Aetna Inc. will become the latest insurer to tell investors whether health care use is picking up when it reports fourth-quarter results on Wednesday.
What to watch for: Insurers have been helped the past several quarters by health care use that has climbed at rates that were lower than expected when they set premiums. Many say the trend is driven by a pullback in consumer spending, and analysts expect it to continue into 2012, but there are some signs this is slowly changing.
Aetna competitor WellPoint Inc. said last week use rose in the fourth quarter but remained lower than normal, and trends were affected more by the cost of care than the number of people receiving it. In other words, the insurer saw bigger hospital bills from more acute cases rather than more people heading to the hospital.
Recommended For You
UnitedHealth Group Inc. said its medical costs climbed in the fourth quarter, and price increases for inpatient hospital care, not use, were the biggest reason behind it. UnitedHealth expects use to climb steadily through 2012.
Aetna said in October that it expected 2012 earnings of at least $4.80 per share. It then raised that forecast to $5 per share in December after seeing strong results the previous two months. That was better than analyst expectations at the time. Analysts surveyed by FactSet now expect, on average, earnings of $5.08 per share.
Aetna said in early December it was confident enough in its cash flow and capital levels to increase its quarterly dividend by 17 percent to 17.5 cents per share. The Hartford, Conn., company began paying a 15-cent quarterly dividend last April, a big increase from the annual 4-cent dividend it had paid for the past five years.
The insurer also has said its medical membership will grow slightly in the fourth quarter and then drop from a projected 18.4 million on Dec. 31 to 17.9 million by the end of March before rebounding.
Why it matters: Aetna is the third-largest health insurer, trailing only WellPoint and UnitedHealth in both enrollment and revenue. Its medical enrollment was 18.2 million at the end of the third quarter. Health insurance is Aetna's main product, but the company also sells dental, group life and disability coverage.
What's expected: Analysts surveyed by FactSet expect, on average, earnings of 96 cents per share on $8.43 billion in revenue.
2010 quarter: Aetna's net income climbed 30 percent to $215.6 million, or 53 cents per share, on $8.54 billion in revenue. The insurer said it was helped in part by better pricing compared to the previous year's quarter. Aetna had struggled through 2009 with medical costs that climbed higher than the company expected when it set prices for that year.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
