Aetna has hiked its 2015 forecast beyond analyst expectations after booking a 17-percent jump in first-quarter earnings, as enrollment gains and moderate medical cost growth helped the nation's third-largest health insurer.
Shares of the Hartford, Connecticut, company climbed to an all-time high price after the insurer detailed results Tuesday morning.
Aetna said it now expects operating earnings this year to range between $7.20 and $7.40 per share. That's up from a forecast it made in February for earnings of at least $7 per share. And that was a 10-cent-per-share increase from its initial 2015 forecast.
Analysts expect, on average, 2015 earnings of $7.17 per share, according to FactSet.
Company leaders told analysts in February that they considered their then-new forecast a floor Aetna aimed to exceed.
Aetna said Tuesday that it raised its expectation for 2015 again after seeing operating earnings, revenue and enrollment all grow in the year's initial quarter. The insurer's net income also climbed to $777.5 million from $665.5 million last year.
Operating earnings, which exclude items like capital gains, totaled $2.39 per share in this year's quarter.
Analysts expected, on average, earnings of $1.95 per share, according to Zacks Investment Research.
Operating revenue of $15.1 billion grew 8 percent in the quarter but came in below average analyst expectations for $15.45 billion, according to the Zacks survey.
The insurer's medical enrollment climbed 4 percent to 23.7 million people. Aetna has signed up more than 950,000 people through the health care overhaul's public insurance exchanges, which allow people to buy coverage with help from income-based subsidies or tax credits. The insurer said more than 90 percent of its customers received a subsidy.
Aetna also said growth in medical costs, its biggest expense, remained moderate, in part because of a deal it worked out earlier this year with Gilead Sciences Inc. on the price of two expensive hepatitis C treatments, Sovaldi and Harvoni.
Aetna followed rival UnitedHealth Group Inc. in trumping Street expectations and raising its 2015 forecast after reporting first-quarter results.
Health insurers have entered 2015 with a more optimistic outlook than they had at the start of last year, when Medicare Advantage funding cuts hung over an industry that also was dealing with the uncertain impact of a new fee from the overhaul and the first open enrollment period for the public exchanges.
"I just think, on the margin, things seem a little bit clearer than they did a year ago," said Aetna Chief Financial Officer Shawn M. Guertin.
Aetna shares reached a new all-time high price of $111.08 Tuesday morning shortly after markets opened, topping the previous high of $109.90 set late last month. By midmorning, its shares were up 62 cents to $107.54.
Aetna shares climbed 30 percent last year and have already advanced another 20 percent so far in 2015. Like competitor UnitedHealth, Aetna has seen its share price double since 2012, hitting several all-time high marks along the way.
Two more large health insurers — Anthem Inc. and Humana Inc. — will report first-quarter results Wednesday.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on AET at http://www.zacks.com/ap/AET
Keywords: Aetna, Earnings Report, Priority Earnings