DOW JONES NEWSWIRES
Aetna Inc.'s (AET) second-quarter profit fell 28% on higher
commercial medical costs as earnings fell short of analysts'
expectations.
The health insurer, as a result, again cut its full-year profit
outlook, this time to $2.75 to $2.90 a share from $3.55 to
$3.70.
Aetna, considered one of the strongest players in commercial
health plans, cut its 2009 forecast in early June, citing rising
medical costs and lower-than-expected Medicare revenue. Some
analysts have said margin pressures that the rest of the sector
felt last year may catch up with Aetna this year and lead to more
outlook cuts.
Chairman and Chief Executive Ronald Williams said Monday that
Aetna continues to see upward pressure on medical costs beyond what
it projected in early June, driven in part by "changing provider
behavior in the face of a deep recession."
The company posted income of $346.6 million, or 77 cents a
share, down from $480.5 million, or 97 cents a share, a year
earlier. Excluding capital gains and losses among other items,
earnings fell to 68 cents from 94 cents. The company had said in
June it expected 76 cents to 80 cents.
Revenue increased 11% to $8.67 billion. Analysts polled by
Thomson Reuters anticipated $8.59 billion.
Aetna said the higher commercial medical costs weren't captured
in its pricing for this year, resulting in a higher commercial
medical benefits ratio. Total medical benefits ratio, or the amount
of premiums used to pay patient medical costs, jumped to 86.8% from
81.9% a year earlier.
Medical membership rose 8.9% from a year earlier and was flat
with the prior quarter at 19.1 million.
Shares closed Friday at $26.44 and haven't traded premarket
-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353;
kerry.benn@dowjones.com
