Aetna Inc (NYSE:AET) reported a 38% jump in net income in the fourth quarter. Its operating earnings increased 11% driven by higher underwriting margins, as well as increased fees and other revenue in its Health Care division, partly offset by higher general and administrative costs. Its revenue advanced 2% in the fourth quarter as both earningsand revenue came in above analysts’ expectations.
Gloomy Outlook For The Year 2016
Despite topping predictions last year, Aetna preferred to be cautious and offered a downbeat outlook for 2016. The company is looking to achieve operating earnings of a minimum of $7.75 a share. That was 31 cents a share lower than the Capital IQ consensus estimate of $8.06 a share. Chairman and CEO Mark Bertolini said that it was projecting its earnings for the current year based on last year’s performance and disciplined pricing and execution.
The company indicated that it was working closely with the Justice Department and State regulators in getting the final approval of its planned acquisition of Humana Inc (NYSE:HUM). Bertolini said that the company would continue to advance its integration readiness plans. For that purpose, Aetna has already gotten seven necessary State approvals. He was confident that the transaction would be closed in the second half of the year.
Operating Earnings Grow
Aetna reported net income of $320.8 million, up 38% from $232.0 million last year. Its earnings surged 40% to 91 cents a share from 65 cents a share. Its operating earnings increased 11% to $482.1 million from $434.0 million while operating earnings per share advanced 13% to $1.37 from $1.22 in the prior year quarter.
Aetna’s total revenue was $15.05 billion, up 2% from $14.77 billion in the previous year quarter. The company attributed it to the growth in its government business and higher health care premium yields due to underwriting margins growth. This was partly offset by losses of membership in its group commercial insured products.