Aetna profit rises 52%; shares hit all-time high
Aetna’s second-quarter profit jumped 52 percent to top expectations, and the nation’s third-largest health insurer raised its 2017 forecast again, this time well beyond analyst projections.
Investors responded by pushing company shares to another all-time high price in Thursday trading.
Aetna added some Medicare customers and grew the health coverage it provides for large employers, but a pullback from the Affordable Care Act’s health insurance exchanges also helped its business improve compared to last year’s quarter.
The Hartford, Conn., insurer’s biggest expense — health care costs — fell and the percentage of premiums it pays in medical claims improved as Aetna slashed its participation in the law’s exchanges to four states from 15 last year. The insurer still expects to lose more than $200 million before taxes this year on ACA-compliant coverage. But that’s better than the approximately $300 million it lost last year.
Aetna once covered more than 900,000 people through the exchanges, which amount to a small slice of its overall business. But the company and several other national insurers have scaled back their presence in the Obama-era law’s marketplaces, where they have struggled with a sicker-than-expected patient population and not enough healthy customers. Aetna covered about 180,000 people through the exchanges at the end of the second quarter and intends to leave that market next year.
Health insurance is Aetna’s main business, and most of its enrollment comes from coverage sold through employers or directly to individuals.
The insurer’s quarterly earnings jumped to $1.2 billion, from $791 million last year.
Aetna also said Thursday that it now expects adjusted earnings of between $9.45 and $9.55 per share for the year, a big hike from its previous forecast for $8.80 to $9 per share.
Aetna shares jumped past $160 Thursday morning to set a new high; they closed at $158.54, up $2.46, or 3.8 percent.
The federal government has returned to a Pennsylvania village that became a flashpoint in the national debate over fracking to investigate ongoing complaints about the quality of the drinking water.
Government scientists are collecting water and air samples this week from about 25 homes in Dimock, about 150 miles north of Philadelphia.
“Take a skunk and every household chemical, put it in a blender, puree it for five minutes and take a whiff,” said Dimock resident Ray Kemble, 61, describing the smell of his well water. “It burns the back of your throat, makes you gag, makes you want to puke.”
He said investigators from the Agency for Toxic Substances and Disease Registry, a federal public health agency, were at his house Monday to collect samples.
Fracking is a drilling method that uses huge amounts of pressurized water, sand and chemicals to extract oil and natural gas from rock formations.
Dimock was the scene of the most highly publicized case of methane contamination to emerge from the early days of Pennsylvania’s natural gas-drilling boom. State regulators blamed faulty gas wells drilled by Cabot Oil & Gas Corp. for leaking combustible methane into Dimock’s groundwater.
Cabot has consistently denied responsibility, saying methane was an issue in the groundwater long before it began drilling.
“Numerous sets of data collected over the past several years in Dimock, by both EPA and DEP, have confirmed there is no threat to human health and the environment,” said company spokesman George Stark.
The Agency for Toxic Substances and Disease Registry said Thursday it is testing the water for bacteria, gases and chemicals. The agency is also testing indoor air for radon. Sampling results are expected in the fall,.
“Residents have continued to raise concerns about natural gas activities impacting their private water well quality,” the agency said in a statement. It said the investigation will “determine if there are drinking water quality issues that may continue to pose a health threat.”
Ray Kemble, of Dimock, Pa., holds a jug of his well water while marching with demonstrators against hydraulic fracturing in Philadelphia in September 2012. “It burns the back of your throat, makes you gag, makes you want to puke,” Kemble said this week of the water he says was contaminated by gas drilling.