(Bloomberg) — Aetna Inc. shares rose to a record after the company added 1 million people to its health-insurance rolls, lifting first-quarter earnings and prompting it to boost its annual forecast.
Operating earnings this year will be $7.20 to $7.40 a share, the Hartford, Connecticut-based insurer said Tuesday in a statement. In February, Aetna had predicted operating earnings of at least $7 a share. Analysts had estimated $7.19 on average, according to data compiled by Bloomberg.
Aetna has benefited as more people sign up for insurance, spurred by President Barack Obama's Patient Protection and Affordable Care Act. The company said it provided medical coverage for 23.7 million people as of March 31, up from 22.7 million a year earlier.
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"Aetna's quarter displayed strong performance despite still significant headwinds from the Affordable Care Act," Peter Costa, an analyst at Wells Fargo & Co., said in a research note.
Aetna rose 3.1 percent to $110.21 at 9:47 a.m. New York time and earlier traded at $111.08, the highest intraday price since the company's market debut in 2000. Through Monday's close the stock had added 20 percent this year.
Medical costs declined in the quarter as Aetna lowered spending at the government-funded business, which includes policies for the poor and elderly. Aetna spent 81.3 cents of every premium dollar at the operation on health claims, down from outlays of 84.7 cents per dollar a year earlier.
UnitedHealth Group Inc., the largest U.S. health insurer, also benefited in the first quarter from lower medical costs.
Aetna's first-quarter operating earnings were $2.39 per share. Analysts had estimated $1.95 on average, according to data compiled by Bloomberg. Revenue rose to $15.1 billion, missing the average analyst prediction of $15.5 billion.
Net income advanced to $778 million, or $2.20 a share, from $666 million a year earlier, or $1.82.
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