Aetna stock falls for Q1 '09 despite strong profits

Sometimes, you lose even when you win. Though Aetna reported that its first-quarter profit beat Wall Street's estimates, higher-than-expected medical costs still spooked investors, driving the company's stock down more than 10 percent. Net income at the health plan climbed 1 percent, to $437.8 million, up from $431.6 million a year before. Operating earnings were $442.6 million, beating Thomson Reuters analysts' consensus. Operating profits a year ago were $469.6 million for the quarter.

All that may have been more or less fine, but medical expense ratios weren't to investors' liking. Medical costs as a proportion of premiums in its commercial health plans were 81.7 percent, above the 80.2 percent to 80.8 percent Aetna had forecasted for 2009.  Also, Aetna had to add $38 million pre-tax to reserves for prior period claims.

Aetna CEO Ronald Williams attributed the raised medical costs partly to an increase in the average cost of a claim at hospitals. (Readers, that sounds a bit fishy to me, given government data I've reviewed on hospital pricing. What do you think?)

To learn more about Aetna's financial situation:
- read this Hartford Courant piece [1]

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Aetna will pay $20 million over use of Ingenix data [3]
Aetna enters PHR market with medical info option [4]