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Aetna 4Q beats estimates
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February 1, 1999: 5:01 p.m. ET
Healthcare firm shares slide despite earnings jump of 29 percent
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NEW YORK (CNNfn) - Shares of Aetna Inc. closed lower Monday, despite the fact that the company reported fourth-quarter earnings above analysts' estimates.
Before one-time items for the fourth quarter ended Dec. 31, Aetna posted operating earnings of $184.5 million, or $1.19 per diluted share, a 29 percent increase over earnings of $142.6 million, or 87 cents a share, reported in the same quarter in 1997.
Including $30.3 million in Y2K costs, the company's earnings were $154.2 million, or 98 cents per share, in the latest quarter.
Analysts polled by research firm First Call expected Aetna (AET) to post profits of 96 cents a share, including Y2K costs.
The Hartford, Conn.-based company's strong earnings capped a year in which it became the largest U.S. health insurance firm with the help of two major acquisitions,
"The fourth quarter capped off a year of building on our strengths and making operational excellence the No. 1 priority in each of our three businesses," said Aetna chairman and CEO Richard L. Huber.
Aetna shares fell 3-7/8 to close at 86-1/4.
Revenue for the quarter jumped by nearly $1 billion, totaling $5.70 billion versus $4.79 billion in 1997. But net income declined to $202.5 million, or $1.31 a diluted share, compared with $273.9 million, or $1.71 a share, a year earlier. Among the factors offsetting gains were higher Medicare medical costs and higher service expenses.
Aetna U.S. Healthcare, one of the company's key businesses, reported quarterly operating earnings of $122.6 million, compared with $87.6 million in the fourth quarter of 1997. The company attributed the increase to growth in its HMO membership, higher net investment income and the addition of NYLCare. U.S. Healthcare full-year operating earnings jumped 26 percent year-on-year before charges for a total of $446.1 million.
The company also announced Monday that its board authorized the repurchase of an additional five million shares. It had repurchased about 1.7 million in the fourth quarter, bringing the total number of shares repurchased to 12.5 million since the inception of its buyback program in 1996.
Year-end results
For the full year 1998, Aetna posted operating earnings before unusual items of $713.6 million, or $4.53 a share, compared with $565.0 million, or $3.38 per share, in 1997.
Analysts expected the company to post earnings of $3.77 a share for the year.
Revenue for the year totaled $20.64 billion versus $18.54 billion the year before. Net income declined to $848.1 million from the $901.1 million posted in 1997.
During the course of the year, Aetna completed its $1 billion purchase of Prudential Healthcare and its more than $1 billion buyout of NYLCare. 
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Aetna
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