Aetna Inc. (NYSE: AET) reported Friday that the company’s fourth-quarter profit fell 15 percent, citing continued rising medical costs that hurt its performance throughout 2009, according to Associated Press.
The health insurer said medical costs, which are its largest expense, rose 14 percent to $6.1 billion in the three months that ended Dec. 31. However, this rise was partially offset by a 9 percent increase in premiums.
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Aetna, the third largest publicly traded health insurer based on medical enrollment, earned $165.9 million, or 38 cents per share, in fourth quarter of 2009. That's down from the $194.7 million, or 42 cents per share, in the same period the prior year. Excluding one-time items it said profit totaled 40 cents per share.
Revenue rose 13 percent to $8.76 billion.
Analysts polled by Thomson Reuters forecast, on average, a profit of 42 cents per share on $8.65 billion in revenue.
Aetna said it spent 85 percent of its commercial premium revenue on medical costs, up from 80.6 percent a year ago.
Commercial premiums include revenue from employer-sponsored group insurance and individual policies, not government programs like Medicaid or Medicare Advantage.
For the full year, Aetna said its profit dropped 8 percent, to $1.28 billion from $1.38 billion. On a per-share basis, profit rose to $2.84 from $2.83 because the company now has fewer shares on the market.
Its revenue rose 12 percent to $34.76 billion from $30.95 billion.
For 2010, Aetna forecast an operating profit of $2.55 to $2.65 per share. Analysts expect $2.83 per share. The insurer has said it expects 2010 operating earnings to be modestly lower than last year due in part to pricing pressures and Medicare Advantage reimbursement cuts.
However, Aetna ended 2009 with enrollment of 18.9 million people, a 7 percent increase over 2008.
Aetna took a $65 million charge in the fourth quarter for two rounds of job cuts it recently completed. The insurer cut 625 jobs in November and then recently cut the same amount.
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