Aetna's second-quarter earnings jumped 33 percent and the health insurer raised its 2015 forecast again after receiving a boost from a government business it plans to feed with a $35 billion acquisition.
Shares of the Hartford, Connecticut-based company started climbing Tuesday before markets opened and after it released results.
Aetna said Thursday that higher underwriting margins or improved profitability helped balance a jump in operating costs. The nation's third-largest health insurer easily topped Wall Street expectations.
The company raised its 2015 forecast for the third time, and now expects full-year operating earnings of at least $7.40 per share. That's up from a range of $7.20 to $7.40 that it predicted this spring.
Analysts expect, on average, earnings of $7.42 per share, according to FactSet.
For the second quarter, Aetna brought in $731.8 million. That compares with $548.8 million last year. Adjusted results in this year's quarter totaled $2.05 per share.
The average estimate of 11 analysts surveyed by Zacks Investment Research was for earnings of $1.84 per share.
Operating revenue climbed 4 percent to $15.1 billion, which fell short of average analyst expectations for $15.43 billion.
Health insurance is Aetna's main product, but the company also sells dental, group life and disability coverage. The company announced last month that it would buy rival insurer Humana Inc., the nation's second-largest provider of federally funded Medicare Advantage plans. It is part of a buyout flurry in the managed care sector, a major push for growth by the largest companies, which could transform the five biggest health insurers into just three.
The Blue Cross-Blue Shield carrier Anthem Inc. bid $48 billion for Cigna Corp., while Medicaid coverage provider Centene Corp. plans to pay about $6.3 billion for fellow insurer Health Net Inc.
UnitedHealth Group Inc., the nation's biggest health insurer for now, recently nabbed pharmacy benefits manager Catamaran Corp. in a deal valued at more than $12 billion.
Insurers say these acquisitions will help them save money by cutting overlapping back-office costs and quickly improve their technology, which is becoming more important in monitoring patient health and helping customers find care. The tie-ups also are a way to quickly gain customers in certain lines of business like the fast-growing Medicare Advantage market and, in some cases, gain negotiating leverage over care providers, who also have been growing larger.
Shares of Aetna rose about 2 percent, or $2.21, to $2.21 less than an hour before markets opened Tuesday.
The stock had already climbed 28 percent since the beginning of the year, while the Standard & Poor's 500 index has increased roughly 2 percent. Aetna shares have increased 45 percent in the last 12 months.
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
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