Diversified healthcare benefits company Aetna, Inc. (AET) reported Wednesday a profit for the fourth quarter that increased 73 percent from last year, reflecting strong performance across all product lines and lower healthcare costs. Operating earnings per share met analysts' expectations, while quarterly revenues topped estimates by a whisker. Aetna also reaffirmed its earnings guidance for the full-year 2012.
"In the fourth quarter and throughout the year, Aetna's commercial underwriting performance benefited from low medical utilization, our pricing discipline, our medical cost management strategies and our unit cost controls. Aetna's strong operating results and significant capital generation allow us to continue investing for the future," CFO Joseph Zubretsky said in a statement.
The Hartford, Connecticut-based health insurer reported net income of $372.6 million or $1.02 per share for the fourth quarter, sharply higher than $215.6 million or $0.53 per share in the year-ago quarter.
Excluding items, operating earnings for the quarter surged to $354.3 million or $0.97 per share from $255.0 million or $0.63 per share in the prior-year quarter.
On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $0.97 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Total revenues for the quarter edged up to $8.57 billion from $8.54 billion in the comparable quarter a year ago. Revenues for the quarter, excluding net realized capital gains, edged up to $8.54 billion from $8.51 billion in the same quarter last year, and topped Wall Street analysts' consensus estimate of $8.50 billion by a whisker.
Healthcare premiums increased to $6.93 billion from $6.89 billion in the year-ago quarter. Other premiums reached $438.9 million, up from $438.0 million in the prior-year quarter. Fees and other revenue were $973.4 million, higher than $903.5 million last year. Net investment income declined to $203.3 million from $279.2 million in the same quarter of 2010.
Aetna's healthcare business delivered revenues, excluding net realized capital gains, of $7.95 billion, up from $7.87 billion a year ago, and Aetna's group insurance business posted revenues, excluding net realized capital gains, of $488.3 million, down from $502.6 million a year ago.
Large case pensions business' revenues, excluding net realized capital gains, dropped to $104.4 million from $138.4 million in the previous year.
Total operating expenses for the quarter edged down to $1.83 billion from $1.89 billion in the year-ago quarter. Healthcare costs were $5.59 billion, lower than $5.72 billion in the same quarter last year.
For fiscal 2011, the company reported net income of $1.99 billion or $5.22 per share, higher than $1.77 billion or $4.18 per share in the prior year.
Excluding items, operating earnings for the year grew to $1.97 billion or $5.17 per share from $1.56 billion or $3.88 per share in the prior-year quarter. Analysts expected the company to report earnings of $5.15 per share for fiscal 2011.
Revenues for the full year, excluding net realized capital gains, edged down to $33.61 billion from $34.02 billion in the previous year. Street was looking for full-year 2011 revenues of $33.53 billion.
Looking ahead to fiscal 2012, Aetna reaffirmed its guidance for operating earnings of about $5.00 per share, with analysts currently looking for earnings of $5.09 per share.
AET closed Tuesday's regular trading session at $43.70, down $0.38 on a volume of 4.69 million shares, higher than the three-month average volume of 3.51 million shares. In the past 52-week period, the stock has been trading in a range of $32.53 to $46.01.
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