The company had 22.7 million health-insurance enrollees at the close of the first quarter. That was up from 18.3 million a year earlier, a 24% increase. Aetna has added more than 500,000 individuals to its rolls since the end of last year. That includes nearly 400,000 additional enrollees in the commercial sector and an increase of 133,000 Medicare beneficiaries. Those gains were partially offset by a 40,000 reduction in Medicaid enrollees.
Aetna CEO Mark Bertolini indicated that the company expects to have a similar presence during the 2015 open-enrollment period, which starts Nov. 15, and that premium increases will range from low single digits to double digits, depending on the market. In particular, he expressed concern about changes to the rules under the Patient Protection and Affordable Care Act and the difficulty that creates in offering competitive, profitable products.
“As a result, our conservatism goes up,” Bertolini said on a call with investors Thursday. “We'll have to go market by market as we move ahead.”
Aetna reported earnings of $666 million during the first three months of 2014—an increase of 36% compared with the same period the prior year. That was on revenue of $14 billion, up from $9.5 billion in 2013. The company had a profit margin of 4.8% for the recently completed quarter, compared to 5.1% during the prior year.
Aetna reported earnings per share of $1.82, up from $1.48 during the comparable period in 2013. For the year, the company boosted projected operating earnings per share from $6.25 to at least $6.35.
Company officials attributed robust profits to enrollment growth, improvement in the company's medical-loss ratios and increased revenues from the 2013 acquisition of Coventry Health Care in Bethesda, Md. But they also cited one-time factors—specifically, harsh winter weather and a mild flu season—as factors that temporarily lifted profits.
Market watchers were buoyed by the results. Analysts at Barclays characterized the report as “significantly better than even the most optimistic expectations.” The company's stock price was up 5% in early trading.
However, anticipating threats to revenue, insurers have expressed concern in recent weeks about the cost of treating hepatitis C patients with Sovaldi. The drug was approved by the Food and Drug Administration in December and can cost $80,000 for a full course of treatment. Aetna's chief financial officer, Shawn Guertin, indicated that the company spent $30 million on the drug in the first quarter, which was in line with projections.
“Overall we look at this as one of the strain items that could potentially be there,” Guertin said.
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