Aetna’s Quarterly Earnings Beat Analysts’ Expectations

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Aetna reported earnings above analysts’ expectations Thursday morning as the company had customer growth across all segments and a lower spending ratio of revenue from insurance premiums on patients’ medical expenses.

Net income was $665.5 million, or $1.82 per share, for the quarter compared with $490.1 million, or $1.48 per share, during the same period in 2013.

Operating earnings were $722 million, or $1.98 per share, for the quarter, compared with $516.5 million, or $1.56 per share, during the same period a year ago. Analysts polled by Thomson Reuters were expecting $1.55 per share, on average.

Total revenue was $13.99 billion for the quarter, compared with $9.54 billion during the same period a year earlier. Health care premiums accounted for $11.91 billion in revenue during the quarter, up from $7.79 billion during the same period in 2013.

The total number of customers in Aetna health plans increased to 22.7 million as of March 31, up from 18.3 million a year earlier. The company had growth in all segments: commercial health plans like those offered by employers to their workers, Medicare Advantage, Medicare Supplement and Medicaid.

Membership in Aetna dental coverage increased to 14.6 million as of March 31, up from 13.5 million a year earlier.

The Pharmacy Benefit Management segment grew to a total of 14.2 million customers on March 31 compared with 9.9 million a year earlier. The company saw growth in all types of pharmacy, or prescription drug, plans: commercial health plans, Medicare Part D, Medicare Advantage and Medicaid.

One closely watched metric in the health insurance industry is the percentage of premium revenue spent on medical expenses, called the “medical loss ratio.” Overall, Aetna’s ratio was 80.4 percent for the quarter, down from 81.9 percent during the first three months of 2013. In commercial health plans, the ratio improved to 77.2 percent for the quarter from 78.9 percent in 2013. In government-funded plans, such as Medicaid and Medicare, the ratio improved to 84.7 percent for the quarter from 88 percent in 2013.

The company repurchased more than 6.5 million shares for $465 million during the quarter compared with 4 million shares for $184 million during the first three months of 2013.

Aetna employs about 6,200 people in Connecticut.

Shares of Aetna stock were up 49 cents to $69.40 in pre-market trading Thursday morning.

About Matthew Sturdevant

Full-time staff journalist at The Hartford Courant and magazine freelancer with a master's degree in writing from Dartmouth. My work has appeared in The Los Angeles Times, The Chicago Tribune, Taiwan News, The Baltimore Sun and many other news sources. My blog has been referenced by Politico.com, the Kaiser Family Foundation, the Georgetown Law Library and a number of organizations in healthcare and business. Sturdevant’s blog is "a well-written wealth of ideas," said The Donald W. Reynolds National Center for Business Journalism, (businessjournalism.org, May 18, 2011). I have experience writing for newspapers, magazines, Web sites and blogs as well as shooting and editing video. I made regular appearances on news-talk radio and on the NBC affiliate station in Corpus Christi, Texas. I made occasional appearances on the Fox affiliate in Connecticut promoting Hartford Courant articles.

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