Health insurer Aetna beat on earnings despite 'pressure' from its Obamacare business


doctor patient concern worry

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In a Friday, May 6, 2016 photo, LSU medical student Felicia Venable, left, briefs fellow students and medical residents on a patient they are visiting during daily rounds with a group of medical residents and medical students at Our Lady of the Lake Regional Medical Center in Baton Rouge, La.

US health insurer Aetna Inc reported a higher-than-expected quarterly profit as memberships grew in its government business, which sells Medicaid and Medicare plans.


The company, which is fighting a U.S. government lawsuit aimed at blocking its $34 billion Humana Inc deal, said its net income rose to $603.9 million, or $1.70 per share, in the quarter, from $560.1 million, or $1.59 per share, a year earlier.

Excluding items, Aetna earned $2.07 per share, in the third quarter ended Sept. 30, ahead of analysts' average estimate of $2.03 per share, according to Thomson Reuters I/B/E/S.

In a release accompanying earnings, Aetna CFO Shawn Guertin said that the strong earnings came despite a continued drag from the insurers Affordable Carte Act (ACA), better known as Obamacare, plans.

"Solid performance among our core businesses and a focus on managing general and administrative expenses have once again offset pressure from our ACA-compliant products, resulting in a strong third quarter for the company and our shareholders," said Guertin.


The company said in August that it would sell individual insurance on the government-run online marketplaces in only four states next year, down from the current 15 states, due to persistent financial losses.

While Aetna did not break out how much the losses were this quarter, they announced in August that the company had lost more than $200 million on ACA business during the second quarter.

Aetna's decision follows similar moves from UnitedHealth Group Inc and Humana Inc, which have cited concerns about financial losses on these exchanges created under President Obama's national healthcare reform law.

The health insurer said on Thursday its medical benefit ratio - the percent of premiums spent on claims - was 80.1 percent for the quarter in its government business compared with 81.6 percent, a year earlier.

The decrease was primarily due to improved performance in Aetna's Medicare products, the company added.


Aetna narrowed its full-year 2016 operating earnings to $7.95-$8.05 per share from $7.90 to $8.10 per share.

Revenue rose 5.5 percent to $15.78 billion, ahead of the average analyst estimate of $15.71 billion.