NEW YORK (TheStreet) -- Shares of Aetna Inc. (AET) are down 2.83% to $76.94 after reporting third quarter results that beat projections, but investors concerned about medical spending trends focused on higher-than-expected costs generated by some of its customers, according to the Wall Street Journal.
Aetna's total medical benefit ratio, which is the amount of premiums used to pay patients' medical costs, declined to 82.3% in this quarter from 83.1% a year ago.
The ratio rose on the commercial side "as a result of medical cost performance in the smaller middle-market business, costs associated with new hepatitis C treatments, and performance in the individual business, which reflects the impact of programs mandated by health care reform in 2014," the company said.
"The acceleration in commercial costs is clearly an unwelcome development," Susquehanna analyst Chris Rigg said, "but we think investors were largely expecting this outcome."
Overall, the company reported a profit of $594.5 million, or $1.67 a share, up from $518.6 million, or $1.38 a share, in the prior-year period. Excluding certain items, operating earnings rose to $1.79 a share from $1.61.
Operating revenue, which excludes net realized capital gains and losses, improved 13% to $14.7 billion.
Analysts polled by Reuters had projected earnings of $1.58 a share and revenue of $14.63 billion.
Separately, TheStreet Ratings team rates AETNA INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AETNA INC (AET) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, notable return on equity, attractive valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."
You can view the full analysis from the report here: AET Ratings Report