Aetna Inc. Earnings Cheat Sheet: Snaps Strong Streak with Profit Drop

S&P 500 (NYSE:SPY) component Aetna Inc. (NYSE:AET) reported its results for the third quarter. Aetna is a health insurance company. It provides its customers, ranging from individuals to employer groups to governmental units, with traditional and consumer-directed health care benefits products and related services, such as medical, pharmaceutical, dental, behavioral health, group life, and disability plans.

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Aetna Earnings Cheat Sheet for the Third Quarter

Results: Net income for the health care plans company fell to $490.4 million ($1.30 per share) vs. $497.6 million ($1.19 per share) a year earlier. This is a decline of 1.4% from the year earlier quarter.

Revenue: Fell 0.7% to $8.48 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: AET beat the mean analyst estimate of $1.14 per share. Analysts were expecting revenue of $8.31 billion.

Quoting Management: “These results are a continuation of our strong operating performance in the first and second quarters, driven largely by lower-than-projected utilization, our pricing discipline and our medical cost management strategies,” said Mark T. Bertolini, Aetna chairman, CEO and president. “In our core health operations, we’re excited about the prospects for our Medicare business, which posted another strong quarter. Aetna Medicare will gain even more momentum with the completion of the Genworth Medicare Supplement acquisition and our recent launch of a co-branded CVS Part D plan.”

“In our emerging businesses, we are advancing new models of payment reform in our relationships with providers as part of our strategy to create shareholder value by leveraging new capabilities and technology assets to strengthen our core health business. Building on our success with the provider systems we have mentioned previously, our Accountable Care Solutions business has a strong pipeline of new opportunities. We are excited about working with providers to offer a variety of low-cost local-market options, including narrow networks. Provider collaboration is key to our strategy for addressing the new health-care marketplace in 2014 and beyond,” said Bertolini.

Key Stats:

Last quarter’s profit decrease breaks a streak of four consecutive quarters of year-over-year profit increases. In the second quarter, net income rose 9.3% from the year earlier, while the figure increased 4.2% in the first quarter, 30% in the fourth quarter of the last fiscal year and 52.5% in the third quarter of the last fiscal year.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 28 cents in the second quarter, by 47 cents in the first quarter, and by 2 cents in the fourth quarter of the last fiscal year.

Revenue has fallen in the past two quarters. In the second quarter, revenue declined 2.4% to $8.34 billion from the year earlier quarter.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from 83 cents a share to 86 cents over the last sixty days. For the fiscal year, the average estimate has moved up from $4.54 a share to $4.80 over the last ninety days.

Competitors to Watch: UnitedHealth Group Inc. (NYSE:UNH), Health Net, Inc. (NYSE:HNT), Coventry Health Care, Inc. (NYSE:CVH), WellPoint, Inc. (NYSE:WLP), CIGNA Corporation (NYSE:CI), WellCare Health Plans, Inc. (NYSE:WCG), Humana Inc. (NYSE:HUM), Centene Corporation (NYSE:CNC), HealthSpring, Inc (NYSE:HS), and Universal American Corp. (NYSE:UAM).

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(Source: Xignite Financials)