Aetna's (NYSE:AET) second-quarter profit jumped 52 percent, topping Wall Street expectations, and it raised its 2017 forecast again, this time well beyond analyst projections.
Shares of the nation's third-largest insurer soared in early Thursday trading, after it detailed results.
Aetna added some Medicare customers and grew its employer-sponsored health coverage in the second quarter, but a pullback from the Affordable Care Act's health insurance exchanges also helped the comparison with last year's quarter.
The Hartford, Connecticut, insurer's biggest expense, health care costs, fell and the percentage of premiums it pays in medical claims improved as Aetna slashed its participation in the law's exchanges down to four states from 15 last year. The insurer still expects to lose more than $200 million before taxes this year on ACA-compliant coverage it sells on and off the law's exchanges. But that's better than the approximately $300 million it lost last year.
Aetna and several other national insurers have scaled back their business on the Obama-era law's exchanges, where they have struggled with a sicker-than-expected patient population and not enough healthy customers, among other challenges. Aetna intends to completely leave that market next year.
Other insurers are still finalizing their 2018 plans for the exchanges, and they also have to contend with the uncertain future of billions of dollars in government funding that President Donald Trump has threatened to stop.
Health insurance is Aetna's main business, and most of its enrollment comes from commercial coverage sold through employers or directly to individuals. But the insurer and its competitors also have been expanding into government-funded business like the Medicaid program that covers the poor or Medicare Advantage plans for people who are over 65.
Aetna's quarterly earnings jumped to $1.2 billion, from $791 million last year, even though its total revenue slipped and enrollment fell due to pullbacks from the exchanges and the company's Medicaid business and a pause in a health insurance tax. Health care costs fell 6 percent to $10.58 billion.
Adjusted results totaled $3.42 per share for the Hartford, Connecticut, insurer. Revenue excluding capital gains came to $15.5 billion.
Analysts expected, on average, earnings of $2.37 per share in the second quarter on $15.24 billion in revenue.
Aetna on Thursday joined competitors like UnitedHealth Group Inc. and the Blue Cross-Blue Shield insurer Anthem Inc. in easily beating second-quarter expectations and hiking its 2017 forecast.
Aetna said Thursday that it now expects adjusted earnings of between $9.45 and $9.55 per share for the year, a big hike from its previous forecast for $8.80 to $9 per share. The top end of that range sits about a dollar above the company's initial forecast for 2017 earnings of at least $8.55 per share.
It's also well above industry analyst per share projections of $8.98, according to a poll by FactSet.
Shares of Aetna jumped nearly 4 percent, or $5.66, to $160.40 in early morning trading, and appeared poised to reach a new all-time high after markets opened. The stock has already set several all-time highs this year. Shares have climbed consistently for much of 2017, particularly since Aetna said in February that it was doubling its quarterly cash dividend to 50 cents a share and would buy back millions of shares.
That announcement came after Aetna said it would abandon a planned, $34-billion purchase of Medicare Advantage provider Humana after a federal judge rejected the deal.