Aetna Sees More Big Benefits From Low Medical Use

[Stocks-to-Watch]

Aetna (AET) once again posted very low medical utilization rates, as people apparently continue to put off medical care. The company’s medical benefit ratio — the percentage of premiums paid out for medical services — was below many analysts’ expectations, helping boost the company’s fourth quarter results. Shares rose 0.8% in early trading.

Aetna posted 97 cents of EPS, which was in line with analysts’ expectations. But the stock is likely moving higher on the low medical benefit ratio, and an increase in membership to 18.5 million from 18.23 million. Overall, the company’s medical loss ratio rose to 80.7% from 78.9% in the third quarter, but that was still below the 83% ratio last year. One analyst noted that many industry observers had expected the ratio to rise more. Low utilization of Medicare services bodes well for the whole industry, wrote Bernstein analyst Ana Gupte.

“Medicare MLR came in at 84.8% compared to us at 92.9% for the quarter again showing that weak Medicare utilization is a strong tailwind for the segment and improved 630 bps on a year over year basis.”

Original Article Source by Barrons.com