Aetna Puts Up Strong 3Q Numbers As CVS Deal Nears Close

October 30, 2018 - 8:18 am



AP Health Writer

HARTFORD, Conn. (WTIC Radio) -  The health insurer Aetna made $1 billion and beat Wall Street expectations in what will likely be its final quarter as a publicly traded company before drugstore chain CVS Health takes over.  

Lower federal taxes and growth in Aetna's Medicare business helped the insurer counter a $130-million hit it took in the third quarter for leaving the Affordable Care Act's insurance marketplaces.  

Overall, Aetna reported adjusted earnings of $2.96 per share in the three-month window that ended Sept. 30. That topped analyst expectations by 12 cents, according to a survey by Zacks Investment Research. Adjusted revenue, which excludes items like capital losses, grew 3 percent to $15.39 billion. That also beat forecasts.  

CVS Health Corp. is buying Aetna, the nation's third-largest insurer, in a roughly $69 billion deal the companies expect to complete before the end of the year. The combination received approval earlier this month from the Department of Justice on the condition that Aetna moves ahead with a plan to sell its Medicare prescription drug coverage, which would resolve some anti-monopoly concerns.  

Aetna hasn't been making annual earnings forecasts due to the pending acquisition.  

Health insurance is Aetna's main product, and the insurer covers more than 22 million people, mostly with commercial coverage sold through employers or directly to individuals.  

CVS Health Corp. wants to use that enrollment base to move deeper into managing customer health, largely through the chain's nearly 10,000 retail stores. The company plans to expand the health services it offers at those locations and get more involved in helping patients stay on their medicines or monitor chronic conditions like diabetes.  

In the third quarter, Aetna's Medicare Advantage business grew 19 percent to cover about 1.8 million people. Medicare Advantage plans are privately run versions of the government's Medicare program for people who are 65 or over or disabled.  

The insurer also saw its income tax fall while benefit costs, the company's largest expense, dropped slightly to $10.85 billion.  

Aetna said it took the $130 million, pre-tax charge due to a provider arbitration ruling tied to its exit from the ACA marketplaces. The insurer once covered more than 900,000 people through those marketplaces, but it rapidly scaled back participation after being hit with steep losses.  

Shares of Hartford, Connecticut-based Aetna Inc. have increased 8 percent since the beginning of the year.  

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