revenues. Earnings per share increased and topped estimates, while revenue was short of view. The company raised its full year profit forecast.
Mark Bertolini, Aetna CEO, said, ''Aetna's strong first-quarter results demonstrate the strength of our diversified business model. Operating revenues increased for the company, and we grew membership for the fourth consecutive quarter fueled by strong growth in our Medicare business.''
Peer Health insurer UnitedHealth Group (UNH) recently reported a lower profit for the first quarter, as higher expenses more than offset a rise in revenues. The company backed its full year earnings view, but scaled down its revenue forecast to account for a customer conversion
Net income attributable to Aetna declined to $490.1 million from $511 million in the previous year. Earnings per share increased to $1.48 from $1.43 as the latest quarter had less shares outstanding.
Excluding items such as transaction and integration-related costs related to the proposed acquisition of Coventry Health Care as well as net realized gains, earnings were $1.50 per share, while it totaled $1.34 per share last year. On average, 19 analysts polled by Thomson Reuters expected earnings of $1.39 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenue increased to $9.54 billion from $8.92 billion. Operating revenue advanced 7 percent to $9.51 billion, primarily due to higher Health Care premiums in the Medicare and Medicaid businesses. Analysts expected revenues of $9.64 billion.
Operating revenue excludes net realized capital gains and losses and interest income on the proceeds of the transaction-related debt.
The Health Care business, which provides insured and self-insured medical, pharmacy, dental and behavioral health products and services, reported 7 percent increase in operating revenues to $8.79 billion, as higher Medicare premium was generated from the Medicare Advantage business.
Group Insurance, which includes group life, disability and long-term care products, reported a 9 percent increase in operating revenues to $581.3 million.
Total Medical Membership climbed to 18.3 million from 17.92 million in the year-ago quarter.
Total benefits and expenses increased 8 percent to $8.79 billion, mainly due to higher health care costs.
Based on the quarterly results, the company now expects operating earnings in 2013 to be $5.50 to $5.60 per share, up from the previous projection of at least $5.40 per share. Wall Street expects annual earnings of $5.53 per share.
The company continues to expect solid operating performance for the remainder of the year and estimate that medical membership will increase to18.4 million by year end. Aetna said membership and earnings would also increase following the closing of the Coventry acquisition.
AET closed on Monday at $56.16.
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