Morning Briefing
Summaries of health policy coverage from major news organizations
Aetna Reports Strong Profits With Better-Than-Expected Second Quarter
The Wall Street Journal: Aetna Lifts Guidance As Profit Tops Expectations
The consolidation momentum is being fed by a desire to diversify and cut costs following changes brought by the Affordable Care Act. The deal to buy Humana would boost Hartford, Conn.-based Aetna’s Medicare business and give it scale to thrive as the industry consolidates. In the latest quarter, Aetna said strength in its Medicare and Medicaid businesses offset the impact of net charges incurred under the federal health law’s provisions meant to adjust for insurers’ risk if they enroll a large share of sicker, higher-cost consumers. (Dulaney, 8/4)
USA Today: Aetna Reports Strong Profit As Humana Deal Continues
The company's medical benefits ratio -- which measures the slice of premiums that is spent on medical claims -- fell from 83.1% a year ago to 81.1%. That's an encouraging trend for investors, who want the company to limit its medical costs. (Bomey, 8/4)
Reuters: Aetna Profit Beats As Moderate Medical Costs Help Government Plans
Aetna Inc on Tuesday reported a better-than-expected adjusted net profit for the second quarter and said "moderate" medical costs boosted the profitability of its government Medicare and Medicaid plans. The third-largest U.S. health insurer, which is in the process of buying rival Humana Inc, also raised its full-year forecast for adjusted net profit to at least $7.40 per share from $7.20-$7.40. (8/4)
The Associated Press: Aetna Turns In Better-Than-Expected 2Q, Hikes Forecast Again
Insurers like Aetna and the Blue Cross-Blue Shield carrier Anthem have been pushing to expand their government business as the baby boomer generation ages and becomes eligible for Medicare coverage and as the federal health care overhaul makes more people eligible for the state-and-federally funded Medicaid program. Aetna stoked its government growth a couple years ago when it completed a $6.9 billion acquisition of fellow insurer Coventry Health Care. It plans to further juice that business with a pending acquisition of Humana Inc., the nation's second-largest provider of Medicare Advantage plans. (8/4)
The Wall Street Journal: Aetna Will Clear Commercial Paper Balances At End Of The Year
Health insurer Aetna Inc. will clear its commercial paper balances at the end of the year to make room to finance its $34 billion acquisition of Humana Inc. The company had no commercial paper outstanding at the end of June, but could borrow more during the second half of the year, said David Buda, treasurer at the company, in an interview with CFO Journal. Instead of rolling the short-term debt over, the company will clear the books at the end of the 2015, freeing up room to borrow more in 2016 to fund the Humana deal, he added. (Monga, 8/4)
CVS also issues its quarterly earnings report -
Marketplace: Post Cigarettes, CVS Looks To Grow As A Health Company
The company is investing in providing health services. It’s taken over the pharmacy counter at hundreds of Target stores. CVS, which reports its quarterly earnings Tuesday, bought Omnicare, a company that provides prescription drugs to long-term care facilities. And for years it has been expanding walk-in clinics in its stores. (Weissmann, 8/4)
The Associated Press: CVS Earnings Rise Despite No Tobacco Fix
Pricey specialty drugs helped CVS Health cope with tobacco withdrawal and top analyst expectations in the second quarter. But the nation's second-largest drugstore chain also narrowed its full-year earnings outlook and issued a third-quarter forecast that fell short of Wall Street's expectations. The Woonsocket, Rhode Island, company said that revenue from its biggest business, its pharmacy benefits management segment, jumped 12 percent in the second quarter to more than $24 billion, spurred in part by specialty drugs. These complex medications treat certain forms of cancer and hepatitis C, among other conditions. They often represent treatment breakthroughs but can cost considerably more than other prescriptions. Use of these drugs is soaring, and health insurers, employers and other bill payers are relying more on companies like CVS Health to help restrain this growth. (Murphy, 8/4)
And in other marketplace news -
The Wall Street Journal: Community Health Spinoff To Focus On Smaller Markets
Community Health Systems Inc. said it would spin off 38 hospitals from California to the Deep South to form a new publicly traded company that focuses on smaller, often rural markets. The plan stands in contrast to the broader pattern among U.S. health-care companies and providers, which have been rushing to consolidate to build market share, find savings and steady themselves for a fast-changing market under the Affordable Care Act. (Weaver and Jaramillo, 8/4)
Los Angeles Times: Shire Offers To Buy Baxter Drug Spinoff For $30 Billion
The Irish drugmaker Shire Is offering to buy Baxalta for about $30 billion in stock as it attempts to solidify its strengthening position in rare disease treatments. Earlier this year, Shire said it would pay $5.2 billion to acquire NPS Pharmaceuticals Inc., which specializes in drugs for rare conditions. Baxalta, a Deerfield, Illinois, company spun off by Baxter International Inc. in July, focuses on bleeding disorders. (8/4)
