WASHINGTON (CBSDC/AP) — Aetna’s chief executive officer says the company has yet to see a “positive impact” from President Barack Obama’s health care law because it’s too soon to tell.
“We picked up 230,000 paid members in the first quarter. We just hit 500,000 today in the second quarter. We will probably plateau around 450,000 paid members by the end of the year, will have some attrition as the year goes along,” Mark Bertolini told Bloomberg. “Currently, there has been no positive impact from a bottom-line standpoint of these members because it’s way too early to tell.”
Bertolini says the health insurance company is still trying to figure out the age demographic of who purchased health care.
“In the first quarter we saw generally an older population sign up, so probably four to five years older than expected on average. As we got near the end of March, we saw younger people sign up and enroll,” Bertolini told Bloomberg.
“Now we’re trying to find what is the age demographic of the people who actually paid in the program.
Company officials said the risk of that business appears to be manageable so far, although they cautioned that they still don’t have a good sense for what types of claims these customers will generate.
“It has been kind of in the neighborhood of our expectations,” Chief Financial Officer Shawn Guertin said, adding that the company still expects a “modest loss” this year from its exchange coverage, a small slice of its overall business.
Aetna’s first-quarter net income soared 36 percent, fueled by gains from a multi-billion-dollar acquisition, and the health insurer hiked its 2014 earnings forecast above Wall Street estimates.
Its results breezed past analysts’ expectations, and Aetna shares jumped more than 5 percent Thursday after it detailed a starkly different quarter compared with competitor UnitedHealth Group, which dragged down other health insurance stocks last week after it said first quarter earnings fell 8 percent.
“I think we executed across all funds,” Bertolini told Bloomberg. “We had growth across all lines of business.”
Aetna completed a $6.9 billion acquisition of fellow insurer Coventry Health Care last May, and it said Thursday that deal was the main factor behind its growth in this year’s first quarter. The Hartford, Conn., insurer’s medical enrollment swelled about 24 percent in the quarter to 22.7 million people versus last year.
Coventry serves customers in two markets primed for growth. It administers Medicaid, the state and federally funded program that covers the needy and disabled people, and it offers Medicare Advantage plans. Those are subsidized versions of the federal government’s Medicare program for the elderly and also disabled people.
Overall, Aetna earned $665.5 million, or $1.82 per share, in the first quarter. That’s up from $490.1 million, or $1.48 per share, a year earlier.
Adjusted earnings totaled $1.98 per share, not counting one-time items.
Analysts forecast earnings of $1.53 per share, according to FactSet.
Operating revenue excluding capital gains totaled $13.97 billion. Analysts expected about $13.6 billion.
Aetna now expects 2014 adjusted earnings of between $6.35 and $6.55 per share, which is more than the average analyst expectation of $6.31 per share.
Shares of several health insurers dipped last week after UnitedHealth Group Inc. also warned that it saw some tough price competition in several markets, including New York. Aetna said Thursday it hasn’t seen the same thing. Trends in the sector should become clear as other major insurers like the Blue Cross Blue Shield provider WellPoint Inc. report results in the next couple weeks.
Aetna shares climbed $3.74, or 5.4 percent, to $72.65 in midday trading, while the Standard & Poor’s 500 index rose slightly. UnitedHealth and WellPoint shares both advanced more than 2 percent.
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