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Aetna AP

Source:Bob Child/Associated Press

Fourth-quarter earnings for Aetna Inc., the health care benefits company based in Hartford, Conn., doubled.


Aetna’s fourth quarter earnings double, still miss Wall Street estimates

by Rose Zhou
Feb 06, 2014


Aetna Inc. earnings nearly doubled in the fourth quarter due, in part, to its largest acquisition in history as well as higher underwriting margins primarily in its underlying commercial business. The nation’s third-largest health insurance company missed Wall Street’s fourth quarter and full-year consensus estimates.
 


In the quarter ended Dec. 31, Hartford, Conn.-based health insurer earned $368.9 million, or $1.00 per diluted share, up 94.1 percent from $190.1 million, or 56 cents per diluted share, in the year-ago period. The quarterly and annual earnings missed Wall Street’s consensus estimate of $1.29 per share, as compiled by Bloomberg Finance L.P.

The company reported restructuring costs in the fourth quarter of $92.9 million related to the acquisition and integration  of Coventry during the three months ended December 31. Fourth-quarter earnings per share was $1.34 excluding these one time charges.

Revenues in the fourth-quarter rose 32.8 percent to $13.18 billion from $9.93 billion the previous year.

“Aetna’s solid fourth-quarter performance closes a great year for the company and is a continued testament to the strength of our diversified portfolio,” Mark Bertolini, chairman, CEO and president of Aetna, said in a press release. “We have strong momentum leading into 2014.”

Bertolini projected medical membership to increase by approximately 50,000 at the end of current quarter, on top of Aetna’s record membership of nearly 22.2 million by the end of 2013.

The health insurer reported higher underwriting margins primarily in its commercial business, partially offset by lower underwriting margins in its underlying Medicare business for the full year of 2013.

Leerink Swann &Co analyst Ana Gupte remains neutral on her market recommendation for Aetna while seven out of 11 analysts hold a “buy” recommendation. Gupte said, the 29-cent earnings per share miss was driven by worse than expected Commercial & Medicare Medical Loss Ratio.

“They missed consensus views which will put a focus on potentially escalating medical utilization ahead of Affordable Care Act implementation,” Gupte said in a flash note.

Aetna earned $47.29 billion, or $5.33 per diluted share in the year ended Dec. 31, a 15.4 percent increase from $36.60 billion, or $4.81 per share in the prior year.  Analysts expected full-year earnings to be $5.66, according to Bloomberg Finance LP

Aetna shares closed at $67.92, down 35 cents or .51 percent from Wednesday's close of $68.27.