Aetna Swings to Profit on Lower Costs - TheStreet

Aetna

(AET)

swung to a profit in the fourth quarter, its results boosted by lower costs and a gain relating to its overestimation of healthcare costs.

The company earned $92 million, or 63 cents a share, on revenue of $4.72 billion in the fourth quarter, compared with a loss of $188 million, or $1.30 a share, on revenue of $6.04 billion, a year ago.

The latest quarter includes a number of items: a gain of $23 million related to the cost overestimation; a charge of $28 million for severance; and $15.2 million in net unrealized capital losses. Excluding items other than the cost reversal, the company earned $142.6 million, or 92 cents a share. Excluding everything, it earned $120 million, or 77 cents a share.

The company said the results reflected a seven-percentage-point decline in the medical cost ratio, a measure of the money it pays out for medical procedures. That, in turn, reflected lower membership in higher-cost plans, price increases, and "more effective contracting." The company has cut nearly 8,500 jobs since December 2001.

The shares were up about 4% to $43.50 on Instinet.