Aetna Inc.’s ( AET ) fourth-quarter earnings fell 49%, partly due to litigation and other special items, as increased coverage costs masked the health insurer’s improved revenue.
Aetna’s profit has come under pressure as consumers start to return to former health-care usage patterns amid an improving U.S. economy. But the company’s membership growth has contributed to increased revenue over the past year.
Aetna agreed in August to buy Coventry Health Care Inc. (CVH) in a $5.7 billion cash and stock deal that will bolster Aetna’s presence in government-financed health care. And earlier this month, Aetna agreed to sell its Missouri Medicaid business to WellCare Health Plans Inc. (WCG) for an undisclosed amount in order to meet requirements tied to the planned Coventry acquisition, which is expected to close in mid-2013.
Aetna reported a profit of $190.1 million, or 56 cents a share, down from $372.6 million, or $1.02 a share, a year earlier. Excluding litigation, early debt extinguishment, severance and other items, per-share earnings fell to 94 cents from 97 cents.
Revenue jumped 16% to $9.93 billion.
Analysts polled by Thomson Reuters had most recently forecast per-share earnings of 95 cents on revenue of $8.97 billion.
Aetna’s total medical benefit ratio–or the amount of premiums used to pay patient medical costs–was 84.1%, compared with 80.7% both a year earlier and in the prior quarter.
Total medical membership was 18.2 million as of Dec. 31, an increase of 64,000 from the prior quarter.
The company affirmed its full-year estimate.
The company also named Shawn M. Guertin chief financial officer, effective Feb. 25, to succeed Joseph M. Zubretsky who will now lead National Businesses, a new unit that includes Aetna’s National Accounts business and emerging businesses, including Accountable Care Solutions, ActiveHealth Solutions, Medicity and iTriage.
Executive Vice President Karen S. Rohan also will assume a newly created role as head of Aetna’s local and regional businesses.
Mr. Guertin was previously Aetna’s head of business segment finance and had joined the company in 2011. He had served as Coventry Health Care Inc.’s (CVH) chief financial officer and treasurer for nearly five years.
Shares closed Wednesday at $48.95 and were inactive premarket. The stock has climbed 12% over the past year.