Higher Medical Costs Crimp Aetna Profits

NEW YORK -- Health insurer Aetna(AET Quote) said its profit skidded 28% in the second quarter because of higher medical expenses in its commercial business, which it expects to continue for the rest of the year.

The Hartford, Conn., company said it earned $346.6 million, or 77 cents a share, compared with $480.5 million, or 97 cents a share, a year earlier. Adjusted earnings per share were 68 cents. Revenue grew 11% to $8.67 billion.

Analysts surveyed by Thomson Reuters expected earnings of 78 cents a share on revenue of $8.56 billion.

Aetna said premium revenue grew 12%, and medical membership was flat at 19.1 million.

Aetna said its prices didn't fully account for higher medical costs. It cut its profit forecast for the second time in two months.