Aetna Says First-Quarter Earnings Beat Analyst Estimates

Aetna (AET) Inc., the third-largest U.S. health insurer, reported profit that beat analysts’ estimates and raised its forecast as membership gains were boosted by enrollment under Obamacare.

First-quarter earnings excluding one-time items were $1.98 a share, 43 cents above the average of 16 analysts’ estimates compiled by Bloomberg. Aetna raised its full-year earnings forecast to $6.35 to $6.55 a share, according to a company statement today. The insurer’s previous outlook was for at least $6.25.

Medical membership rose to more than 22.7 million in the quarter, an increase of 529,000 members from the beginning of the year, the Hartford, Connecticut-based company said. Bad winter weather and a mild flu season helped keep costs down as patients stayed away from the doctor, offsetting the cost of new expensive drugs, including Gilead Sciences Inc.’s $1,000-a-pill hepatitis C treatment.

“The quarter was impressive across all metrics with our expectations that stocks will be up nicely on the news,” said Ana Gupte, an analyst with Leerink Partners LLC.

Aetna rose 5.9 percent to $72.96 at 4 p.m. New York time.

Obamacare Enrollees

The results included 230,000 customers who purchased plans through the health insurance exchanges set up under the Patient Protection and Affordable Care Act. So far, a total of 600,000 people have signed up for Aetna plans on the exchange though the company is expecting only 450,000 of them to pay. On average, about 80 percent of those who have signed up for a plan have actually paid their premiums.

Aetna Chief Executive Officer Mark Bertolini said it is too early to make a judgment on the overall health of the Obamacare customers. About 20 percent of them were previous Aetna customers. Insurers have been concerned that those purchasing the plans will be sicker than the overall population, which could cut into profits.

The Obama administration said this month that 8 million people enrolled in plans on the insurance exchanges created as part of the Affordable Care Act.

First-quarter revenue rose 47 percent to $14 billion, helped by the acquisition of Coventry Health Care Inc., Aetna said. Net income rose 36 percent to $665.5 million, or $1.82 a share, from $490.1 million, or $1.48, a year earlier.

Costs from Sovaldi, which had $2.27 billion in sales in the first quarter, were within Aetna’s expectations though it will be a “strain” on earnings later this year, chief financial officer Shawn Guertin said.

To contact the reporter on this story: Shannon Pettypiece in New York at spettypiece@bloomberg.net

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net Bruce Rule, Angela Zimm

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