Aetna Inc. reported a 4 percent increase in earnings in the third quarter on cost cuts and rising medical membership, prompting the company to boost profit forecasts.
The Hartford-based health insurer reported a profit of $496.7 million, or 95 cents a share, compared with earnings of $476.4 million, or 85 cents a share in the year-ago period.
Per-share earnings beat the estimate of 92 cents by analysts polled by Thomson Financial.
The results included about $16 million after tax, or 3 cents a share, that had been set aside for Medicare claims that did not have to be paid.
Revenue for the quarter that ended Sept. 30 was $6.96 billion, up by 10.5 percent from nearly $6.3 billion in the same period last year. Analysts surveyed by Thomson estimated revenue at $6.97 billion.
For the first nine months of the year, revenue was $20.4 billion, a nearly 9 percent increase from $18.7 billion in the same period in 2006.
The company also boosted full-year operating earnings per share to $3.48, an increase over previous guidance of $3.40 to $3.42. Aetna projected 2008 per share will increase by 15 percent to $4.00.
Medical membership in the quarter grew by 228,000. With members included in Aetna’s acquisition of Schaller Anderson, a Phoenix-based company that manages health care for Medicaid plans, total medical membership was 16.6 million members.
In addition, third-quarter pharmacy membership increased by 83,000, to 10.7 million.
Ronald Williams, chief executive, said completing the acquisition of Schaller Anderson and Goodhealth Worldwide, an underwriting agent for medical insurance that offers expatriate benefits, will produce more revenue.
“These additions further strengthen and broaden our revenue stream and provide us with new opportunities for profitable growth,” he said.
The proportion of spending to pay for health care costs, the member benefit ratio, rose slightly, to 79.4 percent, from 78.8 in the same period last year.
Joseph Zubretsky, executive vice president and chief financial officer, credited new markets for students and government workers for the quarter’s results.