Upcoming AWS Coverage on Magellan Health Post-Earnings Results

LONDON, UK / ACCESSWIRE / May 15, 2017 / Active Wall St. announces its post-earnings coverage on Aetna Inc. (NYSE: AET). The Company released its first quarter fiscal 2017 results on May 02, 2017. The health care Company exceeded earnings estimates. Register with us now for your free membership at:

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One of Aetna's competitors within the Health Care Plans space, Magellan Health, Inc. (NASDAQ: MGLN), reported on April 26, 2017, its financial results for Q1 ended March 31, 2017. AWS will be initiating a research report on Magellan Health in the coming days.

Today, AWS is promoting its earnings coverage on AET; touching on MGLN. Get our free coverage by signing up to:

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Earnings Reviewed

Aetna's total revenue and adjusted revenue for the quarter ended March 31, 2017, were $15.17 billion and $15.49 billion, respectively, and both approximately $15.69 billion, each, for Q1 2016. The decline in total revenue and adjusted revenue was primarily due to lower premiums in Aetna's Health Care segment, including lower membership in Aetna's ACA compliant individual and small group products and the temporary suspension of the HIF in 2017. The Company's total revenue numbers came in below analysts' consensus of $15.40 billion.

For Q1 2017, Aetna's total company expense ratio was 25.4% compared to 18.2% for Q1 2016, primarily due to costs associated with the termination during the reported quarter of the Humana Merger's Agreement. The Company's adjusted expense ratio was 16.0% for Q1 2017 and 18.0% for Q1 2016, respectively.

For Q1 2017, Aetna's net loss was $381 million compared with net income of $737 million for Q1 2016. The net loss during the reported quarter reflected costs associated with the termination of the Humana Merger Agreement. The Company's adjusted earnings were $939 million, or $2.71 per share, for Q1 2017 compared with $821 million or $2.32 per share for Q1 2016. Aetna's adjusted EPS surpassed Wall Street's estimates of $2.37 per share.

Segment Results

During Q1 2017, Aetna's Health Care segment which provides a full range of insured and self-insured medical, pharmacy, dental, and behavioural health products and services, reported total revenue and adjusted revenue of both $14.8 billion and both $15.0 billion for Q1 2016. The decrease in total revenue and adjusted revenue was primarily due to lower membership in Aetna's ACA compliant individual and small group products and the temporary suspension of the HIF in 2017.

During Q1 2017, Aetna's medical membership decreased by 664 thousand compared with December 31, 2016, primarily reflecting declines in Aetna's commercial insured products primarily related to Aetna's ACA compliant individual and small group products.

For Q1 2017, the Company's Commercial Medical benefit ratios (MBR) increased 1.6 pts on a y-o-y basis to 79.4% primarily due to the temporary suspension of the HIF in 2017 and higher medical costs in Aetna's individual Commercial products, including a $110 million premium deficiency reserve. The increase was partially offset by improved performance in Aetna's group Commercial Insured products. Aetna's Q1 2017 government MBR increased to 85.3% compared with Q1 2016 MBR of 83.4%.

Aetna's days claims payable was 53 days at March 31, 2017, a decrease of four days compared with March 31, 2016. The y-o-y drop was driven by a number of factors, including the operational maturation of new Medicaid contracts, decreased claims processing times, and business mix primarily related to the decline in Aetna's individual Commercial product membership.

For Q1 2017, Aetna's healthcare segment reported income before income taxes of $1.2 billion compared with $1.4 billion for Q1 2016. The decrease in income before income taxes was primarily due to the reported quarter reflecting a $231 million pre-tax expense related to estimated future guaranty fund assessments. The segment's pre-tax adjusted earnings remained relatively flat at approximately $1.5 billion, despite the negative impact of the temporary suspension of the HIF in 2017.

Aetna's Group Insurance segment, which includes group life, disability and long-term care products, reported total revenue of $621 million and $612 million for Q1 2017 and Q1 2016, respectively. The segment's adjusted revenue was $619 million and $609 million for the reported quarter and for the year earlier same quarter, respectively. Total revenue and adjusted revenue increased primarily due to higher premiums in Aetna's life and disability products and higher net investment income.

For Q1 2017, the Group Insurance segment reported income before income taxes of $35 million compared with $28 million for Q1 2016. The segment's pre-tax adjusted earnings were $33 million for the reported quarter compared with $25 million for the prior year's comparable quarter.

For Q1 2017, Aetna's Large Case Pensions segment, which manages a variety of discontinued and other retirement and savings products, primarily for qualified pension plans, reported total revenue of $86 million compared to revenue of $67 million for Q1 2016. The segment's adjusted revenue was $86 million for the reported quarter and $65 million for the year earlier quarter. Total revenue and adjusted revenue increased primarily due to higher net investment income. Large Case Pensions segment's income before income taxes totaled $4 million for Q1 2017 compared with $3 million for Q1 2016. Pre-tax adjusted earnings were $4 million for the reported quarter compared with $1 million for the year earlier same quarter.

Balance Sheet

Aetna's total debt to consolidated capitalization ratio was 39.8% at March 31, 2017, compared with 53.6% at December 31, 2016. The total debt to consolidated capitalization ratio at the end of Q1 2017 reflects the redemption of $10.2 billion aggregate principal amount of the senior notes issued in 2016, $750 million aggregate principal number of senior notes due in 2020 and the repayment at maturity of $383 million aggregate principal number of senior notes, each, during the reported quarter.

Stock Performance

On Friday, May 12, 2017, the stock closed the trading session at $142.90, falling 1.03% from its previous closing price of $144.39. A total volume of 2.45 million shares have exchanged hands. Aetna's stock price advanced 10.71% in the last month, 17.89% in the past three months, and 21.80% in the previous six months. Furthermore, since the start of the year, shares of the Company have gained 15.92%. The stock is trading at a PE ratio of 44.35 and has a dividend yield of 1.40%.

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SOURCE: Active Wall Street