Aetna Inc. reported earnings that rose from a year ago, as the insurer had lower costs from restructuring in its latest quarter, but revenue fell because of lower income from premiums.
Aetna, which is in line to be bought by CVS Health Corp. if the deal is approved by regulators, said Tuesday it earned a profit of $244 million, or 74 cents a share, in its fourth quarter, compared with $139 million, or 39 cents a share, a year ago.
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On an adjusted basis, the company earned $411 million, or $1.25 per share, down from $578 million, or $1.63 per share.
Analysts polled by Thomson Reuters were expecting adjusted earnings per share of $1.20.
Revenue fell 5.6% to $14.85 billion, but that figure came in slightly above analysts' predictions. Revenue from health-care premiums and other premiums both fell. Total benefits and expenses declined 7.3%.
The company said that the revenue drop "was primarily due to lower membership" in Affordable Care Act-related products, the health insurer fee's temporary suspension and decreased membership in Medicaid products.
Aetna also said its results included a $99 million expense on the revaluation of deferred tax assets as part of U.S. tax law changes.
Shares, which have gained 66% over the last year, fell 4.4% in premarket trading.
CVS, which in December reached a deal valued at $69 billion to buy Aetna, recently decided it will maintain Aetna's office presence in Hartford, Conn., where Aetna is has been based since the late 1800s. CVS had previously wanted to move the company to New York City. Aetna expects the deal will close in the latter half of this year.
CVS and Aetna both are going to stop stock repurchases and CVS will also not change its dividend as it moves to pay off the $45 billion in debt from the deal. Aetna Chief Executive Mark Bertolini will also become a part of CVS's board. CVS has said it wants to keep Aetna executives on after the deal.
Aetna also said Tuesday it expects a lower corporate tax rate to boost gross adjusted earnings by $800 million for the year. It also noted that earnings will be reduced by between $30 million and $50 million from lower premiums because the health-insurer fee was suspended for 2019.
Write to Allison Prang at email@example.com
(END) Dow Jones Newswires
January 30, 2018 08:00 ET (13:00 GMT)
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