HARTFORD, Conn. (CN) - A revenue miss tied to Aetna’s withdrawal from insurance marketplaces under the federal health care law did not hurt the company’s bottom line, it told investors Tuesday, raising its 2017 forecast again amid higher-than-expected third-quarter earnings.
Though revenues dropped 5 percent, Aetna said it offset this figure with a bigger decrease in health care costs and improvements in its Medicare Advantage business. Net income jumped 39 percent to $838 million.
The announcement to investors Tuesday offered little insight into reports that pharmacy chain CVS has plans to buy Aetna, a Hartford, Connecticut-based insurer that ranks as the nation's third largest.
There will be no comment on "rumors or speculation,” Aetna Chairman and CEO Mark Bertolini said at the start of a call with analysts.
Enrollment in Aetna’s Medicare Advantage plans — a private analogue for the elderly who would otherwise enroll in the government's Medicare program — grew more than 7 percent in the third quarter to about 1.5 million people.
Aetna also announced that contributions from government business now represent more than half the company's total health care premiums,
Another government-backed market, the marketplaces created under the Patient Protection and Affordable Care Act, meanwhile has seen insurers fleeing.
Though it once covered more than 900,000 people through the PPACA's insurance marketplaces, Aetna has said it will intentionally miss the Wednesday sign-up deadline for 2018 coverage so that it can leave the market completely next year.
The marketplaces have not been profitiable for insurers like Aetna, which confronted a sicker-than-expected patient population, with too-few healthy customers to compensate those costs.
Though Aetna’s revenues suffered because of its abandonment of the PPACA and the moratorium on a health insurance tax, the insurer's health care costs fell 6 percent to $10.41 billion in the third quarter.
Aetna reported overall earnings of $2.45 per share, adjusted for one-time charges and gains. Adjusted revenue, which excludes items like capital gains, fell to $14.95 billion from $15.74 billion.
This exceeded the earnings of $2.06 per share on $15.11 billion in revenue expected by analysts, according to a report from Zacks Investment Research.
Revising its 2017 forecast, which it put at $9.45 to $9.55 per share in August, Aetna said it now expects full-year adjusted earnings of about $9.75 per share,
FactSet research says analysts had predicted earnings of just $9.55 per share for 2017.
Despite the rosy forecast, Aetna share slipped $1.05 to $170.18 Tuesday morning, while broader indexes rose slightly.
The insurer had seen a 38 percent rise in share price since January, with news of the CVS takeover bid causing a surge late last week. Citing sources familiar with the deal, the Wall Street Journal reported that CVS is offering more than $200 a share, putting the deal at more than $60 billion.
Analysts say the merger could keep costs down, better equip Aetna to manage customer health, and help people avoid expensive hospital trips.
Health insurance is Aetna's main product, and most of its enrollment of more than 22 million people comes from commercial coverage sold through employers or directly to individuals.
AP writer TOM MURPHY contributed to this report, which included research by Automated Insights and data from Zacks Investment Research.
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