U.S. health insurer
) second quarter 2012 earnings of $1.31 cents per share missed the
Zacks Consensus Estimate by 6 cents. Earnings declined 3% year over
year. Better-than-expected earnings were attributed to revenue
growth, higher underwriting margins and increased membership in the
company's Medicare business.
Aetna's total revenue for the reported quarter grew 6% year over
year to $8.83 billion, led by higher Health Care premiums and fees.
Reported revenue was almost in line with the Zacks Consensus
Estimate of $8.8 billion.
Operating expenses were $1.65 billion, up 3.4% year over year,
due to higher health care costs and general and administrative
Operating expense ratio was 18.7% compared with 19.1% in the
Pre-tax operating margin was 8.9 % for the reported quarter,
down 180 basis points year over year
Aetna's Health Care segment recorded revenues of $8.19 billion,
up 6.3% year over year. Total premium increased 3.4% year over year
to $5.2 billion, primarily attributable to an increase in Medicare
premium and higher Commercial premium yields.
Total medical membership increased by 114,000 sequentially to
18.03 million following the acquisition of Genworth Financial's
Medicare Supplement business. Aetna is the third largest commercial
health insurer, based on both enrollment and revenue, trailing
UnitedHealth Group Inc.
The company's Group Insurance revenues were up 5.2% year over
year to $525.7 million. The segment's operating earnings increased
3.6% year over year to $46.0 million.
At Large Case Pensions, revenues declined 8.6% year over year to
$122.6 million and operating earnings declined 37% year over year
to $3.9 million.
The company repurchased shares worth $581 million during the
2012 Guidance Update
Following its better-than-expected performance, Aetna raised its
2012 earnings guidance to a range of $5.00 to $5.10 per share.
Going forward, we expect Aetna to post favorable earnings every
quarter. The company has made considerable investments in products
and technology, with an intention to extend its core health
business and also to capitalize on exciting new consumer and
provider opportunities emerging in the marketplace.
Aetna's strong operating results and significant capital
generation will allow it to make further investments. We
expect the company to continue performing well in 2012 backed by
the performance of the Medicaid and Medicare segments, fast growing
health services segment and a strong balance sheet.
Last week, its peer
Molina Healthcare Inc.
) reported second-quarter 2012 net loss per share of 80 cents, in
contrast to the Zacks Consensus Estimate of earnings of 4 cents as
well as year-ago earnings of 38 cents. Another peer,
Coventry Health Care Inc.
) reported second-quarter 2012 operating earnings per share of 68
cents, higher than the Zacks Consensus Estimate of 64 cents
but lower than prior-year earnings of 83 cents.
Aetna currently retains a Zacks # 3 Rank, which translates into
a short-term Hold rating. Considering the fundamentals, we are also
maintaining our long-term Neutral recommendation on the shares.
AETNA INC-NEW (AET): Free Stock Analysis Report
COVENTRY HLTHCR (CVH): Free Stock Analysis
MOLINA HLTHCR (MOH): Free Stock Analysis Report
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