) reported second-quarter 2014 earnings of $1.69 per share, beating
the Zacks Consensus Estimate of $1.61 per share. Earnings also grew
4% year over year. Aetna's better-than-expected earnings came on
the back of higher underwriting margins in the Health Care business
and accretion from the Coventry acquisition.
Aetna Inc - Earnings Surprise | FindTheBest
Aetna's total revenue for the reported quarter grew 25% year
over year to $14.5 billion, led by higher Health Care premiums from
the acquisition of Coventry as well as growth in membership in
Health Care business. Reported revenue also surpassed the Zacks
Consensus Estimate $14 billion.
The operating expense ratio was relatively flat year over year at
17.6%. Operating ratio was unchanged as contribution to operating
revenue from the acquisition of Coventry and continued execution of
expense management were offset by inclusion of Health Care Reform
Pre-tax operating margin declined to 7.6% from 8.4% in the second
quarter of 2013.
Aetna ended the reported quarter with Medical membership of 23.1
million, representing a sequential rise of 385,000. Growth in
Commercial Insured and Government products as well as the inclusion
of membership from the acquisition of the InterGlobal group led to
the increase in enrollment.
Inclusion of Coventry revenues, pricing action undertaken by the
company as well as growth in Medicare membership drove 26.7%
year-over-year growth in Aetna's
segment, which recorded revenues of $13.8 billion. Operating
earnings increased 1.3% year over year to $584.3 million on
earnings accretion from Coventry along with higher underwriting
margins in its Commercial as well as Government business.
revenues climbed 8% year over year to $626.4 million. Operating
earnings doubled year over year to $60.6 million led by higher
margins in the Life and Disability insurance business.
Large Case Pensions
, revenues decreased 12.3% year over year to $93.2 million.
Operating earnings increased 42% year over year to $5.4 million.
Share Repurchase Update
In the reported quarter, Aetna spent $255 million in share
Earnings Guidance Upped
Following solid earnings, management raised its earnings guidance
for 2014 to $6.45 to $6.60 from $6.35 to $6.55.
The company also expects to generate revenues of at least $57
million compared with the earlier projection of $56 billion to $57
billion. Aetna also increased its year-end medical membership
projection to approximately 23.4 million from more than 23 million.
Aetna's impressive second-quarter reinforces our confidence in the
company which has raised its earnings outlook for the third time
this year. We expect the company to maintain its earnings trend
given its diversified portfolio, continued progress in integrating
the Coventry business, pricing discipline and solid execution. We
also anticipate that the company will gain on membership enrollment
in its Commercial as well as Government business. The recently
completed acquisition of InterGlobal is also expected to be
accretive to earnings going forward. A strong capital management
will also aid the bottom line.
Among other health insurers, UnitedHealth Group Inc. (
), Assurant Inc. (
) and Centene Corp. (
) surpassed the respective Zacks Consensus Estimate.
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