Aetna posts lower 1Q profit, but beats view

Aetna Inc.'s profit slipped in the first quarter but membership growth and higher premium rates pushed the health insurer's revenue higher, beating Wall Street expectations.

The company said Thursday it earned $431.6 million, or 85 cents per share, in the three months ended March 31 compared with year-ago earnings of $434.6 million, or 81 cents per share. Its earnings per share rose while earnings slipped because it had fewer shares outstanding.

Excluding items, earnings were 92 cents per share in the latest quarter, matching Wall Street's expectations.

Revenue grew 16 percent to $7.74 billion from $6.70 billion, as medical membership increased by 614,000, to 17.5 million. Analysts surveyed by Thomson Financial expected lower revenue of $7.71 billion.

Its shares rose $1.31, or 3 percent, to $44.40 in premarket trading.

Aetna, which is based in Hartford, reaffirmed its outlook for 2008 adjusted earnings per share of $4, and raised its forecast for medical membership growth by 50,000, to a range of 850,000 to 900,000 members.

Medical membership in the first quarter increased by 614,000, to 17.46 million, pharmacy membership rose by 219,000, to 10.95 million, and dental membership increased by 334,000, to about 14.2 million.

Chief executive Ronald Williams cited a recent deal between Aetna and Bank of America as an example of how the insurer hopes "to make Aetna the preferred company in our industry."

The Charlotte, N.C.-based bank will consolidate almost all of its health and insurance plans with Aetna, which will more than double its membership with Bank of America, from 65,000 to roughly 150,000 participants.

The proportion of spending to pay for health care costs, the member benefit ratio, rose slightly, to 81.3 percent, from 80.7 percent in the same period last year.

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AP Business Writer Jennifer Malloy