Skip to main content

Aetna tops Street in 3Q, raises 2014 forecast

By WTOP Staff

TOM MURPHY
AP Business Writer

Aetna became the latest major health insurer to thump third-quarter expectations and raise its 2014 forecast, but the company’s shares slipped Tuesday after it also said expenses climbed more than expected for part of its enrollment.

The nation’s third-largest health insurer said that medical costs for some of its small-business coverage came in higher than projected, and benefit and network changes that it had made to help control those expenses hadn’t worked as expected. The insurer also reported an 18 percent jump in operating expenses, which include selling, general and administrative costs.

Investors, who are skittish about medical costs climbing more rapidly after years of moderate growth, knocked down Aetna’s stock after trading started.

“The pressures they’re facing now aren’t necessarily a shock, but I think some of the market is spooked as far as the costs they are seeing,” Morningstar analyst Vishnu Lekraj said.

Overall, Aetna’s earnings climbed 15 percent in the third quarter to $594.5 million, or $1.67 per share. That compares to net income of $518.6 million, or $1.38 per share, the previous year.

Adjusted earnings totaled $1.79 per share in the most recent quarter.

Analysts expected, on average, $1.58 per share, according to Zacks Investment Research.

Operating revenue, which excludes investment gains and losses, grew 13 percent to $14.7 billion and also topped forecasts.

The insurer beat expectations partly because of the growth of its government businesses, which involves the state- and federally run Medicaid program and Medicare Advantage coverage. Citi analyst Carl McDonald said in a research note that results from that segment appear to be “unsustainably good.”

“The headline earnings number looks good, but Aetna was quite vocal after the second quarter that there was nothing to worry about in the commercial business and about the company’s improved insight into commercial medical cost trend,” McDonald wrote.

Aetna trails only UnitedHealth Group Inc. and WellPoint Inc. on the list of the nation’s largest health insurers. Earlier this month, UnitedHealth reported results that topped expectations and raised its 2014 forecast.

On Tuesday, Aetna Inc. said it now expects 2014 earnings, excluding one-time items, to range between $6.60 and $6.70 per share. That’s up from a forecast it made in July for $6.45 to $6.60 per share.

That also topped average analyst expectations of $6.59 per share, according to FactSet.

Aetna shares fell about 2.8 percent, or $2.21, to $76.97 Tuesday morning, while the Standard & Poor’s 500 index climbed slightly. The stock had climbed 15 percent since the beginning of the year, as of Monday’s close. That more than doubled the growth of the S&P 500.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
Read Next Story

Related News

Frustration grows in Venezuela as earthquake death toll reaches 1,430

Israel and Lebanon sign framework agreement with US in ‘first step’ toward peace, Rubio says

Trump-endorsed populist poised to become Colombia’s next president as rival challenges vote