Aetna Posts Operating Profit on Cost Cuts

Health insurance company Aetna ( AET) reported sharply higher second-quarter profits on cost control measures implemented as part of a large-scale restructuring.

The company earned $108.2 million, or 70 cents a share, up from $10.6 million, or 7 cents a share, in the year-ago quarter. Excluding special charges, Aetna earned $91.3 million, or 59 cents a share, including 27 cents a share for prior-period medical cost estimates.

Excluding the prior period gain, Aetna earned 32 cents a share in the quarter, reversing last year's operating losses and beating the consensus estimate of 25 cents provided by Thomson Financial/First Call.

Total revenue was down to $5.1 billion from $6.5 billion last year, as membership dropped about 595,000 to 14.4 million.

Aetna has been eliminating its unprofitable businesses in an attempt to return to an operating profit. In the second quarter, total benefits and expenses were down to $4.9 billion from $6.5 billion a year ago.

In a press release, the company said its turnaround actions have had "a more favorable impact" than previously estimated. The company plans to deliver about $300 million in operating expense reductions to help align costs with lower membership levels.

Shares of Aetna closed at $43.68 Wednesday before the earnings release.

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