Aetna medical costs spike, shares tumble
Published: 2009-06-03 00:47:37
Author: Lewis Krauskopf | Reuters | April 29, 2009
NEW YORK, April 29 (Reuters) - Aetna Inc (AET.N: Quote, Profile, Research) reported higher-than-expected medical costs in its business serving employers on Wednesday, sending its shares down 9 percent and overshadowing quarterly profit that was slightly above expectations.
The No. 3 U.S. health insurer, which backed its full-year profit forecast, blamed the weak economy for the unexpected cost spikes, as people use medical services in fear of losing their insurance if they are laid off and growing numbers turn to post-employment health coverage.
The report from Aetna contrasts with first-quarter results from rivals, which have posted profits that easily topped analysts' estimates.
"Most everyone has seen better (medical cost) trends and have not referenced any kind of concerns," said David Heupel, a portfolio manager with Thrivent Investment Management. "They are sticking out in that regard this reporting season."
Analysts have speculated the weak economy would help health insurers because people would hold back on medical spending, but Aetna's report suggests otherwise. Still, shares of most rival health insurers rose moderately on Wednesday, shrugging off Aetna's results.
Aetna's net income rose to $437.8 million, or 95 cents per share, from $431.6 million, or 85 cents per share, a year earlier.
Excluding items, earnings of 96 cents a share were 3 cents ahead of the average forecast of analysts, according to Reuters Estimates.
Revenue rose 11 percent to $8.61 billion. The health insurer's enrollment grew 9 percent, to 19.1 million at the end of March.
Full story
Published: 2009-06-03 00:47:37
Author: Lewis Krauskopf | Reuters | April 29, 2009
NEW YORK, April 29 (Reuters) - Aetna Inc (AET.N: Quote, Profile, Research) reported higher-than-expected medical costs in its business serving employers on Wednesday, sending its shares down 9 percent and overshadowing quarterly profit that was slightly above expectations.
The No. 3 U.S. health insurer, which backed its full-year profit forecast, blamed the weak economy for the unexpected cost spikes, as people use medical services in fear of losing their insurance if they are laid off and growing numbers turn to post-employment health coverage.
The report from Aetna contrasts with first-quarter results from rivals, which have posted profits that easily topped analysts' estimates.
"Most everyone has seen better (medical cost) trends and have not referenced any kind of concerns," said David Heupel, a portfolio manager with Thrivent Investment Management. "They are sticking out in that regard this reporting season."
Analysts have speculated the weak economy would help health insurers because people would hold back on medical spending, but Aetna's report suggests otherwise. Still, shares of most rival health insurers rose moderately on Wednesday, shrugging off Aetna's results.
Aetna's net income rose to $437.8 million, or 95 cents per share, from $431.6 million, or 85 cents per share, a year earlier.
Excluding items, earnings of 96 cents a share were 3 cents ahead of the average forecast of analysts, according to Reuters Estimates.
Revenue rose 11 percent to $8.61 billion. The health insurer's enrollment grew 9 percent, to 19.1 million at the end of March.
Full story