) reported fourth-quarter 2013 earnings of $1.34 per share,
missing the Zacks Consensus Estimate by a penny. Earnings were,
however, up 43% year over year. The year-over-year growth was
owing to earnings accretion from the Coventry acquisition as well
as higher underwriting margins primarily in the Commercial
business, partially offset by lower underwriting margins in the
Including one-time items, net income came in at $1.00 per share,
up 79% year over year.
Aetna's total revenue for the reported quarter grew significantly
by 33% year over year to $13.1 billion, led by higher Health Care
premiums from the acquisition of Coventry as well as growth in
Medicare membership and underlying Commercial Insured premium
yield growth. Reported revenues were in line with the Zacks
The operating expense ratio declined 170 basis points year over
year to 18.0%. The improvement in the operating expense ratio
came on the back of operating revenue growth from the acquisition
of Coventry and continued execution of the company's expense
Aetna ended 2013 with record medical membership of nearly 22.2
million up 22.0% year over year and the company now expects to
add another 50,000 members by the end of first-quarter 2014.
Full Year Highlights
Full-year 2013 operating earnings came in at $5.85 per share, two
cents ahead of the Zacks Consensus Estimate and up 14% year over
year. Earnings fell in line with management's projection of
$5.80-$5.90 per share.
Full-year revenues of $47.3 billion increased 29% year over year
and was a tad higher than the Zacks Consensus Estimate of $47.5
billion. Results also outshone the company's own estimate of
Inclusion of Coventry revenues as well as growth in Medicare
membership drove 49.4% year-over-year revenue growth in Aetna's
segment which recorded revenues of $12.4 billion.
Operating earnings increased 60.0% year over year to $493.0
million, due to earnings accretion from Coventry, along with
higher underwriting margins in its Commercial business.
revenues climbed 10% year over year to $591.3 million. The
segment's operating earnings increased by 4.2% year over year to
arge Case Pensions
, revenues slipped 9.3% year over year to $119.3 million.
Operating earnings increased 13.6% year over year to $5.0
Share Repurchase Update
In the reported quarter, Aetna spent $333 million to buy back 5.2
2014 Earnings Guidance
Aetna reiterated its 2014 EPS of minimum $6.25 per share.
Though Aetna missed the earnings expectations, overall results
painted a favorable picture of the company's operating
profitability. Revenues went up, as also number of members served
by the company. However, healthcare costs rose more than the
increase in revenues which adversely affected bottom-line
In 2014, earnings are expected to be impacted by headwinds
related to the Affordable Care Act. However, Aetna should benefit
from growth in the Medicaid and Medicare segments, fast-growing
health services segment, and an expanding provider network. Aetna
is witnessing earnings accretion from the Coventry acquisition.
The acquisition of Coventry has enabled the company to position
itself in the fast-growing government businesses. Aetna has also
made considerable investments in products and technology,
intending to extend its core health business and capitalize on
exciting new consumer and provider opportunities emerging in the
marketplace. A strong balance sheet with low leverage is another
Aetna currently retains a Zacks Rank #3 (Hold). Other health
insurers who have already reported their quarterly earnings
UnitedHealth Group Inc.
), both beating the Zacks Consensus Estimate by a penny. Another
) with a Zacks Rank #2 (Buy), due to release its earnings
tomorrow, is worth considering.
AETNA INC-NEW (AET): Free Stock Analysis
CIGNA CORP (CI): Free Stock Analysis Report
UNITEDHEALTH GP (UNH): Free Stock Analysis
WELLPOINT INC (WLP): Free Stock Analysis
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