Aetna (NYSE:AET) revealed stronger-than-expected first-quarter earnings and raised its full-year outlook on Tuesday, citing continued growth in its Medicare business and anticipated synergies deriving from its proposed acquisition of Coventry Health Care (NYSE:CVH).
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The Hartford, Conn.-based health insurer reported net income of $490.1 million, or $1.48 a share, down 4.1% compared with a year-earlier profit of $511 million, or $1.43.
Excluding one-time integration and other costs, Aetna said it earned $1.50 a share, topping average analyst estimates of $1.39 in a Thomson Reuters poll.
Revenue for the three-month period was $9.54 billion, up 7% from $8.92 billion a year ago, missing the Street’s view of $9.64 billion.
While Aetna's profit has been weighed down by the influx of patients visiting doctors again after low levels during the recession, its membership continues to grow. Its total medical benefit ratio, which is the amount of premiums used to pay patient medical costs, rose to 81.9% from 81.5% in the year-earlier period, while total medical membership edged up to 18.3 million as of the latest quarter's close on March 31 from 18.2 million in the 2012 period.
"Operating revenues increased for the company, and we grew membership for the fourth consecutive quarter fueled by strong growth in our Medicare business,” Aetna CEO Mark Bertolini said in a statement.
The company raised its fiscal 2013 outlook citing “solid operating performance.” It projects medical membership to grow to 18.4 million by the end of the year.
Aetna now sees non-GAAP EPS in the range of $5.50 to $5.60, up from its earlier guidance of at least $5.40 a share and mostly ahead of the consensus view of just $5.53.
It believes membership and earnings will increase further following the expected close later this year of its $5.7 billion acquisition of Coventry, which it is hoping will help boost its presence in the government-backed health-products sector.