Aetna Inc.'s (AET) third-quarter earnings rose 2 percent and trumped expectations as revenue gains outweighed costs tied to paying off debt and the insurer's purchase of Coventry Health Care.
The Hartford, Conn., insurer said Thursday it earned $499.2 million, or $1.47 per share, in the three months that ended Sept. 30. That's up from $490.4 million, or $1.30 per share, in last year's quarter.
Aetna earned $1.55 per share, excluding the one-time costs and capital gains. That topped the average analyst forecast of $1.33 per share, according to FactSet.
Total revenue, which counts capital gains, climbed 5 percent to $8.92 billion. Analysts expected $8.83 billion.
Aetna is the third-largest commercial health insurer based on enrollment, trailing WellPoint Inc. and UnitedHealth Group Inc. Health insurance is Aetna's main product, but the company also sells dental, group life and disability coverage.
The insurer said in August that it would spend $5.7 billion to buy Coventry Health Care Inc., a Medicare and Medicaid coverage provider. The deal will broaden Aetna's Medicaid business a few months before millions of additional people are expected to become eligible for the state- and federally funded program for the needy and disabled under President Barack Obama's massive health care overhaul.
It also will boost the company's portion of business from the federally funded Medicare program at a time when enrollment is growing briskly in part because baby boomers are aging. Medicare provides health coverage to people over age 65 and those who are disabled.
Aetna recorded in the third quarter a charge of 4 cents per share tied to that deal. It also recorded a loss of 7 cents per share tied to the early payoff of some long-term debt.
The insurer's health care premiums climbed 7 percent in the quarter to $7.25 billion. Cost-cutting also helped. Operating expenses fell nearly 10 percent to $1.64 billion.
Aetna also narrowed its 2012 earnings forecast on Thursday. It now expects 2012 adjusted earnings of about $5.10 per share, the high end of Aetna's previous forecast for earnings of $5 to $5.10 per share. Analysts had expected $5.08 per share.