Aetna on Tuesday beat analysts’ expectations for second-quarter earnings as the insurer had growth in membership, revenues and net income.
Net income for the quarter was $548.8 million, or $1.52 per share, compared with $536 million, or $1.49 per share.
Operating earnings were $610 million, or $1.69 per share, compared $582.6 million, or $1.62 per share, during the same quarter a year earlier. Analysts polled by Thomson Reuters were expecting, on average, $1.60 per share.
Aetna completed its acquisition of Coventry Health Care Inc. in May 2013. Aetna’s second quarter of 2013 doesn’t include a full three months of Coventry results, which are included this year and operating earnings are higher as a result.
Additionally, operating earnings benefited from greater underwriting margins in the company’s Group Insurance segment, though this was offset by a lower prior-period reserve development. In insurance, money is set aside to pay claims, and any amount left over is released and reported in earnings after a period of time. The money released is called “prior-period reserves.”
Total revenue for the quarter was $14.5 billion, up 26 percent from $11.5 billion during the same period in 2013.
One closely watched metric in the health insurance business is percentage of premium revenue spent on customers’ medical expenses. It’s called the medical-loss ratio. Aetna reported an 80.6 percent ratio for its commercial business during the quarter, up from 79.1 percent during the same period in 2013. In government-funded health-care segments, such as Medicare products, the ratio was down to 86.5 percent from 88.3 percent in 2013.
Aetna’s total medical membership — all people in employer-based health plans, Medicare Advantage, Medicare Supplement and Medicaid plans — was 23.1 million at the end of the quarter, up from 21.97 million a year earlier. Membership in commercial plans, meaning employer-based coverage, was up to 19.5 million on June 30 from 18.6 million a year earlier.
In its dental plans, Aetna had 14.44 million members at the end of the quarter compared with 14.25 million on June 30, 2013.
Aetna’s membership in pharmacy benefit management services, including employer-based and Medicare drug plans, was up to 15.29 million as of June 30 compared with 13.85 million on June 30, 2013.
The company spent $255 million repurchasing 3.3 million shares during the second quarter.
Shares of the company stock were down $1.82 to $83 in pre-market trading on Tuesday.