Aetna Posts Higher 3Q Profit On Weak Revenue; Is Mum On Reports Of CVS Deal
KNIGHT RIDDER/TRIBUNE 11:07 AM ET 10/31/2017
Oct. 31--Aetna Inc.(AET) posted a nearly 11 percent jump in third-quarter profit on weak revenue Tuesday, while remaining silent on reports that CVS Health Corp.(CVS) is in talks to buy the Hartford insurer.
Aetna credited for the July-to-September period reduced losses in its Obamacare business and improved performance across its core commercial business.
Executives immediately put an end to any expectations of details about a possible deal with CVS. Chief Executive Officer Mark Bertolini and Joseph F. Krocheski, vice president of investor relations, kicked off a conference call with analysts by ruling out comments on "rumors or speculation."
"There's been a lot of speculation in the media about Aetna," Bertolini said.
Aetna raised its profit guidance for the year to about $9.75 per share, from an earlier range of $9.45 to $9.55. That beats Wall Street estimates of $9.56 per share, according to analysts surveyed by Bloomberg.
Adjusted earnings of $814 million, or $2.45 per share, were up from $734 million, or $2.07 per share in the third quarter of 2016, beating Wall Street estimates. Analysts expected adjusted net income of $687 million, or $2.08 per share, according to analysts.
Revenue of $14.96 billion was down 5 percent from $15.78 billion. That was below the $15.12 billion expected by analysts.
Shares rose more than 1 percent in pre-market trading, to $173.50.
Chief Financial Officer Shawn Guertin said the strength of Aetna's "core business fundamentals" in the July-to-September period was due in part to a moderate medical cost trend.
The Wall Street Journal reported last week a buyout offer of $200 a share, or $66 billion, from CVS. For Aetna, a sale it could represent a big step toward a transforming digital future where the insurer's vast trove of data plays a key role in personalized health.
Aetna announced last week it's selling its disability and life insurance business to The Hartford.
