Health Insurance

Health insurer Aetna quarterly profit beats estimates

Key Points
  • U.S. health insurer Aetna reported a better-than-expected first-quarter profit.
  • An adjustment for low health-care spending late last year offset a rise in flu-related costs.
  • Aetna has agreed to be bought by CVS Health.
Aetna chairman and CEO Mark Bertolini speaks during the Fortune Global Forum on November 3, 2015 in San Francisco, California.
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U.S. health insurer Aetna, which has agreed to be bought by CVS Health, reported a better-than-expected first-quarter profit on Tuesday as an adjustment for low healthcare spending late last year offset a rise in flu-related costs.

U.S. drugstore operator CVS agreed in December to acquire Aetna for $69 billion, seeking to tackle soaring healthcare spending through lower-cost medical services in pharmacies.

Aetna said it expects the deal, which is undergoing an antitrust review at the U.S. Department of Justice, to close in the second half of 2018.

Aetna said its overall medical loss ratio the percent of premiums spent on health insurance claims improved to 80.4 percent from 82.5 percent a year earlier.

The company said that its commercial medical cost ratio was helped by exiting the individual insurance market created by former President Barack Obama's health-care reform law often called Obamacare. Collecting more revenue to help pay for the reinstatement of a national, industry-wide health insurance fee of 3 percent also helped its overall medical cost ratio.

The flu dragged on the ratio by 50 basis points, Aetna said.

Profit tops estimates

Aetna's net income was $1.21 billion, or $3.67 per share, in the first quarter ended March 31, compared with a loss of $381 million, or $1.11 per share, a year earlier that was related to costs for its failed deal to buy Humana.

Excluding items, the company reported earnings of $3.19, ahead of analysts' average estimate of $2.97, according to Thomson Reuters I/B/E/S.

Total revenue rose to $15.34 billion from $15.17 billion.