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Aetna stock falls
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August 5, 1997: 4:45 p.m. ET
Second-quarter net meets estimates, but rising costs raise concerns
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NEW YORK (CNNfn) - Aetna Inc. said Tuesday that its second-quarter profits met Wall Street expectations on a 46-percent jump in revenue.
However, shares of the Hartford, Conn.-based insurance titan slumped amid concern about rising costs. The stock fell 14-1/4 to close at 102-3/4 in heavy New York Stock Exchange, trading.
In a statement, Aetna said earnings from continuing operations rose 24 percent to $205.8 million, or $1.27 a common share. Net income for the period was $230.1 million, or $1.43 a share, compared with $288.0 million, or $2.47 a share, a year earlier.
The year-ago results included an after-tax gain of $264 million from the sale of assets. On April 2, 1996, the company sold its property-casualty operations to an affiliate of Travelers Group Inc. for about $4.1 billion cash.
"Second quarter results reflect solid growth, with each core business -- health, retirement services and international -- making a significant contribution," newly named chief executive and president Richard L. Huber said.
Still, the latest results were affected by higher interest expenses primarily due to additional debt incurred in connection with the financing of the U.S. Healthcare Inc. merger.
In addition, Smith Barney's analyst Geoffrey Harris cited rising medical costs for his reasons to downgrade the stock to "outperform" from "buy."
For the first half, Aetna earned $509.4 million, or $3.37 a share, down from $635.7 million, or $5.47 a share, a year earlier. Revenue rose to $9.1 billion from $6.5 billion.
-- from staff and wire reports
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Aetna
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