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Aetna (AET) Q3 Earnings Beat Estimates, Membership Increases

Health insurer Aetna Inc. 's AET third-quarter 2018 earnings of $2.96 per share beat the Zacks Consensus Estimate by 4.2% and increased 21% year over year.

Total revenues of $15.39 billion increased 3% year over year and beat the Zacks Consensus Estimate by 1%.

The increase in adjusted earnings was primarily due to the favorable impact of the Tax Cuts and Jobs Act of 2017 (the TCJA) and higher pre-tax adjusted earnings in Aetna's Health Care segment, partially offset by lower adjusted earnings due to the Group Insurance sale which occurred during fourth-quarter 2017.

Medical membership of 22.1 million grew year over year led by increases in Aetna's Commercial ASC, Medicare and Medicaid products, partially offset by decreases in Aetna's Commercial Insured products.

Aetna Inc. Price, Consensus and EPS Surprise

Aetna Inc. Price, Consensus and EPS Surprise | Aetna Inc. Quote

The adjusted expense ratio was 17.7%, up 20 basis points year over year. The increase was primarily due to the reinstatement of the health insurer fee for 2018 and investment spending on Aetna's growth initiatives, partially offset by the continued execution of Aetna's expense management initiatives.

The effective tax rate was 27.4% for third-quarter 2018 compared with 33.4% in the year-ago quarter courtesy of the tax reform.

Total healthcare medical benefit ratio (MBR) fell 40 basis points year over year to 81.5%.

Financial Position

Total assets were $57.1 billion as of Sep 30, 2018, up 3.4% from the Dec 31, 2017 levels.

Long-term debt decreased 3% from the year-end 2017 levels to $21.8 billion.

Debt-to-capitalization ratio was 30.8% as of Sep 30, 2018 was down 620 basis points from Dec 31, 2017 levels.

Merger with CVS Health

The company during the quarter announced to sell its stand-alone Medicare Part D drug plan business to WellCare Health Plans Inc. WCG under an asset purchase agreement, in order to get a nod to the merger. The Department of Justice has finally approved the merger of Aetna with CVS Health Corp. CVS .

Zacks Rank

Aetna currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Health Maintenance Organizations

Another player in the industry, UnitedHealth Group Inc. UNH beat the Zacks Consensus Estimate by 3.33% in the third quarter.

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UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report

WellCare Health Plans, Inc. (WCG): Free Stock Analysis Report

Aetna Inc. (AET): Free Stock Analysis Report

CVS Health Corporation (CVS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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