Aetna's Q4 net profit falls 57%, but still beats forecasts

Hartford, Conn.-based Aetna saw its net profit drop 57 percent in the fourth quarter of fiscal year 2016 to $139 million, down from $321 million in the same period last year.

Aetna said the drop in net income during Q4 was due to an increase in restructuring costs, including a $330 million pre-tax expense related to its voluntary early retirement program.

Mark Bertolini, chairman and CEO of Aetna, said in light of the company's drop in net income, the insurer's "2016 results exceeded previous projections despite continued challenges in the public exchanges."

In a conference call Tuesday, Mr. Bertolini said Aetna has "no intention" of offering individual health plans on the 2018 ACA exchanges due to regulatory uncertainty. He said the insurer lost $100 million more than expected in 2016 on the individual market.

Aetna also reported its Q4 total revenue and operating revenue at $15.7 billion each, up from $15 billion and $15.1 billion in Q4 FY 2015, respectively. The insurer attributed the increase in total revenue and operating revenue to higher premiums in its healthcare segment. 

Operating earnings for Aetna's healthcare segment in Q4 were $582 million, a year-over-year drop from $493 million. The insurer said the increase in operating earnings was primarily due to higher underwriting margins in Aetna's government business and higher fees. The increase in operating earnings was partially offset by lower underwriting margins in Aetna's commercial business, primarily its individual products.

As of Dec. 31, 2016, Aetna's total medical membership was 23.1 million, remaining flat from September 30, 2016.

Aetna said its full-year 2016 net income was $2.3 billion, compared to the $2.4 billion the company earned for full-year 2015. Additionally, it reported full-year 2016 total revenue and operating revenues of $63.2 billion and $63.0 billion, respectively, compared with $60.3 billion each for full-year 2015.

The insurer projects full-year 2017 operating earnings per share of at least $8.55. 

In regards to a court's ruling to block Aetna's proposed $37 billion acquisition of Humana, Mr. Bertolini said the company is evaluating if it will appeal the decision ahead of the deal's Feb. 15 deadline

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