Aetna’s fourth-quarter net income sank 49 percent as higher medical costs squeezed profitability for the Hartford health insurer’s commercial health coverage, and several one-time expenses chipped away at the bottom line, The Associated Press reports.
Aetna said Thursday the amount it paid in medical claims grew more than 9 percent in the quarter to $6.12 billion as a rise in flu-related expenses countered a drop in use when Superstorm Sandy swept up the East Coast last fall.
All told, the insurer earned $190.1 million, or 56 cents per share, in the three months that ended Dec. 31. That’s down from $372 million, or $1.02 per share, in the 2011 quarter.
Excluding the charges and capital gains, the insurer earned 94 cents per share. That fell short of average analyst expectations of 97 cents per share, according to FactSet.
Total revenue climbed 16 percent to $9.93 billion due largely to a one-time pension premium. Excluding that and other one-time items, revenue grew 5 percent to $8.96 billion, while analysts expected $8.89 billion.
Aetna Chairman and CEO Mark Bertolini said earlier this month the insurer had seen a spike in flu intensity following two very mild seasons. But he still expects Aetna to spend about $40 million to $50 million on claims this season, which is within its normal range. This flu season has stirred worry among managed care investors about a rise in claims due to its early start and rapid spread.
For the full year, Aetna earned $1.66 billion, or $4.81 per share, on about $36.6 billion in total revenue. The insurer recorded adjusted earnings of $5.13 per share not counting the charges and capital gains.
For 2013, Aetna expects adjusted earnings of at least $5.40 per share. Analysts expect, on average, $5.53 per share.
Aetna also said Thursday that executive Shawn M. Guertin will replace Joseph M. Zubretsky as chief financial officer next month. Zubretsky will stay with Aetna to lead the insurer’s newly created national businesses segment, which includes its national accounts and specialty products like behavioral health.
Guertin has served as the head of Aetna’s finance business and worked for nearly five years as chief financial officer and treasurer of Coventry before joining Aetna in 2011.
Aetna shares fell $1.01, or 2.1 percent, to $47.94 in morning trading Thursday. The insurer’s stock climbed 10 percent last year and had already risen more than 3 percent so far in 2013.
