Operating earnings were $0.92 per share, a 14 percent increase over the prior-year quarter, in line with the Thomson/First Call mean of $0.92 per share
Net income was $0.85 per share, a 5 percent increase over the prior-year quarter
Medical membership increased by 614,000 to 17.5 million
Commercial Medical Benefit Ratio was 79.8 percent
Guidance: Full-year 2008 operating earnings per share projected to be $4.00
Hartford, Conn., April 24, 2008 — Aetna (NYSE: AET) today announced first-quarter 2008 operating earnings of $0.92 per share, a 14 percent increase over the prior-year quarter. The increase in operating earnings per share reflects a 16 percent growth in total revenue, primarily from quarter-over-quarter membership growth and premium rate increases, as well as stable underwriting results. This improvement also reflects the benefit of share repurchases. First-quarter net income was $0.85 per share, an increase of 5 percent over the prior-year quarter. Operating earnings exclude net realized capital losses.
"Our focus remains on executing our strategy to drive profitable growth," said Joseph M. Zubretsky, executive vice president and CFO. "We demonstrated this in the first quarter in the following ways: strong top-line growth, resulting from solid membership increases and disciplined pricing actions; strong underwriting discipline and medical cost management that led to a Commercial Medical Benefit Ratio of 79.8 percent; and effective management of capital and its accretive deployment."Given these results, we feel confident in reaffirming our full-year 2008 operating earnings guidance of $4.00 per share," Zubretsky said. "In addition, we project medical membership growth to be in the range of 850,000 to 900,000 members, a 50,000 member increase over our prior guidance."
Health Care business resultsHealth Care, which provides a full range of insured and self-insured medical, pharmacy, dental and behavioral health products and services, reported:
Operating earnings of $461.6 million for the first quarter of 2008, compared with $422.7 million for the first quarter of 2007. The increase in operating earnings reflects a 20 percent increase in revenue primarily from membership growth, premium rate increases and acquisitions, as well as stable underwriting results and continued general and administrative expense efficiencies.
Net income of $447.6 million for the first quarter of 2008, compared with $420.4 million for the first quarter of 2007. Net income includes $18.6 million and $5.2 million of realized capital losses in the first quarter of 2008 and 2007, respectively, due to the accounting for certain fixed income investments which decreased in market value because of the increase in yields caused by the widening of credit spreads in 2008 and the increase in rates in 2007.
Our Medical Benefit Ratios by product for the first quarter 2008 and 2007 were as follows:
First quarter medical membership increased by 614,000 to 17.467 million, pharmacy membership increased by 219,000 to 10.951 million and dental membership increased by 334,000 to 14.166 million.Total revenues for the first quarter of 2008 increased by 19 percent to $7.1 billion from $6.0 billion for the first quarter of 2007.
On Thursday, however, Hartford-based Aetna said its a mix of membership growth and higher premiums boosted revenue 16 percent. Though profit slipped, the results still met Wall Street forecasts.
"We were struck by Aetna's ability to convert its defensive positioning into an offense that is winning business and creating separation from its competitors," said Lehman Brothers analyst Joshua Raskin, in a note to investors Friday.
The company 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.
Raskin said Aetna stands almost alone in its ability to manage through the tough profit environment hampering its competitors.
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