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Aetna posts 1Q loss
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May 10, 2001: 8:34 a.m. ET
Biggest U.S. health insurer has loss of 26 cents a share, misses forecasts
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NEW YORK (CNNfn) - Aetna Inc. posted a first-quarter loss Thursday, missing already lowered analyst expectations, as high medical costs continued to weaken the nation's biggest health insurer.
The Hartford, Conn.-based company reported a first-quarter loss of $36.6 million, or 26 cents a share, excluding charges, compared with earnings from continuing operations of $86.2 million, or 61 cents a share, a year earlier.
Analysts had expected Aetna (AET: Research, Estimates) to post earnings of 1 cent a share excluding charges, according to First Call, which tracks forecasts on Wall Street.
"The problems in our core health business are substantial," Chairman and CEO Dr. John Rowe said. "They are not something we can fix in a quarter or two."
Rowe said Aetna is making extensive changes that he hopes will be reflected in its results by 2002 and 2003.
"We do have important strengths on which to build, including a significant market position, an experienced and professional work force that is anxious to change and determined to succeed, and a new management team of seasoned leaders who are focused on winning by meeting the needs of our customers," Rowe said.
Medical costs a continuing headache
Aetna said in April that its first-quarter earnings would be lower than the 28 cents a share analysts expected at the time, blaming increased medical costs due to greater use of health-care services. It did not provide a revised first-quarter figure at the time. The company also said in April it could not confirm the $1.20 to $1.30 a share earnings it projected for 2001. Analysts now expect the company to earn about 77 cents a share in the year, according to First Call.
Rising medical costs forced Aetna to cut 5,000 jobs, about 12 percent of its work force, in December. They also cut into its third- and fourth-quarter earnings, though the company managed to beat analyst expectations in those quarters.
Aetna (AET: up $0.19 to $25.40, Research, Estimates) stock fell sharply after the company issued its Apr. 10 warning, and it has a 52-week range of $24.05 to $73.69. 
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