(Source: Associated Press/AP Online)
NEW YORK - Health insurer Aetna Inc. said Monday its profit skidded 28 percent in the second quarter due to higher medical expenses in its commercial business, which it expects to continue for the rest of the year.
The Hartford, Conn., company said it earned $346.6 million, or 77 cents per share, compared with $480.5 million, or 97 cents per share. Adjusted earnings per share were 68 cents. Revenue grew 11 percent to $8.67 billion from $7.83 billion.
Thomson Reuters says analysts expected 78 cents per share and revenue of $8.56 billion.
Aetna said its medical benefit ratio, which measures the portion of premium dollars spent on providing care, rose to 86.8 percent from 81.9 percent a year ago. Costs in the commercial, Medicare and Medicaid business all increased.
Premium revenue grew 12 percent, and medical membership was flat at 19.1 million.
Aetna said commercial medical costs increased due to use of more expensive services, and more tests and procedures per visit. That lead to higher costs for emergency room, urgent care, laboratory and preventive services. Aetna said its prices did not fully account for the higher costs, and said health plan providers are changing their behavior due to the recession.
It cut its annual profit forecast for the second time in two months. The company now expects to earn between $2.75 to $2.90 per share. On June 2, it lowered its profit estimate to a range of $3.55 to $3.70 per share, also because of greater commercial medical costs and lower Medicare revenue. Analysts expect earnings of $3.53 per share and $34.35 billion in revenue.
Aetna expects to spend between 84 and 84.5 percent of its commercial premium revenue on providing medical care.
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