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Health insurer Aetna Inc.’s third-quarter 2018 earnings of $2.96 per share beat the Zacks Consensus Estimate by 4.2% and increased 21% year over year.
Total revenues of $15.39 billion increased 3% year over year and beat the Zacks Consensus Estimate by 1%.
The increase in adjusted earnings was primarily due to the favorable impact of the Tax Cuts and Jobs Act of 2017 (the TCJA) and higher pre-tax adjusted earnings in Aetna's Health Care segment, partially offset by lower adjusted earnings due to the Group Insurance sale which occurred during fourth-quarter 2017.
Medical membership of 22.1 million grew year over year led by increases in Aetna's Commercial ASC, Medicare and Medicaid products, partially offset by decreases in Aetna's Commercial Insured products.
The adjusted expense ratio was 17.7%, up 20 basis points year over year. The increase was primarily due to the reinstatement of the health insurer fee for 2018 and investment spending on Aetna's growth initiatives, partially offset by the continued execution of Aetna's expense management initiatives.
The effective tax rate was 27.4% for third-quarter 2018 compared with 33.4% in the year-ago quarter courtesy of the tax reform.
Total healthcare medical benefit ratio (MBR) fell 40 basis points year over year to 81.5%.
Financial Position
Total assets were $57.1 billion as of Sep 30, 2018, up 3.4% from the Dec 31, 2017 levels.
Long-term debt decreased 3% from the year-end 2017 levels to $21.8 billion.
Debt-to-capitalization ratio was 30.8% as of Sep 30, 2018 was down 620 basis points from Dec 31, 2017 levels.
Merger with CVS Health
The company during the quarter announced to sell its stand-alone Medicare Part D drug plan business to WellCare Health Plans Inc. under an asset purchase agreement, in order to get a nod to the merger. The Department of Justice has finally approved the merger of Aetna with CVS Health Corp. (CVS - Free Report) .
Performance of Other Health Maintenance Organizations
Another player in the industry, UnitedHealth Group Inc. (UNH - Free Report) beat the Zacks Consensus Estimate by 3.33% in the third quarter.
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Aetna (AET) Q3 Earnings Beat Estimates, Membership Increases
Health insurer Aetna Inc.’s third-quarter 2018 earnings of $2.96 per share beat the Zacks Consensus Estimate by 4.2% and increased 21% year over year.
Total revenues of $15.39 billion increased 3% year over year and beat the Zacks Consensus Estimate by 1%.
The increase in adjusted earnings was primarily due to the favorable impact of the Tax Cuts and Jobs Act of 2017 (the TCJA) and higher pre-tax adjusted earnings in Aetna's Health Care segment, partially offset by lower adjusted earnings due to the Group Insurance sale which occurred during fourth-quarter 2017.
Medical membership of 22.1 million grew year over year led by increases in Aetna's Commercial ASC, Medicare and Medicaid products, partially offset by decreases in Aetna's Commercial Insured products.
Aetna Inc. Price, Consensus and EPS Surprise
Aetna Inc. Price, Consensus and EPS Surprise | Aetna Inc. Quote
The adjusted expense ratio was 17.7%, up 20 basis points year over year. The increase was primarily due to the reinstatement of the health insurer fee for 2018 and investment spending on Aetna's growth initiatives, partially offset by the continued execution of Aetna's expense management initiatives.
The effective tax rate was 27.4% for third-quarter 2018 compared with 33.4% in the year-ago quarter courtesy of the tax reform.
Total healthcare medical benefit ratio (MBR) fell 40 basis points year over year to 81.5%.
Financial Position
Total assets were $57.1 billion as of Sep 30, 2018, up 3.4% from the Dec 31, 2017 levels.
Long-term debt decreased 3% from the year-end 2017 levels to $21.8 billion.
Debt-to-capitalization ratio was 30.8% as of Sep 30, 2018 was down 620 basis points from Dec 31, 2017 levels.
Merger with CVS Health
The company during the quarter announced to sell its stand-alone Medicare Part D drug plan business to WellCare Health Plans Inc. under an asset purchase agreement, in order to get a nod to the merger. The Department of Justice has finally approved the merger of Aetna with CVS Health Corp. (CVS - Free Report) .
Zacks Rank
Aetna currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Health Maintenance Organizations
Another player in the industry, UnitedHealth Group Inc. (UNH - Free Report) beat the Zacks Consensus Estimate by 3.33% in the third quarter.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>