CORRECT: UPDATE: Aetna's 4Q Earnings Up 73% On Light Health Usage
February 01 2012 - 10:33AM
Dow Jones News
Aetna Inc.'s (AET) fourth-quarter earnings rose 73% as the
health insurer continued to benefit from light medical costs amid a
sluggish pace of patient visits to hospitals and doctors'
offices.
This trend, brought on by the weak economy and high
unemployment, fueled earnings gains and rising stock prices across
the managed-care sector last year. Aetna in mid-December indicated
it capped the year on a strong note by raising its 2011
guidance.
Analysts expect issues like the upcoming presidential election
and Supreme Court ruling on the U.S. health-care overhaul law could
be more influential drivers for health-insurance stocks this year.
The industry has generally taken a cautious approach with 2012
guidance projections, although companies steadily hiked guidance
through last year.
Aetna on Wednesday maintained its forecast--which it raised in
mid-December--for operating earnings of about $5.00 per share this
year, which is less than analysts were recently expecting.
Shares of the Hartford-based company rose 2.2% to $44.65 in
premarket trading. The shares have risen more than 29% over the
last 12 months through Tuesday's close.
The insurer reported a profit of $372.6 million, or $1.02 a
share, up from $215.6 million, or 53 cents, a year earlier.
Excluding items such as realized capital gains, transaction-related
costs and severance, earnings rose to 97 cents from 63 cents.
Revenue excluding capital gains and losses edged up slightly to
$8.54 billion.
Analysts polled by Thomson Reuters had most recently forecast
earnings of 97 cents on revenue of $8.5 billion.
Pretax operating margin rose to 7.9% from 5.5%.
Aetna's total medical benefit ratio, or the amount of premiums
used to pay patient medical costs, fell to 80.7% from 83% a year
earlier and was up from 78.9% in the prior quarter.
The insurer has been making acquisitions lately as it
diversifies its operations. Recent deals include buying Prodigy
Health Group, an administrator of self-funded health-care plans, in
June. In October, Aetna bought the account-based health plan
administrator PayFlex Holdings Inc. and a Medicare supplement
business with more than 150,000 members from Genworth Financial
Inc. (GNW).
Joseph Zubretsky, Aetna's chief financial officer, noted in a
release that the company expects to have $1.35 billion of
deployable capital for this year. "In 2012 we are again looking for
ways to enhance shareholder value through effective capital
deployment," he said.
Aetna's total medical membership rose to 18.5 million from 18.23
million at the end of September. Membership was little changed
compared with the tally at the end of 2010.
-By Jon Kamp, Dow Jones Newswires; 617-654-6728;
jon.kamp@dowjones.com
-Melodie Warner contributed to this article.
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