The Low Post News

Profit at Aetna Jumps by 36%

First quarter income for Aetna soared by 36%, driven by gains from its multi-billion dollar acquisition. The health insurance company hiked its earnings forecast for 2014 to more than expectations on Wall Street.

The quarterly results passed those of Wall Street’s expectations and shares at Aetna were up over 4% in trading during premarket hours.

The insurer, based in Hartford, Connecticut, closed an acquisition worth $6.9 billion for Coventry Health Care a fellow insurer in May of last year. It said on Thursday that the deal was the biggest factor behind this quarter’s impressive growth.

Aetna is the third largest U.S. health insurer and enrollment increased by 24% during the first quarter to more than 22.7 million people, in comparison to last year during the same quarter.

Coventry has clients in two markets that are primed for big growth. It administers the federally and state funded program of Medicaid that covers disabled and needy people, and offers plans for Medicare Advantage.

Those are the subsidized versions for the Medicare program of the U.S. government for disabled and elderly people.

The overhaul in healthcare expanded the eligibility for Medicaid in a number of states this year. The Medicare Advantage plans are facing funding cutbacks because of the healthcare overhaul, but the now retiring baby boomers are igniting growth in enrollment in the plans as well as employers that have dropped their health coverage for retirees.

Aetna in all, earned just over $665.5 million for the quarter equal to $1.82 a share. That was up from the same period a year ago of $490 million or per share earnings of $1.48.

Adjusted earnings for the insurer were $1.98 a share, which did not count items that were one-time such as a loss of $92 million from the early retirement of some debt that was long-term and costs linked to the deal for the acquisition of Coventry.

Forecasts by analysts for earnings averaged $1.53 a share.

Operating revenues, which excluded all capital gains, were $13.97 billion, while analysts were expecting $13.6 billion.

Aetna announced that its revenue also expanded due to increases in premiums on coverage to recover taxes and fees imposed by the healthcare overhaul that started in 2014.

Leave a Reply

Your email address will not be published. Required fields are marked *