Aetna 2Q profit beats expectations

Aetna beat expectations for its second quarter with profits up nearly 2.4%, primarily boosted by gains from its acquisition of Coventry Health Care.

Aetna reported net income of $548.8 million, or a $1.52 a share, from $536 million, or $1.49 a share in the second quarter of 2013.

Aetna beat analyst expectations and raised its projections for the rest of the year. Aetna expects full-year operating earnings of between $6.45 and $6.60 a share, up from its previous forecast of $6.35 to $6.55 a share.

Analysts expect, on average, earnings of $6.50 per share, according to FactSet.

"Our results speak to the strength of our diversified portfolio of businesses and our ability to succeed across many fronts," CEO Mark Bertolini said in a release.

Aetna said the increase in operating income in the second quarter was primarily due to an additional month of financial results from Coventry, which Aetna acquired last year for $6.9 billion.

Aetna is the nation's third-largest health insurer, trailing UnitedHealth Group Inc. and WellPoint Inc. in enrollment. Health insurance is Aetna's main product, but the company also sells dental, group life and disability coverage.

The company said a better performance from its group life and disability business helped grow earnings in the quarter, as did an additional month of results from Medicare and Medicaid coverage provider Coventry Health Care, which Aetna bought for $6.9 billion in a deal that closed last year.

Earnings, adjusted for non-recurring costs, came to $1.69 per share. That topped average analyst expectations of $1.61 per share, according to Zacks Investment Research.

Aetna's operating revenue, which excludes investment gains and losses among other items, totaled $14.5 billion, a 25% increase from last year. That also beat Wall Street forecasts.

Analysts expected $13.97 billion, according to Zacks.

Health care costs, the insurer's biggest expense, rose 29 percent to $10.31 billion, and Aetna said its tax rate climbed to 41% from 37%, due mainly to a non-deductible health insurer fee imposed by the health care overhaul, the massive federal law that aims to cover millions of people.

The insurer's enrollment also climbed about 5% to top 23 million people.

Aetna shares are down about 2.7% to $82.54 in early trading after initially jumping nearly 5% in premarket trading after it released results. The company's stock had advanced 24%, or $16.23, to $84.82 since the beginning of the year, as of Monday's close. That more than triples the 7.1% growth of the Standard & Poor's 500 index over the same span.

Aetna shares have hit several all-time high prices so far in 2014.

Contributing: Associated Press