At an investor’s conference yesterday, U.S. health insurer Aetna Inc. (AET) announced that it expects its 2014 membership to be higher than it initially projected. It also affirmed the earnings expectation for 2014 and 2015.
Aetna now projects year-end 2014 total medical membership to be higher than the prior estimate of 23.4 million members. Since the prior projection itself indicated membership growth of 5.4% year over year, a higher number would mean more growth.
The news reflects the benefits enjoyed by the company from the Obamacare expansion. Aetna’s upward revision to this guidance follows new members from the second open enrollment period on the public health insurance exchanges.
The optimistic outlook sent Aetna’s shares up 1.19% in the trading session on the day.
Aetna also affirmed its 2014 earnings range of $6.60–$6.70 per share and said that the bottom line would be near the upper end of the guidance. The insurer also maintained that revenues would be in the $57–$58 billion band.
Moreover, Aetna reaffirmed that it expects to generate revenues of at least $62 billion, and earnings per share of at least $6.90 in 2015. Based on the results of the second open enrollment period, the company also projected that Medicare Advantage and Individual Public Exchange membership would exceed previous projections in the first quarter of 2015.
A day earlier Aetna also announced that it would increase the pay of its lowest rung employees in April. The minimum base hourly wage of around 500 of its U.S. employees would be raised to $16 per hour. Aetna also announced that it will launch an enhanced medical benefits program for 2016 with an aim to reduce the out-of-pocket health care expenses for some of its U.S. employees.
Aetna carries a Zacks Rank #3 (Hold). Better-ranked players in the space include Anthem, Inc. (ANTM), Humana Inc. (HUM) and UnitedHealth Group Inc. (UNH). All these stocks carry a Zacks Rank #2 (Buy).
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