Aetna today reported an 8% rise in profit for the first quarter Thursday, as it unveiled a new benefits program for the terminally ill.
Hartford, Conn.-based Aetna, which once struggled to turn itself around, reported net income for the first quarter of $365.8 million, or $2.28 per share, compared with $330 million, or $2.12 per share, in the same period last year.
Operating earnings, which exclude net realized capital gains from continuing operations, were $1.75 per share. That beat the $1.72 per share expected among analysts surveyed by Thomson First Call and was 31% higher than a year ago.
Revenue in the first quarter was $4.8 billion, up from $4.5 billion in the same quarter of 2003.
John Rowe, M.D., chairman and chief executive, attributed the earnings rise to higher revenue and increasing membership.
"Importantly, in the first quarter, our profitable growth was across virtually all of our customer markets, geographies and major product lines," he told investors during a conference call this morning.
Medical membership increased by 342,000, or 2.6%, to more than 13.3 million from December 2003. Aetna attributed the rise to new customer sales and improvements in keeping customers. The company also reported membership increases in dental, pharmacy and group insurance.
Christian Miles, an analyst at A.M. Best Co. in Oldwick, N.J., said Aetna is moving from turning the business around toward growing.
"There's nothing negative," he said. "It's generally good news."
But Aetna shares were down $2.96, or 3.4 percent, to $84.79 in afternoon trading on the New York Stock Exchange. The sell-off had been even steeper earlier in the morning. The stock closed down $4.03 at $83.72 by the end of trading today.
Miles said investors may have been skittish at the announcement of the new service, which will provide benefits such as respite care, bereavement counseling, an improved case management program and end-of-life care decision support tools.
"The company is trying to differentiate itself with new products," he said.
Rowe said Aetna will introduce the new product to several large customers before offering it more broadly to members.
The Hartford-based insurer also told analysts it's raising its projected membership numbers for the year to between 600,000 and 750,000 new members. Aetna previously said it would enroll between 500,000 and 700,000.