Aetna Inc (AET.N) reported a quarterly net loss on Tuesday related to costs from its failed acquisition of Humana Inc (HUM.N) and said it will cut exposure to money-losing Obamacare coverage in 2018.
Like other U.S.-based health insurers including Anthem Inc (ANTM.N) and Molina Healthcare Corp (MOH.N), Aetna faces deadlines to file 2018 plans but is uncertain about components of premium rates such as the continuation of government subsidies and the mandate for Americans to have insurance.
President Donald Trump has vowed to repeal and replace the Affordable Care Act, often called Obamacare, although Republican lawmakers have not agreed on how to do so. Insurers are weighing unresolved issues such as a costly health insurance tax in 2018 and the loss of significant government subsidies as soon as this year.
"We continue to evaluate our footprint with a view towards significantly reducing our exposure to individual commercial products in 2018," Aetna Chief Financial Officer Shawn Guertin said during a conference call.
In an interview, Guertin explained that the company is making decisions about the three remaining states where it sells these plans based on the current situation.
Aetna, which has 255,000 customers in individual plans that comply with Obamacare, said customer medical costs were high and recorded a $110 million premium deficiency reserve in the first quarter for future losses.
The company said its first-quarter net loss was $381 million, or $1.11 per share, compared with a profit of $737 million, or $2.08 per share, a year earlier.
That reflected a more than $1 billion termination fee for walking away from Humana in January after a federal judge backed the U.S. Justice Department's decision to block the deal on antitrust grounds.
Aetna said that even without Humana, it will grow its Medicare government business for elderly people and that it is pursuing contracts in the Medicaid program for the poor.
Excluding one-time costs, the company reported a better-than-expected $2.71 per share, above analysts' average estimate of $2.37, according to Thomson Reuters I/B/E/S.
Aetna shares were up 1.6 percent, or $2.21, at $139.02.
Leerink analyst Ana Gupte said the shares had already risen in recent weeks after UnitedHealth Group Inc (UNH.N) and Anthem Inc (ANTM.N) reported earnings, capping today's gains.
Aetna raised its forecast for 2017 adjusted earnings to $8.80-$9.00 per share from at least $8.55 per share, but Gupte said that while the forecast for this year was strong Aetna's medium-term outlook was weak compared to rivals.
"They don't have any really exciting growth platform," she said.
(Additional reporting by Ankur Banerjee in Bengaluru; Editing by Shounak Dasgupta and Meredith Mazzilli)