* Sees FY EPS $3.55-$3.70; previous view was $3.85-$3.95
* Cites commercial medical costs, lower Medicare revs
* Shares down 7 percent
(Adds details, CFO comments)
By Lewis Krauskopf
NEW YORK, June 2 Health insurer Aetna Inc
(AET.N) cut its 2009 forecast on Tuesday, citing higher
projected medical costs for its commercial business serving
employers and lower revenue from its Medicare plans for
Shares of the No. 3 U.S. health insurer fell 7 percent
after the announcement.
The company forecast operating earnings in a range of $3.55
to $3.70 per share, excluding items. It previously forecast
$3.85 to $3.95 per share for the year.
As Aetna prepared its Medicare bids for next year, data
indicated that the insurer would receive about $100 million
less revenue for 2009 than it previously expected, Chief
Financial Officer Joseph Zubretsky said in an interview.
"Unfortunately, we overestimated the amount of revenue we
were going to collect," Zubretsky said.
On the medical cost side, Zubretsky said the company saw a
continuation of a problem it cited in its first-quarter report
in April -- use of more services at health-care facilities such
as hospitals and clinics.
Aetna has been seeking to implement programs to manage
medical costs, but Zubretsky said it was no longer including
benefits of such actions in its outlook.
"We're confident in the success of these programs, (but) we
are no longer including the incremental benefit," Zubretsky
The CFO said a larger proportion of the earnings shortfall
for the 2009 range would be felt in the second quarter.
In 2008, Aetna stood out as one of the few health insurers
not to significantly take down their initial full-year earnings
However, Aetna spooked investors in April, when it reported
higher-than-expected first-quarter medical costs -- a report
that contrasted with the generally rosy quarterly results from
Aetna made the forecast announcement after the market
closed. Shares fell in after hours trading to $25.35 from its
close of $27.27 on the New York Stock Exchange.
(Reporting by Lewis Krauskopf; editing by Carol Bishopric)