Aetna Earnings Rise in Quarter
HARTFORD, Conn. (AP) _ Aetna’s third-quarter operating profits rose 27 percent, exceeding forecasts, as the health insurance giant benefitted from strong enrollment gains in its health maintenance organizations and its ability to contain health costs.
But the company said the Securities and Exchange Commission is conducting a review of its accounting practices, particularly related to Aetna’s $1 billion purchase this summer of Prudential HealthCare. Aetna denied any wrongdoing.
The inquiry shook investors, sending Aetna shares down $2.68 3/4 to $48.50 in New York Stock Exchange trading.
Operating earnings were $193.1 million, or $1.27 per share. That compares with operating earnings of $152.2 million, or 96 cents per share, excluding certain other items, in the same period a year ago.
Analysts surveyed by First Call had expected Aetna to have operating earnings of around $1.16 per share for the quarter.
Operating earnings exclude capital gains or losses and include after-tax Year 2000 costs, which were $14.1 million in the 1999 third quarter and $36.5 million in the year-ago quarter.
Net income in the quarter was $165.3 million, or $1.09 per share. That’s a 20 percent drop from earnings of $212.4 million, or $1.36 per share, a year ago.
The 1999 third-quarter results included $27.8 million in net capital losses, primarily due to a loss on the sale of Aetna Canada.
The 1998 third-quarter reflect the release of a $44.2 million after-tax reserve related to discontinued products in Aetna’s Large Case Pensions segment. They also include capital gains of $16 million and $24.3 million in earnings from the domestic individual life business, which was sold.
Revenues increased 29 percent, from $5.44 billion to $7.02 billion, primarily due to the acquisition of Prudential HealthCare.
On a standalone basis, Aetna U.S. Healthcare’s commercial HMO membership grew 9 percent from year end. Including Prudential HealthCare’s 5.3 million members, total health membership was 21 million at the end of the third quarter, including 10.3 million HMO members.
For the first nine months of the year, net income fell 11 percent, to $571.9 million, or $3.74 per share, compared with $645.6 million, or $4.10 per share in the first nine months of last year.
Total revenues for the first nine months increased 25 percent to $18.67 billion, compared with $14.91 billion a year ago.