Aetna's Premium Income Declines -- WSJ

By FeaturesDow Jones Newswires

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (January 31, 2018).

Aetna Inc. reported a 76% increase in fourth-quarter earnings because of lower restructuring costs, but revenue fell as income from premiums declined.

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Aetna, which is in line to be bought by CVS Health Corp. if the deal is approved by regulators, said it earned $244 million, or 74 cents a share, last quarter compared with $139 million, or 39 cents a share, a year earlier.

On an adjusted basis, earning fell to $411 million, or $1.25 a share, from $578 million, or $1.63 per share.

Analysts polled by Thomson Reuters were expecting adjusted per-share earnings of $1.20.

Revenue fell 5.6% to $14.85 billion from $15.73 billion in the year-earlier quarter, but last quarter's figure was still 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 a decline in membership in Affordable Care Act-related and Medicaid products and the temporary suspension of a fee that health insurers were required to pay under the ACA.

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.

The company also said it expects a lower corporate tax rate to boost gross adjusted earnings by $800 million for 2018 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.

Shares, which have gained 66% over the last year, closed down 3% at $187.89.

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 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.

Write to Allison Prang at allison.prang@wsj.com

(END) Dow Jones Newswires

January 31, 2018 02:47 ET (07:47 GMT)

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