Health insurer Aetna recorded higher revenue and net income in the third quarter of 2018 after adding more Medicare Advantage members.
Aetna recorded revenue of $15.5 billion in the third quarter of 2018, an increase of 3.3% over the same period a year ago. Its net income grew 19.3% year over year to $1 billion in the three months ended Sept. 30.
"Aetna's solid third quarter performance builds on the positive momentum from the first half of 2018," Aetna Chairman and CEO Mark Bertolini said in an announcement. "Our combination with CVS Health will drive the next phase of Aetna's growth and accelerate our opportunity to help transform the health care system."
The U.S. Justice Department earlier this month cleared the way for Aetna to merge with pharmacy giant CVS, with the condition that Aetna sell its Medicare prescription drug business to WellCare Health Plans. Aetna spent $18 million in transaction and integration costs during the third quarter and $95 million total in the last nine months related to the CVS merger.
Aetna said its revenue increased thanks to membership growth in its Medicare business. Membership in Medicare Advantage plans rose 19.3% to nearly 1.8 million in the third quarter. Aetna also grew membership in its Medicare supplement plans by 5.7% to 775,000.
But Aetna lost individual commercial, small group commercial and Medicaid customers. Its membership totaled 22.1 million at Sept. 30 compared with 22.2 million a year ago.
Aetna said its revenue was also helped by the return of the health insurer tax for 2018.
Meanwhile, Aetna's net income was given a boost by the Tax Cuts and Jobs Act of 2017 and the favorable impact of the sale of Aetna's domestic group life insurance, group disability insurance and absence management businesses in the fourth quarter of 2017, the insurer said.
Aetna's medical loss ratio, which represents the amount per premiums spent on medical care and quality improvement, was 81.5% compared with 81.9% a year ago.