Aetna's second-quarter profit climbed more than 2 percent, as gains from an acquisition helped the health insurer top expectations and raise its 2014 earnings forecast again.
But the Hartford, Connecticut, company's shares slipped Tuesday after it also reported a higher medical cost measurement than analysts expected and a slight performance dip for its health care segment, the biggest part of its business.
The insurer said a better performance from its group life and disability business helped grow earnings in the quarter, as did an additional month of results from Medicare and Medicaid coverage provider Coventry Health Care, which Aetna bought last year for $6.9 billion.
But the health care segment's operating earnings, which exclude investment gains and losses, slipped about 1 percent to $584.3 million. Aetna's medical-loss ratio for its commercial health coverage, which basically measures the percentage of premiums spent on medical care and some other costs, climbed to 80.6 percent from 79.1 percent.
"The headline numbers looked fine, but a deeper look into second quarter results is less flattering," Citi analyst Carl McDonald said in a research note.
Overall, earnings for the nation's third-largest health insurer climbed to $548.8 million, or $1.52 per share, from $536 million, or $1.49 per share, in last year's quarter.
Adjusted earnings came to $1.69 per share. That topped average analyst expectations of $1.61 per share, according to Zacks Investment Research.
Aetna's operating revenue, which also excludes investment gains and losses, climbed 25 percent to $14.5 billion revenue That also beat average Wall Street expectations for $13.97 billion.
The insurer's enrollment climbed about 5 percent, compared with last year's second quarter, to top 23 million people. A small part of that gain came from the health care overhaul, the massive law that aims to cover millions of uninsured people.
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