Health insurer Aetna's quarterly profit beats
Reuters
Published Jan 31, 2017 07:48AM ET
Health insurer Aetna's quarterly profit beats
(Reuters) - Health insurer Aetna Inc (N:AET), whose $34 billion deal for Humana Inc (N:HUM) was blocked last week, reported quarterly profit ahead of estimates on Tuesday, helped by higher premiums for its plans and lower-than-expected medical costs.
Aetna's results come nearly two weeks after Republican President Donald Trump signed his first executive order, directing the federal government to scale back regulations, taxes and penalties under the Affordable Care Act, popularly known as Obamacare.
The insurance was set up as part of former President Barack Obama's health reform law.
Insurers, including UnitedHealth Group Inc (N:UNH) and Aetna, largely pulled out of these plans for 2017, saying they were losing too much money.
Aetna's net profit fell to $139 million, or 39 cents per share, in the fourth quarter ended Dec. 31, from $321 million, or 91 cents per share, a year earlier.
Excluding items, Aetna earned $1.63 per share, handily beating analysts' average estimate of $1.44 per share, according to Thomson Reuters I/B/E/S.
Aetna said its total health care medical benefit ratio - the percent of premiums spent on claims - rose to 82.1 percent from 81.9 percent, a year earlier, mainly due to higher medical costs in its individual commercial products.
The No. 3 U.S. health insurer's total revenue rose about 5 percent to $15.73 billion, but was below analysts' average estimate of $15.86 billion.
Total medical membership came in at 23.1 million at the end of December, lower than 23.49 million, a year earlier.
The company said it expects 2017 operating earnings of at least $8.55 per share. Analysts' on average estimated earnings of $8.79 per share.
The decrease in quarterly net income was primarily due to an increase in restructuring costs, which included a $215 million expense recorded during the quarter related to a voluntary early retirement program.
Restructuring costs and exchange medical loss ratio pressured the quarter, but was offset by performance in the government and group insurance businesses, Piper Jaffray analyst Sarah James said.
Aetna and Humana have said they will consider all available options for their proposed merger after a court ruled against the deal, saying it would lower competition.
The court ruling also casts doubt on Anthem Inc's (N:ANTM) proposed $54 billion deal to buy fellow health insurer Cigna Corp (N:CI).
Get The News You Want
The U.S. Justice Department filed a lawsuit last July to block the two deals, arguing they would lead to higher prices. A court ruling on the Anthem-Cigna deal is pending.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.