Aetna trumped fourth-quarter earnings expectations despite pressure from coverage it sells on the Affordable Care Act's exchanges, but the health insurer's 2017 forecast started well below Wall Street projections.
The nation's third largest insurer said Tuesday that it expects adjusted earnings of at least $8.55 for the new year.
Analysts forecast, on average, earnings of $8.78 per share, according to FactSet.
Aetna and other health insurers tend to start their forecasts conservatively because they don't factor in leftover claims from the previous year that have yet to be processed, while some analysts include that variable.
In the fourth quarter, Aetna earnings sank 57 percent to $139 million, a drop attributed largely to restructuring costs that included $215 million for a voluntary early retirement program.
Aetna also faced "continued challenges" from its ACA-related business, Chairman and CEO Mark Bertolini said in a statement. He didn't provide details. Aetna and other big insurers like UnitedHealth Group Inc. have scaled back their presence on the ACA's public exchanges after losing millions of dollars.
Earnings, adjusted for one-time gains and costs, totaled $1.63 for Aetna in the final quarter of 2017. The insurer's total revenue climbed 4.5 percent to $15.73 billion.
Analysts expected earnings of $1.45 per share on $15.87 billion in revenue, according to Zacks Investment Research.
Aetna's total enrollment slipped less than 2 percent to 23.1 million in the fourth quarter. The insurer said it expects another drop of nearly 1 million people in this year's first quarter. That's due largely to a roughly 880,000 decline in its individual and small group business, which includes the ACA exchanges.
Aetna also said Tuesday that it continues to review a takeover bid for bid for rival health insurer Humana.
Last week, a federal judge rejected the roughly $34-billion deal on the grounds that it would hurt competition in hundreds of Medicare Advantage markets. That decision may be appealed by Aetna.
The Department of Justice sued last summer to stop Aetna's pursuit of Humana and a separate buyout attempt, Anthem Inc.'s $48-billion bid for Cigna Corp. That case has yet to be decided.
Shares of Aetna Inc., based in Hartford, Connecticut, climbed nearly 2 percent, or $2.29, to $119 in early morning trading. The stock had fallen almost 6 percent since the beginning of the year after topping $136 and reaching a new all-time high late last year.
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 https://www.zacks.com/ap/AET
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