Aetna Profit Tops Estimates With Deal for Humana in DoubtBy
Aetna Inc. posted fourth-quarter earnings that beat analysts’ estimates, a week after the health insurer’s deal to buy rival Humana Inc. was blocked by a federal judge.
Profit before some items was $1.63 share, Aetna said Tuesday in a statement. Analysts had estimated $1.44 on average. The Hartford, Connecticut-based company also provided an initial forecast for 2017 profit of at least $8.55 a share on that basis.
The financial results show the company prospering in a challenging environment. Aetna withdrew from most of the states where it had been offering Affordable Care Act plans, pressuring revenue. Still, the company has benefited from steady growth in sales of Medicare Advantage health plans, though the Humana deal would accelerate the expansion.
Aetna has said it may appeal the ruling against its $37 billion deal for Humana. The transaction was blocked mainly because it would reduce competition in the market for Medicare Advantage plans, potentially driving up premiums. Adding Humana’s about 3.3 million Medicare Advantage clients would have made Aetna the No. 1 in the industry by that measure.
Aetna’s decision to scale back its sales of ACA plans means the insurer has relatively limited risks tied to Republican plans to repeal and replace Obamacare. Lawmakers haven’t yet decided on what form a replacement for the 2010 health law will ultimately take. Overall, Aetna is the third-biggest U.S. health insurer by enrollment behind UnitedHealth Group Inc. and Anthem Inc.