Health insurers Aetna Inc. (AET) and WellPoint Inc. (WLP)
reported second-quarter results that diverged as the former
continued to benefit from lower use of medical services, but the
latter was hurt by investment impacts and as it used a larger
portion of premiums to cover medical costs.
Aetna's profit rose 9.3% as it continued to benefit from
consumers using fewer health-care services amid a shaky economy.
For the year, the company again raised its per-share earnings
forecast, this time by 40 cents, to $4.60 to $4.70 a share.
Meanwhile, WellPoint's earnings were down 2.9% on investment
impacts and as its medical benefits ratio was hurt by higher than
expected costs in its senior business and other impacts. For the
year, the company raised its per-share earnings forecast to $6.90
to $7.10, including investment impacts of 15 cents a share, from
its prior projection of $6.60.
Aetna has been tacking on acquisitions this year as it
diversifies its operations, including its deal to acquire Prodigy
Health Group, an administrator of self-funded health-care plans.
Providing self-funded options for mid-sized and small businesses is
an area where health insurers have been seeking growth.
Aetna reported that its total medical cost ratio, or the amount
of premiums used to pay patient medical costs, declined to 79.7%
from 81.8% a year earlier but edged up from 79.2% in the first
quarter.
Aetna reported a profit of $536.7 million, or $1.39 a share, up
from $491 million, or $1.14 a share, a year earlier. The latest
period included favorable reserve development impacts of 31 cents,
while the prior year included 30 cents.
Revenue, excluding capital gains, decreased 2.1% to $8.32
billion. Premium revenue was down 2.6%
Analysts polled by Thomson Reuters most recently forecast
earnings of $1.08 on revenue of $8.31 billion.
Total medical membership fell 1.9% to 18.2 million as of June 30
from 18.6 million a year earlier, but was up 447,000 from 17.8
million as of March 31.
WellPoint also has been making acquisitions to diversify its
operations, including a deal for senior-citizen healthcare benefits
provider CareMore that will expand its presence in the growing
Medicare market.
The medical loss ratio--the percentage of premium revenue used
on patient care--rose to 85.7% from 82.9% a year earlier--amid
higher expenses in its senior business and--and also was up from
82.1% in the first quarter.
The nation's largest health-benefits provider by membership
reported a profit of $701.6 million, or $1.89 a share, down from
$722.4 million, or $1.71 a share, a year earlier. Excluding
investment impacts, earnings were up at $1.83 from $1.67.
Operating revenue was up 4.8% to $14.9 billion while total
revenue increased 4.6% to 15.1 billion.
Analysts polled by Thomson Reuters most recently forecast
earnings of $1.80 on operating revenue of $14.67 billion.
Medical enrollment was up 2.1 at 34.2 million as of June 30 from
33.5 million a year earlier, and eased by 40,000 from the prior
quarter.
Shares of Aetna and WellPoint closed Monday at $42.62 and
$73.56, respectively. Neither was active premarket.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com