Aetna raises 2013 outlook after gains in first quarter
(Reuters) - Aetna Inc (AET.N) forecast increases in medical customers and profit for 2013 and reported a 7 percent rise in first-quarter revenue due to higher premiums in the health insurer's Medicare and Medicaid businesses.
But the company said net income had fallen 4 percent to $490.1 million from a year earlier due to costs from its pending purchase of Medicare specialist Coventry Health Care Inc CVH.N.
Excluding those costs and capital gains, earnings rose to $1.50 per share from $1.34. On that basis, analysts were expecting $1.39 per share, according to Thomson Reuters I/B/E/S.
Aetna said revenue increased to $9.54 billion and that operating expenses had fallen during the first quarter because of cost-cutting.
The company and competitors like the larger UnitedHealth Group Inc (UNH.N) and WellPoint Inc WLP.N are preparing for changes in the U.S. healthcare system that will take place in 2014 under President Barack Obama's Affordable Care Act.
That law, which has increased the number of preventive services that insurers must offer, is expected to provide insurance to an additional 30 million Americans over a decade.
Aetna's planned purchase of Coventry is part of its strategy to grow from that expansion.
The company said its healthcare business, which accounts for the majority of its earnings and revenue, had a more profitable quarter in the commercial insurance operation. Its percentage of premiums paid for medical expenses fell in commercial insurance, but rose in its two other healthcare divisions, Medicare and Medicaid.
Aetna provides private Medicare benefits for older people and U.S. government Medicaid insurance for the poor.
Overall, the medical benefit ratio was 81.9 percent, up from 81.5 percent a year earlier.
Aetna forecast 2013 earnings of $5.50 to $5.60 per share, in line with analysts' estimates of $5.53. It previously said it expected a profit of at least $5.40.
Neither outlook includes the Coventry purchase, which Aetna said would add to earnings and was due to close soon.
The company had 18.3 million medical customers at the end of March, helped by growth in its private Medicare business, and said that number would rise slightly this year to 18.4 million.
Aetna shares closed on Monday at $56.16 on the New York Stock Exchange, near their year high of $57.40.
(Reporting by Caroline Humer; Editing by Lisa Von Ahn)