Bloomberg News

Aetna Raises Earnings Forecast After Strong Two Months

December 16, 2011

(Updates with analyst comment in the third paragraph.)

Dec. 14 (Bloomberg) -- Aetna Inc., the third-largest U.S. health insurer, raised its current year and 2012 earnings forecasts after a strong October and November, the company said.

Aetna’s 2011 operating earnings will be $5.15 a share, compared with $5 a share estimated last month, the Hartford, Connecticut-based company said today in a regulatory filing. Operating earnings for 2012 are projected to be $5 a share, compared with $4.80 estimated last month, Aetna said.

“The guidance assumes that AET will be able to largely sustain the strong margins they achieved in 2011 into 2012, which we view as encouraging,” Scott Fidel, an analyst with Deutsche Bank in New York, said in a note to investors. He has a “buy” rating on the stock.

Aetna expects 2012 membership to decline in the first quarter as it loses 500,000 contracts with commercial workers and members from Connecticut’s Medicaid program, the company said. Medicaid is the joint U.S.-state health coverage plan for the poor. Aetna expects to have 17.9 million members on March 31. For the rest of the year, Aetna will gain participants from Medicare, the U.S. health program for the elderly and disabled, the company said.

Aetna released the information ahead of a presentation scheduled tomorrow for investors in New York.

“At the meeting we will be focused on whether Aetna outlines a credible plan to improve top-line growth trends in 2013 and their current M&A strategy, given recent acceleration in industry consolidation,” Fidel said.

Aetna was unchanged in extended trading after declining less than 1 percent to $39.28 at the close in New York. The stock has gained 29 percent this year.

--Editor: Andrew Pollack

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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